<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 10, 1995
______________________________________________________________________________
Horizon/CMS Healthcare Corporation
(Exact name of registrant as specified in its charter)
______________________________________________________________________________
DELAWARE 1-9369 91-1346899
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
______________________________________________________________________________
6001 INDIAN SCHOOL ROAD, N.E., SUITE 530, ALBUQUERQUE, NM 87110
(Address of principal executive offices) (Zip Code)
______________________________________________________________________________
Registrant's telephone number, including area code: (505) 881-4961
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ITEM 5. OTHER EVENTS.
On July 10, 1995, Horizon/CMS Healthcare Corporation ("Horizon") entered
into a Credit Agreement dated as of July 6, 1995, by and among Horizon,
Continental Medical Systems, Inc. ("CMS"), a wholly owned subsidiary of
Horizon, the Lenders Named Therein and NationsBank of Texas, N.A. as Agent
and as Issuing Bank (the "Credit Facility"). The Credit Facility increases
Horizon's available bank credit from $250 million to $485 million and
replaces the two stand alone facilities of Horizon and CMS.
The Credit Facility is filed as Exhibit 99 hereto, and is specifically
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) NOT APPLICABLE.
(B) NOT APPLICABLE.
(C) EXHIBITS:
99 Credit Agreement dated as of July 6, 1995, by and among
Horizon, CMS, the Lenders Named Therein and NationsBank of
Texas, N.A. as Agent and as Issuing Bank.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its
behalf of the undersigned, thereunto duly authorized.
HORIZON/CMS HEALTHCARE CORPORATION
By: /s/ SCOT SAUDER
_______________________________________
Name: Scot Sauder
Title: Vice President - Legal Affairs,
Secretary and General Counsel
Dated: July 25, 1995
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBITS PAGE NUMBER
- ------- ----------------------- -----------
<S> <C> <C>
99 Credit Agreement dated as of July 6,
1995, by and among Horizon, CMS, the
Lenders Named Therein and NationsBank of
Texas, N.A. as Agent and as Issuing
Bank.
</TABLE>
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CONFORMED COPY
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- --------------------------------------------------------------------------------
CREDIT AGREEMENT
DATED AS OF JULY 6, 1995
AMONG
HORIZON/CMS HEALTHCARE CORPORATION,
CONTINENTAL MEDICAL SYSTEMS, INC.,
THE LENDERS NAMED HEREIN,
AND
NATIONSBANK OF TEXAS, N.A.
AS AGENT AND AS ISSUING BANK
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
Article Section Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Defined Terms. . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Terms Generally. . . . . . . . . . . . . . . . . . . . . 26
SECTION 1.03. Types of Borrowings. . . . . . . . . . . . . . . . . . . 26
ARTICLE II THE CREDITS. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.01. Commitment to Make Loans . . . . . . . . . . . . . . . . 26
SECTION 2.02. Loans. . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.03. Notice of Borrowings . . . . . . . . . . . . . . . . . . 29
SECTION 2.04. Notes; Repayment of Loans. . . . . . . . . . . . . . . . 29
SECTION 2.05. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.06. Interest on Loans. . . . . . . . . . . . . . . . . . . . 30
SECTION 2.07. Default Interest . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.08. Alternate Rate of Interest . . . . . . . . . . . . . . . 32
SECTION 2.09. Termination and Reduction of Commitments . . . . . . . . 32
SECTION 2.10. Repayments and Prepayments . . . . . . . . . . . . . . . 33
SECTION 2.11. Reserve Requirements; Certain Changes in Circumstances . 34
SECTION 2.12. Change in Legality . . . . . . . . . . . . . . . . . . . 35
SECTION 2.13. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.14. Pro Rata Treatment . . . . . . . . . . . . . . . . . . . 37
SECTION 2.15. Sharing of Setoffs . . . . . . . . . . . . . . . . . . . 37
SECTION 2.16. Payments . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 2.17. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 2.18. Assignment of Commitments Under Certain Circumstances. . 41
SECTION 2.19. Horizon Letters of Credit. . . . . . . . . . . . . . . . 41
SECTION 2.20. Continental Letters of Credit. . . . . . . . . . . . . . 46
ARTICLE III REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . 50
SECTION 3.01. Organization; Powers . . . . . . . . . . . . . . . . . . 50
SECTION 3.02. Authorization. . . . . . . . . . . . . . . . . . . . . . 50
SECTION 3.03. Enforceability . . . . . . . . . . . . . . . . . . . . . 51
SECTION 3.04. Consents and Governmental Approvals. . . . . . . . . . . 51
SECTION 3.05. Financial Statements . . . . . . . . . . . . . . . . . . 51
SECTION 3.06. No Material Adverse Change . . . . . . . . . . . . . . . 51
SECTION 3.07. Title to Properties; Possession Under Leases . . . . . . 52
SECTION 3.08. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 3.09. Litigation; Compliance with Laws . . . . . . . . . . . . 52
SECTION 3.10. Agreements . . . . . . . . . . . . . . . . . . . . . . . 53
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SECTION 3.11. Federal Reserve Regulations. . . . . . . . . . . . . . . 54
SECTION 3.12. Investment Company Act; Public Utility
Holding Company Act . . . . . . . . . . . . . . . . . . . . 54
SECTION 3.13. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . 54
SECTION 3.14. Tax Returns. . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 3.15. No Material Misstatements. . . . . . . . . . . . . . . . 55
SECTION 3.16. Employee Benefit Plans . . . . . . . . . . . . . . . . . 55
SECTION 3.17. Environmental and Safety Matters . . . . . . . . . . . . 56
SECTION 3.18. Security Interests . . . . . . . . . . . . . . . . . . . 56
SECTION 3.19. Solvency . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 3.20. Transactions with Affiliates . . . . . . . . . . . . . . 57
SECTION 3.21. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 3.22. Labor Relations. . . . . . . . . . . . . . . . . . . . . 58
ARTICLE IV CONDITIONS OF LENDING. . . . . . . . . . . . . . . . . . . . . . 58
SECTION 4.01. First Borrowing. . . . . . . . . . . . . . . . . . . . . 58
SECTION 4.02. All Borrowings . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE V AFFIRMATIVE COVENANTS OF HORIZON. . . . . . . . . . . . . . . . . 64
SECTION 5.01. Existence; Businesses and Properties; Leases
and Operating Leases. . . . . . . . . . . . . . . . . . . . 65
SECTION 5.02. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 5.03. Obligations and Taxes. . . . . . . . . . . . . . . . . . 65
SECTION 5.04. Financial Statements, Reports, etc . . . . . . . . . . . 66
SECTION 5.05. Litigation and Other Notices . . . . . . . . . . . . . . 68
SECTION 5.06. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 5.07. Maintaining Records; Access to Properties and Inspections 68
SECTION 5.08. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . 69
SECTION 5.09. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 5.10. Material Subsidiaries. . . . . . . . . . . . . . . . . . 69
SECTION 5.11. Further Assurances . . . . . . . . . . . . . . . . . . . 69
ARTICLE VI AFFIRMATIVE COVENANTS OF CONTINENTAL . . . . . . . . . . . . . . 69
SECTION 6.01. Existence; Businesses and Properties; Leases and
Operating Leases. . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.02. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.03. Obligations and Taxes. . . . . . . . . . . . . . . . . . 70
SECTION 6.04. Financial Statements, Reports, etc . . . . . . . . . . . 71
SECTION 6.05. Litigation and Other Notices . . . . . . . . . . . . . . 72
SECTION 6.06. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 6.07. Maintaining Records; Access to Properties and Inspections 73
SECTION 6.08. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.09. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.10. Material Subsidiaries. . . . . . . . . . . . . . . . . . 73
SECTION 6.11. Further Assurances . . . . . . . . . . . . . . . . . . . 73
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ARTICLE VII NEGATIVE COVENANTS OF HORIZON . . . . . . . . . . . . . . . . . 74
SECTION 7.01. Indebtedness . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 7.02. Negative Pledge. . . . . . . . . . . . . . . . . . . . . 75
SECTION 7.03. Sale and Lease-Back Transactions . . . . . . . . . . . . 77
SECTION 7.04. Investments, Loans and Advances. . . . . . . . . . . . . 77
SECTION 7.05. Mergers, Consolidations, Dispositions and Acquisitions . 78
SECTION 7.06. Dividends and Distributions. . . . . . . . . . . . . . . 80
SECTION 7.07. Impairment.. . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.08. Limitation on Restrictions on Subsidiaries . . . . . . . 81
SECTION 7.09. No Other Negative Pledges. . . . . . . . . . . . . . . . 81
SECTION 7.10. Transactions with Affiliates . . . . . . . . . . . . . . 81
SECTION 7.11. Business of Horizon and Subsidiaries . . . . . . . . . . 82
SECTION 7.12. Sales of Receivables.. . . . . . . . . . . . . . . . . . 82
SECTION 7.13. Certain Amendments . . . . . . . . . . . . . . . . . . . 82
SECTION 7.14. Changes in GAAP. . . . . . . . . . . . . . . . . . . . . 82
SECTION 7.15. Material Agreements. . . . . . . . . . . . . . . . . . . 82
SECTION 7.16. Issuance of Securities . . . . . . . . . . . . . . . . . 83
SECTION 7.17. Financial Covenants. . . . . . . . . . . . . . . . . . . 83
ARTICLE VIII NEGATIVE COVENANTS OF CONTINENTAL. . . . . . . . . . . . . . . 84
SECTION 8.01. Indebtedness . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 8.02. Negative Pledge. . . . . . . . . . . . . . . . . . . . . 86
SECTION 8.03. Sale and Lease-Back Transactions . . . . . . . . . . . . 87
SECTION 8.04. Investments, Loans and Advances. . . . . . . . . . . . . 88
SECTION 8.05. Mergers, Consolidations, Dispositions and Acquisitions . 89
SECTION 8.06. Dividends and Distributions. . . . . . . . . . . . . . . 91
SECTION 8.07. Impairment.. . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 8.08. Limitation on Restrictions on Subsidiaries . . . . . . . 92
SECTION 8.09. No Other Negative Pledges. . . . . . . . . . . . . . . . 92
SECTION 8.10. Transactions with Affiliates . . . . . . . . . . . . . . 93
SECTION 8.11. Business of Continental and Subsidiaries . . . . . . . . 93
SECTION 8.12. Sales of Receivables.. . . . . . . . . . . . . . . . . . 93
SECTION 8.13. Certain Amendments . . . . . . . . . . . . . . . . . . . 93
SECTION 8.14. Changes in GAAP. . . . . . . . . . . . . . . . . . . . . 94
SECTION 8.15. Material Agreements. . . . . . . . . . . . . . . . . . . 94
SECTION 8.16. Subordinated Debt. . . . . . . . . . . . . . . . . . . . 94
SECTION 8.17. Financial Covenants. . . . . . . . . . . . . . . . . . . 95
ARTICLE IX EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 96
ARTICLE X THE AGENT AND ISSUING BANK. . . . . . . . . . . . . . . . . . . 100
SECTION 10.01. Appointment and Authorization . . . . . . . . . . . . 100
SECTION 10.02. Liability of Agent. . . . . . . . . . . . . . . . . . 101
SECTION 10.03. Action by Agent . . . . . . . . . . . . . . . . . . . 101
SECTION 10.04. Successor Agents. . . . . . . . . . . . . . . . . . . 101
SECTION 10.05. Agent and Affiliate . . . . . . . . . . . . . . . . . 102
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SECTION 10.06. Indemnification . . . . . . . . . . . . . . . . . . . 102
SECTION 10.07. Credit Decision . . . . . . . . . . . . . . . . . . . 103
ARTICLE XI MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 103
SECTION 11.01. Notices . . . . . . . . . . . . . . . . . . . . . . . 103
SECTION 11.02. Survival of Agreement . . . . . . . . . . . . . . . . 104
SECTION 11.03. Binding Effect. . . . . . . . . . . . . . . . . . . . 104
SECTION 11.04. Successors and Assigns. . . . . . . . . . . . . . . . 104
SECTION 11.05. Expenses; Indemnity . . . . . . . . . . . . . . . . . 107
SECTION 11.06. Right of Setoff . . . . . . . . . . . . . . . . . . . 109
SECTION 11.07. Applicable Law. . . . . . . . . . . . . . . . . . . . 110
SECTION 11.08. Waivers; Amendment. . . . . . . . . . . . . . . . . . 110
SECTION 11.09. Interest Rate Limitation. . . . . . . . . . . . . . . 111
SECTION 11.10. Entire Agreement. . . . . . . . . . . . . . . . . . . 112
SECTION 11.11. Severability. . . . . . . . . . . . . . . . . . . . . 112
SECTION 11.12. Counterparts. . . . . . . . . . . . . . . . . . . . . 112
SECTION 11.13. Headings. . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 11.14. Jurisdiction; Consent to Service of Process . . . . . 112
SECTION 11.15. Several Liability . . . . . . . . . . . . . . . . . . 113
SCHEDULES
Schedule 2.01(a) Horizon Commitment
Schedule 2.01(b) Continental Commitment
Schedule 2.19(l) Existing Letters of Credit
Schedule 3.02 Authorizations
Schedule 3.07 Real Property
Schedule 3.08 Subsidiaries
Schedule 3.09 Compliance with Laws
Schedule 3.10 Material Contracts and Licenses
Schedule 3.16 Employee Benefit Plans
Schedule 3.17 Environmental Matters
Schedule 3.20(a) Transactions with Affiliates of Horizon
Schedule 3.20(b) Transactions with Affiliates of Continental
Schedule 7.01 Indebtedness of Horizon
Schedule 7.02 Liens of Horizon
Schedule 7.04 Investments of Horizon
Schedule 7.08 Encumbrances and Restrictions of Horizon
Schedule 8.01 Indebtedness of Continental
Schedule 8.02 Liens of Continental
Schedule 8.04 Investments of Continental
Schedule 8.08 Encumbrances and Restrictions of Continental
Schedule 8.09 Continental Agreements
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EXHIBITS
Exhibit A-1 Form of Horizon Note
Exhibit A-2 Form of Continental Note
Exhibit B-1 Form of Horizon Guarantee Agreement
Exhibit B-2 Form of Horizon Subsidiaries' Guarantee Agreement
Exhibit B-3 Form of Continental Subsidiaries' Guarantee Agreement
Exhibit C-1 Form of Horizon Pledge Agreement
Exhibit C-2 Form of Horizon Subsidiaries' Pledge Agreement
Exhibit C-3 Form of Continental Pledge Agreement
Exhibit C-4 Form of Continental Subsidiaries' Pledge Agreement
Exhibit D Form of Intercompany Note
Exhibit E Form of Assignment and Acceptance
Exhibit F-1 Form of Opinion of Counsel to Horizon
Exhibit F-2 Form of Opinion of Counsel to Continental
Exhibit G-1 Form of Horizon Compliance Certificate
Exhibit G-2 Form of Continental Compliance Certificate
Exhibit H Form of Supplemental Agreement
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CREDIT AGREEMENT dated as of July 6, 1995, among HORIZON/CMS HEALTHCARE
CORPORATION, a Delaware corporation, CONTINENTAL MEDICAL SYSTEMS, INC., a
Delaware corporation, the financial institutions listed on the signature pages
hereof and NATIONSBANK OF TEXAS, N.A., as Agent and as Issuing Bank.
Horizon (such term, and all other capitalized terms herein, being used as
hereinafter defined) has requested the Lenders to extend credit to Horizon in
the aggregate principal amount of up to $250,000,000, in the form of (a) Horizon
Loans made by the Lenders at any time and from time to time during the Horizon
Availability Period in an aggregate principal amount at any one time outstanding
of up to $250,000,000 and (b) Horizon Letters of Credit to be issued by the
Issuing Bank at any time and from time to time during the Horizon Letter of
Credit Availability Period in an aggregate amount at any one time outstanding of
up to $25,000,000; PROVIDED that the sum at any one time of outstanding Horizon
Loans and the Horizon Letter of Credit Exposure at such time shall not exceed
$250,000,000.
Continental has requested the Lenders to extend credit to Continental in
the aggregate principal amount of up to $235,000,000, in the form of (a)
Continental Loans made by the Lenders at any time and from time to time during
the Continental Availability Period in an aggregate principal amount at any one
time outstanding of up to $235,000,000 and (b) Continental Letters of
Credit to be issued by the Issuing Bank at any time and from time to time during
the Continental Letter of Credit Availability Period in an aggregate amount at
any one time outstanding of up to $45,000,000; PROVIDED that the sum at any one
time of outstanding Continental Loans and the Continental Letter of Credit
Exposure at such time shall not exceed $235,000,000.
The proceeds of such Borrowings are to be used, and the Letters of Credit
are to be used, as provided in Section 3.13. The Lenders are willing to extend
such credit to the Borrowers upon the terms and subject to the conditions set
forth herein. Accordingly, the Borrowers, the Lenders, the Agent and the
Issuing Bank agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.
"ABR LOAN" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II.
The term "ADDITIONAL AMOUNT" shall have the meaning assigned to such term
in Section 2.17(a).
<PAGE>
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the product of (a) the Interbank
Offered Rate in effect for such Interest Period and (b) Statutory Reserves.
"ADMINISTRATIVE QUESTIONNAIRE" shall mean, with respect to each Lender, the
administrative questionnaire in the form submitted to such Lender by the Agent
and returned to the Agent duly completed by such Lender.
"AFFILIATE" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"AGENT" shall mean NationsBank of Texas, N.A., in its capacity as agent for
the Lenders hereunder, and its successors in such capacity.
"AGREEMENT" shall mean this Agreement, as amended or modified from time to
time.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. If the Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability or failure of the Agent to obtain sufficient quotations in accordance
with the terms thereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively, without notice to
either Borrower.
"ASSESSMENT RATE" shall mean, for any date, the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Agent in accordance with its usual procedures as the then current net annual
assessment rate that will be employed in determining amounts payable by the
Agent to the Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time deposits made in
dollars at the Agent's domestic offices.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Agent, in the form of
Exhibit E or such other form as shall be approved by the Agent.
"ATTRIBUTABLE DEBT" in respect of a transaction of the type referred to in
Sections 7.03 and 8.03, shall mean, at the time of determination, the greater of
(i) the Fair Market Value of the property subject to such transaction (as
determined in good faith by a Financial Officer of Horizon) or (ii) the present
value (discounted at the interest rate implicit in the applicable lease,
compounded semiannually) of the total obligations of the lessee for rental
payments during the
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remaining term of the lease included in such transaction (including any period
for which such lease has been extended).
"AVERAGE LIFE" shall mean, as of any date, with respect to any
Indebtedness, the quotient obtained by dividing (i) the sum of the products of
the numbers of years from such date to the dates of each successive scheduled
principal payment of such Indebtedness multiplied by the amount of such payment
by (ii) the sum of all such payments.
"BOARD" shall mean the Board of Governors of the Federal Reserve System of
the United States.
"BORROWERS" shall mean Horizon and Continental in their several capacities
and not jointly and severally.
"BORROWING" shall mean a group of Loans of a single Class and Type made by
the Lenders on a single date and as to which a single Interest Period is in
effect.
"BUSINESS DAY" shall mean any day (other than a day which is a Saturday,
Sunday or legal holiday in the State of Texas or the State of New York) on which
banks are open for business in Dallas, Texas and New York, New York; PROVIDED,
HOWEVER, that, when used in connection with a Eurodollar Loan, the term
"BUSINESS DAY" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"CASH EQUIVALENTS" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within 90 days from the date of acquisition thereof;
(b) investments in commercial paper maturing within 90 days from the
date of acquisition thereof and having, at such date of acquisition, a
credit rating from Standard & Poor's Corporation of A-2 or better and a
credit rating from Moody's Investors Service, Inc. of P-2 or better;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 90 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America
3
<PAGE>
or any State thereof which has a combined capital and surplus and undivided
profits of not less than $500,000,000 and a credit rating for short-term
bank deposits of A-3 or better from Standard & Poor's Corporation or P-3 or
better from Moody's Bank Credit Report Service or of any Lender;
(d) investments in any deposit or savings account with any bank or
other financial institution to the extent that such investments are fully
insured by the Federal Deposit Insurance Corporation; and
(e) other investment instruments approved in writing by the Agent and
offered by financial institutions which have a combined capital and surplus
and undivided profits of not less than $500,000,000.
A "CHANGE IN CONTROL" shall be deemed to have occurred if:
(a) Horizon shall cease to own of record and beneficially, 100% of
each class of outstanding Equity Interests of Continental, free and clear
of all Liens (other than any Lien created by the Horizon Pledge Agreement),
whether as a result of the issuance of securities of Continental, any
merger, consolidation, liquidation or dissolution of Continental, any
transfer of securities by Horizon or otherwise;
(b) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of Horizon,
together with any new directors whose election by such Board of Directors
or whose nomination for election by the shareholders of Horizon was
approved by a vote of the percentage specified in the By-laws of Horizon
(but not less than 66-2/3%) of the directors of Horizon then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved
(collectively for purposes of this definition, "incumbent directors") cease
for any reason to constitute a majority of the Board of Directors of
Horizon then in office; or
(c) any person or "group" (within the meaning of Rule 13d-5 under the
Exchange Act) is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all shares that any such person
has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of shares
representing more than 20% of the aggregate ordinary voting power of the
outstanding Equity Interests of Horizon, or (ii) shall otherwise directly
or indirectly Control Horizon (except for any such Control deemed to exist
solely as a result of an incumbent director's status as a director or
executive officer).
"CLASS" shall have the meaning assigned to such term in Section 1.03.
"CLOSING DATE" shall mean the date of the first Borrowing hereunder in
accordance with Sections 4.01 and 4.02.
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"CMS BUSINESS" shall mean the provision of medical rehabilitation programs
and services (whether in an inpatient or outpatient setting or on a contract
services basis), the provision of therapy services and LOCUM TENENS services,
the ownership and operation of nursing homes and the provision of management
services for healthcare institutions, physician and other providers, including
the operation of inpatient and outpatient centers, residential care centers,
transitional living centers and ambulatory surgery centers, the provision of
home healthcare, diagnostic testing and laboratory services, and the provision
of practice management and other healthcare provider management services, and
activities incidental to or supporting the competitive position of Continental
and its subsidiaries in any such businesses.
"CODE" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"COLLATERAL" shall mean all the collateral pledged or purported to be
pledged pursuant to the Pledge Agreements.
"COMMITMENT" shall mean, with respect to any Lender, such Lender's Horizon
Commitment and Continental Commitment.
"COMMITMENT FEES" shall mean the Horizon Commitment Fees and the
Continental Commitment Fees.
"COMMONLY CONTROLLED ENTITY" shall mean each of the Subsidiaries and each
other entity, whether or not incorporated, which is under common control with
either Borrower within the meaning of Section 4001 of ERISA or is part of a
group which includes either Borrower and which is treated as a single employer
under Section 414 of the Code.
"COMMON STOCK" shall mean the Common Stock, par value $.001 per share, of
Horizon and any other Equity Interests of Horizon into which the Common Stock
shall be reclassified or otherwise changed.
"CONSOLIDATED SUBSIDIARIES" shall mean, for any person, all subsidiaries of
such person that should be consolidated with such person for financial reporting
purposes in accordance with GAAP; PROVIDED that the Consolidated Subsidiaries of
Horizon shall exclude the Continental Group.
"CONTINENTAL" shall mean Continental Medical Systems, Inc., a Delaware
corporation, and its successors.
"CONTINENTAL AVAILABILITY PERIOD" shall mean the period from and including
the Closing Date to but excluding the earlier of (a) the Maturity Date and (b)
the termination of the Continental Commitments of the Lenders in accordance with
the terms hereof.
"CONTINENTAL COLLATERAL" shall mean all the collateral pledged or purported
to be pledged pursuant to the Continental Pledge Agreement and the Continental
Subsidiaries' Pledge Agreement.
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"CONTINENTAL COMMITMENT" shall mean, with respect to each Lender, the
commitment of such Lender to make Continental Loans hereunder as set forth in
Section 2.01(b), as the same may be reduced from time to time pursuant to
Section 2.09.
"CONTINENTAL COMMITMENT FEE" shall have the meaning assigned to such term
in Section 2.05(b).
"CONTINENTAL COMMITMENT RATE" shall mean, for any day, calculated on a per
annum basis, (i) 0.3125%, if such day is prior to the Pricing Adjustment Date;
and (ii) if such day is on or after the Pricing Adjustment Date:
(A) 0.2000%, if such day falls within a Continental Level I Pricing
Period;
(B) 0.2500%, if such day falls within a Continental Level II Pricing
Period, a Continental Level III Pricing Period or a Continental Level
IV Pricing Period; and
(C) 0.3125%, if such day falls within a Continental Level V Pricing Period
or a Continental Level VI Pricing Period.
"CONTINENTAL EURODOLLAR MARGIN" shall mean, for any day, calculated on a
per annum basis, (i) 1.2500%, if such day is prior to the Pricing Adjustment
Date; and (ii) if such day is on or after the Pricing Adjustment Date:
(A) 0.6250%, if such day falls within a Continental Level I Pricing
Period;
(B) 0.7500%, if such day falls within a Continental Level II Pricing
Period;
(C) 0.8750%, if such day falls within a Continental Level III Pricing
Period;
(D) 1.0000%, if such day falls within a Continental Level IV Pricing
Period;
(E) 1.2500%, if such day falls within a Continental Level V Pricing
Period; and
(F) 1.5000%, if such day falls within a Continental Level VI Pricing
Period.
"CONTINENTAL FACILITY" shall mean the Continental Loans and the Continental
Letters of Credit provided or participated in by the Lenders to Continental
pursuant to this Agreement and the other Loan Documents.
"CONTINENTAL GROUP" shall mean Continental and the Continental
Subsidiaries.
"CONTINENTAL LETTER OF CREDIT" shall mean any standby letter of credit
issued pursuant to Section 2.20.
"CONTINENTAL LETTER OF CREDIT AVAILABILITY PERIOD" shall mean the period
from and including the Closing Date to but excluding the earlier of (a) the date
five Business Days prior to the
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Maturity Date and (b) the termination of the Continental Commitments of the
Lenders in accordance with the terms hereof.
"CONTINENTAL LETTER OF CREDIT DISBURSEMENT" shall mean a payment or
disbursement made by the Issuing Bank pursuant to a Continental Letter of
Credit.
"CONTINENTAL LETTER OF CREDIT EXPOSURE" shall mean, at any time, the sum of
(i) the aggregate undrawn amount of all outstanding Continental Letters of
Credit, plus (ii) the aggregate amount of all Continental Letter of Credit
Disbursements not yet reimbursed by Continental as provided in Section 2.20.
The Continental Letter of Credit Exposure of any Lender at any time shall mean
its pro rata share (based on the percentage of the aggregate Continental
Commitments represented by such Lender's Continental Commitment) of the
aggregate Continental Letter of Credit Exposure at such time.
"CONTINENTAL LETTER OF CREDIT FEES" shall mean the fees payable to the
Issuing Bank and the Lenders pursuant to Section 2.20(f).
"CONTINENTAL LEVEL I PRICING PERIOD" shall mean, subject to Section
2.06(e), any period on or after the Pricing Adjustment Date during which the
Debt/EBITDAR Ratio of Continental is less than or equal to 3.00:1.00 and no
Event of Default has occurred and is continuing.
"CONTINENTAL LEVEL II PRICING PERIOD" shall mean, subject to Section
2.06(e), any period on or after the Pricing Adjustment Date during which the
Debt/EBITDAR Ratio of Continental is greater than 3.00:1.00 but less than or
equal to 3.50:1.00 and no Event of Default has occurred and is continuing.
"CONTINENTAL LEVEL III PRICING PERIOD" shall mean, subject to Section
2.06(e), any period on or after the Pricing Adjustment Date during which the
Debt/EBITDAR Ratio of Continental is greater than 3.50:1.00 but less than or
equal to 4.00:1.00 and no Event of Default has occurred and is continuing.
"CONTINENTAL LEVEL IV PRICING PERIOD" shall mean, subject to Section
2.06(e), any period on or after the Pricing Adjustment Date during which the
Debt/EBITDAR Ratio of Continental is greater than 4.00:1:00 but less than or
equal to 4.50:1.00 and no Event of Default has occurred and is continuing.
"CONTINENTAL LEVEL V PRICING PERIOD" shall mean, subject to Section
2.06(e), any period on or after the Pricing Adjustment Date during which the
Debt/EBITDAR Ratio of Continental is greater than 4.50:1:00 but less than or
equal to 5.00:1.00 and no Event of Default has occurred and is continuing.
"CONTINENTAL LEVEL VI PRICING PERIOD" shall mean any period on or after the
Pricing Adjustment Date which is not a Continental Level I Pricing Period,
Continental Level II Pricing Period, Continental Level III Pricing Period,
Continental Level IV Pricing Period or Continental Level V Pricing Period.
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"CONTINENTAL LOANS" shall mean the revolving loans made by the Lenders to
Continental pursuant to Section 2.01(b). Each Continental Loan shall be a
Eurodollar Loan or an ABR Loan.
"CONTINENTAL MINIMUM COMPLIANCE LEVEL" shall have the meaning assigned to
such term in Section 8.17(a).
"CONTINENTAL NOTE" shall mean a promissory note of Continental,
substantially in the form of Exhibit A-2, evidencing the Continental Loans.
"CONTINENTAL OBLIGATIONS" shall mean (a) the obligations of Continental in
respect of the due and punctual payment of principal of and interest on the
Continental Loans and all amounts drawn under the Continental Letters of Credit,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (b) all Continental Commitment Fees and all
other fees, expenses, indemnities and expense reimbursement obligations of
Continental under this Agreement or any other Loan Document and (c) all other
obligations, monetary or otherwise, of Continental, any Continental Subsidiary
Guarantor or any Continental Subsidiary Pledgor under any Loan Document
(including any Interest Rate Protection Agreement entered into after the Closing
Date with any Lender as permitted under the Credit Agreement) to which it is a
party, in each case, whether now owing or hereafter existing.
"CONTINENTAL PLEDGE AGREEMENT" shall mean the Pledge and Security Agreement
between Continental and the Agent in the form attached hereto as Exhibit C-3, as
amended from time to time.
"CONTINENTAL SUBSIDIARIES' GUARANTEE AGREEMENT" shall mean the Guarantee
Agreement among the Continental Subsidiary Guarantors and the Agent in the form
attached hereto as Exhibit B-3, as amended from time to time.
"CONTINENTAL SUBSIDIARIES' PLEDGE AGREEMENT" shall mean the Pledge and
Security Agreement among the Continental Subsidiary Pledgors and the Agent in
the form attached hereto as Exhibit C-4, as amended from time to time.
"CONTINENTAL SUBSIDIARY" shall mean any subsidiary of Continental.
"CONTINENTAL SUBSIDIARY GUARANTOR" shall mean each Continental Subsidiary
which is designated as a "Continental Subsidiary Guarantor" on Schedule 3.08 or
in a Supplemental Agreement.
"CONTINENTAL SUBSIDIARY INTERCOMPANY INDEBTEDNESS" shall have the meaning
assigned to such term in Section 8.01(f).
"CONTINENTAL SUBSIDIARY PLEDGOR" shall mean each subsidiary in the
Continental Group which is designated as a "Continental Subsidiary Pledgor" on
Schedule 3.08 or in a Supplemental Agreement.
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"CONTROL" shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and "CONTROLLING" and "CONTROLLED" shall have meanings correlative thereto. For
purposes of this definition, beneficial ownership of 10% or more of the voting
Equity Interests (on a fully diluted basis) of any person shall be deemed to be
"Control" of such person.
"DEBT/EBITDAR RATIO" of any person shall mean, as of any day, the ratio of
(a) the sum of (i) Total Funded Debt of such person as of such day and (ii) 8
times Rental Expense of such person for the Reference Period with respect to
such day to (b) EBITDAR for such Reference Period; PROVIDED, HOWEVER, that if
since the beginning of such Reference Period such person or any of its
Consolidated Subsidiaries shall have acquired all or substantially all of an
operating unit of a business, whether by an acquisition of Equity Interests or
assets, by merger or otherwise, then EBITDAR and Rental Expense for such
Reference Period shall be calculated after giving pro forma effect thereto
(including the issuance of any Indebtedness) as if such acquisition occurred on
the first day of such Reference Period. For purposes of this definition,
whenever pro forma effect is to be given to such an acquisition, the pro forma
calculations shall be determined in good faith by a Financial Officer of
Horizon, subject to the review and approval of the Agent. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest on such Indebtedness shall be calculated as if the rate in effect on
the date of determination had been the applicable rate for the entire Reference
Period.
"DEFAULT" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"DISCLOSURE DOCUMENTS" shall have the meaning assigned to such term in
Section 3.15(b).
"DISQUALIFIED EQUITY INTEREST" of any person shall mean (a) any Equity
Interest of such person which by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable or exercisable), upon
the happening of any event or otherwise (i) matures or is mandatorily redeemable
or subject to any mandatory repurchase requirement, pursuant to a sinking fund
obligation or otherwise, (ii) is convertible into or exchangeable or exercisable
for Indebtedness or Disqualified Equity Interests or (iii) is redeemable or
subject to any mandatory repurchase requirement at the option of the holder
thereof, in whole or in part, in each case on or prior to the first anniversary
of the Maturity Date and (b) any Preferred Stock of such person.
"DOLLARS" or "$" shall mean lawful money of the United States of America.
"EBITDAR" of any person shall mean, for any period, (a) Net Income of such
person for such period, excluding (i) any positive non-cash income and (ii) any
positive income constituting extraordinary items in accordance with GAAP, PLUS
(b) the following items of such person for such period to the extent deducted in
calculating such Net Income: (i) Interest Paid, (ii) income tax expense,
(iii) depreciation expense, (iv) amortization expense, (v) Rental Expense and
(vi) any expenses constituting extraordinary items in accordance with GAAP;
PROVIDED that (A) in determining EBITDAR of Horizon for purposes of this
definition, Net Income of Horizon shall be determined without regard to (I) any
expenses of Horizon and its Consolidated Subsidiaries
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incurred during fiscal year 1996 as a result of the Merger, to the extent that
the aggregate pre-tax amount of all such expenses does not exceed $20,000,000,
and (II) restructuring charges of Horizon and its Consolidated Subsidiaries
incurred during the fourth quarter of fiscal 1995 as a result of the disposition
of eight facilities, as described on Schedule 3.07, to the extent that the
aggregate pre-tax amount of all such charges does not exceed $28,000,000, and
(B) in determining EBITDAR of Continental for purposes of this definition, Net
Income of Continental shall be determined without regard to (I) any expenses of
Continental and its Consolidated Subsidiaries incurred during fiscal year 1996
as a result of the Merger, to the extent that the aggregate pre-tax amount of
all expenses does not exceed $40,000,000 and (II) special charges of Continental
and its Consolidated Subsidiaries incurred during the second and third quarters
of fiscal 1995, to the extent that the aggregate pre-tax amount of all such
charges does not exceed $18,500,000.
"EQUITY INTERESTS" of any person shall mean any and all shares, partnership
and other interests, rights to purchase, warrants, options, participations or
other equivalents of or interests in (however designated) the equity of such
person.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"EURODOLLAR BORROWING" shall mean a Borrowing comprised of Eurodollar
Loans.
"EURODOLLAR LOAN" shall mean any Loan bearing interest at a rate determined
by reference to the Adjusted LIBO Rate in accordance with the provisions of
Article II.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article IX.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXISTING CONTINENTAL CREDIT FACILITY" shall have the meaning assigned to
such term in Section 4.01(o).
"EXISTING HORIZON CREDIT FACILITY" shall have the meaning assigned to such
term in Section 4.01(n).
"EXISTING ISSUING BANK" shall mean Sunwest Bank of Albuquerque, N.A.
"EXISTING LETTERS OF CREDIT" shall have the meaning set forth in Section
2.19(l).
"FACILITIES" shall mean the Horizon Facility and Continental Facility.
"FAIR MARKET VALUE" shall mean, with respect to any asset or Equity
Interest, the sale or lease value, as the case may be, that would be obtained in
an arm's-length transaction between an informed and willing seller or lessor
under no compulsion to sell or lease and an informed and willing buyer or
lessee.
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"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by it. Each change
in the Federal Funds Effective Rate shall be effective on the date thereof,
without notice to either Borrower.
"FEE LETTER" shall have the meaning assigned to such term in
Section 2.05(c).
"FEES" shall mean the Commitment Fees, the other fees payable pursuant to
Section 2.05 and the Letter of Credit Fees.
"FINANCIAL OFFICER" of any corporation shall mean the chief financial
officer or principal accounting officer of such corporation.
"FINANCIAL STATEMENTS" shall have the meaning assigned to such term in
Section 3.05.
"FIXED CHARGE COVERAGE RATIO" of any person shall mean, as of any day, the
ratio of (a) EBITDAR of such person for the Reference Period with respect to
such day to (b) the sum of (i) Principal Payments of such person for such
Reference Period, (ii) Interest Paid of such person for such Reference Period,
(iii) Rental Expense of such person for such Reference Period; PROVIDED,
HOWEVER, that if since the beginning of such Reference Period such person or any
of its Consolidated Subsidiaries shall have acquired all or substantially all of
an operating unit of a business, whether by an acquisition of Equity Interests
or assets, by merger or otherwise, then EBITDAR, Interest Paid and Rental
Expense for such Reference Period shall be calculated after giving pro forma
effect thereto (including the issuance of any Indebtedness) as if such
acquisition occurred on the first day of such Reference Period. For purposes of
this definition, whenever pro forma effect is to be given to such an
acquisition, the pro forma calculations shall be determined in good faith by a
Financial Officer of Horizon, subject to the review and approval of the Agent.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire Reference Period.
"GAAP" shall mean generally accepted accounting principles, applied on a
consistent basis.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or foreign
governmental department, commission, board, bureau, authority, agency, court,
instrumentality or judicial or regulatory body or entity.
"GREENERY CONVERTIBLE NOTES" shall mean the 6-1/2% Convertible Subordinated
Debentures Due 2011 and the 8-3/4% Convertible Senior Subordinated Notes Due
2015 of Horizon outstanding on the Closing Date.
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"GUARANTEE" of or by any person shall mean any obligation, contingent or
otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness
or (c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the term Guarantee
shall not include endorsements for collection or deposit, in either case in the
ordinary course of business.
"GUARANTEE AGREEMENTS" shall mean the Horizon Guarantee Agreement, the
Horizon Subsidiaries' Guarantee Agreement and the Continental Subsidiaries'
Guarantee Agreement.
"HAZARDOUS MATERIALS" shall have the meaning assigned to such term in
Section 3.17.
"HIGHEST LAWFUL RATE" shall mean, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Obligations, as the case may be, under laws applicable to such Lender that are
presently in effect or, to the extent allowed by law, under such applicable laws
that may hereafter be in effect and that allow a higher maximum nonusurious
interest rate than applicable laws now allow.
"HORIZON" shall mean Horizon/CMS Healthcare Corporation, a Delaware
corporation, which prior to the effectiveness of the Merger was named Horizon
Healthcare Corporation, and its successors.
"HORIZON AVAILABILITY PERIOD" shall mean the period from and including the
Closing Date to but excluding the earlier of (a) the Maturity Date and (b) the
termination of the Horizon Commitments of the Lenders in accordance with the
terms hereof.
"HORIZON COLLATERAL" shall mean all the collateral pledged or purported to
be pledged pursuant to the Horizon Pledge Agreement and the Horizon
Subsidiaries' Pledge Agreement.
"HORIZON COMMITMENT" shall mean, with respect to each Lender, the
commitment of such Lender to make Horizon Loans hereunder as set forth in
Section 2.01(a), as the same may be reduced from time to time pursuant to
Section 2.09.
"HORIZON COMMITMENT FEE" shall have the meaning assigned to such term in
Section 2.05(a).
"HORIZON COMMITMENT RATE" shall mean, for any day, calculated on a per
annum basis, (i) .2500%, if such day is prior to the Pricing Adjustment Date;
and (ii) if such day is on or after the Pricing Adjustment Date:
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(A) 0.2000%, if such day falls within a Horizon Level I Pricing Period;
(B) 0.2500%, if such day falls within a Horizon Level II Pricing Period,
Horizon Level III Pricing Period or Horizon Level IV Pricing Period;
and
(C) 0.3125%, if such day falls within a Horizon Level V Pricing Period.
"HORIZON EURODOLLAR MARGIN" shall mean, for any day, calculated on a per
annum basis, (i) 1.0000%, if such day is prior to the Pricing Adjustment Date;
and (ii) if such day is on or after the Pricing Adjustment Date:
(A) 0.6250%, if such day falls within a Horizon Level I Pricing Period;
(B) 0.7500%, if such day falls within a Horizon Level II Pricing Period;
(C) 0.8750%, if such day falls within a Horizon Level III Pricing Period;
(D) 1.0000%, if such day falls within a Horizon Level IV Pricing Period;
and
(E) 1.2500%, if such day falls within a Horizon Level V Pricing Period.
"HORIZON FACILITY" shall mean the Horizon Loans and the Horizon Letters of
Credit provided or participated in by the Lenders to Horizon pursuant to this
Agreement and the other Loan Documents.
"HORIZON GROUP" shall mean Horizon and its subsidiaries (other than
Continental and its subsidiaries).
"HORIZON GUARANTEE AGREEMENT" shall mean the Guarantee Agreement between
Horizon and the Agent in the form attached hereto as Exhibit B-1, as amended
from time to time.
"HORIZON LETTER OF CREDIT" shall mean any standby letter of credit issued
pursuant to Section 2.19, including the Existing Letters of Credit.
"HORIZON LETTER OF CREDIT AVAILABILITY PERIOD" shall mean the period from
and including the Closing Date to but excluding the earlier of (a) the date five
Business Days prior to the Maturity Date and (b) the termination of the Horizon
Commitments of the Lenders in accordance with the terms hereof.
"HORIZON LETTER OF CREDIT DISBURSEMENT" shall mean a payment or
disbursement made by the Issuing Bank pursuant to a Horizon Letter of Credit
(including an Existing Letter of Credit).
"HORIZON LETTER OF CREDIT EXPOSURE" shall mean, at any time, the sum of (a)
the aggregate undrawn amount of all outstanding Horizon Letters of Credit
(including the Existing Letters of Credit), plus (b) the aggregate amount of all
Horizon Letter of Credit Disbursements not yet reimbursed by Horizon as provided
in Section 2.19. The Horizon Letter of Credit Exposure of
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any Lender at any time shall mean its pro rata share (based on the percentage of
the aggregate Horizon Commitments represented by such Lender's Horizon
Commitment) of the aggregate Horizon Letter of Credit Exposure at such time.
"HORIZON LETTER OF CREDIT FEES" shall mean the fees payable to the Issuing
Bank and the Lenders pursuant to Section 2.19(f).
"HORIZON LEVEL I PRICING PERIOD" shall mean, subject to Section 2.06(e),
any period on or after the Pricing Adjustment Date during which the Debt/EBITDAR
Ratio for Horizon is less than or equal to 3.00:1.00 and no Event of Default has
occurred and is continuing.
"HORIZON LEVEL II PRICING PERIOD" shall mean, subject to Section 2.06(e),
any period on or after the Pricing Adjustment Date during which the Debt/EBITDAR
Ratio for Horizon is greater than 3.00:1.00 but less than or equal to 3.50:1.00
and no Event of Default has occurred and is continuing.
"HORIZON LEVEL III PRICING PERIOD" shall mean, subject to Section 2.06(e),
any period on or after the Pricing Adjustment Date during which the Debt/EBITDAR
Ratio for Horizon is greater than 3.50:1.00 but less than or equal to 4.00:1.00
and no Event of Default has occurred and is continuing.
"HORIZON LEVEL IV PRICING PERIOD" shall mean, subject to Section 2.06(e),
any period on or after the Pricing Adjustment Date during which the Debt/EBITDAR
Ratio for Horizon is greater than 4.00:1.00 but less than or equal to 4.50:1.00
and no Event of Default has occurred and is continuing.
"HORIZON LEVEL V PRICING PERIOD" shall mean any period on or after the
Pricing Adjustment Date which is not a Horizon Level I Pricing Period, Horizon
Level II Pricing Period, Horizon Level III Pricing Period or Horizon Level IV
Pricing Period.
"HORIZON LOANS" shall mean the revolving loans made by the Lenders to
Horizon pursuant to Section 2.01(a). Each Horizon Loan shall be a Eurodollar
Loan or an ABR Loan.
"HORIZON MINIMUM COMPLIANCE LEVEL" shall have the meaning assigned to such
term in Section 7.17(a).
"HORIZON NOTE" shall mean a promissory note of Horizon, substantially in
the form of Exhibit A-1, evidencing the Horizon Loans.
"HORIZON OBLIGATIONS" shall mean (a) the obligations of Horizon in respect
of the due and punctual payment of principal of and interest on the Horizon
Loans and all amounts drawn under the Horizon Letters of Credit, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (b) all Horizon Commitment Fees, all fees payable by
Horizon under the Horizon Fee Letter, and all other fees, expenses, indemnities
and expense reimbursement obligations of Horizon under this Agreement or any
other Loan Document and (c) all other obligations, monetary or otherwise, of
Horizon, any Horizon Subsidiary Guarantor or
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any Horizon Subsidiary Pledgor under any Loan Document (including any Interest
Rate Protection Agreement entered into after the Closing Date with any Lender as
permitted under the Credit Agreement) to which it is a party, in each case,
whether now owing or hereafter existing.
"HORIZON PLEDGE AGREEMENT" shall mean the Pledge and Security Agreement
between Horizon and the Agent in the form attached hereto as Exhibit C-1, as
amended from time to time.
"HORIZON SUBSIDIARIES' GUARANTEE AGREEMENT" shall mean the Guarantee
Agreement among the Horizon Subsidiary Guarantors and the Agent in the form
attached hereto as Exhibit B-2, as amended from time to time.
"HORIZON SUBSIDIARIES' PLEDGE AGREEMENT" shall mean the Pledge and Security
Agreement among the Horizon Subsidiary Pledgors and the Agent in the form
attached hereto as Exhibit C-2, as amended from time to time.
"HORIZON SUBSIDIARY" shall mean any subsidiary of Horizon (other than the
Continental Group).
"HORIZON SUBSIDIARY GUARANTOR" shall mean each Horizon Subsidiary which is
designated as a "Horizon Subsidiary Guarantor" on Schedule 3.08 or in a
Supplemental Agreement.
"HORIZON SUBSIDIARY INTERCOMPANY INDEBTEDNESS" shall have the meaning
assigned to such term in Section 7.01(f).
"HORIZON SUBSIDIARY PLEDGOR" shall mean each Horizon Subsidiary which is
designated as a "Horizon Subsidiary Pledgor" on Schedule 3.08 or in a
Supplemental Agreement.
"INACTIVE SUBSIDIARY" of any person shall mean a subsidiary of such person
that has been dissolved or is dormant or inactive.
"INDEBTEDNESS" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property or assets purchased by such person, (e) all obligations of such person
issued or assumed as the deferred purchase price of property or services,
(f) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (g) all Guarantees by such person
of Indebtedness of others, (h) all Capital Lease Obligations of such person,
(i) all obligations of such person in respect of Interest Rate Protection
Agreements and (j) all obligations of such person, contingent or otherwise, as
an account party in respect of letters of credit and bankers' acceptances. The
Indebtedness of any person (i) shall include the Indebtedness of any partnership
in which such person is a general partner and (ii) shall exclude the trade
payables of such person incurred in the ordinary course of business of such
person.
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"INDEMNIFIED PARTY" shall have the meaning assigned to such term in
Section 11.05(b).
"INTERBANK OFFERED RATE" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, the effective rate (rounded upwards, if
necessary, to the next 1/16 of 1%), determined by an office of Agent then
determining such rates, at which deposits in immediately available funds in
dollars approximately equal in principal amount to the Agent's portion of such
Eurodollar Borrowing and for a maturity comparable to such Interest Period are
being, have been, or would be offered or quoted by the Agent to major banks in
the applicable interbank market for Eurodollar deposits at 11:00 a.m., local
time, two Business Days prior to the commencement of such Interest Period. If
no such offers or quotes are generally available for such amount, then the Agent
shall be entitled to determine the Interbank Offered Rate by estimating in its
reasonable judgment the per annum rate (as described above) that would be
applicable if such quotes or offers were generally available.
"INTERCOMPANY NOTES" shall mean the promissory notes of the Subsidiaries
issued to Horizon or Continental as contemplated by Sections 4.01(d)(ii),
7.01(f) and 8.01(f), in the form attached hereto as Exhibit D or such other form
as may be satisfactory to the Agent, representing Horizon Subsidiary
Intercompany Indebtedness or Continental Subsidiary Intercompany Indebtedness,
as applicable.
"INTEREST PAID" of any person shall mean, for any period, the aggregate
amount of interest expense of such person and its Consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP, for such period,
plus, to the extent not included in such interest expense, (a) interest expense
attributable to capital leases, (b) amortization of debt discount and debt
issuance cost, (c) capitalized interest, (d) non-cash interest expense,
(e) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing, (f) interest actually paid
by such person or any of its Consolidated Subsidiaries under any Guarantee or
other obligation of any other person, (g) net costs associated with Interest
Rate Protection Agreements (including amortization of fees), (h) dividends paid
in respect of all Disqualified Equity Interests of the subsidiaries of such
person, (i) dividends paid in respect of all Disqualified Equity Interests of
such person held by any party other than any Wholly Owned Subsidiary of such
person and (j) cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or trust to
pay interest or fees to any party (other than such person) in connection with
loans incurred by such plan or trust to purchase newly issued or treasury shares
of such person or any of its Affiliates.
"INTEREST PAYMENT DATE" shall mean, with respect to any Loan, the last day
of the Interest Period applicable to the Borrowing of which such Loan is a part
and, in the case of any Eurodollar Borrowing with an Interest Period of more
than three months' duration, each day that would have been an Interest Payment
Date had successive Interest Periods of three months' duration been applicable
to such Borrowing and, in addition, the date of any refinancing of such
Borrowing with or to a Borrowing of a different Type.
"INTEREST PERIOD" shall mean (a) as to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing or on the last day of the immediately
preceding
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Interest Period applicable to such Borrowing, as the case may be, and ending on
the numerically corresponding day (or, if there is no numerically corresponding
day, on the last day) in the calendar month that is 1, 2, 3 or, if Eurodollar
Loans with such an Interest Period are available from each Lender, 6 months
thereafter, as the applicable Borrower may elect, and (b) as to any
ABR Borrowing, the period commencing on the date of such Borrowing or on the
last day of the immediately preceding Interest Period applicable to such
Borrowing, as the case may be, and ending on the earliest of (i) the next
succeeding March 31, June 30, September 30 or December 31, (ii) the Maturity
Date and (iii) the date such Borrowing is repaid or prepaid in accordance with
Section 2.10; PROVIDED, HOWEVER, that if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such
next succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day.
Interest shall accrue from and including the first day of an Interest Period to,
but excluding, the last day of such Interest Period.
"INTEREST RATE PROTECTION AGREEMENT" shall mean any interest rate swap,
collar, cap, foreign currency exchange agreement or other arrangement requiring
payments contingent upon interest or exchange rates.
"ISSUING BANK" shall mean NationsBank of Texas, N.A., in its capacity as
the issuer of Letters of Credit, and its successors in such capacity; PROVIDED
that "Issuing Bank" shall mean the Existing Issuing Bank, in its capacity as the
issuer of the Existing Letters of Credit, insofar as such term is used in
relation to the Existing Letters of Credit.
"LENDER" shall mean each financial institution listed on the signature
pages hereof, each assignee which becomes a Lender pursuant to Section 11.04(b),
and their respective successors.
"LETTER OF CREDIT DISBURSEMENTS" shall mean the Horizon Letter of Credit
Disbursements and the Continental Letter of Credit Disbursements.
"LETTER OF CREDIT EXPOSURE" shall mean the Horizon Letter of Credit
Exposure and Continental Letter of Credit Exposure.
"LETTER OF CREDIT FEES" shall mean the Horizon Letter of Credit Fees and
Continental Letter of Credit Fees.
"LETTERS OF CREDIT" shall mean the Horizon Letters of Credit and
Continental Letters of Credit.
"LEVERAGE RATIO" of any person shall mean, as of any day, the ratio of (a)
the sum of (i) Total Funded Debt of such person as of such day and (ii) 8 times
Rental Expense of such person for the Reference Period with respect to such day
to (b) the sum of (i) Total Funded Debt of such person as of such day, (ii) 8
times Rental Expense of such person for such Reference Period and
(iii) Stockholders' Equity of such person as of such day.
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"LICENSE" shall mean, as to any person, any license, permit, certificate of
need, authorization, certification, accreditation, franchise, approval, or grant
of rights by any Governmental Authority or other party necessary or appropriate
for such person to own, maintain, or operate its business, properties and
assets, including Medicare and Medicaid certifications.
"LIEN" shall mean, with respect to any asset, any mortgage, deed of trust,
lien, pledge, easement, restriction, restrictive covenant, lease, sublease,
option, charge, security interest or encumbrance of any kind in respect of such
asset. For purposes hereof, any Borrower or Subsidiary shall be deemed to own
subject to a lien any asset which it has acquired or holds subject to the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement relating to such asset.
"LOAN DOCUMENTS" shall mean (a) this Agreement, (b) the Notes, (c) the
Letters of Credit, (d) the Guarantee Agreements, (e) the Pledge Agreements, (f)
the Intercompany Notes, (g) any Interest Rate Protection Agreements entered into
after the Closing Date with any Lender as permitted under the Credit Agreement
and (h) any Supplemental Agreements.
"LOANS" shall mean the Horizon Loans and Continental Loans.
"MAJOR POTENTIAL LIABILITY" shall mean any uninsured claims in excess of
$3,500,000 in the aggregate, uninsured malpractice claims in excess of
$2,000,000 in the aggregate, or contingent liabilities and any other potential
liabilities not owing in the ordinary course of business in excess of $2,000,000
in the aggregate.
"MARGIN STOCK" shall have the meaning assigned to such term under
Regulation U.
"MATERIAL ADVERSE CHANGE" shall mean a material adverse change in the
business, assets, liabilities, financial condition, prospects or results of
operations of Horizon and its subsidiaries (other than the Continental Group),
taken as a whole, or of Continental and its subsidiaries, taken as a whole.
"MATERIAL ADVERSE EFFECT" shall mean (a) with respect to Horizon, a
materially adverse effect on the business, assets, liabilities, financial
condition, prospects or results of operations of Horizon and its subsidiaries
(other than the Continental Group), taken as a whole, (b) with respect to
Continental, a materially adverse effect on the business, assets, liabilities,
financial condition, prospects or results of operations of Continental and its
subsidiaries, taken as a whole, (c) a material impairment of the ability of
Horizon or Continental to perform any of its obligations under any Loan Document
to which it is or will be a party or (d) a material impairment of the rights of
or benefits available to the Lenders under any Loan Document.
"MATERIAL CONTRACTS" shall have the meaning assigned to such term in
Section 3.10(a).
"MATERIAL SUBSIDIARY" shall mean with respect to any person (referred to in
this definition as the "parent"), as of any date, any subsidiary of such person
that has (i) total revenues of more
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than $2,000,000 during the Reference Period with respect to such date or (ii)
total assets of more than $2,000,000 as of the last day of such Reference
Period.
"MATURITY DATE" shall mean June 30, 2000.
"MERGER" shall mean the merger of Merger Sub with and into Continental
pursuant to the terms of the Merger Agreement, as a result of which Continental
shall become a Wholly Owned Subsidiary of Horizon.
"MERGER AGREEMENT" shall mean the Amended and Restated Agreement and Plan
of Merger dated as of May 23, 1995 among the Borrowers and the Merger Sub, and
any related agreements for the Merger.
"MERGER SUB" shall mean CMS Merger Corporation, a Delaware corporation and
a Wholly Owned Subsidiary of Horizon.
"MULTIEMPLOYER PLAN" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NET INCOME" of any person (for purposes of this definition, the "parent")
shall mean, for any period, the net income of the parent and its Consolidated
Subsidiaries, determined on a consolidated basis in accordance with GAAP;
PROVIDED, HOWEVER, that there shall not be included in such Net Income:
(a) any net income of any person if such person is not a subsidiary
of the parent, except that (i) the parent's equity in the net income of any
such person for such period shall be included in such Net Income up to the
aggregate amount of cash actually distributed by such person during such
period to the parent or a subsidiary of the parent as a dividend or other
distribution (subject, in the case of a dividend or other distribution to
such a subsidiary, to the limitations contained in clause (c) below) and
(ii) the parent's equity in a net loss of any such person for such period
shall be included in determining such Net Income;
(b) any net income of any person acquired by the parent or a
subsidiary of the parent in a pooling of interests transaction for any
period prior to the date of such acquisition;
(c) any net income of any subsidiary if such subsidiary of the parent
is subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such subsidiary, directly or
indirectly, to the parent, except that (i) the parent's equity in the net
income of any such subsidiary for such period shall be included in such Net
Income up to the aggregate amount of cash actually distributed by such
subsidiary during such period to the parent or another subsidiary of the
parent as a dividend or other distribution (subject, in the case of a
dividend or other distribution to another subsidiary, to the limitation
contained in this clause) and (ii) the parent's equity in
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a net loss of any such subsidiary for such period shall be included in
determining such Net Income;
(d) any net income of any subsidiary of the parent which is not a
Subsidiary Guarantor, except that (i) the parent's equity in the net income
of any such subsidiary for such period shall be included in such Net Income
up to the aggregate amount of cash actually distributed by such subsidiary
during such period to the parent as a dividend or other distribution and
(ii) the parent's equity in a net loss of any such subsidiary for such
period shall be included in determining such Net Income;
(e) the cumulative effect of a change in accounting principles; and
(f) in the case of the Net Income of Horizon, Horizon's equity in the
net income (or net loss) of the Continental Group, regardless of the amount
of cash actually distributed to Horizon by the Continental Group; it being
the agreement of the parties hereto that the Net Income of Horizon shall be
calculated as if the Continental Group were separate from, and unrelated
to, the Horizon Group.
"NET PROCEEDS" shall mean, with respect to any disposition of Equity
Interests or other assets, an amount equal to (a) the gross proceeds received by
or on behalf of a person or any subsidiary of such person from or in respect of
such disposition less (b) any expenses reasonably incurred by such person and
the subsidiaries of such person in respect of such sale.
"NEW LENDING OFFICE" shall have the meaning assigned to such term in
Section 2.17(g).
"NON-U.S. LENDER" shall have the meaning assigned to such term in
Section 2.17(g).
"NOTES" shall mean the Horizon Notes and the Continental Notes.
"OBLIGATIONS" shall mean the Horizon Obligations and the Continental
Obligations.
"OPERATING LEASE" shall mean, as applied to any person, any lease
(including leases which may be terminated by the lessee at any time) of any
property (whether real, personal or mixed) under which such person is the lessee
and which is not a Capital Lease Obligation.
"OTHER TAXES" shall have the meaning assigned to such term in
Section 2.17(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor thereto.
"PERMITTED CONTINENTAL GUARANTEES" shall have the meaning assigned to such
term in Section 8.01(g).
"PERMITTED CONTINENTAL SALE AND LEASE-BACK TRANSACTIONS" shall have the
meaning assigned to such term in Section 8.03.
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"PERMITTED CONTINENTAL SENIOR INDEBTEDNESS" shall have the meaning assigned
to such term in Section 8.01(e).
"PERMITTED HORIZON GUARANTEES" shall have the meaning assigned to such term
in Section 7.01(h).
"PERMITTED HORIZON SALE AND LEASE-BACK TRANSACTIONS" shall have the meaning
assigned to such term in Section 7.03.
"PERMITTED HORIZON SENIOR INDEBTEDNESS" shall have the meaning assigned to
such term in Section 7.01(e).
A "PERSON" shall mean any natural person, corporation, business trust,
joint venture, association, company, limited liability company, partnership,
government (or any agency or political subdivision thereof) or other entity.
"PLAN" shall mean at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which any Borrower or Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PLEDGE AGREEMENTS" shall mean the Horizon Pledge Agreement, the Horizon
Subsidiaries' Pledge Agreement, the Continental Pledge Agreement and the
Continental Subsidiaries' Pledge Agreement.
"PREFERRED STOCK", as applied to the Equity Interests of any corporation,
shall mean Equity Interests of any class or classes (however designated) which
is preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Equity Interests of any other class of such
corporation.
"PRICING ADJUSTMENT DATE" shall mean, with respect to Horizon or
Continental, the due date for the delivery by such Borrower to the Agent of the
Required Financial Statements pursuant to Section 5.04(a) or 6.04(a), as
applicable, for its full 1995 fiscal year (or, if earlier, the actual date of
delivery of such Required Financial Statements).
"PRICING PERIOD" shall mean a Horizon Level I Pricing Period, Horizon Level
II Pricing Period, Horizon Level III Pricing Period, Horizon Level IV Pricing
Period, Horizon Level V Pricing Period, Continental Level I Pricing Period,
Continental Level II Pricing Period, Continental Level III Pricing Period,
Continental Level IV Pricing Period, Continental Level V Pricing Period or
Continental Level VI Pricing Period.
"PRIME RATE" shall mean the rate of interest per annum adopted from time to
time by the Agent as its prime rate in effect at its principal office in Dallas,
Texas. Each change in the Prime Rate shall be effective on the date such change
is adopted, without notice to either Borrower. The Prime Rate is a reference
rate used by the Agent in determining interest rates on certain loans
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and is not intended to be the lowest rate of interest charged on any extension
of credit to any debtor.
"PRINCIPAL PAYMENTS" for any person shall mean, for any period, all
scheduled amortization and other mandatory payments of principal of Indebtedness
(other than Loans) of such person and its Consolidated Subsidiaries during such
period, determined on a consolidated basis in accordance with GAAP, including
discount or premium relating to such Indebtedness, whether expensed or
capitalized.
"REFERENCE PERIOD" shall mean, with respect to any date and any person, the
period of four consecutive fiscal quarters of such person immediately preceding,
or ending on, such date.
"REFINANCING" shall have the meaning assigned to such term in Section
4.01(l).
"REGISTER" shall have the meaning assigned to such term in
Section 11.04(d).
"REGULATION G" shall mean Regulation G of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REGULATION U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REGULATION X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"RENTAL EXPENSE" of any person shall mean, for any period, the aggregate
amount of fixed and contingent rentals payable by such person and its
Consolidated Subsidiaries, determined on a consolidated basis in accordance with
GAAP, for such period with respect to leases of real and personal property
(determined without duplication of any items included in Interest Paid for such
period).
"REPORTABLE EVENT" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the 30-day notice period
is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 2615.
"REQUIRED FINANCIAL STATEMENTS" of Horizon or Continental shall mean, with
respect to any period, the financial statements of such Borrower for such period
required under Section 5.04 or Section 6.04, as applicable.
"REQUIRED LENDERS" shall mean, at any time, Lenders holding Loans and
participations in Letters of Credit and having unused Commitments, representing
in the aggregate at least 51% of the sum at such time of (a) the aggregate
principal amount of the Loans outstanding, (b) the aggregate amount of the
Letter of Credit Exposure and (c) the aggregate amount of unused Commitments.
"SEC" shall mean the Securities and Exchange Commission and any successor
agency.
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"SECURED PARTIES" shall mean (a) the Lenders, (b) the Agent in its capacity
as such under each Loan Document, (c) the beneficiaries of each indemnification
obligation undertaken by any Borrower, Subsidiary Guarantor or Subsidiary
Pledgor under any Loan Document, (d) any Lender in its capacity as a
counterparty to an Interest Rate Protection Agreement entered into after the
Closing Date as permitted under the Credit Agreement and (e) the successors and
assigns of the foregoing.
"SINGLE EMPLOYER PLAN" shall mean any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"SOLVENT" shall have the meaning assigned to such term in Section 3.19.
"STATED MATURITY" means, with respect to any Indebtedness, the date
specified as the fixed date on which the principal of such Indebtedness is due
and payable, including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such Indebtedness at the
option of the holder thereof upon the happening of any contingency).
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority to which the Agent is
subject for Eurocurrency Liabilities (as defined in Regulation D of the Board).
Such reserve percentages shall include those imposed pursuant to such Regulation
D. Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities and
to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets which may be available from time to time to any
Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"STOCKHOLDERS' EQUITY" of any person shall mean, as of any date, (a) the
total of the amounts shown on the balance sheet of such person and its
Consolidated Subsidiaries, determined on a consolidated basis in accordance with
GAAP, as of such date as (i) the par or stated value of all outstanding Equity
Interests of such person, (ii) paid-in capital or capital surplus relating to
such Equity Interests and (iii) any retained earnings or earned surplus, plus,
(b) in determining Stockholders' Equity for purposes of Section 7.17(a) and
8.17(a), an amount equal to the after-tax amount of any expenses of such person
and its Consolidated Subsidiaries incurred during fiscal year 1996 as a result
of the Merger, to the extent that, in the case of the Stockholders' Equity of
Horizon, the aggregate pre-tax amount of all such expenses does not exceed
$20,000,000 and, in the case of the Stockholders' Equity of Continental, the
aggregate pre-tax amount of all such expenses does not exceed $40,000,000, less
(c)(i) any accumulated deficit and (ii) any amounts attributable to Disqualified
Equity Interests; PROVIDED that, in the case of the Stockholders' Equity of
Horizon, (A) no credit shall be given for any retained earnings attributable to
dividends paid by Continental or any of the Continental Subsidiaries after the
Closing Date and (B) full deduction shall be made for any capital contributions
to Continental or any of the Continental Subsidiaries made by Horizon after the
Closing Date; PROVIDED FURTHER that the foregoing definition shall not be deemed
to imply that any such capital contribution is permitted under this Agreement.
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"SUBORDINATED DEBT" shall mean, (a) in the case of Continental, (i) all
Indebtedness outstanding under the $2,000,000 7-3/4% Convertible Subordinated
Debentures due May 1, 2012, issued to Rocco A. Ortenzio by Continental and (ii)
all Indebtedness outstanding under the Subordinated Note Indentures, (b) in the
case of Horizon, all Indebtedness represented by the Greenery Convertible Notes
and (c) in the case of either Borrower, any Indebtedness which is by its terms
subordinate or junior in right of payment to any other Indebtedness.
"SUBORDINATED NOTE INDENTURES" shall mean (a) the Indenture dated as of
March 15, 1993, between Continental and NationsBank of Virginia, N.A., as
Trustee, relating to 10-3/8% Senior Subordinated Notes due 2003 issued by
Continental and (b) the Indenture dated as of August 17, 1992, between
Continental and NationsBank of Virginia, N.A., as Trustee, relating to 10-7/8%
Senior Subordinated Notes due 2002 issued by Continental.
"SUBSIDIARIES" shall mean any and all subsidiaries of Horizon (from and
after consummation of the Merger, including the Continental Group) or of
Continental.
The term "SUBSIDIARY" shall mean, with respect to any person (referred to
in this definition as the "parent"), any corporation, partnership, association
or other business entity (a) of which Equity Interests representing at least 50%
of the aggregate ordinary voting power or at least 50% of the ownership
interests is, at the time any determination is being made, owned, Controlled or
held, or (b) which is, at the time any determination is made, otherwise
Controlled, by (i) the parent, (ii) one or more subsidiaries of the parent or
(iii) the parent and one or more subsidiaries of the parent.
"SUBSIDIARY GUARANTORS" shall mean the Horizon Subsidiary Guarantors and
the Continental Subsidiary Guarantors.
"SUBSIDIARY PLEDGORS" shall mean the Horizon Subsidiary Pledgors and the
Continental Subsidiary Pledgors.
"SUPPLEMENTAL AGREEMENT" shall mean an agreement between a Subsidiary and
the Agent in the form attached hereto as Exhibit H, as amended from time to
time.
"TAXES" shall have the meaning assigned to such term in Section 2.17(a).
"TOTAL FUNDED DEBT" of any person shall mean, as of any date, without
duplication, (a) the aggregate amount of Indebtedness of such person and its
Consolidated Subsidiaries as of such date which has a final maturity more than
one year after such date or which is extendible or renewable at the option of
such person or any of its Consolidated Subsidiaries to a time more than one year
after such date (whether or not renewed or extended), including any current
installment thereof due within one year after such date, determined on a
consolidated basis in accordance with GAAP, (b) the aggregate undrawn amount on
all outstanding letters of credit (including Letters of Credit) as to which such
person or any of its Consolidated Subsidiaries is the account party and (c) the
aggregate principal amount of outstanding Loans of such person as of such date;
PROVIDED, HOWEVER, that (i) in the case of the Total Funded Debt of Horizon or
Continental, the Permitted Horizon Guarantees or Permitted Continental
Guarantees, as applicable, shall be
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excluded and (ii) in the case of the Total Funded Debt of Horizon, the
Guarantees by the Horizon Group of the Continental Obligations shall be
excluded.
"TRANSFEREE" shall have the meaning assigned to such term in Section
2.17(a).
"TYPE" shall have the meaning assigned to such term in Section 1.03.
"UNQUALIFIED OPINION" shall have the meaning assigned to such term in
Section 5.04(a).
"WHOLLY OWNED SUBSIDIARY" of any person shall mean, at any time, any
subsidiary of such person all the Equity Interests of which are at such time
directly or indirectly owned by such person.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Unless otherwise
expressly provided herein, all terms of an accounting or financial nature used
herein shall be interpreted in accordance with GAAP, as in effect from time to
time; PROVIDED, HOWEVER, that, for purposes of (a) making any calculation
contemplated by the provisions of Article II and (b) determining compliance with
any covenant set forth in Article VII or VIII, such terms shall be construed in
accordance with GAAP as in effect on the Closing Date applied on a basis
consistent with the application used in preparing Horizon's audited Financial
Statements referred to in Section 3.05. Unless otherwise expressly provided
herein, the word "day" means a calendar day.
SECTION 1.03. TYPES OF BORROWINGS. The term "BORROWING" refers to the
portion of the aggregate principal amount of Loans of any Class outstanding
hereunder which bears interest of a specific Type and for a specific Interest
Period pursuant to a notice of Borrowing pursuant to Section 2.03. Each
Lender's ratable share of each Borrowing is referred to herein as a separate
"LOAN". Borrowings and Loans hereunder are distinguished by "CLASS" and by
"TYPE". The Class of a Loan or of a Commitment to make such a Loan or of a
Borrowing comprising such Loans refers to whether such Loan is a Horizon Loan or
a Continental Loan, each of which is a separate Class. The "TYPE" of a Loan
refers to whether such Loan is an ABR Loan or a Eurodollar Loan. Borrowings and
Loans may (but need not) be identified by Class and Type (E.G., a "Eurodollar
Horizon Loan" is a Loan which is both a Horizon Loan and a Eurodollar Loan).
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENT TO MAKE LOANS. (a) Subject to the terms and
conditions and relying upon the representations and warranties herein set forth,
each Lender agrees, severally and not jointly, to make Horizon Loans to Horizon,
at any time and from time to time during the
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Horizon Availability Period, in an aggregate principal amount at any one time
outstanding not to exceed the excess, if any, of such Lender's Horizon
Commitment set forth opposite its name on Schedule 2.01(a) (as the same may be
reduced from time to time pursuant to Section 2.09) over its Horizon Letter of
Credit Exposure at such time. Horizon may borrow, pay or prepay and reborrow
Horizon Loans during the Horizon Availability Period, within the limits set
forth in this Section 2.01(a) and upon the other terms and subject to the other
conditions and limitations set forth herein.
(b) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender agrees, severally
and not jointly, to make Continental Loans to Continental, at any time and from
time to time during the Continental Availability Period, in an aggregate
principal amount at any one time outstanding not to exceed the excess, if any,
of such Lender's Continental Commitment set forth opposite its name on Schedule
2.01(b) (as the same may be reduced from time to time pursuant to Section 2.09)
over its Continental Letter of Credit Exposure at such time. Continental may
borrow, pay or prepay and reborrow Continental Loans during the Continental
Availability Period, within the limits set forth in this Section 2.01(b) and
upon the other terms and subject to the other conditions and limitations set
forth herein.
SECTION 2.02. LOANS. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
respective Horizon Commitments or Continental Commitments, as the case may be;
PROVIDED, HOWEVER, that the failure of any Lender to make any Loan shall not in
itself relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender). The
Loans comprising each Borrowing shall be in an aggregate principal amount which
is equal to (i) $2,500,000 or any greater integral multiple of $1,000,000 in the
case of Eurodollar Loans and (ii) $500,000 or any greater integral multiple of
$100,000 in the case of ABR Loans (or, in either case, an aggregate principal
amount equal to the remaining balance of the Horizon Commitments or the
Continental Commitments, as the case may be).
(b) A particular Borrowing of any Class shall consist solely of ABR Loans
or Eurodollar Loans of such Class, as a Borrower may request pursuant to Section
2.03. Each Lender may at its option fulfill its Commitment with respect to any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; PROVIDED that any exercise of such option shall not
affect the obligation of the applicable Borrower to repay such Loan in
accordance with the terms of this Agreement and the applicable Note. Borrowings
by a Borrower of more than one Type and Eurodollar Loans bearing interest for
more than one specific Interest Period may be outstanding at the same time;
PROVIDED, HOWEVER, that neither Borrower shall be entitled to request any
Borrowing which, if made, would result in an aggregate of more than eight
separate Eurodollar Loans of any Lender being outstanding hereunder at any one
time. For purposes of the foregoing, Loans having different Interest Periods,
regardless of whether they commence on the same date, shall be considered
separate Loans.
(c) Subject to Section 2.02(g), each Lender shall make a Loan in the
amount of its pro rata portion, as determined under Section 2.14, of each
Borrowing hereunder on the proposed
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date thereof by wire transfer of immediately available funds to the Agent in
Dallas, Texas, not later than 1:00 p.m., Dallas time, and the Agent shall by
3:00 p.m., Dallas time, credit the amounts so received to the general deposit
account of the requesting Borrower with the Agent or, if a Borrowing shall not
occur on such date because any condition precedent herein specified shall not
have been met, return the amounts so received to the respective Lenders.
(d) If the Agent has not received from the applicable Borrower the payment
required by Section 2.19(g) or 2.20(g), as applicable, by 12:30 p.m., Dallas
time, on the date on which the Issuing Bank has notified such Borrower and the
Agent that payment of a draft presented under the applicable Letter of Credit
will be made, as provided in Section 2.19(g) or 2.20(g), as applicable, the
Agent will promptly notify the Issuing Bank and each Lender of the corresponding
Letter of Credit Disbursement and, in the case of each Lender, its pro rata
portion, as determined under Section 2.14, of such Letter of Credit
Disbursement. Not later than 2:00 p.m., Dallas time, on such date, each Lender
shall make available its pro rata portion of such Letter of Credit Disbursement,
in Federal or other funds immediately available in Dallas, to the Agent at its
address set forth in Section 11.01, and the Agent will promptly make such funds
available to the Issuing Bank. The Agent will promptly remit to each Lender that
shall have made such funds available its pro rata portion, as determined under
Section 2.14, of any amounts subsequently received by the Agent from the
applicable Borrower in respect of such Letter of Credit Disbursement.
(e) Unless the Agent shall have received notice from a Lender prior to any
Borrowing, or prior to the time of any required payment by such Lender in
respect of a Letter of Credit Disbursement, that such Lender will not make
available to the Agent such Lender's portion of such Borrowing or payment, the
Agent may assume that such Lender has made such portion available to the Agent
on the date of such Borrowing or payment in accordance with Section 2.02(c) or
(d), as applicable, and the Agent may, in reliance upon such assumption, make
available to the requesting Borrower or the Issuing Bank, as applicable, on such
date a corresponding amount. If and to the extent that such Lender shall not
have made such portion available to the Agent, such Lender and such Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to such Borrower or the Issuing Bank (or, if the Agent and the
Issuing Bank are the same person, from the date of such payment in respect of a
Letter of Credit Disbursement), as applicable, until the date such amount is
repaid to the Agent at, (i) in the case of such Borrower, the interest rate
applicable thereto pursuant to Section 2.06, 2.19(g) or 2.20(g), as applicable,
and (ii) in the case of such Lender, the Federal Funds Effective Rate. If such
Lender shall repay to the Agent such corresponding amount in respect of a
Borrowing, such amount shall constitute such Lender's Loan as part of such
Borrowing for purposes of this Agreement.
(f) Notwithstanding any other provision of this Agreement, neither
Borrower shall be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date. Any Borrowing
which cannot be refinanced as a Eurodollar Borrowing by reason of the preceding
sentence shall be automatically converted at the end of the Interest Period in
effect for such Borrowing into an ABR Borrowing.
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(g) A Borrower may refinance all or any part of any Borrowing with a
Borrowing of the same or a different Type, upon the terms and subject to the
conditions and limitations set forth in this Agreement. Any Borrowing or part
thereof so refinanced shall be deemed to be repaid or prepaid in accordance with
Section 2.04 or 2.10, as applicable, with the proceeds of a new Borrowing and
the proceeds of such new Borrowing (to the extent they do not exceed the
principal amount of the Borrowing being refinanced) shall not be paid by the
Lenders to the Agent or by the Agent to such Borrower pursuant to Section
2.02(c).
SECTION 2.03. NOTICE OF BORROWINGS. The requesting Borrower shall give
the Agent written or telecopy notice (or telephone notice promptly confirmed in
writing or by telecopy) (a) in the case of a Eurodollar Borrowing, not later
than 10:00 a.m., Dallas time, three Business Days before a proposed borrowing
and (b) in the case of an ABR Borrowing, not later than 11:00 a.m., Dallas time,
on the day of the proposed borrowing. Such notice shall be irrevocable and
shall in each case refer to this Agreement and specify (i) whether the Borrowing
then being requested is to be a Eurodollar Borrowing or an ABR Borrowing;
(ii) the date of such Borrowing (which shall be a Business Day) and the amount
thereof; and (iii) if such Borrowing is to be a Eurodollar Borrowing, the
Interest Period with respect thereto. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
an ABR Borrowing. If no Interest Period with respect to any Eurodollar
Borrowing is specified in any such notice, then the requesting Borrower shall be
deemed to have selected an Interest Period of one month's duration. If the
requesting Borrower shall not have given notice in accordance with this
Section 2.03 of its election to refinance a Borrowing prior to the end of the
Interest Period in effect for such Borrowing, then such Borrower shall (unless
such Borrowing is repaid at the end of such Interest Period) be deemed to have
given notice of an election to refinance such Borrowing with an ABR Borrowing.
The Agent shall promptly advise the Lenders of any notice given pursuant to this
Section 2.03 and of each Lender's portion of the requested Borrowing.
SECTION 2.04. NOTES; REPAYMENT OF LOANS. The Horizon Loans and the
Continental Loans made by each Lender shall be evidenced by a Horizon Note or a
Continental Note, as applicable, duly executed and delivered on behalf of the
applicable Borrower, dated the Closing Date, in substantially the form attached
hereto as Exhibit A-1 or A-2, as applicable, with the blanks appropriately
filled in, payable to the order of such Lender in a principal amount equal to
such Lender's Horizon Commitment (in the case of a Horizon Note) and the
Continental Commitment (in the case of a Continental Note). The outstanding
principal balance of each Loan, as evidenced by the applicable Note, shall be
payable on the last day of the Interest Period applicable to such Loan and on
the Maturity Date. Each Note shall bear interest from the date of the first
Borrowing hereunder on the outstanding principal balance thereof as set forth in
Section 2.06. Each Lender shall, and is hereby authorized by each Borrower to,
endorse on the schedule attached to each Note delivered to such Lender (or on a
continuation of such schedule attached to such Note and made a part thereof), or
otherwise to record in such Lender's internal records, an appropriate notation
evidencing the date and amount of each applicable Loan from such Lender, each
payment and prepayment of principal of any such Loan, each payment of interest
on any such Loan and the other information provided for on such schedule;
PROVIDED, HOWEVER, that the failure of any Lender to make such a notation or any
error therein shall not affect the obligation of the applicable Borrower to
repay the Loans made by such Lender in accordance with the terms of this
Agreement and the applicable Notes.
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SECTION 2.05. FEES. (a) Horizon shall pay to the Agent for the account
of each Lender, on the last day of March, June, September and December in each
year, and on the date on which the Horizon Commitment of such Lender shall be
terminated as provided herein, a commitment fee (a "HORIZON COMMITMENT FEE") on
the average daily unused amount of the Horizon Commitment of such Lender during
the preceding quarter (or shorter period commencing with the Closing Date or
ending with the date on which the Horizon Commitment of such Lender shall be
terminated), equal to the Horizon Commitment Rate per annum. The "unused
amount" of the Horizon Commitment of a Lender on any date means the amount of
such Lender's Horizon Commitment on such date, less the sum of its outstanding
Horizon Loans on such date and its Horizon Letter of Credit Exposure on such
date. All Horizon Commitment Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days. The Horizon Commitment Fee due to
each Lender shall commence to accrue from the Closing Date and shall cease to
accrue on the date on which the Horizon Commitment of such Lender shall be
terminated as provided herein.
(b) Continental shall pay to the Agent for the account of each Lender, on
the last day of March, June, September and December in each year, and on the
date on which the Continental Commitment of such Lender shall be terminated as
provided herein, a commitment fee (a "CONTINENTAL COMMITMENT FEE") on the
average daily unused amount of the Continental Commitment of such Lender during
the preceding quarter (or shorter period commencing with the Closing Date or
ending with the date on which the Continental Commitment of such Lender shall be
terminated), equal to the Continental Commitment Rate per annum. The "unused
amount" of the Continental Commitment of a Lender on any date means the amount
of such Lender's Continental Commitment on such date, less the sum of its
outstanding Continental Loans on such date and its Continental Letter of Credit
Exposure on such date. All Continental Commitment Fees shall be computed on the
basis of the actual number of days elapsed in a year of 360 days. The
Continental Commitment Fee due to each Lender shall commence to accrue from the
Closing Date and shall cease to accrue on the date on which the Continental
Commitment of such Lender shall be terminated as provided herein.
(c) Horizon agrees to pay to the Agent, for its own account, the fees set
forth in the Fee Letter dated May 26, 1995, as amended (the "FEE LETTER"),
between the Agent and Horizon, in the amounts and on the dates provided in the
Fee Letter. The annual administration fee provided in the Fee Letter shall by
payable in advance on the Closing Date and each anniversary thereof prior to the
Maturity Date. Such fees shall be in addition to reimbursement of the Agent's
reasonable out-of-pocket expenses.
(d) All Fees shall be paid on the dates due, in immediately available
funds. Once paid, none of the Fees shall be refundable under any circumstances.
SECTION 2.06. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.07, each Horizon Loan comprising an ABR Borrowing shall bear interest
for each day from the date such Horizon Loan is made until it becomes due
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when determined by reference to the Prime Rate
and over a year of 360 days at all other times unless such calculation would
result in a usurious rate, in which case such interest shall be computed on the
basis of the actual number of
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days elapsed over a year of 365 or 366 days, as the case may be) at a rate per
annum equal to the Alternate Base Rate, but in no event to exceed the Highest
Lawful Rate.
(b) Subject to the provisions of Section 2.07, each Continental Loan
comprising an ABR Borrowing shall bear interest for each day from the date such
Continental Loan is made until it becomes due (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be, when determined by reference to the Prime Rate and over a year of 360 days
at all other times unless such calculation would result in a usurious rate, in
which case such interest shall be computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be) at a rate per
annum equal to the Alternate Base Rate, but in no event to exceed the Highest
Lawful Rate.
(c) Subject to the provisions of Section 2.07, each Horizon Loan
comprising a Eurodollar Borrowing shall bear interest for each day from the date
such Horizon Loan is made until it becomes due (computed on the basis of the
actual number of days elapsed over a year of 360 days unless such calculation
would result in a usurious rate, in which case such interest shall be computed
on the basis of the actual number of days elapsed over a year of 365 or 366
days, as the case may be) at a rate per annum equal to the Adjusted LIBO Rate
for the Interest Period in effect for such Borrowing, plus the Horizon
Eurodollar Margin, but in no event to exceed the Highest Lawful Rate.
(d) Subject to the provisions of Section 2.07, each Continental Loan
comprising a Eurodollar Borrowing shall bear interest for each day from the date
such Continental Loan is made until it becomes due (computed on the basis of the
actual number of days elapsed over a year of 360 days unless such calculation
would result in a usurious rate, in which case such interest shall be computed
on the basis of the actual number of days elapsed over a year of 365 or 366
days, as the case may be) at a rate per annum equal to the Adjusted LIBO Rate
for the Interest Period in effect for such Borrowing, plus the Continental
Eurodollar Margin, but in no event to exceed the Highest Lawful Rate.
(e) Subject to the applicable terms and conditions of Section 1.01, each
Pricing Period shall commence on (and include) the date of delivery to the Agent
of Required Financial Statements demonstrating that such period has commenced
(or, in the case of a Horizon Level V Pricing Period or a Continental Level VI
Pricing Period, on the first date on which the Borrower has failed to deliver
any of its Required Financial Statements when due in accordance with Section
5.04 or 6.04, as applicable) and shall terminate on (and exclude) the earlier of
(i) the date of delivery to the Agent of any subsequent Required Financial
Statements demonstrating that such period has terminated and (ii) the first date
on which the applicable Borrower has failed to deliver any of its Required
Financial Statements when due in accordance with Section 5.04 or 6.04, as
applicable.
(f) Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan, except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Agent, and such determination shall be conclusive absent manifest error.
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SECTION 2.07. DEFAULT INTEREST. If a Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due under this Agreement or any other Loan Document, by acceleration or
otherwise, interest shall accrue, to the extent permitted by law, on such
defaulted amount during the period from (and including) the date of such default
to (but not including) the date of actual payment (after as well as before
judgment) at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be, when determined
by reference to the Prime Rate and over a year of 360 days at all other times
unless such calculation would result in a usurious rate, in which case such
interest shall be computed on the basis of the actual number of days elapsed
over a year of 365 or 366 days, as the case may be) equal to the rate applicable
to ABR Loans of such Borrower during such period pursuant to Section 2.06, plus
2.00%, but in no event to exceed the Highest Lawful Rate. Such Borrower shall
pay all such accrued but unpaid interest from time to time upon demand.
SECTION 2.08. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the Business Day prior to the commencement of any Interest
Period for a Eurodollar Borrowing the Agent shall have determined that dollar
deposits in the principal amounts of the Loans comprising such Borrowing are not
generally available in the applicable interbank market, or that the rates at
which such dollar deposits are being offered will not adequately and fairly
reflect the cost to any Lender of making or maintaining its Eurodollar Loan
during such Interest Period, or that reasonable means do not exist for
ascertaining the Adjusted LIBO Rate, the Agent shall, as soon as practicable
thereafter, give written or telecopy notice of such determination to the
Borrowers and the Lenders. In the event of any such determination, any request
by a Borrower for a Eurodollar Borrowing pursuant to Section 2.03 shall, until
the Agent shall have advised the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, be deemed to be a
request for an ABR Borrowing. Each determination by the Agent hereunder shall
be conclusive absent manifest error.
SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS. (a) The
Commitments shall be automatically terminated at 5:00 p.m., Dallas time, on (i)
July 15, 1995, if the first Borrowing hereunder in accordance with Article IV
has not occurred by such date, and (ii) otherwise, the Maturity Date.
(b) Upon at least five Business Days' prior irrevocable written or
telecopy notice to the Agent, Horizon may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Horizon
Commitments; PROVIDED, HOWEVER, that each partial reduction of the Horizon
Commitments shall be in an aggregate principal amount which is an integral
multiple of $500,000.
(c) Upon at least five Business Days' prior irrevocable written or
telecopy notice to the Agent, Continental may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Continental
Commitments; PROVIDED, HOWEVER, that each partial reduction of the Continental
Commitments shall be in an aggregate principal amount which is an integral
multiple of $500,000.
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(d) Each reduction in the Commitments shall be made ratably among the
Lenders in accordance with their respective applicable Commitments. On the date
of each termination or reduction of the Horizon Commitments, Horizon shall pay
to the Agent, for the account of the Lenders, the Horizon Commitment Fees on the
amount of the Horizon Commitments so terminated or reduced accrued to the date
of such termination or reduction. On the date of each termination or reduction
of the Continental Commitments, Continental shall pay to the Agent, for the
account of the Lenders, the Continental Commitment Fees on the amount of the
Continental Commitments so terminated or reduced accrued to the date of such
termination or reduction.
SECTION 2.10. REPAYMENTS AND PREPAYMENTS. (a) To the extent not
previously paid, all Borrowings shall be due and payable on the Maturity Date.
(b) In the event and on each occasion that the sum of (i) the aggregate
outstanding principal amount of the Horizon Loans and (ii) the Horizon Letter of
Credit Exposure exceeds the aggregate amount of the Horizon Commitments at such
time, Horizon shall immediately prepay Horizon Loans (and, to the extent that
the amount of such excess is greater than the aggregate principal amount of
outstanding Horizon Loans, provide cash collateral in respect of the Horizon
Letter of Credit Exposure pursuant to Section 2.19(k) and thereupon such cash
shall be deemed to reduce the Horizon Letter of Credit Exposure for purposes of
this Section 2.10(b)) in an aggregate principal amount equal to such excess.
(c) In the event and on each occasion that the sum of (i) the aggregate
outstanding principal amount of the Continental Loans and (ii) the Continental
Letter of Credit Exposure exceeds the aggregate amount of the Continental
Commitments at such time, Continental shall immediately prepay Continental Loans
(and, to the extent that the amount of such excess is greater than the aggregate
principal amount of outstanding Continental Loans, provide cash collateral in
respect of the Continental Letter of Credit Exposure pursuant to Section 2.20(k)
and thereupon such cash shall be deemed to reduce the Continental Letter of
Credit Exposure for purposes of this Section 2.10(c)) in an aggregate principal
amount equal to such excess.
(d) Subject to Section 2.10(e), each Borrower shall have the right at any
time and from time to time to prepay any Borrowing of such Borrower, in whole or
in part, upon prior written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) to the Agent (i) in the case of any
prepayment of Eurodollar Loans, at least three Business Days in advance of the
proposed prepayment and (ii) in the case of any prepayment of ABR Loans, by
11:00 a.m., Dallas time, on the day of the proposed prepayment; PROVIDED,
HOWEVER, that (A) each partial prepayment of Eurodollar Loans under this
Section 2.10(d) shall be in an aggregate principal amount equal to an integral
multiple of $1,000,000, (B) each partial prepayment of ABR Loans under this
Section 2.10(d) shall be in an aggregate principal amount equal to an integral
multiple of $100,000, (C) a partial prepayment of a Eurodollar Borrowing under
this Section 2.10(d) shall not be made that would result in the remaining
aggregate outstanding principal amount thereof being less than $2,500,000 and
(D) a partial prepayment of an ABR Borrowing under this Section 2.10(d) shall
not be made that would result in the remaining aggregate outstanding principal
amount thereof being less than $500,000. Each notice of prepayment shall
specify the prepayment date, the Class, the Type, the Interest Period of the
Borrowing to be prepaid (in the case of a Eurodollar Borrowing) and the
principal amount thereof to be prepaid,
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shall be irrevocable and shall commit the applicable Borrower to prepay such
Borrowing by the amount stated therein on the date stated therein.
(e) Each payment of Borrowings pursuant to this Section 2.10 shall be
accompanied by accrued interest on the principal amount paid to but excluding
the date of payment. All payments under this Section 2.10 shall be subject to
Section 2.13, but otherwise shall be without premium or penalty. Any mandatory
prepayment of Loans of any Class pursuant to Section 2.10(b) or (c) shall be
applied to prepay all ABR Loans of such Class before any Eurodollar Loans of
such Class are prepaid.
SECTION 2.11. RESERVE REQUIREMENTS; CERTAIN CHANGES IN CIRCUMSTANCES.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or any Fees
or other amounts payable hereunder (other than changes in respect of taxes
imposed on the overall net income of such Lender by the jurisdiction in which
such Lender has its principal office or by any political subdivision or taxing
authority therein), or shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of or credit extended by such Lender (except any such reserve
requirement which is reflected in the Adjusted LIBO Rate) or shall impose on
such Lender or the applicable interbank market any other condition affecting
this Agreement or Eurodollar Loans made by such Lender, and the result of any of
the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan or to reduce the amount of any sum received or
receivable by such Lender hereunder or under the Notes (whether of principal,
interest or otherwise) or Letters of Credit by an amount deemed by such Lender
to be material, then from time to time each Borrower shall pay to such Lender
upon demand such additional amount or amounts as will compensate such Lender for
such additional costs incurred or reduction suffered with respect to the
Facility of such Borrower.
(b) If any Lender shall have determined that the adoption after the date
hereof of any law, rule, regulation, agreement or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any lending office of such Lender) or
any Lender's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement, the Letters of Credit or
the Loans made by such Lender pursuant hereto to a level below that which such
Lender or such Lender's holding company could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's policies
and the policies of such Lender's holding company with respect to capital
adequacy) by an amount deemed by such Lender to be material, then from time to
time each Borrower shall pay to such Lender upon demand such additional amount
or amounts
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as will compensate such Lender or such Lender's holding company for any such
reduction suffered with respect to the Facility of such Borrower.
(c) A certificate of each Lender setting forth such amount or amounts as
shall be necessary to compensate such Lender or its holding company as specified
in paragraph (a) or (b) above, as the case may be, shall be delivered to the
applicable Borrower and shall be conclusive absent manifest error. Such
Borrower shall pay each Lender the amount shown as due on any such certificate
delivered by it within 10 days after its receipt of the same.
(d) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to any other period.
The protection of this Section 2.11 shall be available to each Lender regardless
of any possible contention of the invalidity or inapplicability of the law,
rule, regulation, guideline or other change, condition or circumstances which
shall have occurred or been imposed.
(e) Any Lender claiming compensation for any additional amounts pursuant
to this Section 2.11 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its applicable lending
office if the making of such change would avoid the need for or reduce the
amount of any such additional amounts or additional amounts that may thereafter
accrue and that would not be otherwise disadvantageous to such Lender in its
sole judgment.
(f) No Lender shall be entitled to compensation under this Section 2.11
for any costs incurred or reductions suffered with respect to any date unless
such Lender shall have notified the applicable Borrower that it will demand
compensation for such costs or reductions not more than 90 days after the later
of (i) such date and (ii) the date on which such Lender becomes aware of such
costs or reductions.
SECTION 2.12. CHANGE IN LEGALITY. (a) Notwithstanding any other
provision herein, if any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written or
telecopy notice to the Borrowers and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon any request by either Borrower for a Eurodollar
Borrowing shall, as to such Lender only, be deemed a request for an ABR
Loan unless such declaration shall be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective date of such
notice as provided in Section 2.12(b).
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In the event that any Lender shall exercise its rights under clause (i) or
(ii) above, all payments and prepayments of principal which would otherwise have
been applied to repay the Eurodollar Loans that would have been made by such
Lender or the converted Eurodollar Loans of such Lender shall instead be applied
to repay the ABR Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.12, a notice to the Borrowers by any
Lender shall be effective as to each Eurodollar Loan, if lawful, on the last day
of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by each
Borrower.
(c) In the event of a change in any law or regulation that enables any
Lender to exercise its rights under clause (i) or (ii) of Section 2.12(a), such
Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its applicable lending office if the
making of such change would avoid the need for such exercise of rights and would
not be otherwise disadvantageous to such Lender in its sole judgment.
SECTION 2.13. INDEMNITY. To the fullest extent permitted under applicable
law, each Borrower shall indemnify each Lender against any loss or expense which
such Lender may sustain or incur as a consequence of (a) any failure by such
Borrower to fulfill on the date of any borrowing hereunder the applicable
conditions set forth in Article IV, (b) any failure by such Borrower to borrow
or to refinance or continue any Loan hereunder after irrevocable notice of such
borrowing or refinancing has been given pursuant to Section 2.03, (c) any
payment or prepayment of a Eurodollar Loan required by any other provision of
this Agreement or otherwise made or deemed made on a date other than the last
day of the Interest Period applicable thereto, (d) any default in payment or
prepayment of the principal amount of any Loan or any part thereof or interest
accrued thereon, as and when due and payable (at the due date thereof, whether
by scheduled maturity, acceleration, irrevocable notice of prepayment or
otherwise) or (e) the occurrence of any Event of Default, including, in each
such case, any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof as a Eurodollar
Loan. Such loss or reasonable expense shall include an amount equal to the
excess, if any, as reasonably determined by such Lender, of (i) its cost of
obtaining the funds for the Loan being paid, prepaid or not borrowed, refinanced
or not paid or prepaid (assumed to be the Adjusted LIBO Rate applicable thereto)
for the period from the date of such payment, prepayment or failure to borrow,
refinance or failure to pay or prepay to the last day of the Interest Period for
such Loan (or, in the case of a failure to borrow or refinance, the Interest
Period for such Loan which would have commenced on the date of such failure)
over (ii) the amount of interest (as reasonably determined by such Lender) that
would be realized by such Lender in reemploying the funds so paid, prepaid or
not borrowed or refinanced for such period or Interest Period, as the case may
be. A certificate of any Lender setting forth any amount or amounts which such
Lender is entitled to receive pursuant to this Section 2.13 shall be delivered
to the applicable Borrower and shall be conclusive absent manifest error. Such
Borrower shall pay each Lender the amount shown as due on any such certificate
delivered by it within 10 days after its receipt of the same.
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SECTION 2.14. PRO RATA TREATMENT. Except as required under Section 2.12,
each Borrowing, each payment or prepayment of principal of any Borrowing, each
payment of interest on the Loans, each payment of the Commitment Fees, each
reduction of the Commitments, each refinancing of any Borrowing with a Borrowing
of any Type and each Letter of Credit Disbursement shall be allocated pro rata
among the Lenders in accordance with their respective Horizon Commitments or
Continental Commitments, as applicable (or, in the case of any Lender which has
not funded its applicable Commitment as required hereunder, in accordance with
the aggregate unpaid principal amount of its applicable Loans). Each Lender
agrees that in computing such Lender's portion of any Borrowing to be made
hereunder, the Agent may, in its discretion, round each Lender's percentage of
such Borrowing, computed in accordance with Schedule 2.01(a) or 2.01(b), as
applicable, to the next higher or lower whole dollar amount. The Agent will
promptly distribute in lawful money of the United States and in immediately
available funds to each Lender its pro rata portion, as determined under Section
2.14, of each payment received by the Agent for the account of the Lenders.
SECTION 2.15. SHARING OF SETOFFS. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
either Borrower, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or Loans as a result
of which the aggregate unpaid principal portion of its Loans shall be
proportionately less than the aggregate unpaid principal portion of the Loans of
any other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in such Loans of such other Lender, so that
the aggregate unpaid principal amount of the Loans and participations in Loans
held by each Lender shall be in the same proportion to the aggregate unpaid
principal amount of all Loans then outstanding as the principal amount of its
Loans prior to such exercise of banker's lien, setoff or counterclaim or other
event was to the principal amount of all Loans outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; PROVIDED,
HOWEVER, that, if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.15 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. Each Borrower expressly consents to the
foregoing arrangements and agrees that any Lender holding a participation in a
Loan deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by such Borrower to such Lender by reason thereof as fully as if such Lender had
made a Loan directly to such Borrower in the amount of such participation.
SECTION 2.16. PAYMENTS. (a) Each Borrower shall make each payment
(including principal of or interest on any Borrowing or any Fees or other
amounts) hereunder or under any other Loan Document not later than 12:00 (noon),
Dallas time, on the date when due in dollars to the Agent at its offices at 901
Main Street, 13th Floor, Dallas, Texas 75202, in immediately available funds.
Any such payment received after such time on any date shall be deemed made on
the next Business Day.
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(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.17. TAXES. (a) Any and all payments by either Borrower
hereunder shall be made, in accordance with Section 2.16, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
EXCLUDING (i) taxes imposed on the net income of the Agent or any Lender (or any
transferee or assignee thereof, including a participation holder (any such
entity being called a "TRANSFEREE")) and (ii) franchise taxes imposed on the
Agent or any Lender (or Transferee), in each case by the jurisdiction under the
laws of which the Agent or any Lender (or Transferee) is organized or any
political subdivision thereof (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities, collectively or individually,
"TAXES"). If a Borrower shall be required to deduct any Taxes from or in
respect of any sum payable hereunder to any Lender (or Transferee) or the Agent,
(A) the sum payable shall be increased by the amount (an "ADDITIONAL AMOUNT")
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.17) such Lender (or
Transferee) or the Agent, as the case may be, shall receive an amount equal to
the sum it would have received had no such deductions been made, (B) such
Borrower shall make such deductions and (C) such Borrower shall pay the full
amount deducted to the relevant taxing authority or other Governmental Authority
in accordance with applicable law.
(b) In addition, to the fullest extent permitted under applicable law,
each Borrower agrees to indemnify the Agent, the Issuing Bank and each Lender
from, and hold them harmless against, and to pay to the relevant Governmental
Authority in accordance with applicable law, any current or future stamp or
documentary taxes or any other excise or property taxes, assessments, charges or
similar levies made by any Governmental Authority which arise from any payment
made hereunder by such Borrower or from the execution and delivery by such
Borrower of this Agreement or any other Loan Document or otherwise with respect
to the Facility of such Borrower (hereinafter referred to as "OTHER TAXES").
(c) To the fullest extent permitted under applicable law, each Borrower
will indemnify each Lender (or Transferee) and the Agent for the full amount of
Taxes and Other Taxes paid by such Lender (or Transferee) or the Agent, as the
case may be, and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted by the relevant Governmental Authority,
in each case to the extent relating to the Facility of such Borrower. A
certificate as to the amount of such payment or liability prepared by a Lender
(or Transferee), or the Agent on its behalf, or by the Agent on its own behalf,
shall be conclusive absent manifest error. Such indemnification shall be made
within 30 days after the date any Lender (or Transferee) or the Agent, as the
case may be, makes written demand therefor.
(d) If any Lender (or Transferee) or the Agent shall become aware that it
is entitled to claim a refund in respect of Taxes or Other Taxes as to which it
has been indemnified by a
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Borrower, or with respect to which such Borrower has paid additional amounts,
pursuant to this Section 2.17, it shall promptly notify such Borrower of the
availability of such refund claim and shall, within 30 days after receipt of a
request by such Borrower, make a claim to such Governmental Authority for such
refund at such Borrower's expense. If any Lender (or Transferee) or the Agent
receives a refund (including pursuant to a claim for refund made pursuant to the
preceding sentence) in respect of any Taxes or Other Taxes as to which it has
been indemnified by such Borrower, or with respect to which such Borrower has
paid additional amounts, pursuant to this Section 2.17, it shall within 30 days
from the date of such receipt pay over such refund to such Borrower (but only to
the extent of indemnity payments made, or additional amounts paid, by such
Borrower under this Section 2.17 with respect to the Taxes or Other Taxes giving
rise to such refund), net of all out-of-pocket expenses of such Lender (or
Transferee) or the Agent and without interest (other than interest paid by the
relevant Governmental Authority with respect to such refund); PROVIDED, HOWEVER,
that such Borrower, upon the request of such Lender (or Transferee) or the
Agent, agrees to repay the amount paid over to such Borrower (plus penalties,
interest or other charges) to such Lender (or Transferee) or the Agent in the
event such Lender (or Transferee) or the Agent is required to repay such refund
to such Governmental Authority.
(e) As soon as practicable after the date of any payment of Taxes or Other
Taxes by either Borrower to the relevant Governmental Authority, such Borrower
will deliver to the Agent, at its address referred to in Section 11.01, the
original or a certified copy of a receipt evidencing payment thereof.
(f) To the fullest extent permitted under applicable law, the provisions
of this Section 2.17 shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of the Loans, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of the Agent or
any Lender.
(g) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "NON-U.S. LENDER") shall deliver to each Borrower and the Agent two
copies of either United States Internal Revenue Service Form 1001 or Form 4224,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any subsequent versions thereof
or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, a
certificate representing that such Non-U.S. Lender is not a bank for purposes of
Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Code) of either Borrower and is not a controlled
foreign corporation related to either Borrower (within the meaning of Section
864(d)(4) of the Code), properly completed and duly executed by such Non-U.S.
Lender) claiming complete exemption from, or reduced rate of, U.S. Federal
withholding tax on payments by the Borrowers under this Agreement and the other
Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or
before the date it becomes a party to this Agreement (or, in the case of a
Transferee that is a participation holder, on or before the date such
participation holder becomes a Transferee hereunder) and on or before the date,
if any, such Non-
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U.S. Lender changes its applicable lending office by designating a different
lending office (a "NEW LENDING OFFICE"). In addition, each Non-U.S. Lender
shall deliver such forms promptly upon the obsolescence or invalidity of any
form previously delivered by such Non-U.S. Lender. Notwithstanding any other
provision of this Section 2.17(g), a Non-U.S. Lender shall not be required to
deliver any form pursuant to this Section 2.17(g) that such Non-U.S. Lender is
not legally able to deliver.
(h) Neither Borrower shall be required to indemnify any Non-U.S. Lender,
or to pay any additional amounts to any Non-U.S. Lender, in respect of United
States Federal withholding tax pursuant to Section 2.17 to the extent that
(i) the obligation to pay such additional amounts would not have arisen but for
a failure by such Non-U.S. Lender to comply with the provisions of Section
2.17(g) or (ii) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S. Lender became a party
to this Agreement (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to a Loan; PROVIDED, HOWEVER,
that this clause (ii) shall not apply to any Transferee or New Lending Office
that becomes a Transferee or New Lending Office as a result of an assignment,
participation, transfer or designation made at the request of either Borrower;
and PROVIDED FURTHER, HOWEVER, that this clause (ii) shall not apply to the
extent the indemnity payment or additional amounts any Transferee, or Lender (or
Transferee) through a New Lending Office, would be entitled to receive (without
regard to this clause (ii)) do not exceed the indemnity payment or additional
amounts that the person making the assignment, participation or transfer to such
Transferee, or Lender (or Transferee) making the designation of such New Lending
Office, would have been entitled to receive in the absence of such assignment,
participation, transfer or designation.
(i) Any Lender (or Transferee) claiming any indemnity payment or
additional amounts payable pursuant to this Section 2.17 shall use reasonable
efforts (consistent with legal and regulatory restrictions) to file any
certificate or document reasonably requested in writing by the applicable
Borrower or to change the jurisdiction of its applicable lending office if the
making of such a filing or change would avoid the need for or reduce the amount
of any such indemnity payment or additional amounts that may thereafter accrue
and would not be otherwise disadvantageous to such Lender (or Transferee) in its
sole judgment.
(j) Nothing contained in this Section 2.17 shall require any Lender (or
Transferee) or Agent to make available any of its tax returns (or any other
information that it deems to be confidential or proprietary).
(k) No Lender (or Transferee) shall be entitled to claim any indemnity
payment or additional amount payable pursuant to this Section 2.17 with respect
to any date unless such Lender shall have notified the Borrower that it will
demand such payment or additional amount not more than 90 days after the later
of (i) such date and (ii) the date on which such Lender (or Transferee) becomes
aware of such costs or reductions.
SECTION 2.18. ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES. In
the event that any Lender shall have delivered a notice or certificate pursuant
to Section 2.11 or 2.12, or a Borrower shall be required to pay additional
amounts to any Lender under Section 2.17, either Borrower shall have the right,
at its own expense, upon notice to such Lender and the Agent, to require such
Lender to transfer and assign without recourse (in accordance with and subject
to the provisions set forth in Section 11.04) all its interests, rights and
obligations under this Agreement to another financial institution which shall
assume such obligations; PROVIDED that (a) no such assignment shall conflict
with any law,
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rule, regulation or order of any Governmental Authority and (b) such Borrower
shall pay to the affected Lender in immediately available funds on the date of
such assignment the entire amount of principal of and interest accrued to the
date of payment on the Loans and participations in the Letter of Credit
Disbursements made by it hereunder and all other amounts accrued for its account
or owed to it hereunder; PROVIDED FURTHER that if prior to any such assignment
the circumstances or event that resulted in such Lender's notice or certificate
under Section 2.11 or 2.12 or demand for additional amounts under Section 2.17,
as the case may be, shall cease to exist or become inapplicable for any reason
or if such Lender shall waive its rights in respect of such circumstances or
event under Section 2.11, 2.12 or 2.17, as the case may be, then such Lender
shall not thereafter be required to make any such assignment hereunder.
SECTION 2.19. HORIZON LETTERS OF CREDIT. (a) Horizon may request the
issuance of Horizon Letters of Credit, in a form reasonably acceptable to the
Agent and the Issuing Bank, for the account of Horizon, at any time and from
time to time during the Horizon Letter of Credit Availability Period; PROVIDED
that any Horizon Letter of Credit shall be issued only if, and each request by
Horizon for the issuance of any Horizon Letter of Credit shall be deemed a
representation and warranty of Horizon that, immediately following the issuance
of such Horizon Letter of Credit, (i) the Horizon Letter of Credit Exposure
shall not exceed $25,000,000 and (ii) the sum of (A) the Horizon Letter of
Credit Exposure and (B) the aggregate principal amount of outstanding Horizon
Loans shall not exceed the aggregate amount of the Horizon Commitments at such
time. The agreement of the Existing Issuing Bank to waive any requirement under
the Existing Horizon Credit Facility that any Existing Letter of Credit be
cancelled or cash collateralized prior to the Closing Date shall be deemed an
"issuance" of such Existing Letter of Credit for purposes hereof.
(b) Each Horizon Letter of Credit (other than any Existing Letter of
Credit) shall expire at the close of business on the earlier of (i) 12 calendar
months after the date of issuance of such Horizon Letter of Credit and (ii) the
last day of the Horizon Letter of Credit Availability Period, unless such
Horizon Letter of Credit expires by its terms on an earlier date. Each Horizon
Letter of Credit shall provide for payments of drawings in dollars.
(c) Each issuance of any Horizon Letter of Credit shall be made on at
least three Business Days' prior irrevocable written or telecopy notice (or such
shorter notice as shall be acceptable to the Issuing Bank) from Horizon to the
Agent and the Issuing Bank specifying the date of issuance, the date on which
such Horizon Letter of Credit is to expire in accordance with Section 2.19(b),
the amount of such Horizon Letter of Credit, the name and address of the
beneficiary of such Horizon Letter of Credit, and such other information as may
be necessary or desirable to complete such Horizon Letter of Credit. The
Issuing Bank will give the Agent prompt notice of the issuance and amount of
such Horizon Letter of Credit and the expiration date of such Horizon Letter of
Credit (and the Agent shall give prompt notice thereof to each Lender). During
the Horizon Letter of Credit Availability Period, the Issuing Bank also will
give the Agent (and, in the case of clause (ii) below, the Lenders) (i) daily
notice of the amount available to be drawn under each outstanding Letter of
Credit and (ii) a quarterly summary indicating, on a daily basis during such
quarter, the issuance of any Horizon Letter of Credit and the amount thereof,
the expiration of any
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Horizon Letter of Credit and the amount thereof and the payment on any draft
presented under any Horizon Letter of Credit.
(d) By the issuance of a Horizon Letter of Credit (including an Existing
Letter of Credit) and without any further action on the part of the Issuing
Bank, the Agent or the Lenders in respect thereof, the Issuing Bank hereby
grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Horizon Letter of Credit equal to such Lender's pro rata
portion, as determined under Section 2.14, of the aggregate amount available to
be drawn under such Horizon Letter of Credit, effective upon the issuance of
such Horizon Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Agent, on behalf of the Issuing Bank, in accordance with Section 2.02(d),
such Lender's pro rata portion, as determined under Section 2.14, of each
Horizon Letter of Credit Disbursement made by the Issuing Bank and not
reimbursed by the Borrower when due in accordance with Section 2.19(g); PROVIDED
that the Lenders shall not be obligated to make any such payment with respect to
any wrongful Horizon Letter of Credit Disbursement made as a result of the gross
negligence or willful misconduct of the Issuing Bank.
(e) Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to Section 2.19(d) in respect of Horizon Letters of
Credit (including Existing Letters of Credit) is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction whatsoever
(subject only to the proviso set forth in Section 2.19(d)).
(f) During the Horizon Letter of Credit Availability Period, Horizon shall
pay to the Agent, on the last day of March, June, September and December in each
year and on the date on which the Horizon Commitments shall be terminated as
provided herein, (i) for the account of the Lenders, ratably in proportion to
their Horizon Commitments, a fee on the average daily aggregate amount available
to be drawn under all outstanding Horizon Letters of Credit (including Existing
Letters of Credit) during the preceding quarter (or shorter period commencing
with the Closing Date) at a rate per annum equal to the Horizon Eurodollar
Margin from time to time in effect during such period pursuant to Section 2.06
and (ii) for the account of the Issuing Bank, a fee on the average daily
aggregate amount available to be drawn under all outstanding Horizon Letters of
Credit (including Existing Letters of Credit) of such Issuing Bank during the
preceding quarter (or shorter period commencing with the Closing Date) at a rate
per annum equal to 0.125%. Such fees shall be computed on the basis of the
actual number of days elapsed in a year of 360 days. Such fees shall accrue
from and including the Closing Date to but excluding the last day of the Horizon
Letter of Credit Availability Period. In addition to the foregoing, Horizon
shall pay directly to the Issuing Bank, for its account, payable within 15 days
after demand therefor by the Issuing Bank, the Issuing Bank's customary
processing and documentation fees in connection with the issuance or amendment
of or payment on any Horizon Letter of Credit, including any trade or
documentary Letter of Credit.
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(g) If the Issuing Bank shall pay any draft presented under a Horizon
Letter of Credit (including an Existing Letter of Credit), Horizon shall pay to
the Agent, on behalf of the Issuing Bank, an amount equal to the amount of such
draft before 12:00 noon (Dallas time), on the day on which the Issuing Bank
shall have notified Horizon that payment of such draft will be made. The Agent
shall promptly pay any such amounts received by it to the Issuing Bank. If
Horizon shall fail to pay any amount required to be paid by it under this
Section 2.19(g) when due, such unpaid amount shall bear interest, for each day
from and including the due date to but excluding the date of payment, at a rate
per annum equal to the rate applicable to ABR Revolving Loans during such period
pursuant to Section 2.06, plus 2.00%, but in no event to exceed the Highest
Lawful Rate.
(h) To the fullest extent permitted under applicable law, Horizon's
obligation to reimburse Horizon Letter of Credit Disbursements as provided in
Section 2.19(g) shall be absolute, unconditional and irrevocable and shall be
performed strictly in accordance with the terms of this Agreement under any and
all circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Horizon Letter of
Credit (including any Existing Letter of Credit) or any other Loan
Document;
(ii) the existence of any claim, setoff, defense or other right which
Horizon, Continental, any Subsidiary or any other person may at any time
have against the beneficiary under any Horizon Letter of Credit (including
any Existing Letter of Credit), the Issuing Bank, the Agent, any Lender or
any other person in connection with this Agreement, any other Loan Document
or any other related or unrelated agreement or transaction;
(iii) any draft or other document presented under a Horizon Letter of
Credit (including an Existing Letter of Credit) proving to be forged,
fraudulent, invalid or insufficient in any respect or failing to comply
with the Uniform Customs and Practices for Documentary Credits, as in
effect from time to time, or any statement therein being untrue or
inaccurate in any respect, except to the extent the same is attributable to
the gross negligence or willful misconduct of the Issuing Bank;
(iv) payment by the Issuing Bank under a Horizon Letter of Credit
(including an Existing Letter of Credit) against presentation of a draft or
other document which does not comply with the terms of such Horizon Letter
of Credit; PROVIDED that such payment was not wrongfully made as a result
of the gross negligence or willful misconduct of the Issuing Bank; and
(v) any other act or omission or delay of any kind or any other
circumstance or event whatsoever, whether or not similar to any of the
foregoing and whether or not foreseeable, that might, but for the
provisions of this Section 2.19(h), constitute a legal or equitable
discharge of Horizon's obligations hereunder, except to the extent the same
is attributable to the gross negligence or willful misconduct of the
Issuing Bank.
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(i) To the fullest extent permitted under applicable law, it is expressly
understood and agreed that, for purposes of determining whether a wrongful
payment under a Horizon Letter of Credit (including an Existing Letter of
Credit) resulted from the Issuing Bank's gross negligence or willful misconduct,
(i) the Issuing Bank's acceptance of documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, (ii) the Issuing Bank's exclusive
reliance on the documents presented to it under such Horizon Letter of Credit as
to any and all matters set forth therein, including the amount of any draft
presented under such Horizon Letter of Credit, whether or not the amount due to
the beneficiary thereunder equals the amount of such draft and whether or not
any document presented pursuant to such Horizon Letter of Credit proves to be
insufficient in any respect (so long as such document on its face appears to be
in order), and whether or not any other statement or any other document
presented pursuant to such Horizon Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (iii) any noncompliance in any immaterial respect of the
documents presented under such Horizon Letter of Credit with the terms thereof
shall, in each case, be deemed not to constitute willful misconduct or gross
negligence of the Issuing Bank. It is further understood and agreed that,
notwithstanding the proviso to clause (iv) of Section 2.19(h), Horizon's
obligation hereunder to reimburse Letter of Credit Disbursements will not be
excused by the gross negligence or willful misconduct of the Issuing Bank to the
extent that such Letter of Credit Disbursement actually discharged a liability
of, or otherwise benefited, or was recovered by, Horizon; PROVIDED that the
foregoing shall not be construed to excuse the Issuing Bank from liability to
Horizon to the extent of any direct damages suffered by Horizon that are caused
by the Issuing Bank's gross negligence or willful misconduct in determining
whether drafts and other documents presented under a Horizon Letter of Credit
comply with the terms thereof.
(j) The Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a
Horizon Letter of Credit. The Issuing Bank shall as promptly as possible give
telephonic notification, confirmed by telex or telecopy, to the Agent and
Horizon of such demand for payment and whether the Issuing Bank has made or will
make a Horizon Letter of Credit Disbursement thereunder; PROVIDED that the
failure to give such notice shall not relieve Horizon of its obligation to
reimburse any such Horizon Letter of Credit Disbursement in accordance with this
Section 2.19. The Agent shall promptly give each Lender notice thereof.
(k) In the event that Horizon is required pursuant to the terms of this
Agreement or any other Loan Document to provide cash collateral in respect of
the Horizon Letter of Credit Exposure, Horizon shall deposit in an account with
the Agent, for the benefit of the Lenders, an amount in cash equal to the
Horizon Letter of Credit Exposure (or such lesser amount as shall be required
hereunder or thereunder). Such deposit shall be held by the Agent as collateral
for the payment and performance of the Horizon Obligations. The Agent shall
have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment
of such deposits in Cash Equivalents, which investments shall be made as
directed by Horizon (unless such investments shall be contrary to applicable law
or regulation or a Default or Event of Default shall have occurred and be
continuing, in which case the determination of whomever to make
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investments shall be made at the option and in the discretion of the Agent),
such deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall
automatically be applied by the Agent to reimburse the Issuing Bank for Horizon
Letter of Credit Disbursements and, if the maturity of the Loans has been
accelerated, to satisfy the Horizon Obligations. If Horizon is required to
provide an amount of cash collateral hereunder as a result of an Event of
Default, such amount (to the extent not applied as aforesaid) shall be returned
to Horizon within three Business Days after all Events of Default have been
cured or waived. If Horizon is required to provide an amount of cash collateral
hereunder pursuant to Section 2.10(b), such amount (to the extent not applied as
aforesaid) shall be returned to Horizon upon demand; PROVIDED that, after giving
effect to such return, (i) the sum of (A) the aggregate amount of the Horizon
Letter of Credit Exposure plus (B) the aggregate outstanding principal amount of
Horizon Loans would not exceed the aggregate Horizon Commitments and (ii) no
Default or Event of Default shall have occurred and be continuing.
(l) "EXISTING LETTERS OF CREDIT" shall mean the letters of credit issued
by the Existing Issuing Bank, to the extent listed on Schedule 2.19(l). As to
each Existing Letter of Credit, Schedule 2.19(l) sets forth the date of issuance
of such Letter of Credit, the date on which such Letter of Credit is to expire
in accordance with its terms, the amount of such Letter of Credit and the name
of the beneficiary of such Letter of Credit. Horizon agrees to use its
reasonable efforts to cause all Existing Letters of Credit to be replaced as
soon as reasonably practicable with new Letters of Credit issued by the Agent in
its capacity as Issuing Bank. Pending such replacement, the parties hereto
agree that each Existing Letter of Credit will be treated as if it had been
originally issued under this Agreement and that, effective upon the termination
of the Existing Horizon Credit Facility, all participations in the Existing
Letters of Credit arising under the Existing Horizon Credit Facility will be
terminated. Specifically, and without limitation of the foregoing or the other
provisions of this Section 2.19, (i) the amount of each Existing Letter of
Credit shall count towards the limits set forth in the proviso to Section
2.19(a) and in Section 2.01(a), (ii) each Lender hereby acquires on the Closing
Date from the Existing Issuing Bank a participation in each Existing Letter of
Credit equal to such Lender's pro rata portion, as determined under Section
2.14, of the aggregate amount available to be drawn under such Existing Letter
of Credit, (iii) each Lender hereby absolutely and unconditionally agrees to pay
to the Agent, on behalf of the Existing Issuing Bank, in accordance with Section
2.02(d), such Lender's pro rata portion, as determined under Section 2.14, of
each Horizon Letter of Credit Disbursement made by the Existing Issuing Bank and
not reimbursed by Horizon when due in accordance with Section 2.19(g) (subject
to the proviso set forth in Section 2.19(d)) and (iv) the Existing Issuing Bank
shall have the benefit of all agreements, covenants and indemnities set forth
herein which are for the benefit of the "Issuing Bank," insofar as such term is
used in relation to the Existing Letters of Credit, and shall comply with all
agreements and obligations set forth herein which bind the "Issuing Bank",
insofar as such term is used in relation to the Existing Letters of Credit.
SECTION 2.20. CONTINENTAL LETTERS OF CREDIT. (a) Continental may request
the issuance of Continental Letters of Credit, in a form reasonably acceptable
to the Agent and the Issuing Bank, for the account of Continental, at any time
and from time to time during the
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Continental Letter of Credit Availability Period; PROVIDED that any Continental
Letter of Credit shall be issued only if, and each request by Continental for
the issuance of any Continental Letter of Credit shall be deemed a
representation and warranty of Continental that, immediately following the
issuance of such Continental Letter of Credit, (i) the Continental Letter of
Credit Exposure shall not exceed $45,000,000 and (ii) the sum of
(A) the Continental Letter of Credit Exposure and (B) the aggregate principal
amount of outstanding Continental Loans shall not exceed the aggregate amount of
the Continental Commitments at such time.
(b) Each Continental Letter of Credit shall expire at the close of
business on the earlier of (i) 12 calendar months after the date of issuance of
such Continental Letter of Credit and (ii) the last day of the Continental
Letter of Credit Availability Period, unless such Continental Letter of Credit
expires by its terms on an earlier date. Each Continental Letter of Credit
shall provide for payments of drawings in dollars.
(c) Each issuance of any Continental Letter of Credit shall be made on at
least three Business Days' prior irrevocable written or telecopy notice (or such
shorter notice as shall be acceptable to the Issuing Bank) from Continental to
the Agent and the Issuing Bank specifying the date of issuance, the date on
which such Continental Letter of Credit is to expire in accordance with Section
2.20(b), the amount of such Continental Letter of Credit, the name and address
of the beneficiary of such Continental Letter of Credit, and such other
information as may be necessary or desirable to complete such Continental Letter
of Credit. The Issuing Bank will give the Agent prompt notice of the issuance
and amount of such Continental Letter of Credit and the expiration date of such
Continental Letter of Credit (and the Agent shall give prompt notice thereof to
each Lender). During the Continental Letter of Credit Availability Period, the
Issuing Bank also will give the Agent (i) daily notice of the amount available
to be drawn under each outstanding Continental Letter of Credit and (ii) a
quarterly summary indicating, on a daily basis during such quarter, the issuance
of any Continental Letter of Credit and the amount thereof, the expiration of
any Continental Letter of Credit and the amount thereof and the payment on any
draft presented under any Continental Letter of Credit.
(d) By the issuance of a Continental Letter of Credit and without any
further action on the part of the Issuing Bank, the Agent or the Lenders in
respect thereof, the Issuing Bank hereby grants to each Lender, and each Lender
hereby acquires from the Issuing Bank, a participation in such Continental
Letter of Credit equal to such Lender's pro rata portion, as determined under
Section 2.14, of the aggregate amount available to be drawn under such
Continental Letter of Credit, effective upon the issuance of such Continental
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to the Agent, on
behalf of the Issuing Bank, in accordance with Section 2.02(d), such Lender's
pro rata portion, as determined under Section 2.14, of each Continental Letter
of Credit Disbursement made by the Issuing Bank and not reimbursed by
Continental when due in accordance with Section 2.20(g); PROVIDED that the
Lenders shall not be obligated to make any such payment with respect to any
wrongful Continental Letter of Credit Disbursement made as a result of the gross
negligence or willful misconduct of the Issuing Bank.
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(e) Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to Section 2.20(d) in respect of Continental Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or Event of Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever (subject only to the
proviso set forth in Section 2.20(d)).
(f) During the Continental Letter of Credit Availability Period,
Continental shall pay to the Agent, on the last day of March, June, September
and December in each year and on the date on which the Continental Commitments
shall be terminated as provided herein, (i) for the account of the Lenders,
ratably in proportion to their Continental Commitments, a fee on the average
daily aggregate amount available to be drawn under all outstanding Continental
Letters of Credit during the preceding quarter (or shorter period commencing
with the Closing Date) at a rate per annum equal to the Continental Eurodollar
Margin from time to time in effect during such period pursuant to Section 2.06
and (ii) for the account of the Issuing Bank, a fee on the average daily
aggregate amount available to be drawn under all outstanding Continental Letters
of Credit during the preceding quarter (or shorter period commencing with the
Closing Date) at a rate per annum equal to 0.125%. Such fees shall be computed
on the basis of the actual number of days elapsed in a year of 360 days. Such
fees shall accrue from and including the Closing Date to but excluding the last
day of the Continental Letter of Credit Availability Period. In addition to the
foregoing, Continental shall pay directly to the Issuing Bank, for its account,
payable within 15 days after demand therefor by the Issuing Bank, the Issuing
Bank's customary processing and documentation fees in connection with the
issuance or amendment of
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or payment on any Continental Letter of Credit, including any trade or
documentary Letter of Credit.
(g) If the Issuing Bank shall pay any draft presented under a Continental
Letter of Credit, Continental shall pay to the Agent, on behalf of the Issuing
Bank, an amount equal to the amount of such draft before 12:00 noon (Dallas
time), on the day on which the Issuing Bank shall have notified Continental that
payment of such draft will be made. The Agent shall promptly pay any such
amounts received by it to the Issuing Bank. If Continental shall fail to pay
any amount required to be paid by it under this Section 2.20(g) when due, such
unpaid amount shall bear interest, for each day from and including the due date
to but excluding the date of payment, at a rate per annum equal to the rate
applicable to ABR Revolving Loans during such period pursuant to Section 2.06,
plus 2.00%.
(h) Continental's obligation to reimburse Continental Letter of Credit
Disbursements as provided in Section 2.20(g) shall be absolute, unconditional
and irrevocable and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Continental Letter
of Credit or any other Loan Document;
(ii) the existence of any claim, setoff, defense or other right which
Continental, Horizon, any Subsidiary or any other person may at any time
have againstthe beneficiary under any Continental Letter of Credit, the
Issuing Bank, the Agent, any Lender or any other person in connection with
this Agreement, any other Loan Document or any other related or unrelated
agreement or transaction;
(iii) any draft or other document presented under a Continental
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) payment by the Issuing Bank under a Continental Letter of Credit
against presentation of a draft or other document which does not comply
with the terms of such Continental Letter of Credit; PROVIDED that such
payment was not wrongfully made as a result of the gross negligence or
willful misconduct of the Issuing Bank; and
(v) any other act or omission or delay of any kind or any other
circumstance or event whatsoever, whether or not similar to any of the
foregoing and whether or not foreseeable, that might, but for the
provisions of this Section 2.20(h), constitute a legal or equitable
discharge of Continental's obligations hereunder.
(i) It is expressly understood and agreed that, for purposes of
determining whether a wrongful payment under a Continental Letter of Credit
resulted from the Issuing Bank's gross negligence or willful misconduct, (i) the
Issuing Bank's acceptance of documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary, (ii) the Issuing Bank's exclusive reliance on the
documents
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presented to it under such Continental Letter of Credit as to any and all
matters set forth therein, including the amount of any draft presented under
such Continental Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Continental Letter of Credit proves to be
insufficient in any respect (so long as such document on its face appears to be
in order), and whether or not any other statement or any other document
presented pursuant to such Continental Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (iii) any noncompliance in any immaterial respect of the
documents presented under such Continental Letter of Credit with the terms
thereof shall, in each case, be deemed not to constitute willful misconduct or
gross negligence of the Issuing Bank. It is further understood and agreed that,
notwithstanding the proviso to clause (iv) of Section 2.20(h), Continental's
obligation hereunder to reimburse Continental Letter of Credit Disbursements
will not be excused by the gross negligence or willful misconduct of the Issuing
Bank to the extent that such Letter of Credit Disbursement actually discharged a
liability of, or otherwise benefited, or was recovered by, Continental; PROVIDED
that the foregoing shall not be construed to excuse the Issuing Bank from
liability to Continental to the extent of any direct damages suffered by
Continental that are caused by the Issuing Bank's gross negligence or willful
misconduct in determining whether drafts and other documents presented under a
Continental Letter of Credit comply with the terms thereof.
(j) The Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a
Continental Letter of Credit. The Issuing Bank shall as promptly as possible
give telephonic notification, confirmed by telex or telecopy, to the Agent and
Continental of such demand for payment and whether the Issuing Bank has made or
will make a Continental Letter of Credit Disbursement thereunder, provided that
the failure to give such notice shall not relieve Continental of its obligation
to reimburse any such Continental Letter of Credit Disbursement in accordance
with this Section 2.20. The Agent shall promptly give each Lender notice
thereof.
(k) In the event that Continental is required pursuant to the terms of
this Agreement or any other Loan Document to provide cash collateral in respect
of the Continental Letter of Credit Exposure, Continental shall deposit in an
account with the Agent, for the benefit of the Lenders, an amount in cash equal
to the Continental Letter of Credit Exposure (or such lesser amount as shall be
required hereunder or thereunder). Such deposit shall be held by the Agent as
collateral for the payment and performance of the Continental Obligations. The
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits in Cash Equivalents, which investments shall be made
as directed by Continental (unless such investments shall be contrary to
applicable law or regulation or a Default or Event of Default shall have
occurred and be continuing, in which case the determination of whomever to make
investments shall be made at the option and in the discretion of the Agent),
such deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall
automatically be applied by the Agent to reimburse the Issuing Bank for
Continental Letter of Credit Disbursements and, if the maturity of the Loans has
been accelerated, to satisfy the Continental Obligations. If Continental is
required to provide an amount of cash collateral hereunder as a result of an
Event of Default, such amount (to the extent not applied as aforesaid) shall be
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returned to Continental within three Business Days after all Events of Default
have been cured or waived. If Continental is required to provide an amount of
cash collateral hereunder pursuant to Section 2.10(c), such amount (to the
extent not applied as aforesaid) shall be returned to Continental upon demand;
PROVIDED that, after giving effect to such return, (i) the sum of (A) the
aggregate amount of the Continental Letter of Credit Exposure plus (B) the
aggregate outstanding principal amount of Continental Loans would not exceed the
aggregate Continental Commitments and (ii) no Default or Event of Default shall
have occurred and be continuing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants (as to itself and its subsidiaries)
to each of the Lenders, as follows:
SECTION 3.01. ORGANIZATION; POWERS. Each of the Borrowers and the
Subsidiaries (a) is a corporation or partnership duly organized, formed or
registered, as applicable, validly existing and in good standing under the laws
of the jurisdiction of its organization, (b) has all requisite power and
authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business in
every jurisdiction where such qualification is required, except where the
failure so to qualify would not result, individually or in the aggregate, in a
Material Adverse Effect, and (d) has the corporate or partnership power and
authority, as applicable, to execute, deliver and perform its obligations under
each of the Loan Documents and each other agreement or instrument contemplated
thereby to which it is or will be a party and, in the case of each Borrower, to
consummate the Merger and to obtain extensions of credit hereunder.
SECTION 3.02. AUTHORIZATION. The execution, delivery and performance by
each of the Borrowers and the Subsidiaries of each of the Loan Documents to
which it is or will be a party and, in the case of each Borrower, the
consummation of the Merger and the extensions of credit hereunder (a) have been
duly authorized by all requisite corporate, partnership and, if required,
stockholder action and (b) except as set forth on Schedule 3.02, will not
(i) violate (A) any provision of law, statute, rule or regulation, or of the
articles of incorporation, certificate of partnership, by-laws, partnership
agreement or other constitutive documents of any Borrower or Subsidiary, (B) any
order of any Governmental Authority or (C) any provision of any indenture or
other material agreement or instrument to which any Borrower or Subsidiary is a
party or by which any of them or any of their property is or may be bound,
(ii) be in conflict with, result in a breach of or constitute (alone or with
notice or lapse of time or both) a default or give rise to increased,
additional, accelerated or guaranteed rights of any person under any such
indenture, agreement or other instrument or (iii) except for the Lien of the
Pledge Agreements, result in the creation or imposition of any Lien upon or with
respect to any property or assets now owned or hereafter acquired by any
Borrower or Subsidiary.
SECTION 3.03. ENFORCEABILITY. This Agreement has been duly executed and
delivered by each Borrower and constitutes, and each other Loan Document when
executed and delivered by any Borrower or Subsidiary will constitute, a legal,
valid and binding obligation of such party
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enforceable against such party in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditors' rights
generally and by equitable principles of general applicability (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 3.04. CONSENTS AND GOVERNMENTAL APPROVALS. No action, consent or
approval of, registration or filing with or any other action by (a) any
Governmental Authority, (b) any stockholder or creditor of any Borrower or
Subsidiary or (c) any other person is or will be required in connection with the
Merger, the Facilities or the performance by any Borrower or Subsidiary of the
Loan Documents to which it is or will be a party, except such as (i) have been
made or obtained and are in full force and effect or (ii) are required to waive
the conflicts, if any, set forth on Schedule 3.02.
SECTION 3.05. FINANCIAL STATEMENTS. The Borrowers have heretofore
furnished to the Lenders (a)(i) the consolidated balance sheet, statement of
operations and statement of cash flows of Horizon and its Consolidated
Subsidiaries as of and for the fiscal year ended May 31, 1994, audited by and
accompanied by the opinion of Arthur Andersen LLP, independent public
accountants, and (ii) the consolidated balance sheet, statement of operations
and statement of cash flows of Continental and its Consolidated Subsidiaries as
of and for the fiscal year ended June 30, 1994, audited by and accompanied by
the opinion of Ernst & Young LLP, independent public accountants, and (b)(i) the
unaudited consolidated balance sheet, statement of operations and statement of
cash flows of Horizon and its Consolidated Subsidiaries as of and for the fiscal
quarter and the portion of the fiscal year ended February 28, 1995, certified by
a Financial Officer of Horizon, and (ii) the unaudited consolidated balance
sheet, statement of operations and statement of cash flows of Continental and
its Consolidated Subsidiaries as of and for the fiscal quarter and the portion
of the fiscal year ended March 31, 1995, certified by a Financial Officer of
Continental (the financial statements referred to in clauses (a) and (b) above,
collectively, the "FINANCIAL STATEMENTS"). The Financial Statements present
fairly in accordance with GAAP (subject, in the case of the unaudited Financial
Statements, to normal, recurring year end audit adjustments) the consolidated
financial position and the consolidated results of operations and consolidated
cash flows of each Borrower and its Consolidated Subsidiaries as of such dates
and for such periods. Such balance sheets and the notes thereto disclose all
material liabilities, actual or contingent, of each Borrower and its
Consolidated Subsidiaries as of the dates thereof. The Financial Statements
were prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited Financial Statements, as permitted by Form 10-Q of the
SEC).
SECTION 3.06. NO MATERIAL ADVERSE CHANGE. Since May 31, 1994, in the case
of Horizon, and since June 30, 1994, in the case of Continental, except for any
such changes expressly disclosed in the definitive Joint Proxy
Statement/Prospectus filed with the SEC in connection with the Merger dated June
6, 1995, as supplemented by the Supplement thereto dated June 21, 1995, or in
any other filing with the SEC made after May 31, 1994, in the case of Horizon,
or June 30, 1994, in the case of Continental, and in either case made prior to
the date hereof, there has occurred no material adverse change in the business,
assets, financial condition, prospects or results of operations of Horizon and
its subsidiaries or Continental and its subsidiaries, as applicable, taken as a
whole, and there exists no condition, event or occurrence
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that, individually or in the aggregate, could reasonably be expected to result
in a material adverse change in the business, assets, financial condition,
prospects or results of operations of either Borrower and its subsidiaries,
taken as a whole.
SECTION 3.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES. (a) Each of
the Borrowers and the Subsidiaries has good and marketable title to, or valid
leasehold interests in, all its material properties and assets, except for minor
defects in title that do not interfere with its ability to conduct its business
as currently conducted or to utilize such properties and assets for their
intended purposes. All such properties and assets are free and clear of Liens,
other than Liens permitted by Section 7.02 or 8.02.
(b) Schedule 3.07 sets forth, as of the Closing Date, a true, complete and
correct list of (i) all real property owned by the Borrowers and the
Subsidiaries having a book value in excess of $100,000; (ii) all material real
property leased by the Borrowers and the Subsidiaries; and (iii) the location of
each such real property.
(c) Each of the Borrowers and the Subsidiaries has complied with all
obligations under all material leases to which it is a party and all such leases
are in full force and effect. Each of the Borrowers and the Subsidiaries enjoys
peaceful and undisturbed possession under all such material leases.
SECTION 3.08. SUBSIDIARIES. Schedule 3.08 sets forth as of the Closing
Date a list of all the Subsidiaries, the respective jurisdictions of
organization thereof and the percentage ownership interest, direct or indirect,
of Horizon therein and specifies which of such Subsidiaries are Material
Subsidiaries and which of such Subsidiaries are Inactive Subsidiaries.
SECTION 3.09. LITIGATION; COMPLIANCE WITH LAWS. (a) There are no actions,
suits or proceedings at law or in equity or by or before any Governmental
Authority now pending or, to the knowledge of the Borrowers, threatened against
or affecting any Borrower, any Subsidiary or any business, property or rights of
any Borrower or Subsidiary (i) which involve any Loan Document or the Merger or
(ii) as to which there is a reasonable possibility of an adverse determination
and which, if adversely determined, could be reasonably expected to result,
individually or in the aggregate, in a Material Adverse Effect.
(b) Neither Borrower nor any Subsidiary is in violation of any law, rule
or regulation, or in default with respect to any judgment, writ, injunction,
order or decree, of any Governmental Authority, where such violation or default
could be reasonably expected to result, individually or in the aggregate, in a
Material Adverse Effect. Except as set forth in Schedule 3.09, neither Borrower
nor any Subsidiary has received any written communication during the past three
years from any Governmental Authority that alleges that such party or any of its
Affiliates is not in compliance in any material respect with any law, rule or
regulation or any judgment, writ, injunction or decree. Continental and its
subsidiaries have in all material respects been reimbursed by their fiscal
intermediaries for only the correct amounts for therapeutic recreation services
as routine services rather than ancillary services, and have not in any material
respect sought payment from, nor been paid by, Medicare, for therapeutic
recreation services, on a charge basis.
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SECTION 3.10. AGREEMENTS. (a) Each "material contract" (within the
meaning of Item 601(b)(10) of Regulation S-K under the Exchange Act), each
material agreement relating to the incurrence of Indebtedness or Disqualified
Equity Interests and each material Operating Lease to which any Borrower or
Subsidiary is a party or by which it or any of its properties or assets are or
may be bound as of the date hereof is listed on Schedule 3.10 hereto
(collectively, the "MATERIAL CONTRACTS"). Except as expressly set forth in
Schedule 3.10, none of the Material Contracts have been amended, modified or
waived in any respect.
(b) Except as set forth in Schedule 3.10, each Material Contract is valid,
binding and in full force and effect and is enforceable by the Borrower or the
Subsidiary which is a party thereto in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditors' rights
generally and by equitable principles of general applicability (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Except as set forth in Schedule 3.10, each of the Borrowers and the Subsidiaries
has performed in all material respects all obligations required to be performed
by it to date under the Material Contracts and it is not (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
material respect thereunder and, to the knowledge of the Borrowers, no other
party to any of the Material Contracts is (with or without the lapse of time or
the giving of notice, or both) in breach or default in any material respect
thereunder. Neither Borrower nor any Subsidiary, nor, to the knowledge of the
Borrowers, any other party to any Material Contract, has given notice of
termination of, or taken any action inconsistent with the continuation of, any
Material Contract. None of such other parties has any presently exercisable
right to terminate any Material Contract nor will any such other party have any
right to terminate any Material Contract on account of the execution, delivery
or performance of the Loan Documents or the consummation of the Merger.
(c) The Continental Obligations of Continental constitute "Permitted
Indebtedness" and "Senior Indebtedness" within the meaning of the Subordinated
Note Indentures. The Continental Facility constitutes a "Credit Facility"
within the meaning of the Subordinated Note Indentures. After giving effect to
the Refinancing, there is no outstanding "Designated Senior Indebtedness" within
the meaning of the Subordinated Note Indentures, except for the Continental
Facility. After giving effect to the Merger and the Refinancing, no "Default"
or "Event of Default" within the meaning of the Subordinated Note Indentures has
occurred and is continuing. The consummation of the Merger will not constitute
a "Change in Control" or an "Asset Sale" within the meaning of the Subordinated
Note Indentures. Immediately after giving effect to the Merger, Continental
shall have complied with Section 801 of the Subordinated Note Indentures.
SECTION 3.11. FEDERAL RESERVE REGULATIONS. (a) Neither Borrower nor any
Subsidiary is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying Margin
Stock.
(b) No part of the proceeds of any Loan and no Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose which entails a violation of, or which is
inconsistent with, the provisions of the regulations of the Board, including
Regulation G, U and X.
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SECTION 3.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT.
Neither Borrower nor any Subsidiary is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935 or (c) subject to regulation as a "public
utility" or a "public service corporation" or the equivalent under any federal
or state law.
SECTION 3.13. USE OF PROCEEDS. (a) The proceeds of the Horizon Loans
will be used solely for the general corporate purposes of the Horizon Group,
including refinancing the Existing Horizon Credit Facility, repurchasing
Greenery Convertible Notes to the extent permitted in accordance with the terms
hereof and providing funds for working capital, capital expenditures in the
ordinary course of business and acquisitions permitted hereunder. The Horizon
Letters of Credit will be issued solely to support various financial and other
performance obligations of the Horizon Group incurred in the ordinary course of
business. The proceeds of Horizon Subsidiary Intercompany Indebtedness of any
Horizon Subsidiary will be used by such Horizon Subsidiary solely for the
general corporate purposes of such Horizon Subsidiary, including refinancing the
Existing Horizon Credit Facility and providing funds for working capital,
capital expenditures in the ordinary course of business and acquisitions
permitted hereunder.
(b) The proceeds of the Continental Loans will be used for the general
corporate purposes of the Continental Group, including refinancing the Existing
Continental Credit Facility, repurchasing Subordinated Debt issued under the
Subordinated Note Indentures to the extent permitted in accordance with the
terms hereof and providing funds for working capital, capital expenditures in
the ordinary course of business and acquisitions permitted hereunder. The
Continental Letters of Credit will be issued solely to support various financial
and other performance obligations of the Continental Group incurred in the
ordinary course of business. The proceeds of Continental Subsidiary
Intercompany Indebtedness of any Continental Subsidiary will be used by such
Continental Subsidiary solely for the general corporate purposes of such
Continental Subsidiary, including refinancing the Existing Continental Credit
Facility and providing funds for working capital, capital expenditures in the
ordinary course of business and acquisitions permitted hereunder.
SECTION 3.14. TAX RETURNS. Each of the Borrowers and the Subsidiaries has
filed or caused to be filed all Federal, state and local tax returns required to
have been filed by it and has paid or caused to be paid all taxes shown to be
due and payable on such returns or on any assessments received by it, except
taxes that are being contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP have been set aside on the
Financial Statements.
SECTION 3.15. NO MATERIAL MISSTATEMENTS. (a) No information, report,
financial statement, exhibit or schedule furnished by or on behalf of any
Borrower or Subsidiary to the Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain any material misstatement of fact or
omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were, are
or will be made, not misleading.
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(b) Each Borrower has timely and duly filed all the reports and other
material that it was required to file with the SEC since May 31, 1994, in the
case of Horizon, and since June 30, 1994, in the case of Continental. Copies
of all such reports and other material, including the Joint Proxy
Statement/Prospectus relating to the Merger dated June 6, 1995, together in each
case with all amendments thereto (collectively, the "DISCLOSURE DOCUMENTS"),
have been delivered to the Agent. Except as reflected in any subsequent
amendment or supplement to a Disclosure Document, no Disclosure Document,
including any financial statement contained therein, at the time it was filed or
mailed to stockholders, as the case may be, contained any misstatement of a
material fact or omitted to state a material fact necessary to make the
statements contained therein, in the light of the circumstances under which they
were made, not misleading.
(c) All representations and warranties of the Borrowers and the Merger Sub
set forth in the Merger Agreement were true and correct on and as of the date of
such agreement and will be true and correct in all material respects on and as
of the Closing Date with the same effect as though made on and as of the Closing
Date, except to the extent such representations and warranties expressly relate
to an earlier date (in which case such representations and warranties were true
and correct in all material respects on and as of such earlier date).
SECTION 3.16. EMPLOYEE BENEFIT PLANS. (a) Each of the Borrowers and the
Commonly Controlled Entities is in compliance in all material respects with the
applicable provisions of ERISA and the regulations and published interpretations
thereunder. Neither a Reportable Event nor an "accumulated funding deficiency"
(within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred within the last
five years with respect to any Plan, and each Plan has complied in all material
respects with the applicable provisions of ERISA and the Code. Neither
Borrower nor any Commonly Controlled Entity has any unsatisfied liability with
respect to a Single Employer Plan that has been terminated and no Lien in favor
of the PBGC or a Plan has arisen during the last five years.
(b) Except as set forth on Schedule 3.16, the present value of all accrued
benefits under each Single Employer Plan in which any Borrower or Commonly
Controlled Entity is a participant (based on those assumptions used to fund the
Plans) did not, as of the last day of the plan year that ended prior to the date
of this Agreement, exceed the value of the assets of such Plan allocable to such
accrued benefits.
(c) Neither Borrower nor any Commonly Controlled Entity has had a complete
or partial withdrawal from any Multiemployer Plan, and neither Borrower nor any
Commonly Controlled Entity would become subject to any liability under ERISA if
such Borrower or such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the last day of the plan year that ended
prior to the date of this Agreement.
(d) No such Multiemployer Plan with respect to which a Borrower or any
Commonly Controlled Entity could incur potential liability in excess of $250,000
is in "reorganization" or "insolvent," within the meaning of such terms as used
in ERISA.
(e) The present value (determined using actuarial and other assumptions
which are reasonable in respect of the benefits provided and the employees
participating) of the liability of
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each Borrower and each Subsidiary for post retirement benefits to be provided to
their current and former employees under Plans which are welfare benefit plans
(as defined in Section 3(1) of ERISA) does not, in the aggregate, exceed the
assets under all such Plans allocable to such benefits, except as set forth in
Schedule 3.16.
SECTION 3.17. ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth in
Schedule 3.17, each of the Borrower and the Subsidiaries has complied in all
material respects with all applicable Federal, state, local and other statutes,
ordinances, orders, judgments, rulings and regulations relating to protection of
the environment or to employee health or safety. Except as set forth in
Schedule 3.17, neither Borrower nor any Subsidiary has received notice of any
material failure so to comply. The facilities of the Borrowers and the
Subsidiaries do not manage or contain any hazardous wastes, hazardous
substances, hazardous materials, toxic substances, toxic pollutants or similarly
denominated substances, as those terms or similar terms are used in the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Hazardous Materials Transportation Act, the
Toxic Substance Control Act, the Clean Air Act, the Clean Water Act or any other
applicable law relating to protection of the environment or to employee health
and safety (collectively, "HAZARDOUS MATERIALS"), in violation in any material
respect of any such law or any regulations promulgated pursuant thereto. Except
as set forth in Schedule 3.17, to the knowledge of each Borrower, there are no
events, conditions or circumstances involving environmental pollution,
regulation or control or employee health or safety that are reasonably likely to
result in any material liabilities being incurred by any Borrower or Subsidiary.
SECTION 3.18. SECURITY INTERESTS. The Agent for the benefit of the
Secured Parties will at all times have the Liens provided for in the Pledge
Agreements and the Pledge Agreements will at all times constitute a valid and
continuing lien of record and first priority perfected security interest in all
the Collateral.
SECTION 3.19. SOLVENCY. After giving effect to the Merger and the
Refinancing, each of the Borrowers and the Subsidiaries will be Solvent on the
date of the Merger. "SOLVENT" means, with respect to any person, that (a) the
sum of the assets of such person, both at a fair valuation and at present fair
salable value, will exceed the liabilities of such person, (b) such person will
have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (c) such person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of the foregoing definition, "DEBTS" means any
liabilities on claims, and "CLAIM" means (i) a right to payment, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, or (ii) a right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured. With respect to any contingent or disputed
liabilities, such liabilities shall be computed at the amount which, in light of
all the facts and circumstances existing at the time, represents the amount
which can reasonably be expected to become an actual or matured liability.
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SECTION 3.20. TRANSACTIONS WITH AFFILIATES. (a) Except as set forth in
Schedule 3.20(a) and except for agreements and arrangements among Horizon and
its Subsidiaries (other than the Continental Group) or among its Subsidiaries
(other than the Continental Group), as of the Closing Date, neither Horizon nor
any of its subsidiaries is a party to or engaged in any transaction with, and
none of the properties and assets of Horizon or any of its subsidiaries is
subject to or bound by, any agreement or arrangement with, any Affiliate of
Horizon or any of its subsidiaries.
(b) Except as set forth in Schedule 3.20(b) and except for agreements and
arrangements among Continental and its Subsidiaries or among its Subsidiaries,
as of the Closing Date, neither Continental nor any of its subsidiaries is a
party to or engaged in any transaction with, and none of the properties and
assets of Continental or any of its subsidiaries is subject to or bound by, any
agreement or arrangement with, any Affiliate of Continental or any of its
subsidiaries.
SECTION 3.21. INSURANCE. Each of the Borrowers and the Subsidiaries
maintain policies of fire and casualty, liability, malpractice, business
interruption and other forms of insurance in such amounts, with such deductibles
and against such risks and losses as are reasonable for the business and assets
of the Borrowers and the Subsidiaries. All such policies are in full force and
effect, all premiums due and payable thereon have been paid (other than
retroactive or retrospective premium adjustments that are not yet, but may be,
required to be paid with respect to any period ending prior to the Closing Date
under comprehensive general liability and workmen's compensation insurance
policies), and no notice of cancellation or termination has been received with
respect to any such policy which has not been replaced on substantially similar
terms prior to the date of such cancellation. The activities and operations of
the Borrowers and the Subsidiaries have been conducted in a manner so as to
conform in all material respects to all applicable provisions of such insurance
policies.
SECTION 3.22. LABOR RELATIONS. Except for such matters as could not be
reasonably expected to result, individually or in the aggregate, in a Material
Adverse Effect, (a) neither Borrower nor any Subsidiary is engaged in any unfair
labor practice, (b) no unfair labor practice complaint is pending or, to the
knowledge of the Borrowers, threatened against any Borrower or any of the
Subsidiaries before the National Labor Relations Board, (c) no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is pending or, to the knowledge of the Borrowers, threatened against
any Borrower or any Subsidiary, (d) no strike, labor dispute, slowdown or
stoppage is pending or, to the knowledge of the Borrowers, threatened against
any Borrower or Subsidiary, (e) to the knowledge of the Borrowers, no union
representation question exists with respect to the employees of any Borrower or
Subsidiary and (f) to the knowledge of the Borrowers, no union organizing
activities are taking place with respect to the employees of any Borrower or
Subsidiary.
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. FIRST BORROWING. The obligations of the Lenders to make
Loans hereunder, and the obligation of the Issuing Bank to issue Letters of
Credit hereunder, are subject
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to the satisfaction of the conditions that on the date of the first Horizon
Borrowing and the first Continental Borrowing hereunder:
(a) The Agent shall have received counterparts hereof signed by each
of the parties hereto (or, in the case of any Lender as to which an
executed counterpart shall not have been received, telegraphic, telex,
telecopy or other written confirmation from such party in form satisfactory
to the Agent of the execution of a counterpart hereof by such Lender).
(b) The Agent shall have received for the account of each Lender duly
executed Notes, dated the Closing Date, complying with the provisions of
Section 2.04.
(c) The Agent shall have received counterparts of (i) the Horizon
Guarantee Agreement, duly executed by Horizon, (ii) the Horizon
Subsidiaries' Guarantee Agreement, duly executed by each Material
Subsidiary of Horizon (other than Royal Oaks Partnership) and (iii) the
Continental Subsidiaries' Guarantee Agreement, duly executed by each
Material Subsidiary of Continental (other than K.C. Rehabilitation
Hospital, Inc., North Louisiana Rehabilitation Center, Inc., Kansas
Rehabilitation Hospital, Inc., CMS Jonesboro Rehabilitation, Inc., Houston
Rehabilitation Associates and Baton Rouge Rehab, Inc.).
(d) The Agent on behalf of the Secured Parties shall have a
perfected, first priority security interest in the Collateral and the Agent
shall have received:
(i) counterparts of (A) the Horizon Pledge Agreement, duly
executed by Horizon, (B) the Horizon Subsidiaries' Pledge Agreement,
duly executed by each Material Subsidiary of Horizon (other than Royal
Oaks Partnership), (C) the Continental Pledge Agreement, duly executed
by Continental and (D) the Continental Subsidiaries' Pledge Agreement,
duly executed by each Material Subsidiary of Continental (other than
K.C. Rehabilitation Hospital, Inc., North Louisiana Rehabilitation
Center, Inc., Kansas Rehabilitation Hospital, Inc., CMS Jonesboro
Rehabilitation, Inc., Houston Rehabilitation Associates and Baton
Rouge Rehab, Inc.);
(ii) certificates representing all outstanding capital stock of
Continental and the other Subsidiaries (other than immaterial
Subsidiaries acceptable to the Agent), accompanied by stock powers
endorsed in blank, and Intercompany Notes, duly executed by the
Subsidiary Guarantors and by North Louisiana Rehabilitation Center,
Inc., Kansas Rehabilitation Hospital, Inc., CMS Jonesboro
Rehabilitation, Inc., Houston Rehabilitation Associates and Baton
Rouge Rehab, Inc., accompanied by assignments executed in blank;
(iii) an acknowledgement copy, or other evidence satisfactory to
the Agent, of the proper filing, registration or recordation of each
document (including each Uniform Commercial Code financing statement)
required by law or reasonably requested by the Agent to be filed,
registered or recorded, in each
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jurisdiction in which such filing, registration or recordation is so
required or requested, in order to create in favor of the Agent for
the benefit of the Secured Parties a valid, legal and perfected
security interest in or Lien on the Collateral that is the subject of
the Pledge Agreements;
(iv) certified copies of Requests for Information or Copies
(form UCC-11), or equivalent reports from Prentice-Hall Financial
Services or other independent search service satisfactory to the
Agent, listing (A) any judgment naming any Borrower or Subsidiary as
judgment debtor in any of the jurisdictions where a Uniform Commercial
Code financing statement would be required by law to be filed in order
to create a perfected security interest or lien on any of the personal
or real property of the Borrowers and the Subsidiaries, (B) any tax
lien that names any Borrower or Subsidiary as a delinquent taxpayer in
any of the jurisdictions referred to in the preceding clause (A), and
(C) any Uniform Commercial Code financing statement that names any
Borrower or Subsidiary as debtor or seller filed in any of the
jurisdictions referred to in the preceding clause (A);
(v) appropriate duly executed termination statements (Form UCC-
3) signed by all persons disclosed on current financing statements as
secured parties in the jurisdictions referred to in clause (iii) above
in form for filing under the Uniform Commercial Code of such
jurisdictions (except with respect to Liens permitted under Section
7.02 or 8.02); and
(vi) an escrow agreement in form and substance satisfactory to
the Agent executed by the lenders under the Existing Horizon Credit
Facility and Existing Continental Credit Facility providing for the
release on the Closing Date of the termination statements referred to
in clause (v) above and such other matters as the Agent may reasonably
require.
(e) The Agent shall have received an opinion of counsel to Horizon,
the Horizon Subsidiary Guarantors and the Horizon Subsidiary Pledgors
substantially in the form of Exhibit F-1 hereto and an opinion of counsel
to Continental, the Continental Subsidiary Guarantors and the Continental
Subsidiary Pledgors substantially in the form of Exhibit F-2 hereto and, in
each case, covering such additional matters relating to the Merger, the
Refinancing and the other transactions contemplated hereby as the Agent may
reasonably request, such opinion to be dated the Closing Date and addressed
to the Agent and the Lenders.
(f) The Agent shall have received:
(i) a certificate, dated the Closing Date and signed by a
Financial Officer of each of the Borrowers, confirming compliance with
the conditions precedent set forth in paragraphs (s), (t) and (u) of
this Section 4.01;
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(ii) a copy of the certificate of incorporation, certificate of
partnership or other constitutive documents, including all amendments
thereto, of each of the Borrowers, the Subsidiary Guarantors and the
Subsidiary Pledgors, certified as of a recent date by the Secretary of
State of the State of its organization, and a certificate as to the
good standing of each such party as of a recent date, from such
Secretary of State;
(iii) a certificate of the Secretary, Assistant Secretary or
other authorized representative of each of the Borrowers, the
Subsidiary Guarantors and the Subsidiary Pledgors, dated the Closing
Date and certifying (A) that attached thereto is a true and complete
copy of the by-laws or partnership agreement, as applicable, of such
party as in effect on the Closing Date and at all times since a date
prior to the date of the resolutions described in clause (B) below,
(B) that attached thereto is a true and complete copy of resolutions
duly adopted by the Board of Directors of such party (or, in the case
of a partnership, the managing general partner thereof) authorizing
the execution, delivery and performance of the Loan Documents to which
such party is or will be a party, the consummation of the Merger and,
in the case of each Borrower the extensions of credit hereunder, and
that such resolutions have not been modified, rescinded or amended and
are in full force and effect, (C) that the certificate of
incorporation, certificate of partnership or other constitutive
documents of such party have not been amended since the date of the
last amendment thereto shown on the certificate of good standing
furnished pursuant to clause (ii) above and (D) as to the incumbency
and specimen signature of each authorized representative executing any
Loan Document or any other document delivered in connection herewith
on behalf of such party;
(iv) a certificate of another authorized representative as to
the incumbency and specimen signature of the person executing the
certificate pursuant to clause (iii) above; and
(v) such other documents, opinions, certificates and agreements
in connection with the Merger and the Facilities, in form and
substance satisfactory to the Agent, as it or its counsel shall
reasonably request.
(g) The Agent and the Lenders shall have received financial
statements prepared in accordance with GAAP and satisfactory in all
respects to the Agent and the Lenders, including (i) three years of audited
consolidated financial statements of Horizon and its Consolidated
Subsidiaries and Continental and its Consolidated Subsidiaries,
(ii) quarterly financial statements of Horizon and its Consolidated
Subsidiaries and of Continental and its Consolidated Subsidiaries for the
period after the date of the last audited financial statements and prior to
the Closing Date, (iii) projected financial statements of Horizon and its
Consolidated Subsidiaries and of Continental and its Consolidated
Subsidiaries for the period after the Closing Date through the Maturity
Date, (iv) a pro forma opening balance sheet of Horizon and its
Consolidated Subsidiaries and of Continental and its Consolidated
Subsidiaries, reflecting the Merger, as of May 31, 1995, and (v) a
statement
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of sources and uses of funds in connection with the Merger, in each case
certified by a Financial Officer of the applicable Borrower.
(h) The Agent and the Lenders shall be satisfied with (i) the
structure, the terms and all other aspects of the Merger, including all
legal, tax and accounting matters related to the Merger and (ii) all legal
matters and documentation incident to the Facilities and all corporate and
other proceedings taken or to be taken in connection therewith.
(i) The Agent and the Lenders shall have completed, and shall be
satisfied with the results of, their due diligence investigation of the
business, assets, operations, properties, condition (financial and
otherwise), liabilities (actual and contingent) and prospects of each
Borrower.
(j) The Agent and the Lenders shall be satisfied with the amount and
scope of the insurance coverage of the Borrowers and the Subsidiaries and
the identity of the insurers providing such coverage, and shall have
received a report from each Borrower's independent insurance broker,
together with any other evidence reasonably requested by the Agent,
demonstrating that the insurance required by Sections 5.02 and 6.02 is in
effect.
(k) The Agent and the Lenders shall be satisfied in all respects with
all agreements and transactions between any Borrower or Subsidiary, on the
one hand, and any of its Affiliates, on the other hand.
(l) The first Borrowings under the Facilities shall occur
contemporaneously with the closing of the Merger and the refinancing of the
Existing Horizon Credit Facility and Existing Continental Credit Facility
(the "REFINANCING").
(m) The Merger Agreement shall not have been amended or modified, nor
any material provision thereof waived, except such as shall be acceptable
to the Agent in its sole discretion; and all conditions precedent to the
obligations of the Borrowers set forth therein shall have been satisfied
(without giving effect to any waiver thereof, except such as shall be
acceptable to the Agent in its sole discretion).
(n) After giving effect to the Refinancing, (i) all obligations of
Horizon and its subsidiaries under the Amended and Restated Revolving
Credit Loan Agreement dated as of March 16, 1995, among Horizon, the
lenders party thereto and The Boatmen's National Bank of St. Louis, as
Agent (the "EXISTING HORIZON CREDIT FACILITY"), shall have been paid in
full with a portion of the proceeds of such Horizon Borrowing, (ii) all
letters of credit and other contingent obligations of Horizon and its
subsidiaries in connection with the Existing Horizon Credit Facility
(except for the Existing Letters of Credit) shall have been terminated and
replaced by Horizon Letters of Credit and (iii) all Liens securing
obligations under the Existing Horizon Credit Facility shall have been
released and the Existing Horizon Credit Facility shall have been
terminated.
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(o) After giving effect to the Refinancing, (i) all obligations of
Continental and its subsidiaries under the Amended and Restated Credit
Agreement dated as of August 28, 1991, among Continental, the lenders party
thereto and Citibank, N.A., as Agent, as amended (the "EXISTING CONTINENTAL
CREDIT FACILITY"), shall have been paid in full with a portion of the
proceeds of such Continental Borrowing, (ii) all letters of credit and
other contingent obligations of Continental and its subsidiaries in
connection with the Existing Continental Credit Facility shall have been
terminated and replaced by Continental Letters of Credit and (iii) all
Liens securing obligations under the Existing Continental Credit Facility
shall have been released and the Existing Continental Credit Facility shall
have been terminated.
(p) After giving effect to the Refinancing, the Borrowers and their
subsidiaries shall have no indebtedness or other liabilities, except in
respect of (i) the Facilities, (ii) other indebtedness the amount, terms
and conditions (including identity of the issuer, maturity, amortization,
interest rates and fees, covenants, subordination terms, events of default
and redemption and other provisions) and holders of which are satisfactory
in all respects to the Agent and (iii) other liabilities satisfactory in
all respects to the Agent.
(q) After giving effect to the Merger and the Refinancing, (i) no
default, event of default, prepayment event or change in control shall have
occurred and be continuing under, or within the meaning of, either
Subordinated Note Indenture and (ii) the Continental Obligations of
Continental shall constitute "Senior Indebtedness" within the meaning of
the Subordinated Note Indentures.
(r) All governmental, regulatory, shareholder and third party
consents, approvals, filings, registrations and other actions required in
order to consummate the Merger or the Facilities shall have been obtained
or made, as applicable, and shall remain in full force and effect, in each
case without the imposition of any condition or restriction which is, in
the judgment of the Agent, materially adverse to any Borrower or
Subsidiary, and the Agent shall have received satisfactory evidence
thereof.
(s) There shall not be any pending proceeding requesting an
injunction or restraining order with respect to the Merger or the
Facilities or challenging the validity or enforceability of the Merger or
the Facilities.
(t) Since May 31, 1994, in the case of Horizon, and since June 30,
1994, in the case of Continental, except for any changes expressly
disclosed in the definitive Joint Proxy Statement/Prospectus filed with the
SEC in connection with the Merger dated June 6, 1995, as supplemented by
the Supplement thereto dated June 21, 1995, or in any other filing with the
SEC made after May 31, 1994, in the case of Horizon, or June 30, 1994, in
the case of Continental, and in either case made prior to the date hereof,
no Material Adverse Change has occurred and there exists no condition,
event or occurrence that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Change.
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(u) The Borrowers shall have paid all Fees and other amounts due and
payable to the Agent or any Lender on or prior to the Closing Date under
the Fee Letter or any Loan Document, including reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the
Borrowers (to the extent invoices or statements therefor have been
received).
Each of the first Horizon Borrowing and the first Continental Borrowing
hereunder shall be deemed to constitute a representation and warranty by each
Borrower on the date of such Borrowing as to the matters specified in paragraphs
(l), (m), (n), (o), (p), (q), (r), (s) and (t) of this Section 4.01.
SECTION 4.02. ALL BORROWINGS. The obligations of the Lenders to make
Loans hereunder, and the obligation of the Issuing Bank to issue Letters of
Credit hereunder, are subject to the satisfaction of the conditions that on the
date of each Borrowing (including each Borrowing in which Loans are refinanced
with new Loans as contemplated by Section 2.02(g)) and on the date of issuance
of each Letter of Credit:
(a) The Agent shall have received a notice of such Borrowing as
required by Section 2.03 or a notice requesting the issuance of a Letter of
Credit as required by Section 2.19(c) or 2.20(c), as applicable.
(b) The representations and warranties set forth in Article III
hereof (except, in the case of a refinancing of Loans of a particular Class
that does not increase the aggregate principal amount of Loans of such
Class outstanding, the representations and warranties set forth in
Section 3.06) and the representations and warranties of the Borrowers and
the Subsidiaries set forth in the other Loan Documents, shall be true and
correct in all material respects on and as of the date of such Borrowing or
the date of the issuance of such Letter of Credit with the same effect as
though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date (in
which case such representations and warranties shall be true and correct in
all material respects on and as of such earlier date).
(c) In the case of any Horizon Borrowing or the issuance of any
Horizon Letter of Credit, at the time of and immediately after such
Borrowing or the issuance of such Letter of Credit, the aggregate
outstanding principal amount of the Horizon Loans and the Horizon Letter of
Credit Exposure will not exceed the limitations set forth in Sections
2.01(a) and 2.19(a), as applicable.
(d) In the case of any Continental Borrowing or the issuance of any
Continental Letter of Credit, at the time of and immediately after such
Borrowing or the issuance of such Letter of Credit, the aggregate
outstanding principal amount of the Continental Loans and the Continental
Letter of Credit Exposure will not exceed the limitations set forth in
Sections 2.01(b) and 2.20(a), as applicable.
(e) At the time of and immediately after such Borrowing or the
issuance of such Letter of Credit, no Default or Event of Default shall
have occurred and be continuing.
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Each Borrowing hereunder and each request for the issuance of a Letter of Credit
hereunder shall be deemed to constitute a representation and warranty by each
Borrower on the date of such Borrowing or issuance as to the matters specified
in paragraphs (b), (c), (d) and (e) of this Section 4.02.
ARTICLE V
AFFIRMATIVE COVENANTS OF HORIZON
Horizon covenants and agrees with each Lender that so long as this
Agreement shall remain in effect or any Obligations shall be unpaid, and until
the Commitments have been terminated and the Loans, together with interest, Fees
and all other Obligations have been paid in full, all Letters of Credit have
been cancelled or have expired and all amounts drawn thereunder have been
reimbursed in full, unless the Required Lenders shall otherwise consent in
writing:
SECTION 5.01. EXISTENCE; BUSINESSES AND PROPERTIES; LEASES AND OPERATING
LEASES. (a) Horizon will, and will cause each of the Horizon Subsidiaries to,
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence, except as otherwise expressly permitted
under Section 7.05(a).
(b) Horizon will, and will cause each of the Horizon Subsidiaries to, do
or cause to be done all things necessary to obtain, preserve, renew, extend,
comply with and keep in full force and effect the rights, Licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated; comply
in all material respects with all applicable laws, rules, regulations and orders
of any Governmental Authority, whether now in effect or hereafter enacted; and
at all times maintain and preserve all property material to the conduct of such
business and keep such property in good repair, working order and condition and
from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.
(c) Horizon shall, and shall cause each of the Horizon Subsidiaries to,
maintain and comply in all material respects with each of its material Operating
Leases.
SECTION 5.02. INSURANCE. Horizon will, and will cause each of the Horizon
Subsidiaries to, keep its insurable properties adequately insured at all times
by financially sound and reputable insurers; maintain such other insurance, to
such extent and against such risks, including fire and other risks insured
against by extended coverage, as is customary with companies in the same or
similar businesses, including business interruption insurance, malpractice
insurance and public liability insurance against claims for personal injury or
death or property damage occurring upon, in, about or in connection with the use
of any properties owned, occupied, controlled or managed by it; maintain such
other insurance as may be required by law; PROVIDED that Horizon may continue
through its self insurance program to provide insurance coverage for Horizon
Group employee health claims and workman's compensation up to the maximum
occurrence limit amount of $100,000 per occurrence and $250,000 per occurrence,
respectively. Horizon will deliver
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evidence of renewal of each such insurance policy on or before the date of
expiration, and from time to time shall deliver to the Agent, upon demand,
evidence of the maintenance of such insurance. Horizon will permit the Agent
and an insurance consultant retained by the Agent, at the expense of Horizon, to
review the insurance policies maintained by Horizon and the Horizon Subsidiaries
on an annual basis and will implement any changes to such policies reasonably
recommended by such consultant.
SECTION 5.03. OBLIGATIONS AND TAXES. Horizon will, and will cause each of
the Horizon Subsidiaries to, pay its Indebtedness and other obligations promptly
and in accordance with their terms and pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property, before the same shall
become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise which, if unpaid, might give rise to a Lien
upon such properties or any part thereof; PROVIDED, HOWEVER, that such payment
and discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and Horizon shall have set
aside on its books adequate reserves in accordance with GAAP with respect
thereto.
SECTION 5.04. FINANCIAL STATEMENTS, REPORTS, ETC. Horizon will furnish to
the Agent and each Lender:
(a) within 90 days after the end of each fiscal year, its
consolidated balance sheet and related statements of operations and cash
flows, showing the financial position of Horizon and its consolidated
subsidiaries (which include the Continental Group) as of the close of such
fiscal year and the results of their operations and cash flows during such
year, all audited by Arthur Andersen LLP or another nationally recognized
"Big Six" independent public accounting firm and accompanied by an opinion
of such accountants (which shall not be qualified in any material respect)
to the effect that such financial statements fairly present the
consolidated financial position, results of operations and cash flows of
Horizon and its consolidated subsidiaries in accordance with GAAP
consistently applied (an "UNQUALIFIED OPINION"); PROVIDED that the delivery
pursuant to paragraph (h) or (i) below of a copy of the Annual Report on
Form 10-K or Annual Report to Shareholders of Horizon for such fiscal year
filed with the SEC or mailed to shareholders shall be deemed to satisfy the
requirements of this paragraph (a), if such filing or mailing is timely
made and contains an Unqualified Opinion;
(b) within 90 days after the end of each fiscal year, its
consolidated balance sheet and related statements of operations and cash
flows, showing the financial position of Horizon and its Consolidated
Subsidiaries (which exclude the Continental Group) as of the close of such
fiscal year and the results of their operations and cash flows during such
year, all certified by a Financial Officer of Horizon as fairly presenting
the consolidated financial position and consolidated results of operations
and cash flows of Horizon and its Consolidated Subsidiaries in accordance
with GAAP consistently applied;
(c) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, its consolidated balance sheet and related
consolidated statements of
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operations and cash flows, showing the consolidated financial position of
Horizon and its consolidated subsidiaries (which include the Continental
Group) as of the close of such fiscal quarter and the consolidated results
of their operations and cash flows during such fiscal quarter and the then
elapsed portion of the fiscal year, all certified by a Financial Officer as
fairly presenting the consolidated financial position and consolidated
results of operations and cash flows of Horizon and its consolidated
subsidiaries in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments; PROVIDED that the delivery pursuant to
paragraph (i) below of a copy of the Quarterly Report on Form 10-Q of
Horizon for such quarterly period filed with the SEC shall be deemed to
satisfy the requirements of this paragraph (c), if such filing is timely
made;
(d) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, its consolidated balance sheet and related
consolidated statements of operations and cash flows, showing the
consolidated financial position of Horizon and its Consolidated
Subsidiaries (which exclude the Continental Group) as of the close of such
fiscal quarter and the consolidated results of their operations and cash
flows during such fiscal quarter and the then elapsed portion of the fiscal
year, all certified by a Financial Officer as fairly presenting the
consolidated financial position and consolidated results of operations and
cash flows of Horizon and its Consolidated Subsidiaries in accordance with
GAAP consistently applied, subject to normal year-end audit adjustments;
(e) within 90 days after the end of each fiscal year and within 45
days after the end of each of the first three fiscal quarters of each year,
summary information presenting the consolidating financial position as of,
and consolidating results of operations and cash flows for, such period of
Horizon and its Consolidated Subsidiaries by line of business;
(f) within 45 days after the end of each fiscal quarter of each
fiscal year, a certificate of a Financial Officer of Horizon certifying
that no Default or Event of Default has occurred or, if such Default or
Event of Default has occurred, specifying the nature and extent thereof and
any corrective action taken or proposed to be taken with respect thereto;
(g) concurrently with any delivery of a certificate under paragraph
(a) or (c) above, a certificate of a Financial Officer of Horizon,
substantially in the form attached hereto as Exhibit G-1, (i) setting forth
the Debt/EBITDAR Ratio of Horizon as of the date of such certificate and a
reasonably detailed calculation thereof, (ii) demonstrating compliance with
the covenants contained in Sections 7.06 and 7.17 and setting forth the
related computations in reasonable detail and (iii) stating whether, since
the date of its most recent Required Financial Statements previously
delivered to the Agent, there has been any material change in the generally
accepted accounting principles applied in the preparation of Horizon's
financial statements and, if so, describing such change;
(h) promptly upon the delivery or mailing thereof to the holders of
Common Stock, copies of all reports, financial information, proxy
statements and other information so delivered or mailed;
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(i) promptly upon the filing thereof, copies of all registration
statements (other than exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which Horizon shall have filed with the SEC; and
(j) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of Horizon or any
Horizon Subsidiary, or compliance with the terms of any Loan Document, as
any Agent or Lender may reasonably request.
SECTION 5.05. LITIGATION AND OTHER NOTICES. Horizon will furnish to the
Agent and each Lender prompt written notice of the following:
(a) any Default or Event of Default, specifying the nature and extent
thereof and the corrective action (if any) proposed to be taken with
respect thereto;
(b) the filing or commencement of, or any threats or notices of
intention of any person to file or commence, or any material escalation of,
any actions, suits, investigations or proceedings, whether at law or in
equity or by or before any Governmental Authority, against or affecting
Horizon or any of the Horizon Subsidiaries (i) as to which there is a
reasonable possibility of an adverse determination and which, if so
determined, could reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect or (ii) which involves a claim or
series of related claims against Horizon or any Horizon Subsidiary in
excess of $1,000,000; and
(c) any developments that have resulted, or could reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Effect.
SECTION 5.06. ERISA. (a) Horizon will, and will cause each of the
Horizon Subsidiaries to, comply in all material respects with the applicable
provisions of ERISA.
(b) Horizon will promptly give notice to the Agent and each Lender of the
following events, as soon as possible and in any event within 30 days after
Horizon or any Horizon Subsidiary knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to any
Single Employer Plan, a failure to make any required contribution to a Plan
(excluding any such failure resulting from an administrative error and involving
an amount that is not material), any Lien in favor of the PBGC or a Plan, or any
withdrawal from, or the termination, reorganization or insolvency (within the
meaning of such terms as used in ERISA) of, any Multiemployer Plan; or (ii) the
institution of proceedings or the taking of any other action by the PBGC,
Horizon, any Commonly Controlled Entity or any Multiemployer Plan with respect
to the withdrawal from, or the termination, reorganization or insolvency (within
the meaning of such terms as used in ERISA) of, any Plan covered by Title IV of
ERISA (excluding any termination of a Single Employer Plan pursuant to Section
4041(b) of ERISA).
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SECTION 5.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS.
Horizon will, and will cause each of the Horizon Subsidiaries to, maintain all
financial records in accordance with GAAP and permit representatives designated
by the Agent or any Lender to visit and inspect the financial records and the
properties of Horizon or any Horizon Subsidiary, at reasonable times and as
often as requested, and to make extracts from and copies of such financial
records, and permit representatives designated by the Agent or any Lender to
discuss the affairs, finances and condition of Horizon or any Horizon Subsidiary
with the officers thereof and the independent accountants therefor.
SECTION 5.08. USE OF PROCEEDS. Horizon will use the Letters of Credit and
the proceeds of the Loans, and will cause the Horizon Subsidiaries to use the
proceeds of the Horizon Subsidiary Intercompany Indebtedness, only for the
purposes set forth in Section 3.13(a).
SECTION 5.09. FISCAL YEAR. Horizon will, and will cause each of the
Horizon Subsidiaries to, cause its fiscal year to commence on June 1 in each
year and to end on May 31 in each year.
SECTION 5.10. MATERIAL SUBSIDIARIES. Within 15 days after the due date
for delivery of any of the Required Financial Statements in accordance with
Section 5.04(a), (b) or (c), Horizon will cause any Horizon Subsidiary which
qualifies as a Material Subsidiary based on its total assets as of the end of,
and its total revenues for, the then most recent Reference Period, but which is
not a Subsidiary Guarantor and a Subsidiary Pledgor, to execute and deliver a
Supplemental Agreement pursuant to which such Horizon Subsidiary shall become a
Subsidiary Guarantor and a Subsidiary Pledgor and will cause all the terms of
such Supplemental Agreement to be satisfied.
SECTION 5.11. FURTHER ASSURANCES. Horizon will, and will cause each of
the Horizon Subsidiaries to, execute any and all further documents, agreements
and instruments, and take all further action, which may be required under
applicable law, or which the Required Lenders or the Agent may reasonably
request, in order to effectuate the transactions contemplated by the Loan
Documents and in order to grant, preserve, protect and perfect the validity and
first priority of the Liens created or intended to be created by the Pledge
Agreements.
ARTICLE VI
AFFIRMATIVE COVENANTS OF CONTINENTAL
Continental covenants and agrees with each Lender that so long as this
Agreement shall remain in effect or any Continental Obligations shall be unpaid,
and until the Continental Commitments have been terminated and the Continental
Loans, together with interest thereon, Fees related thereto and all other
Continental Obligations have been paid in full, all Continental Letters of
Credit have been cancelled or have expired and all amounts drawn thereunder have
been reimbursed in full, unless the Required Lenders shall otherwise consent in
writing:
SECTION 6.01. EXISTENCE; BUSINESSES AND PROPERTIES; LEASES AND OPERATING
LEASES. (a) Continental will, and will cause each of the Continental
Subsidiaries to, do or cause to be
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done all things necessary to preserve, renew and keep in full force and effect
its legal existence, except as otherwise expressly permitted under
Section 8.05(a).
(b) Continental will, and will cause each of the Continental Subsidiaries
to, do or cause to be done all things necessary to obtain, preserve, renew,
extend, comply with and keep in full force and effect the rights, Licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and trade
names material to the conduct of its business; maintain and operate such
business in substantially the manner in which it is presently conducted and
operated; comply in all material respects with all applicable laws, rules,
regulations and orders of any Governmental Authority, whether now in effect or
hereafter enacted; and at all times maintain and preserve all property material
to the conduct of such business and keep such property in good repair, working
order and condition and from time to time make, or cause to be made, all needful
and proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times.
(c) Continental shall, and shall cause each of the Continental
Subsidiaries to, maintain and comply in all material respects with each of its
material Operating Leases.
SECTION 6.02. INSURANCE. Continental will, and will cause each of the
Continental Subsidiaries to, keep its insurable properties adequately insured at
all times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in the same
or similar businesses, including business interruption insurance, malpractice
insurance and public liability insurance against claims for personal injury or
death or property damage occurring upon, in, about or in connection with the use
of any properties owned, occupied, controlled or managed by it; maintain such
other insurance as may be required by law. Continental will deliver evidence of
renewal of each such insurance policy on or before the date of expiration, and
from time to time shall deliver to the Agent, upon demand, evidence of the
maintenance of such insurance. Continental will permit the Agent and an
insurance consultant retained by the Agent, at the expense of Continental, to
review the insurance policies maintained by Continental and the Continental
Subsidiaries on an annual basis and will implement any changes to such policies
reasonably recommended by such consultant.
SECTION 6.03. OBLIGATIONS AND TAXES. Continental will, and will cause
each of the Continental Subsidiaries to, pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise which, if unpaid, might
give rise to a Lien upon such properties or any part thereof; PROVIDED, HOWEVER,
that such payment and discharge shall not be required with respect to any such
tax, assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and Continental
shall have set aside on its books adequate reserves with respect thereto.
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SECTION 6.04. FINANCIAL STATEMENTS, REPORTS, ETC. Continental will
furnish to the Agent and each Lender:
(a) within 90 days after the end of each fiscal year, its
consolidated balance sheet and related statements of operations and cash
flows, showing the financial position of Continental and its Consolidated
Subsidiaries as of the close of such fiscal year and the results of their
operations and cash flows during such year, all audited by Arthur Andersen
LLP or another nationally recognized "Big Six" independent public
accounting firm and accompanied by an opinion of such accountants (which
shall not be qualified in any material respect) to the effect that such
financial statements fairly present the consolidated financial position,
results of operations and cash flows of Continental and its Consolidated
Subsidiaries in accordance with GAAP consistently applied (an "UNQUALIFIED
OPINION"); PROVIDED that the delivery pursuant to paragraph (f) below of a
copy of the Annual Report on Form 10-K of Continental for such fiscal year
filed with the SEC shall be deemed to satisfy the requirements of this
paragraph (a), if such filing is timely made and contains an Unqualified
Opinion;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, its consolidated balance sheet and related
consolidated statements of operations and cash flows, showing the
consolidated financial position of Continental and its Consolidated
Subsidiaries as of the close of such fiscal quarter and the consolidated
results of their operations and cash flows during such fiscal quarter and
the then elapsed portion of the fiscal year, all certified by a Financial
Officer as fairly presenting the consolidated financial position and
consolidated results of operations and cash flows of Continental and its
Consolidated Subsidiaries in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments; PROVIDED that the delivery
pursuant to paragraph (f) below of a copy of the Quarterly Report on Form
10-Q of Continental for such quarterly period filed with the SEC shall be
deemed to satisfy the requirements of this paragraph (b), if such filing is
timely made;
(c) within 90 days after the end of each fiscal year and within 45
days after the end of each of the first three fiscal quarters of each year,
summary information presenting the consolidating financial position as of,
and consolidating results of operations and cash flows for, such period of
Continental and its Consolidated Subsidiaries by line of business;
(d) within 45 days after the end of each fiscal quarter of each
fiscal year, a certificate of a Financial Officer of Continental certifying
that no Default or Event of Default has occurred or, if such Default or
Event of Default has occurred, specifying the nature and extent thereof and
any corrective action taken or proposed to be taken with respect thereto;
(e) concurrently with any delivery of a certificate under paragraph
(a) or (b) above, a certificate of a Financial Officer of Continental,
substantially in the form attached hereto as Exhibit G-2, (i) setting forth
the Debt/EBITDAR Ratio of Continental as of the date of such certificate
and a reasonably detailed calculation thereof, (ii) demonstrating
compliance with the covenants contained in Sections 8.06 and 8.17 and
setting forth the
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related computations in reasonable detail and (iii) stating whether, since
the date of its most recent Required Financial Statements previously
delivered to the Agent, there has been any material change in the generally
accepted accounting principles applied in the preparation of Continental's
financial statements and, if so, describing such change;
(f) promptly upon the filing thereof, copies of all registration
statements (other than exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which Continental shall have filed with the SEC; and
(g) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of Continental or any
Continental Subsidiary, or compliance with the terms of any Loan Document,
as any Agent or Lender may reasonably request.
SECTION 6.05. LITIGATION AND OTHER NOTICES. Continental will furnish to
the Agent and each Lender prompt written notice of the following:
(a) any Default or Event of Default, specifying the nature and extent
thereof and the corrective action (if any) proposed to be taken with
respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, or any material escalation of,
any actions, suits, investigations or proceedings, whether at law or in
equity or by or before any Governmental Authority, against or affecting
Continental or any of the Continental Subsidiaries (i) as to which there is
a reasonable possibility of an adverse determination and which, if so
determined, could reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect or (ii) which involves a claim or
series of related claims against Continental or any Continental Subsidiary
in excess of $1,000,000; and
(c) any developments that have resulted, or could reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Effect.
SECTION 6.06. ERISA. (a) Continental will, and will cause each of the
Continental Subsidiaries to, comply in all material respects with the applicable
provisions of ERISA.
(b) Continental will promptly give notice to the Agent and each Lender of
the following events, as soon as possible and in any event within 30 days after
Continental or any Continental Subsidiary knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with respect
to any Single Employer Plan, a failure to make any required contribution to a
Plan (excluding any such failure resulting from an administrative error and
involving an amount that is not material), any Lien in favor of the PBGC or a
Plan, or any withdrawal from, or the termination, reorganization or insolvency
(within the meaning of such terms as used in ERISA) of, any Multiemployer Plan;
or (ii) the institution of proceedings or the taking of any other action by the
PBGC, Continental, any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination, reorganization or
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insolvency (within the meaning of such terms as used in ERISA) of, any Plan
covered by Title IV of ERISA (excluding any termination of a Single Employer
Plan pursuant to Section 4041(b) of ERISA).
SECTION 6.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS.
Continental will, and will cause each of the Continental Subsidiaries to,
maintain all financial records in accordance with GAAP and permit
representatives designated by the Agent or any Lender to visit and inspect the
financial records and the properties of Continental or any Continental
Subsidiary, at reasonable times and as often as requested, and to make extracts
from and copies of such financial records, and permit representatives designated
by the Agent or any Lender to discuss the affairs, finances and condition of
Continental or any Continental Subsidiary with the officers thereof and the
independent accountants therefor.
SECTION 6.08. USE OF PROCEEDS. Continental will use the Letters of Credit
and the proceeds of the Loans, and will cause the Continental Subsidiaries to
use the proceeds of the Continental Subsidiary Intercompany Indebtedness, only
for the purposes set forth in Section 3.13(b).
SECTION 6.09. FISCAL YEAR. Continental will, and will cause each of the
Continental Subsidiaries (other than any joint venture which is required by
contract with an unrelated third party to maintain a different fiscal year) to,
cause its fiscal year to commence on June 1 in each year and to end on May 31 in
each year, commencing with its 1996 fiscal year.
SECTION 6.10. MATERIAL SUBSIDIARIES. Within 15 days after the due date
for delivery of any of the Required Financial Statements in accordance with
Section 6.04(a) or (b), Continental will cause any Continental Subsidiary which
qualifies as a Material Subsidiary based on its total assets as of the end of,
and its total revenues for, the then most recent Reference Period, but which is
not a Subsidiary Guarantor and a Subsidiary Pledgor, to execute and deliver a
Supplemental Agreement pursuant to which such Horizon Subsidiary shall become a
Subsidiary Guarantor and a Subsidiary Pledgor and will cause all the terms of
such Supplemental Agreement to be satisfied.
SECTION 6.11. FURTHER ASSURANCES. Continental will, and will cause each
of the Continental Subsidiaries to, execute any and all further documents,
agreements and instruments, and take all further action, which may be required
under applicable law, or which the Required Lenders or the Agent may reasonably
request, in order to effectuate the transactions contemplated by the Loan
Documents and in order to grant, preserve, protect and perfect the validity and
first priority of the Liens created or intended to be created by the Pledge
Agreements.
ARTICLE VII
NEGATIVE COVENANTS OF HORIZON
Horizon covenants and agrees with each Lender that so long as this
Agreement shall remain in effect or any Obligations shall be unpaid, and until
the Commitments have been terminated and the Loans, together with interest, Fees
and all other Obligations have been paid in
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full, all Letters of Credit have been cancelled or have expired and all amounts
drawn thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing:
SECTION 7.01. INDEBTEDNESS. Horizon will not, and will not cause or
permit any of the Horizon Subsidiaries to, incur, create, issue, assume or
permit to exist any Indebtedness or Disqualified Equity Interests, except:
(a) Indebtedness represented by this Agreement and the Horizon
Subsidiaries' Guarantee Agreement;
(b) Indebtedness existing on the Closing Date to the extent set forth
on Schedule 7.01;
(c) other Indebtedness existing on the Closing Date up to an
aggregate principal amount of $3,000,000;
(d) Indebtedness issued in exchange for, or the proceeds of which are
used to refinance, any Indebtedness permitted by clause (b) or (c) above;
PROVIDED, HOWEVER, that (i) the principal amount of the Indebtedness so
issued shall not exceed the principal amount of the Indebtedness so
exchanged or refinanced and (ii) the Indebtedness so issued (A) shall not
mature prior to the Stated Maturity of the Indebtedness so exchanged or
refinanced, (B) shall have an Average Life equal to or greater than the
remaining Average Life of the Indebtedness so exchanged or refinanced and
(C) shall be subordinated in right of payment to the prior payment in full
of the Horizon Obligations to at least the same extent as the Indebtedness
so exchanged or refinanced;
(e) Indebtedness of any Horizon Subsidiary that is both a Horizon
Subsidiary Guarantor and a Horizon Subsidiary Pledgor incurred after the
Closing Date ("PERMITTED HORIZON SENIOR INDEBTEDNESS"); PROVIDED, HOWEVER,
that the aggregate principal amount of such Indebtedness outstanding at any
time shall not exceed an amount equal to 15% of the Stockholders' Equity of
Horizon as of the last day of the then most recent full fiscal quarter for
which Horizon has delivered its Required Financial Statements to the Agent;
(f) Indebtedness of any Horizon Subsidiary to Horizon ("HORIZON
SUBSIDIARY INTERCOMPANY INDEBTEDNESS"); PROVIDED that:
(i) such loan from Horizon is evidenced by an Intercompany Note
issued by such Horizon Subsidiary to Horizon;
(ii) such Intercompany Note is subject to the lien of the Horizon
Pledge Agreement and has been delivered to the Agent;
(iii) (A) the aggregate principal amount of such Indebtedness
incurred by any single Horizon Subsidiary which is not both a
Subsidiary Guarantor and a Subsidiary Pledgor, plus the aggregate
amount of all other direct or indirect investments by Horizon in such
Horizon Subsidiary, shall not exceed $1,000,000
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outstanding at any time, (B) the aggregate principal amount of such
Indebtedness incurred by all such Horizon Subsidiaries referred to in
the foregoing clause (A), plus the aggregate amount of all other
direct or indirect investments by Horizon in all such Horizon
Subsidiaries, shall not exceed $10,000,000 outstanding at any time and
(C) no such Horizon Subsidiary shall be a Material Subsidiary;
(iv) such loan from Horizon is used by such Horizon Subsidiary as
provided in Section 3.13(a); and
(v) no such loan shall be made to any such Horizon Subsidiary
that is the subject of a proceeding described in paragraph (g) or (h)
of Article IX;
(g) Indebtedness of Horizon which is subordinated in right of payment
to the prior payment in full of all Horizon Obligations; PROVIDED, that (i)
no scheduled payment of principal of such Indebtedness is payable prior to
the first anniversary of the Maturity Date, (ii) the other terms and
conditions of such Indebtedness (including covenants, subordination terms,
events of default and other provisions) are satisfactory in all respects to
the Required Lenders and (iii) Horizon shall have prepared and furnished to
the Agent prior to the incurrence of such Indebtedness pro forma financial
statements demonstrating to the satisfaction of the Agent that none of the
financial covenants in Section 7.17 will be violated after giving pro forma
effect to such proposed incurrence;
(h) Guarantees by Horizon issued after the Closing Date of
Indebtedness of any Horizon Subsidiary ("PERMITTED HORIZON GUARANTEES");
PROVIDED that (i) such Indebtedness of such Horizon Subsidiary is otherwise
permitted hereunder and (ii) the aggregate face amount of all such
Guarantees is not more than $5,000,000.
(i) Interest Rate Protection Agreements containing terms satisfactory
to the Agent; PROVIDED that the notional principal amount of such Interest
Rate Protection Agreements does not exceed the amount of indebtedness of
Horizon and the Horizon Subsidiaries outstanding on the date such
agreements are entered into.
SECTION 7.02. NEGATIVE PLEDGE. Horizon will not, and will not cause or
permit any of the Horizon Subsidiaries to, create, incur, assume or permit to
exist any Lien on any property or assets (including stock or other securities of
any subsidiary or other person) now owned or hereafter acquired by it or on any
income or revenues or rights in respect of any thereof, except:
(a) Liens in favor of the Agent on behalf of the Secured Parties
created by the Horizon Pledge Agreement and the Horizon Subsidiaries'
Pledge Agreement;
(b) Liens existing on the Closing Date, to the extent set forth in
Schedule 7.02, securing Indebtedness permitted under Section 7.01(b) or
(c);
(c) Liens arising after the Closing Date securing Permitted Horizon
Senior Indebtedness or Indebtedness permitted under Section 7.01(d);
PROVIDED that, in the case of Liens securing such Indebtedness permitted
under Section 7.01(d), such Liens cover
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only property and assets covered on the Closing Date and the aggregate
principal amount of such Indebtedness so secured does not exceed the amount
so secured on the Closing Date;
(d) Liens attributable to Permitted Horizon Sale and Lease-Back
Transactions;
(e) Liens for taxes not yet due or which are being contested in
compliance with Section 5.03 and for which adequate reserves have been
established;
(f) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, construction or other like Liens arising in the ordinary
course of business and securing obligations that are not due or which are
being contested in compliance with Section 5.03 and for which adequate
reserves have been established;
(g) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases (other than Capital Lease
Obligations), statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;
(h) deposits in connection with workmen's compensation, unemployment
insurance, old age pensions, or other social security or retirement
benefits legislation in respect of employees of the Horizon Group;
(i) zoning restrictions, easements, rights-of-way, restrictions on
use of real property and other similar encumbrances incurred in the
ordinary course of business which, in the aggregate, are not substantial in
amount and do not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of Horizon
or any of the Horizon Subsidiaries; and
(j) other Liens securing Indebtedness or other obligations up to an
aggregate amount of $5,000,000 at any time outstanding.
SECTION 7.03. SALE AND LEASE-BACK TRANSACTIONS. Horizon will not, and
will not cause or permit any of the Horizon Subsidiaries to, enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, except to the extent that
the aggregate amount of Attributable Debt with respect to any such transactions
outstanding at any time is no more than $10,000,000 ("PERMITTED HORIZON SALE AND
LEASE-BACK TRANSACTIONS").
SECTION 7.04. INVESTMENTS, LOANS AND ADVANCES. Horizon will not, and will
not cause or permit any of the Horizon Subsidiaries to, purchase, hold or
acquire any Equity Interests, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment, capital contribution or any other beneficial interest in,
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or issue or permit to exist any guarantee of any Operating Lease or other
obligation not constituting Indebtedness of, any other person, except:
(a) Cash Equivalents;
(b) Horizon Subsidiary Intercompany Indebtedness incurred by any
Horizon Subsidiary which is both a Horizon Subsidiary Guarantor and a
Horizon Subsidiary Pledgor;
(c) promissory notes or notes receivable received in settlement of
customer accounts arising in the ordinary course of business and payable in
accordance with the customary trade terms of Horizon or any of the Horizon
Subsidiaries;
(d) equity investments in Continental and in Horizon Subsidiaries
existing on the Closing Date (after giving effect to the Merger); PROVIDED
that each such Horizon Subsidiary (other than any such Horizon Subsidiary
which is not a Material Subsidiary) is both a Horizon Subsidiary Guarantor
and a Horizon Subsidiary Pledgor;
(e) equity investments by Horizon made after the Closing Date to
acquire from unrelated third parties a person in the same line of business
as Horizon, which person becomes a Horizon Subsidiary upon consummation
thereof, and additional equity investments in any of the then existing
Horizon Subsidiaries acquired from unrelated third parties; PROVIDED in the
case of each such investment that:
(i) no Default or Event of Default has occurred and is
continuing at the time of such investment or would occur immediately
after giving effect thereto (on a pro forma basis as if such
disposition had occurred on the first day of the applicable Reference
Period for purposes of Section 7.17), and Horizon shall have prepared
and furnished to the Agent prior to the consummation of such
investment pro forma financial statements demonstrating to the
satisfaction of the Agent that none of the financial covenants in
Section 7.17 will be violated after giving pro forma effect to such
proposed investment;
(ii) the aggregate Fair Market Value of the consideration,
whether payable upon consummation thereof or in the form of earn-outs,
non-competes or other deferred payment arrangements, for such
investment (in the case of additional equity investments in an
existing subsidiary, including the existing amount of the investment
in such subsidiary) including cash, securities, other property and the
assumption of Indebtedness, does not exceed an amount equal to 10% of
the Stockholders' Equity of Horizon as of the last day of the then
most recent full fiscal quarter for which Horizon has delivered its
Required Financial Statements to the Agent; and
(iii) such person (A) shall have executed and delivered to
the Agent the Horizon Subsidiaries' Guarantee Agreement and the
Horizon Subsidiaries' Pledge Agreement or (B) such person shall have
executed and delivered to the Agent a
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Supplemental Agreement and thereby become a Subsidiary Guarantor and
Subsidiary Pledgor (and all the terms of such Supplemental Agreement
shall have been satisfied);
(f) Horizon Subsidiary Intercompany Indebtedness incurred by, and
equity investments in, any Horizon Subsidiary which is not a Material
Subsidiary and is not an Inactive Subsidiary; PROVIDED that (i) the
aggregate amount thereof by or in any such single Horizon Subsidiary shall
not exceed $1,000,000 outstanding at any time and (ii) the aggregate amount
thereof by or in all such Horizon Subsidiaries outstanding at any time
shall not exceed $10,000,000;
(g) advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business;
(h) guarantees by Horizon of Operating Leases and other obligations
not constituting Indebtedness of any of its Wholly Owned Subsidiaries in
the Horizon Group; and
(i) (A) up to $2,750,000 in investments in Royal Oaks Partnership
existing on the Closing Date and (B) other investments existing on the
Closing Date to the extent set forth on Schedule 7.04.
SECTION 7.05. MERGERS, CONSOLIDATIONS, DISPOSITIONS AND ACQUISITIONS.
(a) Horizon will not, and will not cause or permit any of the Horizon
Subsidiaries to, (i) merge into or consolidate with any other person, (ii)
permit any other person to merge into or consolidate with it, (iii) sell,
transfer, lease or otherwise dispose of any assets (whether now owned or
hereafter acquired) or any interest therein, including through the creation of
any joint venture, or (iv) issue or sell any Equity Interests of any Horizon
Subsidiary, except:
(A) sales in the ordinary course of business consistent with past
practice;
(B) dispositions of obsolete or useless tangible assets in the
ordinary course of business;
(C) dispositions of up to $10,000,000 in aggregate book value (or
$5,000,000 in book value for any single asset) of the assets of Horizon or
any of the Horizon Subsidiaries; and
(D) if no Default or Event of Default shall have occurred and be
continuing at the time thereof or would occur after giving effect thereto,
(I) Horizon may merge with any of its Wholly Owned Subsidiaries in the
Horizon Group in a transaction in which Horizon is the surviving
corporation and (II) any such Wholly Owned Subsidiary may merge into or
consolidate with any other such Wholly Owned Subsidiary in a transaction in
which the surviving entity is such a Wholly Owned Subsidiary and no person
other than Horizon or any of such Wholly Owned Subsidiaries receives any
consideration.
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If any person ceases to be a Horizon Subsidiary as a result of a disposition
permitted under this Section 7.05(a), the Agent shall cancel and release such
person's obligations under its Horizon Subsidiary Guarantee Agreement and
Horizon Subsidiary Pledge Agreement.
(b) Horizon will not, and will not cause or permit any of the Horizon
Subsidiaries to, purchase, lease or otherwise acquire all or any substantial
part of the assets of any person, except for assets to be used by Horizon or any
of the Horizon Subsidiaries in the same line of business as Horizon; PROVIDED
that:
(i) no Default or Event of Default has occurred and is continuing at
the time of any such acquisition or would occur immediately after giving
effect thereto (on a pro forma basis as if such acquisition had occurred on
the first day of the applicable Reference Period for purposes of Section
7.17), and Horizon shall have prepared and furnished to the Agent prior to
the consummation of such acquisition pro forma financial statements
demonstrating to the satisfaction of the Agent that none of the financial
covenants in Section 7.17 will be violated after giving pro forma effect to
such proposed acquisition; and
(ii) except in the case of any acquisition from a Wholly Owned
Subsidiary of Horizon in the Horizon Group, the aggregate Fair Market Value
of the consideration, whether payable upon consummation thereof or in the
form of earn-outs, non-competes or other deferred payment arrangements, for
such acquisition (including cash, securities, other property and assumption
of Indebtedness), plus the costs incurred in acquiring such assets do not
exceed the amount equal to 10% of the Stockholders' Equity of Horizon as of
the last day of the then most recent full fiscal quarter for which Horizon
has delivered its Required Financial Statements to the Agent.
SECTION 7.06. DIVIDENDS AND DISTRIBUTIONS. Horizon will not, and will not
cause or permit any of the Horizon Subsidiaries to, (a) declare or pay, directly
or indirectly, any dividend or make any other distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, with respect to any Equity Interests of Horizon or any of the Horizon
Subsidiaries, (b) directly or indirectly redeem, purchase, retire or otherwise
acquire for value, any Equity Interests of Horizon or any of the Horizon
Subsidiaries or (c) directly or indirectly redeem, purchase, prepay, retire or
otherwise acquire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Indebtedness (other than Horizon Loans and
Horizon Subsidiary Intercompany Indebtedness) or set aside any amount for any
such purpose; PROVIDED, HOWEVER, that:
(i) any Horizon Subsidiary may declare and pay dividends or make
other distributions to Horizon or any Wholly Owned Subsidiary of Horizon in
the Horizon Group;
(ii) Horizon may acquire additional Equity Interests in a majority-
owned Horizon Subsidiary; PROVIDED that such acquisition is permitted by
Section 7.04(e);
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<PAGE>
(iii) Horizon may give notice of redemption of, offer to repurchase
and repurchase the Greenery Convertible Notes; PROVIDED that the aggregate
principal amount of the Greenery Convertible Notes so redeemed or purchased
does not exceed $26,000,000; and
(iv) Horizon may pay cash dividends to holders of Common Stock during
any fiscal year of Horizon in an amount which does not exceed 25% of the
Net Income of Horizon for its immediately preceding fiscal year; PROVIDED,
HOWEVER, that (A) no Default or Event of Default has occurred and is
continuing or would occur immediately after giving effect thereto; and (B)
no such dividends shall be declared or paid until at least 10 days after
receipt by the Agent of the Required Financial Statements for such
preceding fiscal year.
SECTION 7.07. IMPAIRMENT. (a) Horizon will not, and will not permit any
of the Horizon Subsidiaries to, take or omit to take any action, which action or
omission might or would have the result of materially impairing the security
interests in favor of the Agent on behalf of the Secured Parties with respect to
the Horizon Collateral, and Horizon will not, and will not permit any of the
Horizon Subsidiaries to, grant to any person (other than the Agent on behalf of
the Secured Parties) any interest whatsoever in the Horizon Collateral.
(b) Horizon will not, and will not permit any of the Horizon Subsidiaries
to, enter into or be party to any agreement that subordinates (i) the payment,
performance or collateralization of any obligations owing by any such subsidiary
to Horizon to (ii) the payment, performance, or collateralization of any other
obligations (other than the Horizon Obligations).
(c) Horizon will not, and will not permit any of the Horizon Subsidiaries
to, enter into any agreement, any term or condition of which would, if complied
with by Horizon or such subsidiary, result in a Default or Event of Default.
SECTION 7.08. LIMITATION ON RESTRICTIONS ON SUBSIDIARIES. Horizon will
not, and will not cause or permit any of the Horizon Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction on (a) the ability of any Horizon
Subsidiary to (i) pay dividends or make any other distributions on or in respect
of its Equity Interests, or pay any Indebtedness owed to Horizon or any Horizon
Subsidiary, (ii) make loans or advances to Horizon or any Horizon Subsidiary or
(iii) transfer any of its properties or assets to Horizon or any Horizon
Subsidiary or (b) the ability of Horizon and the Horizon Subsidiaries to pledge
to the Agent any Equity Interests in any Horizon Subsidiary formed or acquired
after the Closing Date, except for such encumbrances or restrictions existing
under or by reason of:
(i) customary non-assignment provisions in any lease governing a
leasehold interest;
(ii) this Agreement and the other Loan Documents; and
(iii) encumbrances and restrictions existing on the Closing Date, to
the extent set forth in Schedule 7.08.
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<PAGE>
SECTION 7.09. NO OTHER NEGATIVE PLEDGES. Horizon will not, and will not
cause or permit any of the Horizon Subsidiaries to, directly or indirectly,
enter into any agreement prohibiting the creation or assumption of any Lien upon
the properties or assets of Horizon or any of the Horizon Subsidiaries, whether
now owned or hereafter acquired, or requiring an obligation to be secured if
some other obligation is secured, or prohibiting Horizon or any of the Horizon
Subsidiaries from selling, leasing, pledging, hypothecating or otherwise
disposing of any assets of such persons, except for:
(a) this Agreement; and
(b) any agreement with the holder of any Permitted Horizon Senior
Indebtedness secured by collateral in accordance with Section 7.02(b), to
the extent such agreement limits or restricts Horizon's right to sell,
lease, pledge, hypothecate or otherwise dispose of such collateral.
SECTION 7.10. TRANSACTIONS WITH AFFILIATES. Horizon will not, and will
not cause or permit any of the Horizon Subsidiaries to, sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise enter into any other transactions with, any of its Affiliates, except
that so long as no Default or Event of Default shall have occurred and be
continuing, Horizon or any of the Horizon Subsidiaries may enter into any of the
foregoing transactions in the ordinary course of business and pursuant to the
reasonable requirements of its business at prices and on terms and conditions
that are (a) set forth in writing and (b) as favorable to Horizon or such
Horizon Subsidiary as would be obtainable at the time in a comparable
transaction on an arm's-length basis from an unrelated third party. The
provisions of this Section 7.10 shall not prohibit (i) any payment permitted
under Section 7.04 or 7.06, (ii) any transaction among Horizon and any of its
Wholly Owned Subsidiaries (excluding the Continental Group) or among its Wholly
Owned Subsidiaries (excluding the Continental Group) or (iii) any transaction
expressly permitted by the other provisions of this Agreement or the provisions
of any of the other Loan Documents.
SECTION 7.11. BUSINESS OF HORIZON AND SUBSIDIARIES. Horizon will not, and
will not cause or permit any of the Horizon Subsidiaries to, change the nature
of its business as now conducted in any material respect or 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 healthcare operations.
SECTION 7.12. SALES OF RECEIVABLES. Horizon will not, and will not cause
or permit any of the Horizon Subsidiaries to, sell with recourse, discount or
otherwise sell or dispose of its notes or accounts receivable.
SECTION 7.13. CERTAIN AMENDMENTS. (a) Horizon will not, and will not
cause or permit any of the Horizon Subsidiaries to, enter into any amendment,
modification or waiver in respect of any term or condition of (i) the
certificate of incorporation or by-laws of Horizon or of any Material Contract,
other than amendments, modifications and waivers which are not, individually or
in the aggregate, in the reasonable judgment of the Agent, adverse in any
material respect to the rights or interests of the Lenders, (ii) the articles of
incorporation, bylaws, partnership
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<PAGE>
agreement or joint venture agreement of any Horizon Subsidiary, if the effect is
to prohibit a change in control or pledge of the Equity Interests of such person
or (iii) any agreements relating to the Subordinated Debt of Horizon, including
any of the terms or provisions contained in any indenture relating to the
subordination of payment of any such Subordinated Debt to the payment of the
Horizon Obligations.
(b) Horizon will not forgive any Horizon Subsidiary Intercompany
Indebtedness.
(c) Horizon will not, and will not cause or permit any of the Horizon
Subsidiaries to, amend, modify or waive, or permit the amendment, modification
or waiver of, any of the terms or provisions contained in any agreements
relating to any Permitted Horizon Senior Indebtedness, other than amendments,
modifications and waivers which are not, individually or in the aggregate, in
the reasonable judgment of the Agent, adverse in any material respect to the
rights or interests of the Lenders.
SECTION 7.14. CHANGES IN GAAP. Horizon will not, and will not cause or
permit any of the Horizon Subsidiaries to, change its fiscal year without the
prior written consent of the Required Lenders or change its method of financial
accounting except in accordance with GAAP.
SECTION 7.15. MATERIAL AGREEMENTS. Horizon will not, and will not cause
or permit any of the Horizon Subsidiaries to, breach, violate or be in default
under any Material Contract and fail to cure such breach, violation or default
within any applicable cure period or permit any Major Potential Liability of
Horizon or any of the Horizon Subsidiaries to exist.
SECTION 7.16. ISSUANCE OF SECURITIES. Horizon will not, and will not
cause or permit any of the Horizon Subsidiaries to, issue any capital stock,
create any new class of stock, or issue any other Equity Interests (including
any securities convertible into, or exchangeable for, capital stock); PROVIDED,
HOWEVER, that Horizon shall have the right from time to time to issue capital
stock (other than Disqualified Equity Interests) and create one or more new
classes of stock (other than Disqualified Equity Interests).
SECTION 7.17. FINANCIAL COVENANTS. Horizon will not:
(a) STOCKHOLDERS' EQUITY. Permit the Stockholders' Equity of Horizon
as of the last day of any fiscal quarter of Horizon to be less than the
"HORIZON MINIMUM COMPLIANCE LEVEL". The Horizon Minimum Compliance Level
on the Closing Date shall be equal to 95% of the Stockholders' Equity of
Horizon as of May 31, 1995, and shall be increased as of the last day of
each fiscal quarter of Horizon ending after the Closing Date by an amount
equal to the sum of (i) 75% of Net Income (if positive) for such fiscal
quarter, (ii) the aggregate Net Proceeds received from the issue or sale by
Horizon of Equity Interests subsequent to the Closing Date, (iii) the
amount by which Indebtedness is reduced on the balance sheet of Horizon and
its Consolidated Subsidiaries upon the conversion or exchange subsequent to
the Closing Date of any Indebtedness convertible into or exchangeable for
Equity Interests and (iv) the amount of Stockholders' Equity of any person
acquired after the Closing Date in a pooling of interests transaction. The
foregoing increases in the Horizon Minimum Compliance Level shall be fully
cumulative
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and no reduction in the Horizon Minimum Compliance Level shall be made to
reflect negative Net Income for any period.
(b) FIXED CHARGE COVERAGE RATIO. Permit the Fixed Charge Coverage
Ratio of Horizon as of the last day of any fiscal quarter of Horizon ending
during any fiscal year referred to in the chart below to be less than the
ratio set forth in the chart below for such fiscal quarter in such fiscal
year.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Fiscal Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1.50:1.00 1.50:1.00 1.50:1.00 1.50:1.00
---------------------------------------------------------------------------
1997 1.50:1.00 1.50:1.00 1.50:1.00 1.75:1.00
---------------------------------------------------------------------------
1998 1.75:1.00 1.75:1.00 1.75:1.00 1.75:1.00
---------------------------------------------------------------------------
1999 1.75:1.00 1.75:1.00 1.75:1.00 1.75:1.00
---------------------------------------------------------------------------
2000 1.75:1.00 1.75:1.00 1.75:1.00 1.75:1.00
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
(c) LEVERAGE RATIO. Permit the Leverage Ratio of Horizon as of the
last day of any fiscal quarter of Horizon ending during any fiscal year
referred to in the chart below to be greater than the ratio set forth in
the chart below for such fiscal quarter in such fiscal year.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Fiscal Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 0.65:1.00 0.65:1.00 0.65:1.00 0.65:1.00
---------------------------------------------------------------------------
1997 0.65:1.00 0.65:1.00 0.65:1.00 0.60:1.00
---------------------------------------------------------------------------
1998 0.60:1.00 0.60:1.00 0.60:1.00 0.60:1.00
---------------------------------------------------------------------------
1999 0.60:1.00 0.60:1.00 0.60:1.00 0.60:1.00
---------------------------------------------------------------------------
2000 0.60:1.00 0.60:1.00 0.60:1.00 0.60:1.00
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
(d) DEBT/EBITDAR RATIO. Permit the Debt/EBITDAR Ratio of Horizon as
of the last day of any fiscal quarter of Horizon ending during any fiscal
year referred to in the chart below to be greater than the ratio set forth
in the chart below for such fiscal quarter in such fiscal year.
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<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Fiscal Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 5.00:1.00 5.00:1.00 5.00:1.00 5.00:1.00
---------------------------------------------------------------------------
1997 5.00:1.00 5.00:1.00 5.00:1.00 4.50:1.00
---------------------------------------------------------------------------
1998 4.50:1.00 4.50:1.00 4.50:1.00 4.00:1.00
---------------------------------------------------------------------------
1999 4.00:1.00 4.00:1.00 4.00:1.00 4.00:1.00
---------------------------------------------------------------------------
2000 4.00:1.00 4.00:1.00 4.00:1.00 4.00:1.00
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
ARTICLE VIII
NEGATIVE COVENANTS OF CONTINENTAL
Continental covenants and agrees with each Lender that so long as this
Agreement shall remain in effect or any Continental Obligations shall be unpaid,
and until the Continental Commitments have been terminated and the Continental
Loans, together with interest thereon, Fees related thereto and all other
Continental Obligations have been paid in full, all Continental Letters of
Credit have been cancelled or have expired and all amounts drawn thereunder have
been reimbursed in full, unless the Required Lenders shall otherwise consent in
writing:
SECTION 8.01. INDEBTEDNESS. Continental will not, and will not cause or
permit any of the Continental Subsidiaries to, incur, create, issue, assume or
permit to exist any Indebtedness or Disqualified Equity Interests, except:
(a) Indebtedness represented by this Agreement and the Continental
Subsidiaries' Guarantee Agreement;
(b) Indebtedness and Disqualified Equity Interests existing on the
Closing Date to the extent set forth on Schedule 8.01;
(c) Capital Lease Obligations existing on the Closing Date up to an
aggregate amount of $3,500,000 and other Indebtedness existing on the
Closing Date up to an aggregate principal amount of $5,000,000;
(d) Indebtedness issued in exchange for, or the proceeds of which are
used to refinance, any Indebtedness permitted by clause (b) or (c) above,
other than any Indebtedness under the Subordinated Debt Indentures;
PROVIDED, HOWEVER, that (i) the principal amount of the Indebtedness so
issued shall not exceed the principal amount of the Indebtedness so
exchanged or refinanced and (ii) the Indebtedness so issued (A) shall not
mature prior to the Stated Maturity of the Indebtedness so exchanged or
refinanced, (B) shall have an Average Life equal to or greater than the
remaining Average Life of the Indebtedness so exchanged or refinanced and
(C) shall be subordinated in right of payment to the prior payment of the
Continental Obligations to at least the same extent as the Indebtedness so
exchanged or refinanced;
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(e) Indebtedness of any Continental Subsidiary that is both a
Continental Subsidiary Guarantor and a Continental Subsidiary Pledgor
incurred after the Closing Date ("PERMITTED CONTINENTAL SENIOR
INDEBTEDNESS"); PROVIDED, HOWEVER, that the aggregate principal amount of
such Indebtedness outstanding at any time shall not exceed an amount equal
to 15% of the Stockholders' Equity of Continental as of the last day of the
then most recent full fiscal quarter for which Continental has delivered
its Required Financial Statements to the Agent;
(f) Indebtedness of any Continental Subsidiary to Continental
("CONTINENTAL SUBSIDIARY INTERCOMPANY INDEBTEDNESS"); PROVIDED that:
(i) such loan from Continental is evidenced by an Intercompany
Note issued by such Continental Subsidiary to Continental;
(ii) such Intercompany Note is subject to the lien of the
Continental Pledge Agreement and has been delivered to the Agent;
(iii) (A) the aggregate principal amount of such Indebtedness
incurred by any single Continental Subsidiary which is not both a
Subsidiary Guarantor and a Subsidiary Pledgor, plus the aggregate
amount of all other direct or indirect investments by Continental in
such Continental Subsidiary, shall not exceed $1,000,000 outstanding
at any time, (B) the aggregate principal amount of such Indebtedness
incurred by all such Continental Subsidiaries referred to in the
foregoing clause (A), plus the aggregate amount of all other direct or
indirect investments by Continental in all such Continental
Subsidiaries, shall not exceed $10,000,000 outstanding at any time and
(C) no such Continental Subsidiary shall be a Material Subsidiary;
(iv) such loan from Continental is used by such Continental
Subsidiary as provided in Section 3.13(b);
(v) no such loan shall be made to any such Continental
Subsidiary that is the subject of a proceeding described in paragraph
(g) or (h) of Article IX; and
(vi) the principal amount of such Indebtedness incurred by any
majority-owned Continental Subsidiary shall not exceed any limitation
thereon imposed by contract with or obligation to any holder of a
minority interest therein;
(g) Guarantees by Continental issued after the Closing Date of
Indebtedness of the Continental Subsidiaries ("PERMITTED CONTINENTAL
GUARANTEES"); PROVIDED that (i) such Indebtedness of such Continental
Subsidiary is otherwise permitted hereunder and (ii) the aggregate face
amount of all such Guarantees is not more than $5,000,000; and
(h) Interest Rate Protection Agreements containing terms satisfactory
to the Agent; PROVIDED that the notional principal amount of such Interest
Rate Protection
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Agreements does not exceed the amount of indebtedness of Continental and
the Continental Subsidiaries outstanding on the date such agreements are
entered into.
SECTION 8.02. NEGATIVE PLEDGE. Continental will not, and will not cause
or permit any of the Continental Subsidiaries to, create, incur, assume or
permit to exist any Lien on any property or assets (including stock or other
securities of any Continental Subsidiary or other person) now owned or hereafter
acquired by it or on any income or revenues or rights in respect of any thereof,
except:
(a) Liens in favor of the Agent on behalf of the Secured Parties
created by the Continental Pledge Agreement and the Continental
Subsidiaries' Pledge Agreement;
(b) Liens existing on the Closing Date, to the extent set forth in
Schedule 8.02, securing Indebtedness permitted under Section 8.01(b) or (c)
and Operating Leases existing on the Closing Date, to the extent set forth
in Schedule 8.02;
(c) Liens arising after the Closing Date securing Permitted
Continental Senior Indebtedness or Indebtedness permitted under Section
8.01(d); PROVIDED that, in the case of Liens securing such Indebtedness
permitted under Section 8.01(d), such Liens cover only property and assets
covered on the Closing Date and the aggregate principal amount of such
Indebtedness so secured does not exceed the amount so secured on the
Closing Date;
(d) Liens attributable to Permitted Continental Sale and Lease-Back
Transactions;
(e) Liens for taxes not yet due or which are being contested in
compliance with Section 6.03 and for which adequate reserves have been
established;
(f) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, construction or other like Liens arising in the ordinary
course of business and securing obligations that are not due or which are
being contested in compliance with Section 6.03 and for which adequate
reserves have been established;
(g) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases (other than Capital Lease
Obligations), statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(h) deposits in connection with workmen's compensation, unemployment
insurance, old age pensions, or other social security or retirement
benefits legislation in respect of employees of the Continental Group;
(i) zoning restrictions, easements, rights-of-way, restrictions on
use of real property and other similar encumbrances incurred in the
ordinary course of business which, in the aggregate, are not substantial in
amount and do not materially detract from
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the value of the property subject thereto or interfere with the ordinary
conduct of the business of Continental or any of the Continental
Subsidiaries; and
(j) other Liens securing Indebtedness or other obligations up to an
aggregate amount of $5,000,000 at any time outstanding.
SECTION 8.03. SALE AND LEASE-BACK TRANSACTIONS. Continental will not, and
will not cause or permit any of the Continental Subsidiaries to, enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, except to the extent that
the aggregate amount of Attributable Debt with respect to any such transaction
outstanding at any time is no more than $10,000,000 ("PERMITTED CONTINENTAL SALE
AND LEASE-BACK TRANSACTIONS").
SECTION 8.04. INVESTMENTS, LOANS AND ADVANCES. Continental will not, and
will not cause or permit any of the Continental Subsidiaries to, purchase, hold
or acquire any Equity Interests, evidences of indebtedness or other securities
of, make or permit to exist any loans or advances to, or make or permit to exist
any investment, capital contribution or any other beneficial interest in, or
issue or permit to exist any guarantee of any Operating Lease or other
obligation not constituting Indebtedness of, any other person, except:
(a) Cash Equivalents;
(b) Continental Subsidiary Intercompany Indebtedness incurred by any
Continental Subsidiary which is both a Continental Subsidiary Guarantor and
a Continental Subsidiary Pledgor; PROVIDED that the principal amount of
such Indebtedness incurred by any majority-owned Continental Subsidiary
shall not exceed any limitation thereon (or on the amount of indebtedness
that can be secured by the pledge of the Equity Interests of such person or
of any Affiliate of such person) imposed by contract with or other
obligation to any holder of a minority interest therein;
(c) equity investments in Continental Subsidiaries existing on the
Closing Date; PROVIDED that each such Continental Subsidiary (other than
any such Continental Subsidiary which is not a Material Subsidiary and
other than North Louisiana Rehabilitation Center, Inc., Kansas
Rehabilitation Hospital, Inc., CMS Jonesboro Rehabilitation, Inc., Houston
Rehabilitation Associates and Baton Rouge Rehab, Inc.) is both a
Continental Subsidiary Guarantor and a Continental Subsidiary Pledgor; and
(d) equity investments by Continental made after the Closing Date to
acquire from unrelated third parties a person in a CMS Business, which
person becomes a Continental Subsidiary upon consummation thereof, and
additional equity investments in any of the then existing Continental
Subsidiaries acquired from unrelated third parties; PROVIDED in the case of
each such investment that:
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(i) no Default or Event of Default has occurred and is
continuing at the time of such investment or would occur immediately
after giving effect thereto (on a pro forma basis as if such
disposition had occurred on the first day of the applicable Reference
Period for purposes of Section 8.17), and Continental shall have
prepared and furnished to the Agent prior to the consummation of such
investment pro forma financial statements demonstrating to the
satisfaction of the Agent that none of the financial covenants in
Section 8.17 will be violated after giving pro forma effect to such
proposed investment;
(ii) the aggregate Fair Market Value of the consideration,
whether payable upon consummation thereof or in the form of earn-outs,
non-competes or other deferred payment arrangements, for such
investment (in the case of additional equity investments in an
existing subsidiary, including the existing amount of the investment
in such subsidiary), including cash, securities, other property and
the assumption of Indebtedness, does not exceed an amount equal to 10%
of the Stockholders' Equity of Continental as of the last day of the
then most recent full fiscal quarter for which Continental has
delivered its Required Financial Statements to the Agent; and
(iii) such person (A) shall have executed and delivered to
the Agent the Continental Subsidiaries' Guarantee Agreement and the
Continental Subsidiaries' Pledge Agreement or (B) such person shall
have executed and delivered to the Agent a Supplemental Agreement and
thereby become a Subsidiary Guarantor and Subsidiary Pledgor (and all
the terms of such Supplemental Agreement shall have been satisfied);
(e) (i) Continental Subsidiary Intercompany Indebtedness incurred by,
and equity investments in, any Continental Subsidiary which is not a
Material Subsidiary and is not an Inactive Subsidiary and (ii) advances to
K.C. Rehabilitation Hospital, Inc.; PROVIDED that (A) the aggregate amount
thereof by, in or to any such single Continental Subsidiary (including K.C.
Rehabilitation Hospital, Inc.) shall not exceed $1,000,000 outstanding at
any time and (B) the aggregate amount thereof by, in or to all such
Continental Subsidiaries (including K.C. Rehabilitation Hospital, Inc.)
outstanding at any time shall not exceed $10,000,000;
(f) other investments existing on the Closing Date, to the extent set
forth on Schedule 8.04;
(g) advances to North Louisiana Rehabilitation Center, Inc., Kansas
Rehabilitation Hospital, Inc., CMS Jonesboro Rehabilitation, Inc., Houston
Rehabilitation Associates and Baton Rouge Rehab, Inc., evidenced by
Intercompany Notes; PROVIDED, THAT, the aggregate principal amount thereof
to any such Subsidiary outstanding at any time does not exceed the amount
set forth with respect to such Subsidiary on Schedule 8.04;
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(h) advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business; and
(i) guarantees by Continental of Operating Leases and other
obligations not constituting Indebtedness of the Continental Subsidiaries;
PROVIDED that any such guarantee of an Operating Lease or other obligation
of any such Continental Subsidiary which is not a Wholly Owned Subsidiary
of Continental is outstanding on the Closing Date.
SECTION 8.05. MERGERS, CONSOLIDATIONS, DISPOSITIONS AND ACQUISITIONS.
(a) Continental will not, and will not cause or permit any of the Continental
Subsidiaries to, (i) merge into or consolidate with any other person, (ii)
permit any other person to merge into or consolidate with it, (iii) sell,
transfer, lease or otherwise dispose of any assets (whether now owned or
hereafter acquired) or any interest therein, including through the creation of
any joint venture, or (iv) issue or sell any Equity Interests of any of the
Continental Subsidiaries, except:
(A) sales in the ordinary course of business consistent with past
practice;
(B) dispositions of obsolete or useless tangible assets in the
ordinary course of business;
(C) dispositions of up to $10,000,000 in aggregate book value (or
$5,000,000 in book value for any single asset) of the assets of Continental
or any of the Continental Subsidiaries; PROVIDED that the proceeds thereof
are not required to be used, and are not used, directly or indirectly, to
purchase or otherwise acquire any Subordinated Debt; and
(D) if no Default or Event of Default shall have occurred and be
continuing at the time thereof or would occur immediately after giving
effect thereto, (I) Continental may merge with any of its Wholly Owned
Subsidiaries in a transaction in which Continental is the surviving
corporation and (II) any such Wholly Owned Subsidiary may merge into or
consolidate with any other such Wholly Owned Subsidiary in a transaction in
which the surviving entity is such a Wholly Owned Subsidiary and no person
other than Continental or any of its Wholly Owned Subsidiaries receives any
consideration.
If any person ceases to be a Continental Subsidiary as a result of a disposition
permitted under this Section 8.05(a), the Agent shall cancel and release such
person's obligations under its Continental Subsidiary Guarantee Agreement and
Continental Subsidiary Pledge Agreement.
(b) Continental will not, and will not cause or permit any of the
Continental Subsidiaries to, purchase, lease or otherwise acquire all or any
substantial part of the assets of any person, except for assets to be used by
Continental or any of the Continental Subsidiaries in the same line of business
as Continental; PROVIDED that:
(i) no Default or Event of Default has occurred and is continuing at
the time of any such acquisition or would occur immediately after giving
effect thereto (on a pro forma basis as if such acquisition had occurred on
the first day of the applicable Reference
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Period for purposes of Section 8.17), and Continental shall have prepared
and furnished to the Agent prior to the consummation of such acquisition
pro forma financial statements demonstrating to the satisfaction of the
Agent that none of the financial covenants in Section 8.17 will be violated
after giving pro forma effect to such proposed acquisition; and
(ii) except in the case of any acquisition from a Wholly Owned
Subsidiary of Continental, the aggregate Fair Market Value of the
consideration, whether payable upon consummation thereof or in the form of
earn-outs, non-competes or other deferred payment arrangements, for such
acquisition (including cash, securities, other property and assumption of
Indebtedness), plus the costs incurred in acquiring such assets do not
exceed the amount equal to 10% of the Stockholders' Equity of Continental
as of the last day of the then most recent full fiscal quarter for which
Continental has delivered its Required Financial Statements to the Agent.
SECTION 8.06. DIVIDENDS AND DISTRIBUTIONS. Continental will not, and will
not cause or permit any of the Continental Subsidiaries to, (a) declare or pay,
directly or indirectly, any dividend or make any other distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, with respect to any Equity Interests of Continental or any
of the Continental Subsidiaries, (b) directly or indirectly redeem, purchase,
retire or otherwise acquire for value, any equity interests of Continental or
any of the Continental Subsidiaries or (c) directly or indirectly redeem,
purchase, prepay, retire or otherwise acquire for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund payment, any
Indebtedness (other than Continental Loans and Continental Subsidiary
Intercompany Indebtedness) or set aside any amount for any such purpose;
PROVIDED, HOWEVER, that:
(i) any Continental Subsidiary may declare and pay dividends or make
other distributions to Continental or any Wholly Owned Subsidiary of
Continental;
(ii) Continental may acquire additional Equity Interests in a
majority-owned Continental Subsidiary; PROVIDED that such acquisition is
permitted by Section 8.04(d); and
(iii) Continental may declare and pay dividends or make other
distributions to Horizon, subject to all applicable provisions of the
Subordinated Note Indentures;
(iv) Continental may purchase Indebtedness to the extent permitted
under Section 8.16; and
(v) if no Default or Event of Default has occurred and is continuing
at the time thereof or would occur immediately after giving effect thereto,
any Continental Subsidiary may declare and pay pro rata cash dividends or
make other pro rata cash distributions to unrelated third parties holding
minority equity interests in such Continental Subsidiaries to the extent
contemplated by applicable agreements with such parties (but this clause
(v) shall not permit the repurchase or other acquisition of such
interests).
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SECTION 8.07. IMPAIRMENT. (a) Continental will not, and will not permit
any of the Continental Subsidiaries to, take or omit to take any action, which
action or omission might or would have the result of materially impairing the
security interests in favor of the Agent on behalf of the Secured Parties with
respect to the Continental Collateral, and Continental will not, and will not
permit any of the Continental Subsidiaries to, grant to any person (other than
the Agent on behalf of the Secured Parties) any interest whatsoever in any
Continental Collateral.
(b) Continental will not, and will not permit any of the Continental
Subsidiaries to, enter into or be party to any agreement that subordinates (i)
the payment, performance or collateralization of any obligations owing by any
Continental Subsidiary to Continental to (ii) the payment, performance, or
collateralization of any other obligations (other than the Continental
Obligations).
(c) Continental will not, and will not permit any of the Continental
Subsidiaries to, enter into any agreement, any term or condition of which would,
if complied with by Continental or any Continental Subsidiary, result in a
Default or Event of Default.
SECTION 8.08. LIMITATION ON RESTRICTIONS ON SUBSIDIARIES. Continental
will not, and will not cause or permit any of the Continental Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction on (a) the ability of any
Continental Subsidiary to (i) pay dividends or make any other distributions on
or in respect of its Equity Interests, or pay any Indebtedness owed to
Continental or any Continental Subsidiary, (ii) make loans or advances to
Continental or any Continental Subsidiary or (iii) transfer any of its
properties or assets to Continental or any Continental Subsidiary or (b) the
ability of Continental and the Continental Subsidiaries to pledge to the Agent
any Equity Interests in any Continental Subsidiary formed or acquired after the
Closing Date, except for such encumbrances or restrictions existing under or by
reason of:
(A) customary non-assignment provisions in any lease governing a
leasehold interest;
(B) this Agreement and the other Loan Documents; and
(C) encumbrances and restrictions existing on the Closing Date, to
the extent set forth in Schedule 8.08.
SECTION 8.09. NO OTHER NEGATIVE PLEDGES. Continental will not, and will
not cause or permit any of the Continental Subsidiaries to, directly or
indirectly, enter into any agreement prohibiting the creation or assumption of
any Lien upon the properties or assets of Continental or any of the Continental
Subsidiaries, whether now owned or hereafter acquired, or, except as set forth
on Schedule 8.09, requiring an obligation to be secured if some other obligation
is secured or prohibiting Continental or any of the Continental Subsidiaries
from selling, leasing, pledging, hypothecating or otherwise disposing of any
assets of such persons, except for:
(a) this Agreement;
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(b) any such prohibitions in effect on the Closing Date pursuant to
the Subordinated Note Indentures; and
(c) any agreement with the holder of any Permitted Continental Senior
Indebtedness secured by collateral in accordance with Section 8.02(b), to
the extent such agreement limits or restricts Continental's right to sell,
lease, pledge, hypothecate or otherwise dispose of such collateral.
SECTION 8.10. TRANSACTIONS WITH AFFILIATES. Continental will not, and
will not cause or permit any of the Continental Subsidiaries to, sell or
transfer any property or assets to, or purchase or acquire any property or
assets from, or otherwise enter into any other transactions with, any of its
Affiliates, except that so long as no Default or Event of Default shall have
occurred and be continuing, Continental or any of the Continental Subsidiaries
may enter into any of the foregoing transactions in the ordinary course of
business at prices and on terms and conditions that (a) are set forth in
writing, (b) are as favorable to Continental or such Continental Subsidiary as
would be obtainable at the time in a comparable transaction on an arm's-length
basis from an unrelated third party and (c) with respect to a transaction or
series of related transactions involving payments in excess of $10,000,000 in
the aggregate, such transaction or series of related transactions shall have
been approved by a majority of the independent directors of the Board of
Directors of Continental. The provisions of this Section 8.10 shall not
prohibit (a) any payment permitted under Section 8.04 or 8.06, (b) any
transaction among Continental and any of its Wholly Owned Subsidiaries or among
its Wholly Owned Subsidiaries or (c) any transaction expressly permitted by the
other provisions of this Agreement or the provisions of any of the other Loan
Documents.
SECTION 8.11. BUSINESS OF CONTINENTAL AND SUBSIDIARIES. Continental will
not, and will not cause or permit any of the Continental Subsidiaries to, change
the nature of its business as now conducted in any material respect or engage in
any business other than the CMS Businesses.
SECTION 8.12. SALES OF RECEIVABLES. Continental will not, and will not
cause or permit any of the Continental Subsidiaries to, sell with recourse,
discount or otherwise sell or dispose of its notes or accounts receivable.
SECTION 8.13. CERTAIN AMENDMENTS. (a) Continental will not, and will not
cause or permit any of the Continental Subsidiaries to, enter into any
amendment, modification or waiver in respect of any term or condition of (i) the
certificate of incorporation or by-laws of Continental or of any Material
Contract, other than amendments, modifications and waivers which are not,
individually or in the aggregate, in the reasonable judgment of the Agent,
adverse in any material respect to the rights or interests of the Lenders or
(ii) the articles of incorporation, bylaws, partnership agreement or joint
venture agreement of any such Continental Subsidiary, if the effect is to
prohibit a change in control or pledge of the Equity Interests of such person.
(b) Continental will not forgive any Continental Subsidiary Intercompany
Indebtedness.
(c) Continental will not, and will not cause or permit any of the
Continental Subsidiaries to, amend, modify or waive, or permit the amendment,
modification or waiver of, any of the terms
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or provisions contained in any agreements relating to any Permitted Continental
Senior Indebtedness, other than amendments, modifications and waivers which are
not, individually or in the aggregate, in the reasonable judgment of the Agent,
adverse in any material respect to the rights or interests of the Lenders.
SECTION 8.14. CHANGES IN GAAP. Continental will not, and will not cause
or permit any of the Continental Subsidiaries to, change its fiscal year (except
to cause such year to end on May 31) without the prior written consent of the
Required Lenders or change its method of financial accounting except in
accordance with GAAP.
SECTION 8.15. MATERIAL AGREEMENTS. Continental will not, and will not
cause or permit any of the Continental Subsidiaries to, default upon or fail to
pay any Indebtedness for money borrowed as the same matures, or breach, violate
or be in default under either Subordinated Note Indenture or any other Material
Contract and fail to cure such breach, violation or default within any
applicable cure period or permit any Major Potential Liability of Continental or
any of the Continental Subsidiaries to exist.
SECTION 8.16. SUBORDINATED DEBT. (a) Continental will not, and will not
cause or permit any of the Continental Subsidiaries to, enter into any
amendment, modification or waiver in respect of any provision of either
Subordinated Note Indenture, or any other document or agreement evidencing or
relating to the Subordinated Debt issued thereunder, if such amendment,
modification or waiver has the effect of (i) changing the definitions of
"Permitted Indebtedness," "Senior Indebtedness" or "Credit Facility," changing
the subordination provisions, or changing covenants limiting distributions by
subsidiaries or (ii) otherwise making the covenants and other provisions more
onerous or restrictive than those in effect on the date of such Subordinated
Note Indenture.
(b) Continental will not designate any Indebtedness as "Designated Senior
Indebtedness," within the meaning of either Subordinated Note Indenture, except
Indebtedness of $50,000,000 or more issued by Continental in accordance with the
terms hereof in any single transaction (so long as any Indebtedness so
designated shall provide that, at least three days prior to delivery of any
notice under either Subordinated Note Indenture, the holders of such Designated
Indebtedness shall deliver a copy of such notice to the Agent).
(c) Neither Continental nor any of its Affiliates shall purchase or
acquire, make any offer to any holder thereof to purchase or acquire, or agree
to purchase or acquire, any Subordinated Debt of Continental prior to its stated
maturity, except that from time to time Continental may purchase (and make
offers to purchase) the Subordinated Debt outstanding on the Closing Date under
the Subordinated Note Indentures upon the following conditions:
(i) the aggregate amount of cash spent by Continental or any of its
Affiliates after the Closing Date to make any purchases of such
Subordinated Debt (including principal and premium, if any) shall in no
event exceed $100,000,000; and
(ii) no Default or Event of Default shall have occurred and be
continuing at the time thereof or would occur immediately after giving
effect thereto.
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SECTION 8.17. FINANCIAL COVENANTS. Continental will not:
(a) STOCKHOLDERS' EQUITY. Permit the Stockholders' Equity of
Continental as of the last day of any fiscal quarter of Continental to be
less than the "CONTINENTAL MINIMUM COMPLIANCE LEVEL". The Continental
Minimum Compliance Level on the Closing Date shall be equal to 95% of the
Stockholders' Equity of Continental as of June 30, 1995, and shall be
increased as of the last day of each fiscal quarter of Continental ending
after the Closing Date by an amount equal to the sum of (i) 75% of Net
Income (if positive) for such fiscal quarter, (ii) the aggregate Net
Proceeds of any capital contribution received from Horizon subsequent
to the Closing Date, (iii) the amount by which Indebtedness is reduced on
the balance sheet of Continental and its Consolidated Subsidiaries upon the
conversion or exchange subsequent to the Closing Date of any Indebtedness
convertible into or exchangeable for Equity Interests and (iv) the amount
of Stockholders' Equity of any person acquired after the Closing Date in a
pooling of interests transaction. The foregoing increases in the
Continental Minimum Compliance Level shall be fully cumulative and no
reduction in the Continental Minimum Compliance Level shall be made to
reflect negative Net Income for any period.
(b) FIXED CHARGE COVERAGE RATIO. Permit the Fixed Charge Coverage
Ratio of Continental as of the last day of any fiscal quarter of
Continental ending during any fiscal year referred to in the chart below to
be less than the ratio set forth in the chart below opposite such fiscal
year.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Fiscal Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1.50:1.00 1.50:1.00 1.50:1.00 1.50:1.00
---------------------------------------------------------------------------
1997 1.50:1.00 1.50:1.00 1.50:1.00 1.75:1.00
---------------------------------------------------------------------------
1998 1.75:1.00 1.75:1.00 1.75:1.00 1.75:1.00
---------------------------------------------------------------------------
1999 1.75:1.00 1.75:1.00 1.75:1.00 1.75:1.00
---------------------------------------------------------------------------
2000 1.75:1.00 1.75:1.00 1.75:1.00 1.75:1.00
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
(c) LEVERAGE RATIO. Permit the Leverage Ratio of Continental as of
the last day of any fiscal quarter of Continental ending during any fiscal
year referred to in the chart below to be greater than the ratio set forth
in the chart below for such fiscal quarter in such fiscal year.
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<TABLE>
<CAPTION>
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Fiscal Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 0.80:1.00 0.80:1.00 0.80:1.00 0.80:1.00
---------------------------------------------------------------------------
1997 0.80:1.00 0.80:1.00 0.80:1.00 0.75:1.00
---------------------------------------------------------------------------
1998 0.75:1.00 0.75:1.00 0.75:1.00 0.70:1.00
---------------------------------------------------------------------------
1999 0.70:1.00 0.70:1.00 0.70:1.00 0.65:1.00
---------------------------------------------------------------------------
2000 0.65:1.00 0.65:1.00 0.65:1.00 0.60:1.00
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
(d) DEBT/EBITDAR RATIO. Permit the Debt/EBITDAR Ratio of Continental
as of the last day of any fiscal quarter of Continental ending during any
fiscal year referred to in the chart below to be greater than the ratio set
forth in the chart below for such fiscal quarter in such fiscal year.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Fiscal Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 5.50:1.00 5.50:1.00 5.50:1.00 5.00:1.00
---------------------------------------------------------------------------
1997 5.00:1.00 5.00:1.00 5.00:1.00 4.75:1.00
---------------------------------------------------------------------------
1998 4.75:1.00 4.75:1.00 4.75:1.00 4.50:1.00
---------------------------------------------------------------------------
1999 4.50:1.00 4.50:1.00 4.50:1.00 4.00:1.00
---------------------------------------------------------------------------
2000 4.00:1.00 4.00:1.00 4.00:1.00 4.00:1.00
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
ARTICLE IX
EVENTS OF DEFAULT
In case of the happening of any of the following events ("EVENTS OF
DEFAULT"):
(a) default shall be made by either Borrower in the payment of any
principal of any Loan or any reimbursement obligation in respect of a
Letter of Credit when and as the same shall become due and payable, whether
at the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(b) default shall be made in the payment of any interest on any Loan
or any Fee or any other amount (other than an amount referred to in
paragraph (a) above) due under any Loan Document, when and as the same
shall become due and payable, and such default shall continue unremedied
for a period of three Business Days;
(c) default shall be made in the due observance or performance by (i)
Horizon or any Horizon Subsidiary of any covenant, condition or agreement
contained in Section 5.01(a), 5.05, 5.08, 5.09, 5.10 or in Article VII or
(ii) Continental or any
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Continental Subsidiary of any covenant, condition or agreement contained in
Section 6.01(a), 6.05, 6.08, 6.09, 6.10 or Article VIII;
(d) default shall be made in the due observance or performance by any
Borrower or Subsidiary of any covenant, condition or agreement contained in
any Loan Document (other than those specified in paragraph (a), (b) or (c)
above) and such default shall continue unremedied for a period of 30 days
after notice thereof from the Agent or any Lender to such Borrower;
(e) any representation or warranty made or deemed made in or in
connection with any Loan Document or the extensions of credit hereunder, or
any representation, warranty, statement or information contained in any
report, certificate, financial statement or other instrument furnished in
connection with or pursuant to any Loan Document, shall prove to have been
false or misleading in any material respect when so made, deemed made or
furnished;
(f) any Borrower or Subsidiary shall (i) fail to pay any principal or
interest, regardless of amount, due in respect of any Indebtedness in a
principal amount in excess of $500,000, when and as the same shall become
due and payable, or (ii) fail to observe or perform any other term,
covenant, condition or agreement contained in any agreement or instrument
evidencing or governing any such Indebtedness if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the holder or
holders of such Indebtedness or a trustee on its or their behalf to cause,
with or without the giving of notice, the lapse of time or both, such
Indebtedness to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of any Borrower or Subsidiary, or of a substantial
part of its property or assets, under Title 11 of the United States Code,
as now constituted or hereafter amended, or any other Federal, state or
foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Borrower or Subsidiary, or for a substantial part
of its property or assets, or (iii) the winding-up or liquidation of any
Borrower or Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;
(h) any Borrower or Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described
in paragraph (g) above, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for such party or for a substantial part of its property or assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the
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benefit of creditors, (vi) become unable, admit in writing its inability or
fail generally to pay its debts as they become due or (vii) take any action
for the purpose of effecting any of the foregoing;
(i) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $1,000,000 shall be rendered against any
Borrower or Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of any Borrower or
Subsidiary to enforce any such judgment;
(j)(i) any person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Single
Employer Plan, or any Lien shall arise on the assets of any Borrower or
Commonly Controlled Entity in favor of the PBGC or a Plan, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence
to have a trustee appointed, or a trustee shall be appointed, to administer
or to terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA (excluding
any termination of a Single Employer Plan pursuant to Section 4041(b) of
ERISA) or (v) any Borrower or Commonly Controlled Entity shall incur any
liability in connection with a withdrawal from, or the termination,
reorganization or insolvency of (within the meaning of such terms as used
in ERISA), a Multiemployer Plan; and, in each case in clauses (i) through
(v) above, such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to involve possible taxes,
penalties, and other liabilities of any Borrower or Subsidiary in an
aggregate amount in excess of $1,000,000 (or in the case of clause (v)
above, $500,000 per annum); or any other event or condition shall occur or
exist with respect to a Plan and such event or condition, together with all
other such events or conditions, if any, could reasonably be expected to
have a Material Adverse Effect;
(k) any Lien purported to be created by any Pledge Agreement shall
cease to be, or shall for any reason be asserted by any Borrower or
Subsidiary not to be, a valid, perfected, first priority Lien on the
Collateral covered thereby, other than as a result of an act or omission of
the Agent or any Lender;
(l) any Loan Document shall be declared by any Governmental Authority
to be invalid or unenforceable in whole or in part in any material respect
or shall for any reason not be, or shall be asserted by any Borrower or
Subsidiary not to be, in full force and effect and enforceable in
accordance with its terms;
(m) any Material Contract or other material agreement binding on any
Borrower or Subsidiary shall be declared by any Governmental Authority to
be invalid or
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unenforceable in whole or in part in any material respect or shall for any
other reason not be, or shall be asserted by any Borrower or Subsidiary not
to be, in full force and effect and enforceable in accordance with its
terms or shall be in default and such event or condition, together with all
other such events or conditions, if any, could reasonably be expected to
have a Material Adverse Effect;
(n) any License shall lapse, terminate, or be suspended and such
event or condition, together with all other such events or conditions, if
any, could reasonably be expected to have a Material Adverse Effect;
(o) either (i) any Borrower or Subsidiary shall be liable, whether
directly, indirectly through required indemnification of any person, or
otherwise, for the costs of investigation and/or remediation of any
Hazardous Material originating from or affecting property or properties,
whether or not owned, leased or operated by any Borrower or Subsidiary,
which liability, together with all other such liabilities, could reasonably
be expected to have a Material Adverse Effect or (ii) any Federal, state,
regional, local or other Governmental Authority shall commence or
materially escalate an investigation concerning any matter or take any
other action of any kind that, together with all other such actions, could
reasonably be expected to have a Material Adverse Effect;
(p) any Borrower or Subsidiary shall, without the prior written
consent of the Required Lenders, (i) take any affirmative or voluntary
action to grant or suffer to exist any mortgage, pledge, security interest,
encumbrance, or other Lien securing any Subordinated Debt upon any of its
properties or assets, (ii) grant any guarantee of the payment or
performance of any Subordinated Debt or any obligation relating thereto,
(iii) prepay, redeem, purchase or acquire (except as permitted by Section
8.16), defease, or otherwise satisfy any Subordinated Debt (or defease any
covenants in respect of any Subordinated Debt) prior to its scheduled
payment date or maturity, or (iv) make an offer to any holder of
Subordinated Debt to, or agree to, prepay, redeem, purchase or acquire
(except as permitted by Section 8.16), defease, or otherwise satisfy such
Subordinated Debt (or defease any covenants in respect of any Subordinated
Debt) prior to its scheduled payment date or maturity;
(q) (i) any Continental Obligations of Continental shall fail to
constitute "Senior Indebtedness" under either Subordinated Note Indenture
or (ii) any Borrower or Subsidiary shall take any action inconsistent with
the status of the Continental Obligations of Continental as "Senior
Indebtedness" under the Subordinated Note Indentures; or
(r) any Change in Control shall occur;
then, and in every such event, and at any time thereafter during the continuance
of such event, the Agent, with the consent of the Required Lenders, may, and at
the request of the Required Lenders, shall, take one or more of the following
actions, at the same or different times: (i) by notice to the Borrowers
terminate the Commitments and they shall immediately terminate; (ii) by notice
to the Borrowers declare the Loans then outstanding to be forthwith due and
payable (in whole or, in the sole discretion of the Required Lenders, from time
to time in part), whereupon
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the principal of the Loans so declared to be due and payable, together with
accrued interest thereon and any unpaid accrued Fees and all other liabilities
of the Borrowers accrued hereunder or under any other Loan Document, shall
thereupon become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrowers to the fullest extent permitted under applicable law,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; (iii) require cash collateral as contemplated by
Sections 2.19(k) and 2.20(k) in an amount not exceeding the Letter of Credit
Exposure; (iv) exercise any remedies available under the Guarantee Agreements,
the Pledge Agreements or otherwise; or (v) any combination of the foregoing;
PROVIDED that in the case of (A) any of the Events of Default with respect to a
Borrower described in paragraph (g) or (h) above and (B) the Event of Default
specified in paragraph (r) above, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the Borrowers
accrued hereunder or under any other Loan Document, shall automatically become
due and payable, without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the Borrowers to the fullest
extent permitted under applicable law, anything contained herein or in any other
Loan Document to the contrary notwithstanding.
ARTICLE X
THE AGENT AND ISSUING BANK
SECTION 10.01. APPOINTMENT AND AUTHORIZATION. (a) Each of the Lenders,
and each subsequent holder of any Note by its acceptance thereof, hereby
irrevocably appoints and authorizes the Agent and the Issuing Bank to take such
actions as agent on behalf of such Lender or holder and to exercise such powers
as are specifically delegated to the Agent or the Issuing Bank, as the case may
be, by the terms and provisions hereof and of the other Loan Documents, together
with such actions and powers as are reasonably incidental thereto.
(b) The Agent is hereby expressly authorized by the Lenders, without
hereby limiting any implied authority, and hereby agrees (in the case of clause
(ii) below, at the direction of the Required Lenders), (i) to receive on behalf
of the Lenders all payments of principal of and interest on the Loans and all
other amounts due to the Lenders hereunder, and promptly to distribute to each
Lender its pro rata portion, as determined under Section 2.14, of each payment
so received; (ii) to give notice on behalf of each of the Lenders to the
Borrowers of any Event of Default specified in this Agreement of which the Agent
has actual knowledge acquired in connection with its agency hereunder; and
(iii) to distribute to each Lender copies of all notices, financial statements
and other materials delivered by the Borrowers (including all amendments,
waivers and consents entered into) pursuant to this Agreement as received by the
Agent.
SECTION 10.02. LIABILITY OF AGENT. Neither the Agent, the Issuing Bank,
nor any of their respective directors, officers, employees or agents, shall be
liable as such for any action taken or omitted to be taken by any of them,
except for such party's own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by any Borrower or
Subsidiary of any of
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the terms, conditions, covenants or agreements contained in any Loan Document.
Neither the Agent nor the Issuing Bank shall be responsible to the Lenders or
the holders of the Notes for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement, the Notes or any other Loan
Documents or other instruments or agreements. Each of the Agent and the Issuing
Bank may deem and treat the payee of any Note as the owner thereof for all
purposes hereof until it shall have received from the payee of such Note notice,
given as provided herein, of the transfer thereof in compliance with
Section 11.04. Each of the Agent and the Issuing Bank shall in all cases be
fully protected in acting, or refraining from acting, in accordance with written
instructions signed by the Required Lenders and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders and each subsequent holder
of any Note. Each of the Agent and the Required Lenders shall, in the absence
of knowledge to the contrary, be entitled to rely on any instrument or document
believed by it in good faith to be genuine and correct and to have been signed
or sent by the proper person or persons. To the fullest extent permitted under
applicable law, neither the Agent, the Issuing Bank nor any of their respective
directors, officers, employees or agents, shall have any responsibility to
either Borrower on account of the failure of or delay in performance or breach
by any Lender of any of its obligations hereunder or to any Lender on account of
the failure of or delay in performance or breach by any other Lender or any
Borrower or Subsidiary of any of their respective obligations hereunder or under
any other Loan Document or in connection herewith or therewith. Each of the
Agent and the Issuing Bank may execute any and all duties hereunder by or
through agents or employees, shall be entitled to consult with legal counsel,
independent public accountants and other experts selected by it with respect to
all matters arising hereunder and, to the fullest extent permitted under
applicable law, shall not be liable for any action taken or omitted to be taken
in good faith by it in accordance with the advice of such counsel, accountants
or experts.
SECTION 10.03. ACTION BY AGENT. The Lenders hereby acknowledge that
neither the Agent nor the Issuing Bank shall be under any duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement unless it shall be requested in writing to do so by the Required
Lenders. The obligations of the Agent and the Issuing Bank under the Loan
Documents are only those expressly set forth herein and therein. Without
limiting the generality of the foregoing, the Agent shall not be required to
take any action with respect to any Default or Event of Default, except as
expressly provided in Article IX.
SECTION 10.04. SUCCESSOR AGENTS. Subject to the appointment and
acceptance of a successor as provided below, each of the Agent and the Issuing
Bank (except, in the case of the Issuing Bank, in respect of Letters of Credit
issued by it) may resign at any time by notifying the Lenders and the Borrowers.
Upon any such resignation, the Required Lenders shall have the right, subject
(so long as no Event of Default shall have occurred and be continuing) to the
prior written consent of the Borrowers, to appoint a successor. If a successor
shall not have been so appointed by the Required Lenders, or shall not have
accepted such appointment, within 30 days after the retiring Agent or Issuing
Bank, as the case may be, gives notice of its resignation, then the retiring
Agent or Issuing Bank, as the case may be, may, on behalf of the Lenders,
appoint a successor, which shall be a commercial bank organized or licensed
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $500,000,000 or an Affiliate
of any such bank. Upon the acceptance of any appointment as the
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Agent or Issuing Bank, as the case may be, hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent or Issuing Bank and the retiring
Agent or Issuing Bank shall be discharged from its duties and obligations
hereunder. After the resignation of the Agent or Issuing Bank, as the case may
be, hereunder, the provisions of this Article and Section 11.05 shall continue
in effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as the Agent or Issuing Bank.
SECTION 10.05. AGENT AND AFFILIATE. With respect to the Loans made by it
hereunder, the Letters of Credit issued by it hereunder and the Notes issued to
it, each of the Agent and the Issuing Bank in its individual capacity and not as
the Agent or Issuing Bank shall have the same rights and powers as any other
Lender and may exercise the same as though it were not the Agent or Issuing
Bank. Each of the Agent and the Issuing Bank (and its Affiliates) may accept
deposits from, lend money to and generally engage in any kind of business and
transactions with any Borrower or Subsidiary or other Affiliate thereof as if it
were not the Agent or Issuing Bank (or such Affiliate thereof).
SECTION 10.06. INDEMNIFICATION. Each Lender agrees (a) to reimburse each
of the Agent and the Issuing Bank, on demand, in the amount of its pro rata
share (based on its Commitment hereunder) of any expenses incurred for the
benefit of the Lenders by the Agent or the Issuing Bank, as the case may be,
including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, which shall not have been reimbursed
by either Borrower or any Subsidiary, and (b) to indemnify and hold harmless
each of the Agent, the Issuing Bank and any of their respective directors,
officers, employees or agents, on demand, in the amount of such pro rata share,
from and against any and all liabilities, taxes, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against it in its capacity as the Agent or the Issuing Bank or any of them in
any way relating to or arising out of this Agreement or any other Loan Document
or any action taken or omitted by it or any of them under this Agreement or any
other Loan Document, to the extent the same shall not have been reimbursed by
either Borrower; PROVIDED that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent, the Issuing Bank or any of their respective directors,
officers, employees or agents.
SECTION 10.07. CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, the Issuing Bank or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agent, the Issuing Bank or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement
or any other Loan Document, any related agreement or any document furnished
hereunder or thereunder.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. NOTICES. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy as follows:
(a) if to Horizon, to it at 6001 Indian School Road, NE, Suite 530,
Albuquerque, New Mexico 87110, Attention: General
Counsel (Telecopy No. (505) 881-5097);
(b) if to Continental, to it at P.O. Box 715, 600 Wilson Lane,
Mechanicsburg, Pennsylvania 17055, Attention: General
Counsel (Telecopy No. (717) 790-8475) with a copy to Horizon
at the address provided in clause (a) above;
(b) if to the Agent or the Issuing Bank, to it at 901 Main Street,
13th Floor, Dallas, Texas 75202, Attention: Agency Services (Telecopy No.
(214) 508-2118) with copies to (i) Guillermo Borda, Vice President, at the
foregoing address and (ii) Fennebresque, Clark, Swindell & Hay, at
NationsBank Corporate Center, 100 North Tryon Street, Suite 2900,
Charlotte, North Carolina 28202-4011, Attention of Andrew C. Karp (Telecopy
No. (704) 347-3838);
(c) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.01 or in the Assignment and Acceptance pursuant to
which such Lender shall have become a party hereto; and
(d) if to the Existing Issuing Bank, to it at its address (or
telecopy number) set forth on its signature page hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 11.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 11.01.
SECTION 11.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by either Borrower herein or in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders, the Agent and the Issuing Bank and shall
survive the making by the Lenders of the Loans, the execution and delivery to
the Lenders of the Notes evidencing such Loans, and the issuance of the Letters
of Credit, regardless of any investigation made by the Lenders, the Agent or the
Issuing Bank or on their behalf, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan, any Fee, any
Letter of Credit Disbursement or any other amount payable under this Agreement
or
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any other Loan Document is outstanding and unpaid and so long as the Commitments
have not been terminated.
SECTION 11.03. BINDING EFFECT. This Agreement shall become effective when
it shall have been executed by each Borrower, the Agent, the Issuing Bank and
the Existing Issuing Bank, when the Agent shall have received copies hereof
which, when taken together, bear the signatures of each Lender, and when the
conditions set forth in Sections 4.01 and 4.02 to the first Borrowing hereunder
shall have been satisfied.
SECTION 11.04. SUCCESSORS AND ASSIGNS. (a) Subject to Section 11.04(i),
whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party
and all covenants, promises and agreements by or on behalf of either Borrower,
the Agent, the Issuing Bank, the Existing Issuing Bank or the Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment, the Loans at the time owing to it, the Notes held by
it and the participations in Letters of Credit held by it); PROVIDED, HOWEVER,
that (i) any such assignment of such interests, rights and obligations shall be
made pro rata between the Facilities, (ii) except in the case of an assignment
to a Lender or an Affiliate of a Lender, the assigning Lender shall have
obtained the prior written consent to such assignment of the Borrowers and the
Agent (which consent shall not be unreasonably withheld), (iii) except in the
case of an assignment to a Lender or an Affiliate of a Lender, the sum of
(A) the principal amount of the outstanding Loans subject to each such
assignment and (B) the unused amount of the Commitment of the assigning Lender
subject to such assignment (in each case determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Agent) shall not be less than the lesser of (I) $10,000,000 and (II) the entire
remaining amount of the outstanding Loans and unused Commitment of such Lender,
(iv) the parties to each such assignment shall execute and deliver to the Agent
an Assignment and Acceptance, together with the Note or Notes subject to such
assignment and a processing and recordation fee of $2,500 and (v) the assignee,
if it shall not be a Lender or an Affiliate thereof, shall deliver to the Agent
an Administrative Questionnaire. Upon acceptance and recording pursuant to
Section 11.04(e), from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five Business Days after
the execution thereof (unless the Agent shall otherwise agree), (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.11, 2.13,
2.17 and 10.05, as well as to any interest and Fees accrued for its account and
not yet paid).
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(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim;
(ii) except as set forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, any other Loan Document or any other instrument or document furnished
pursuant hereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, any other Loan Document or
any other instrument or document furnished pursuant hereto, or the financial
condition of any Borrower or Subsidiary or the performance or observance by any
Borrower or Subsidiary of any of its obligations under this Agreement, any other
Loan Document or any other instrument or document furnished pursuant hereto;
(iii) such assignee represents and warrants that it is legally authorized to
enter into such Assignment and Acceptance; (iv) such assignee confirms that it
has received a copy of the Loan Documents, together with copies of the most
recent Required Financial Statements and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (v) such assignee will independently and
without reliance upon the Agent, the Issuing Bank, such assigning Lender 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; (vi) such assignee appoints and
authorizes each of the Agent and the Issuing Bank to exercise such powers under
this Agreement as are delegated to such party by the terms hereof, together with
such powers as are reasonably incidental hereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Agent shall maintain at one of its offices in Dallas, Texas, a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "REGISTER"). The entries in the Register shall be
conclusive in the absence of manifest error and the Borrowers, the Agent and the
Lenders may treat each person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrowers, the Issuing Bank
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee together with the Note or Notes
subject to such assignment, an Administrative Questionnaire completed in respect
of the assignee (unless the assignee shall already be a Lender hereunder or
shall be an Affiliate of a Lender), the processing and recordation fee referred
to in Section 11.04(b) and, if required, the written consent of each Borrower to
such assignment and, if required, upon granting its own consent to such
assignment, the Agent shall (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Issuing Bank and the Lenders. Within five Business Days
after receipt of notice, each Borrower, at its own expense, shall execute and
deliver to the Agent, in exchange for the surrendered Note or Notes, a new Note
or Notes
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payable to the order of such assignee in a principal amount equal to the
Commitments assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a portion of the Commitments, a new Note or Notes
payable to the order of such assigning Lender in a principal amount equal to the
remaining portion of the Commitments retained by it. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note; such new Note or Notes shall be dated the date
of the surrendered Note or Notes which they replace and shall otherwise be in
substantially the form of Exhibits A-1 and A-2 hereto, as applicable. Cancelled
Notes shall be returned to the applicable Borrower.
(f) Each Lender may sell participations in all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment, the Loans owing to it, the Notes held by it and the
participations in Letters of Credit held by it) to one or more participants;
PROVIDED, HOWEVER, that (i) such Lender's obligations under this Agreement shall
remain unchanged and such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (ii) any such
participation of such interests, rights and obligations shall be made pro rata
between the Facilities, (iii) except in the case of a participation to a Lender
or an Affiliate of a Lender, such Lender shall have obtained the prior written
consent to such participation of the Borrowers and the Agent (which consent
shall not be unreasonably withheld), (iv) the participating banks or other
entities shall be entitled to the benefit of the cost protection provisions
contained in Sections 2.11, 2.13 and 2.17 to the same extent as if they were
Lenders and (v) the Borrowers, the Agent, the Issuing Bank and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's interests, rights and obligations under this Agreement, and such
Lender shall retain the sole right to enforce the obligations of either Borrower
relating to the Loans and to approve any amendment, modification or waiver of
any provision of this Agreement (other than amendments, modifications or waivers
decreasing the principal amount of any Loan, extending the Maturity Date,
extending any date for the payment of any interest on any Loan or any Fees,
waiving or excusing any such payment or any part thereof, decreasing the rate of
interest on any Loan, changing or extending any Commitment or decreasing any
Fees, reducing the amount of or postponing the date fixed for any reimbursement
of a Letter of Credit Disbursement or, except in connection with a disposition
approved by the Required Lenders, permitting the release or sharing of any
Collateral under any Pledge Agreement or permitting the release of any guarantor
from a Guarantee Agreement or increasing the aggregate Commitments of the
Lenders).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
11.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to either Borrower or any of the
Subsidiaries furnished to such Lender by or on behalf of such Borrower or any of
the Subsidiaries; PROVIDED that, prior to any such disclosure of information
designated by such Borrower as confidential, each such assignee or participant
or proposed assignee or participant shall execute an agreement whereby such
assignee or participant shall agree (subject to customary exceptions) to
preserve the confidentiality of such confidential information.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement and the Notes issued to it to a Federal Reserve Bank;
PROVIDED that no such assignment shall release a Lender from any of its
obligations hereunder.
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(i) Neither Borrower shall assign or delegate any of its rights or duties
hereunder or any interest herein (whether voluntarily, by operation of law or
otherwise). Any purported assignment or delegation in violation of the
foregoing shall be void.
SECTION 11.05. EXPENSES; INDEMNITY. (a) Each Borrower agrees to pay
(whether or not the transactions contemplated hereby shall be consummated) all
reasonable out-of-pocket costs and expenses incurred by the Agent or the Issuing
Bank in connection with the preparation, execution and delivery of this
Agreement and the other Loan Documents, the syndication or closing of the
Facility of such Borrower, the administration of the Facility of such Borrower
or any amendment, modification or waiver of the provisions hereof or thereof or
incurred by the Agent, the Issuing Bank or any Lender in connection with the
enforcement or protection of the rights of the Agent, the Issuing Bank and the
Lenders under this Agreement and the other Loan Documents or in connection with
the Loans made under the Facility of such Borrower, the Notes issued under the
Facility of such Borrower or the Letters of Credit issued under the Facility of
such Borrower, including the reasonable fees, charges and disbursements of
(i) Fennebresque, Clark, Swindell & Hay, counsel for the Agent, (ii) any third
party consultants retained to assist the Agent in analyzing any due diligence
issues with respect to such Borrower and (iii) in connection with any such
enforcement or protection, any other counsel for the Agent, the Issuing Bank or
any Lender (including the non-duplicative allocated fees and expenses of any in-
house staff counsel).
(b) To the fullest extent permitted under applicable law, each Borrower
agrees to indemnify each of the Agent, the Issuing Bank, the Lenders, the
Affiliates of the Agent, the Issuing Bank or the Lenders, and their respective
directors, officers, employees, agents and Controlling persons (each, an
"INDEMNIFIED PARTY") from and against any and all losses, claims (whether valid
or not), damages and liabilities, joint or several, to which such Indemnified
Party may become subject, related to or arising out of (i) the Merger or the
Facility of such Borrower, (ii) the execution or delivery of this Agreement or
any other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto or thereto of their respective
obligations, hereunder or thereunder or the consummation of the Merger and the
other transactions contemplated hereby or thereby, (iii) the use of the Letters
of Credit or the proceeds of the Loans under the Facility of such Borrower or
(iv) any claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnified Party is a party thereto. Each
Borrower further agrees to reimburse each Indemnified Party for all expenses
(including reasonable attorneys' fees and expenses) as they are incurred in
connection with the investigation of, preparation for or defense of any pending
or threatened claim or any action or proceeding arising therefrom.
Notwithstanding the foregoing, the obligation to indemnify any Indemnified Party
under this Section 11.05(b) shall not apply in respect of any loss, claim,
damage or liability to the extent that a court of competent jurisdiction shall
have determined by final and nonappealable judgment that such loss, claim,
damage or liability resulted from such Indemnified Party's willful malfeasance
or gross negligence.
(c) To the fullest extent permitted under applicable law, each Borrower
agrees to indemnify each of the Agent, the Issuing Bank, the Lenders and the
other Indemnified Parties from and against any and all losses, claims (whether
valid or not), damages and liabilities, joint or several, to which such
Indemnified Party may become subject, related to or arising out of (i) any
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Federal, state, local or other statute, ordinance, order, judgment, ruling or
regulation relating to environmental pollution, regulation or control affecting
such Borrower, any of its subsidiaries or its properties or assets, (ii) any
Hazardous Materials managed by such Borrower or any of its subsidiaries,
(iii) any event, condition or circumstance involving environmental pollution,
regulation or control affecting such Borrower or any of its subsidiaries or its
properties or assets or (iv) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnified Party is a
party thereto. Each Borrower further agrees to reimburse each Indemnified Party
for all expenses (including reasonable attorneys' fees and expenses) as they are
incurred in connection with the investigation of, preparation for or defense of
any pending or threatened claim or any action or proceeding arising therefrom.
Notwithstanding the foregoing, the obligation to indemnify any Indemnified Party
under this Section 11.05(c) shall not apply in respect of any loss, claim,
damage or liability to the extent that a court of competent jurisdiction shall
have determined by final and nonappealable judgment that such loss, claim,
damage or liability resulted from (A) such Indemnified Party's willful
malfeasance or gross negligence or (B) any activities of such Indemnified Party
which render it liable as an owner or operator of a facility under Section 107
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, and all regulations promulgated pursuant thereto.
(d) In the event that the foregoing indemnity of a Borrower is unavailable
or insufficient to hold an Indemnified Party harmless, then, to the fullest
extent permitted under applicable law, such Borrower will contribute to amounts
paid or payable by such Indemnified Party in respect of such Indemnified Party's
losses, claims, damages or liabilities in such proportions as appropriately
reflect the relative benefits received by and fault of such Borrower and such
Indemnified Party in connection with the matters as to which such losses,
claims, damages or liabilities relate and other equitable considerations.
(e) If any action, proceeding or investigation is commenced, as to which
any Indemnified Party proposes to demand such indemnification, it shall notify
the indemnifying Borrower with reasonable promptness; PROVIDED, HOWEVER, that
any failure by such Indemnified Party to notify such Borrower shall not relieve
such Borrower from its obligations hereunder except to the extent such Borrower
is prejudiced thereby. Such Borrower shall be entitled to assume the defense of
any such action, proceeding or investigation, including the employment of
counsel and the payment of all fees and expenses. Each Indemnified Party shall
have the right to employ separate counsel in connection with any such action,
proceeding or investigation and to participate in the defense thereof, but the
fees and expenses of such counsel shall be paid by such Indemnified Party,
unless (i) such Borrower has failed to assume the defense and employ counsel as
provided herein, (ii) such Borrower has agreed in writing to pay such fees and
expenses of separate counsel or (iii) an action, proceeding or investigation has
been commenced against such Indemnified Party and such Borrower and
representation of both such Borrower and such Indemnified Party by the same
counsel would be inappropriate because of actual or potential conflicts of
interest between the parties (in the case of any Agent or Lender, the existence
of any such actual or potential conflict of interest to be determined by such
party, taking into account, among other things, any relevant regulatory
concerns). In the case of any circumstance described in clause (i), (ii) or
(iii) of the immediately preceding sentence, such Borrower shall be responsible
for the reasonable fees and expenses of such separate counsel; PROVIDED,
HOWEVER, that in any event such Borrower shall not be required to pay the fees
and expenses of more than one separate counsel (plus appropriate
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local counsel under the direction of such separate counsel) for all Indemnified
Parties. Such Borrower shall be liable only for settlement of any claim against
an Indemnified Party made with such Borrower's written consent.
(f) The provisions of this Section 11.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Agent or any Lender. All amounts due under this
Section 11.05 shall be payable on written demand therefor.
SECTION 11.06. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted under law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of either Borrower against any of and all
the obligations of such Borrower now or hereafter existing under this Agreement
and the other Loan Documents held by such Lender, irrespective of whether or not
such Lender shall have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section 11.06 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 11.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS, EXCEPT TO THE EXTENT THAT THE FEDERAL LAWS OF THE UNITED STATES
OF AMERICA MAY APPLY. To the extent Article 5069-1.04 of the Texas Revised Civil
Statutes is relevant to any Lender for the purposes of determining the Highest
Lawful Rate, such Lender hereby elects to determine the applicable rate ceiling
under such Article by the indicated (weekly) rate ceiling from time to time in
effect, subject to such Lender's right subsequently to change such method in
accordance with applicable law. Texas Revised Civil Statute Annotated Article
5069, Chapter 15 (which regulates certain revolving credit loan accounts and
revolving triparty accounts), shall not apply to this Agreement, the Notes or
the other Loan Documents.
SECTION 11.08. WAIVERS; AMENDMENT. (a) To the fullest extent permitted
under applicable law, no failure or delay of the Agent, the Issuing Bank or any
Lender in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. To the fullest extent permitted under applicable law, the
rights and remedies of the Agent, the Issuing Bank and the Lenders hereunder and
under the other Loan Documents are cumulative and are not exclusive of any
rights or remedies which they would otherwise have. To the fullest extent
permitted under applicable law, no waiver of any provision of this Agreement or
any other Loan Document or consent to any departure by either Borrower therefrom
shall in any event be effective unless the same shall be permitted by Section
11.08(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or
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demand on either Borrower in any case shall entitle such Borrower to any other
or further notice or demand in similar or other circumstances.
(b) None of this Agreement, the other Loan Documents and any provision
hereof or thereof may be waived, amended or modified, except pursuant to an
agreement or agreements in writing entered into by the Borrowers and the
Required Lenders; PROVIDED, HOWEVER, that no such waiver, amendment or
modification shall (i) decrease the principal amount of any Loan, extend the
Maturity Date, extend any date for the payment of any interest on any Loan or
any Fees, or waive or excuse any such payment or any part thereof, or decrease
the rate of interest on any Loan, without the prior written consent of each
holder of a Note affected thereby, (ii) change or extend the Commitment or
decrease the Fees of any Lender without the prior written consent of such
Lender, (iii) reduce the amount of or postpone the date fixed for any
reimbursement of a Letter of Credit Disbursement without the prior written
consent of each Lender affected thereby, (iv) except in connection with a
disposition approved by the Required Lenders, permit the release or sharing of
any Collateral under any Pledge Agreement or permit the release of any guarantor
from any Guarantee Agreement without the prior written consent of each Lender,
(v) increase the aggregate Commitments of the Lenders without the prior written
consent of each Lender or (vi) amend or modify the provisions of Section 2.13,
2.14 or 2.15, the provisions of Section 11.04(i), the provisions of this Section
11.08 or the definition of "Required Lenders" or otherwise change the percentage
of the Commitments, the percentage of the aggregate unpaid principal amount of
the Notes or the number of Lenders which shall be required for the Lenders or
any of them to take any action under any provision of this Agreement or any
other Loan Document, without the prior written consent of each Lender; PROVIDED
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Agent or Issuing Bank hereunder without the prior
written consent of the Agent or the Issuing Bank, as applicable. Each Lender
and each holder of a Note shall be bound by any waiver, amendment or
modification authorized by this Section 11.08 regardless of whether its Note
shall have been marked to make reference thereto, and any consent by any Lender
or holder of a Note pursuant to this Section 11.08 shall bind any person
subsequently acquiring a Note from it, whether or not such Note shall have been
so marked.
SECTION 11.09. INTEREST RATE LIMITATION. It is the intention of the
parties hereto to comply with applicable usury laws; accordingly, it is agreed
that notwithstanding any provisions to the contrary in this Agreement, the
Notes, the other Loan Documents or in any of the documents securing payment
thereof or otherwise relating thereto, in no event shall the aggregate of any
consideration that constitutes interest under law applicable to each Lender that
is contracted for, taken, reserved, charged or received under this Agreement,
the Notes, the other Loan Documents or under any of the aforesaid agreements
exceed the maximum amount allowed by such applicable law. If any such excess of
interest contracted for, charged or received under this Agreement, the Notes,
the other Loan Documents or under the terms of any of the documents securing
payment thereof or otherwise relating thereto, or if the maturity of the
indebtedness evidenced by the Notes is accelerated in whole or in part, or in
the event that all or part of the principal of or interest on the Notes shall be
prepaid, so that under any of such circumstances the amount of interest
contracted for, charged or received under this Agreement, the Notes, the other
Loan Documents or under any of the documents securing payment thereof or
otherwise relating thereto on the amount of principal actually outstanding from
time to time under the Notes shall
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exceed the maximum amount of interest permitted by applicable usury laws, then
in any such event (i) the provisions of this Section 11.09 shall govern and
control, (ii) neither Horizon, Continental, or any other Subsidiary nor any
other person now or hereafter liable under this Agreement or the other Loan
Documents for the payment of the Notes shall be obligated to pay in excess of
the maximum amount of interest permitted to be contracted for by, charged to or
received from the person obligated thereon under applicable usury laws, (iii)
any such excess shall be applied as a credit against the then unpaid principal
amount of the Notes or refunded to the person paying the same, at the holder's
option, and (iv) the effective rate of interest shall be automatically reduced
to the maximum lawful rate of interest permitted under applicable usury laws as
now or hereafter construed by the courts having jurisdiction thereof. It is
further agreed that, without limitation of the foregoing, all calculations of
the rate of interest contracted for, charged or received under this Agreement,
the Notes, the other Loan Documents or under such other documents or instruments
which are made for the purpose of determining whether such rate exceeds the
maximum lawful rate of interest shall be made, to the extent permitted by
applicable usury laws, by amortizing, prorating, allocating and spreading in
equal parts during the period of the full stated term of the indebtedness
evidenced by the Notes, all interest at any time contracted for, charged or
received from either Borrower or otherwise by the holder or holders thereof in
connection with the Notes, the other Loan Documents or this Agreement.
SECTION 11.10. ENTIRE AGREEMENT. (a) This Agreement, the other Loan
Documents and the Fee Letter constitute the entire contract among the parties
relative to the subject matter hereof and thereof. Any agreement previously
entered into among the parties with respect to the subject matter hereof and
thereof is superseded by this Agreement, the other Loan Documents and the Fee
Letter. Nothing in this Agreement, the other Loan Documents or the Fee Letter,
expressed or implied, is intended to confer upon any party, other than the
parties hereto and thereto and the other Secured Parties, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, the other Loan
Documents or the Fee Letters.
(b) THIS WRITTEN AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS, AND THE
INSTRUMENTS AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 11.11. SEVERABILITY. To the fullest extent permitted under
applicable law, in the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. To the fullest extent permitted under applicable
law, the parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
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SECTION 11.12. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 11.03.
SECTION 11.13. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 11.14. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) To the
fullest extent permitted under applicable law, each Borrower hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any Texas State court or Federal court of the United States of
America sitting in Dallas, Texas, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement or the
other Loan Documents, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such Texas State or, to the extent permitted under law, in such
Federal court. To the fullest extent permitted under applicable law, each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement
shall affect any right that the Agent, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against either Borrower or its properties in the courts
of any jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
Texas State court or Federal court of the United States of America sitting in
Dallas, Texas. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted under law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) To the fullest extent permitted under applicable law, each party to
this Agreement irrevocably consents to service of process in the manner provided
for notices in Section 11.01. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any other manner permitted
under law.
SECTION 11.15. SEVERAL LIABILITY. The obligations of the Borrowers
hereunder are several obligations, not joint and several obligations.
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HORIZON/CMS CREDIT AGREEMENT
IN WITNESS WHEREOF, the Borrowers, the Agent, the Issuing Bank, the
Existing Issuing Bank, and the Lenders have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
HORIZON/CMS HEALTHCARE
CORPORATION, as a Borrower
by /s/ Ernest A. Schofield
--------------------------------------
Name: Ernest A. Schofield
Title: Senior Vice President
CONTINENTAL MEDICAL SYSTEMS, INC.,
as a Borrower
by /s/ Ernest A. Schofield
--------------------------------------
Name: Ernest A. Schofield
Title: Senior Vice President
NATIONSBANK OF TEXAS, N.A.,
as Agent, as Issuing Bank and
as a Lender
by /s/ Guillermo Borda
--------------------------------------
Name: Guillermo Borda
Title: Vice President
BANK OF AMERICA NT & SA,
as Co-Agent and as a Lender
by /s/ Wyatt R. Ritchie
--------------------------------------
Name: Wyatt R. Ritchie
Title: Vice President
BANKERS TRUST COMPANY,
as a Lender
by /s/ Christopher Kinslow
--------------------------------------
Name: Christopher Kinslow
Title: Vice President
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HORIZON/CMS CREDIT AGREEMENT
BANQUE PARIBAS,
as a Lender
by /s/ Pierre-Jean de Filippis
--------------------------------------
Name: Pierre-Jean de Filippis
Title: General Manager
by /s/ Rosemary Davis
--------------------------------------
Name: Rosemary Davis
Title: Vice President
CHEMICAL BANK,
as Co-Agent and as a Lender
by /s/ William J. Baggiano
--------------------------------------
Name: William J. Baggiano
Title: Managing Director
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH,
as a Lender
by /s/ Farboud Tavangar
--------------------------------------
Name: Farboud Tavangar
Title: Authorized Signature
THE DAIWA BANK, LTD.,
as a Lender
by /s/ Kirk L. Stites
--------------------------------------
Name: Kirk L. Stites
Title: Vice President
by /s/ James T. Wang
--------------------------------------
Name: James T. Wang
Title: Vice President and Manager
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HORIZON/CMS CREDIT AGREEMENT
DEUTSCHE BANK AG, LOS ANGELES
AND/OR CAYMAN ISLANDS BRANCHES,
as a Lender
by /s/ J. Scott Jessup
--------------------------------------
Name: J. Scott Jessup
Title: Vice President
by /s/ Christine N. Lane
--------------------------------------
Name: Christine N. Lane
Title: Vice President
FIRST INTERSTATE BANK OF TEXAS, N.A.,
as Co-Agent and as a Lender
by /s/ Rajiv Chopiza
--------------------------------------
Name: Rajiv Chopiza
Title: Banking Officer
MELLON BANK, N.A.,
as a Lender
by /s/ Richard A. Lopatt
--------------------------------------
Name: Richard A. Lopatt
Title: Vice President
NATWEST BANK N.A.,
as a Lender
by /s/ Dilcia Pena Hill
--------------------------------------
Name: Dilcia Pena Hill
Title: Vice President
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HORIZON/CMS CREDIT AGREEMENT
PNC BANK NATIONAL ASSOCIATION,
as Co-Agent and as a Lender
by /s/ Joseph M. Rusnic
--------------------------------------
Name: Joseph M. Rusnic
Title: Vice President
SHAWMUT BANK CONNECTICUT, N.A.,
as Co-Agent and as a Lender
by /s/ Manfred O. Eigenbrod
--------------------------------------
Name: Manfred O. Eigenbrod
Title: Managing Director
SOCIETY NATIONAL BANK,
as a Lender
by /s/Angela G. Mago
--------------------------------------
Name: Angela G. Mago
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY,
as a Lender
by /s/ Neal Hoffson
--------------------------------------
Name: Neal Hoffson
Title: Vice President
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS, as Co-Agent and as a Lender
by /s/ Juan A. Cazorla
--------------------------------------
Name: Juan A. Cazorla
Title: Assistant Vice President
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HORIZON/CMS CREDIT AGREEMENT
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY,
as a Lender
by /s/ Masatake Yashiro
--------------------------------------
Name: Masatake Yashiro
Title: General Manger
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LA AGENCY,
as Co-Agent and as a Lender
by /s/ Yutaka Kamisawa
--------------------------------------
Name: Yutaka Kamisawa
Title: Deputy General Manager
THE MITSUBISHI BANK, LTD.,
LOS ANGELES BRANCH,
as Co-Agent and as a Lender
by /s/ Albert W. Kelley
--------------------------------------
Name: Albert W. Kelley
Title: Vice President
THE NIPPON CREDIT BANK, LTD.,
LOS ANGELES AGENCY,
as a Lender
by /s/ Yoshinobu Fukushima
--------------------------------------
Name: Yoshinobu Fukushima
Title: General Manager
THE SUMITOMO BANK, LIMITED,
as a Lender
by /s/ Hiroshi Amano
--------------------------------------
Name: Hiroshi Amano
Title: General Manager
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HORIZON/CMS CREDIT AGREEMENT
THE SUMITOMO TRUST & BANKING CO.,
LTD., NEW YORK BRANCH,
as a Lender
by /s/ Suraj P. Bhatia
--------------------------------------
Name: Suraj P. Bhatia
Title: Manager, Corporate Finance Dept.
SUNWEST BANK OF ALBUQUERQUE, N.A.,
as Existing Issuing Bank
by /s/ Nancy K. Madigan
--------------------------------------
Name: Nancy K. Madigan
Title: Vice President
Address: P.O. Box 25500, 303 Roma NW,
Albuquerque, NM 87102
Telecopy: 505-282-4178
115
