EXECUTION COPY
SECOND AMENDMENT dated as of July 16, 1996 (this "SECOND
AMENDMENT"), to the Amended and Restated Credit Agreement
dated as of September 26, 1995 (as amended to the date hereof,
the "AMENDED CREDIT AGREEMENT"), among Horizon/CMS Healthcare
Corporation, a Delaware corporation ("HORIZON"), Continental
Medical Systems, Inc., a Delaware corporation ("CONTINENTAL",
and together with Horizon, the "BORROWERS"), the lenders listed
on the signature pages thereto (the "LENDERS") and NationsBank
of Texas, N.A., as agent for the Lenders (in such capacity, the
"AGENT") and as issuing bank (in such capacity, the "ISSUING
BANK").
The parties hereto have agreed, subject to the terms and conditions
hereof, to amend the Amended Credit Agreement as provided herein.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to such terms in the Amended Credit Agreement (the Amended
Credit Agreement, as amended and waived by, and together with, this Second
Amendment, and as hereinafter amended, modified, extended or restated from
time to time, being called the "AMENDED AGREEMENT").
Accordingly, the parties hereto hereby agree as follows:
SECTION 1.01. AMENDMENT TO SECTION 2.10. Section 2.10(b) of the
Amended Agreement is hereby deleted in its entirety and the following is
hereby substituted in lieu thereof:
(b) Horizon shall have the option to request the extension of the
Maturity Date by one year, on an annual basis in accordance with this
Section 2.10(b), so that a five-year Availability Period would be
maintained; PROVIDED that, in the case of any such request in 1997, Horizon
may request an extension of the Maturity Date by two years so long as no
one-year extension was requested and granted in 1996 (a "1997 SPECIAL
EXTENSION"). In the event that Horizon desires to extend the maturity of
the Facility, Horizon shall give notice of such request to the Agent not
less than 30 days, and not more than 120 days, before the date (the
"PROPOSED EXTENSION DATE") which is four years (or three years in the case
of a 1997 Special Extension) prior to the existing Maturity Date. The Agent
shall give the other Lenders prompt notice of the receipt of any such
request. Such request shall be deemed granted if, and only if, the Agent
shall have received written notice of the approval of such proposed
extension, by September 30 immediately following the Proposed Extension
Date, from each Lender, except for any Lender which is replaced by Horizon
as provided in this Section 2.10(b); otherwise, the existing Maturity Date
shall not be extended. Any such Lender which shall have failed to give
such notice of approval by such September 30 is referred to herein as a
"DISSENTING LENDER". Horizon shall have the right to
replace any Dissenting Lender by causing such Lender to transfer and assign
all its interests, rights and obligations under this Amended Agreement to
another financial institution pursuant to Section 2.19 (a "REPLACEMENT
LENDER") by October 15 immediately following such Proposed Extension Date;
PROVIDED that the Consenting Lenders shall have given written notice to the
Agent of the approval of the proposed extension by such September 30.
Horizon may request an extension of the Maturity Date pursuant to this
Section 2.10(b) in each year, commencing in 1996; PROVIDED that, except in
the case of any such request in 1996 or pursuant to a 1997 Special
Extension, it shall have requested and received an extension of the
Maturity Date pursuant to this Section 2.10(b) in the previous year. The
Agent shall give Horizon and each Lender prompt written notice of whether
any proposed extension has been granted or denied. Any request for an
extension of the Maturity Date that has been granted in accordance with the
procedure set forth in this Section 2.10(b) is referred to herein as an
"APPROVED EXTENSION" and the Proposed Extension Date relating to such
Approved Extension is referred to herein as an "EXTENSION DATE".
SECTION 1.02. AMENDMENT TO SECTION 3.09. Section 3.09(b) of the
Amended Agreement is hereby amended by adding the following language after
the word "decree" and before the period at the end of the second sentence
thereof:
", except any such communication relating to matters that could not
reasonably be expected to result, individually or in the aggregate, in
a Material Adverse Effect"
SECTION 1.03. AMENDMENT TO SECTION 6.05 AND RELATED SCHEDULE. (a) The
following proviso is hereby added at the end of paragraph (C) of Section
6.05(a):
"PROVIDED that the dispositions described on Schedule 6.05(a) hereto shall
not be subject to such $20,000,000 aggregate book value and $5,000,000 for
any single asset book value limitations, so long as 100% of the Net
Proceeds thereof remaining after the repayment of existing debt (in an
aggregate amount not to exceed $9,500,000) relating to the assets being
disposed of in such described dispositions shall be promptly applied to the
prepayment of outstanding Loans, but shall not be applied to reduce the
Commitments;"
(b) Schedule 6.05(a) attached to this Second Amendment is hereby adopted
as Schedule 6.05(a) for purposes of the Amended Agreement.
SECTION 1.04. AMENDMENT OF EBITDAR DEFINITION. The following clause is
hereby added at the end of the proviso to the definition of EBITDAR in Section
1.01 of the Amended Agreement:
", (D) up to $11,000,000 of non-cash charges incurred during the fourth
quarter of fiscal year 1996 as a result of the implementation of Financial
Accounting Standards Board Statement No. 121 and (E) up to $9,000,000 of
restructuring charges incurred during the fourth quarter of fiscal year
1996 as a result of the dispositions described on Schedule 6.05(a) hereto".
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SECTION 1.05. WAIVER. On and as of (but not before) the Second
Amendment Effective Date (as defined in Section 1.07), any inaccuracies in
the representations made after September 26, 1995 and prior to (but not
after) the Second Amendment Effective Date pursuant to the second sentence of
Section 3.09(b) of the Amended Agreement (but only to the extent such
inaccuracies would have been averted if the amendment set forth in Section
1.02 of this Second Amendment had been effective prior to the making of the
such representations) shall be permanently waived. The preceding sentence
shall be limited precisely as written.
SECTION 1.06. REPRESENTATIONS AND WARRANTIES. The Borrowers hereby
represent and warrant to the Agent and the Lenders, as follows:
(a) The representations and warranties set forth in Article III of
the Amended Agreement, and in each other Loan Document, are true and
correct in all material respects on and as of the date hereof and on and as
of the Second Amendment Effective Date with the same effect as if made on
and as of the date hereof or the Second Amendment Effective Date, as the
case may be, except to the extent such representations and warranties
expressly relate solely to an earlier date.
(b) Each of the Borrowers, the Subsidiary Pledgors and the Subsidiary
Guarantors is in compliance in all material respects with all the terms and
conditions of the Amended Agreement and the other Loan Documents on its
part to be observed or performed and no Default or Event of Default has
occurred or is continuing under the Amended Agreement.
(c) The execution, delivery and performance by each of the Borrowers
of this Second Amendment have been duly authorized by such party.
(d) This Second Amendment constitutes the legal, valid and binding
obligation of each of the Borrowers, enforceable against it in accordance
with its terms.
(e) The execution, delivery and performance by each of the Borrowers
of this Second Amendment (i) do not conflict with or violate (A) any
provision of law, statute, rule or regulation, or of the certificate of
incorporation or by-laws of either of the Borrowers, (B) any order of any
Governmental Authority or (C) any provision of any indenture, agreement or
other instrument to which either of the Borrowers is a party or by which it
or any of its property may be bound and (ii) do not require any consents
under, result in a breach of or constitute (with notice or lapse of time or
both) a default under any such indenture, agreement or instrument.
SECTION 1.07. EFFECTIVENESS. This Second Amendment shall become
effective only upon satisfaction of the following conditions precedent (the
first date upon which each such condition has been satisfied being herein
called the "SECOND AMENDMENT EFFECTIVE DATE"):
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(a) The Agent shall have received duly executed counterparts of this
Second Amendment which, when taken together, bear the authorized signatures
of the Borrowers and the Required Lenders.
(b) The Required Lenders shall be satisfied that the representations
and warranties set forth in Section 1.06 are true and correct on and as of
the Second Amendment Effective Date and that no Default or Event of Default
has occurred or is continuing.
(c) There shall not be any action pending or any judgment, order or
decree in effect which, in the judgment of the Required Lenders or their
counsel, is likely to restrain, prevent or impose materially adverse
conditions upon performance by any of the Borrowers, the Subsidiary
Pledgors or the Subsidiary Guarantors of its obligations under the Loan
Documents.
(d) The Required Lenders shall have received such other documents,
legal opinions, instruments and certificates as they shall reasonably
request and such other documents, legal opinions, instruments and
certificates shall be satisfactory in form and substance to the Required
Lenders and their counsel. All corporate and other proceedings taken or
to be taken in connection with this First Amendment and all documents
incidental thereto, whether or not referred to herein, shall be
satisfactory in form and substance to the Required Lenders and their
counsel.
(e) The Borrowers shall have paid in full all amounts due and payable
as of the Second Amendment Effective Date under the Credit Agreement and
shall have paid a total amendment fee of $87,500 (of which $3,500 shall be
distributed to each Lender).
SECTION 1.08. APPLICABLE LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
EXCEPT TO THE EXTENT THAT THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA
MAY APPLY.
SECTION 1.09. EXPENSES. The Borrowers shall pay all reasonable
out-of-pocket expenses incurred by the Agent and the Required Lenders in
connection with the preparation, negotiation, execution, delivery and
enforcement of this Second Amendment, including, but not limited to, the
reasonable fees and disbursements of counsel. The agreement set forth in
this Section 1.09 shall survive the termination of this Second Amendment and
the Amended Agreement.
SECTION 1.10. COUNTERPARTS. This Second Amendment may be executed in
any number of counterparts, each of which shall constitute an original but
all of which when taken together shall constitute but one agreement.
SECTION 1.11. CREDIT AGREEMENT. Except as expressly set forth herein,
the amendments and waiver provided herein shall not by implication or
otherwise limit, constitute
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a waiver of, or otherwise affect the rights and remedies of the Lenders, the
Agent or the other Secured Parties under the Amended Agreement or any other
Loan Document, nor shall they constitute a waiver of any Default or Event of
Default, nor shall they alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the
Amended Agreement or any other Loan Document. Each of the amendments and
waiver provided herein shall apply and be effective only with respect to the
provisions of the Amended Agreement specifically referred to by such
amendment or waiver, as the case may be. Except as expressly amended herein,
the Amended Agreement shall continue in full force and effect in accordance
with the provisions thereof. As used in the Amended Agreement, the terms
"Agreement", "herein", "hereinafter", "hereunder", "hereto" and words of
similar import shall mean, from and after the date hereof, the Amended
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment
to be duly executed by their duly authorized officers, all as of the date
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 Managing
Agent and as a Lender
By /s/ WYATT R. RITCHIE
-------------------------------------------------
Name: Wyatt R. Ritchie
Title: Managing Director
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as a Lender
By /s/ ROBERT M. OSIESKI
-------------------------------------------------
Name: Robert M. Osieski
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as Co-Agent and as a Lender
By /s/ FARBOUD TAVANGAR
-------------------------------------------------
Name: Farboud Tavangar
Title: Authorized Signature
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LONG TERM CREDIT BANK OF JAPAN, LTD., LA
AGENCY, as Co-Agent and as a Lender
By /s/ T. MORGAN EDWARDS II
-------------------------------------------------
Name: T. Morgan Edwards II
Title: Deputy General Manager
PNC BANK, NATIONAL ASSOCIATION, as Co-Agent
and as a Lender
By /s/ KAREN GEORGE
-------------------------------------------------
Name: Karen George
Title: Assistant Vice President
THE CHASE MANHATTAN BANK, as successor to
CHEMICAL BANK, as a Lender
By /s/ DAWN LEE LUM
-------------------------------------------------
Name: Dawn Lee Lum
Title: Vice President
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION,
formerly FIRST INTERSTATE BANK OF TEXAS, N.A.,
as a Lender
By /s/ KIMBERLY K. WELCH
-------------------------------------------------
Name: Kimberly K. Welch
Title: Assistant Vice President
TORONTO DOMINION (TEXAS) INC., as a Lender
By /s/ NEVA NESBITT
-------------------------------------------------
Name: Neva Nesbitt
Title: Vice President
BANKERS TRUST COMPANY, as a Lender
By /s/ PATRICIA HOGAN
-------------------------------------------------
Name: Patricia Hogan
Title: Vice President
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BANQUE PARIBAS, as a Lender
By /s/ PIERRE-JEAN DE FILIPPIS
-------------------------------------------------
Name: Pierre-Jean de Filippis
Title: General Manager
By /s/ KENNETH E. MOORE, JR.
-------------------------------------------------
Name: Kenneth E. Moore, Jr.
Title: Vice President
BANQUE NATIONALE de PARIS, as a Lender
By /s/ C. BETTLES
-------------------------------------------------
Name: C. Bettles
Title: Senior Vice President and Manager
By /s/ MARGARET MUDD
-------------------------------------------------
Name: Margaret Mudd
Title: VP
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/ ROSS A. HOWARD
-------------------------------------------------
Name: Ross A. Howard
Title: Director
MELLON BANK, N.A., as a Lender
By /s/ RICHARD A. LOPAIT
-------------------------------------------------
Name: Richard A. Lopait
Title: Vice President
FIRST NATIONAL BANK, FORMERLY KNOWN AS
FLEET BANK OF MASSACHUSETTS, as a Lender
By /s/ GINGER STOLRENTHALER
-------------------------------------------------
Name: Ginger Stolrenthaler
Title: Vice President
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KEYBANK NATIONAL ASSOCIATION, as a Lender
By /s/ ANGELA G. MAGO
-------------------------------------------------
Name: Angela G. Mago
Title: Vice President
SUNWEST BANK OF ALBUQUERQUE, N.A., as a
Lender and as Issuing Bank
By /s/ NANCY MADIGAN
-------------------------------------------------
Name: Nancy Madigan
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
successor by merger to THE BANK OF TOKYO TRUST
COMPANY
By /s/ AUGUSTINE OKWU
-------------------------------------------------
Name: Augustine Okwu
Title: Vice President
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS,
as a Lender
By /s/ JUAN A. CAZORLA
-------------------------------------------------
Name: Juan A. Cazorla
Title: Assistant Vice President
THE NIPPON CREDIT BANK, LTD., LOS ANGELES
AGENCY, as a Lender
By /s/ BERNARDO E. CORREA-HENSCHKE
-------------------------------------------------
Name: Bernardo E. Correa-Henschke
Title: Vice President & Senior Manager
THE SUMITOMO BANK, LIMITED, as a Lender
By /s/ REIJI SATO
-------------------------------------------------
Name: Reiji Sato
Title: Joint General Manager
THE SUMITOMO TRUST & BANKING CO., LTD., NEW
YORK BRANCH, as a Lender
By /s/ JOSEPH M. KELLEY
-------------------------------------------------
Name: Joseph M. Kelley
Title: Senior Vice President
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THE SUMITOMO BANK, LIMITED, CHICAGO
BRANCH, as a Lender
By /s/ JAMES T. WANG
-------------------------------------------------
Name: James T. Wang
Title: Vice President & Manager
THE MITSUBISHI BANK, LTD., LOS ANGELES
BRANCH, as a Lender
By /s/ ALBERT W. KELLEY
-------------------------------------------------
Name: Albert W. Kelley
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH, as a Lender
By /s/ AKIJIRO YOSHINO
-------------------------------------------------
Name: Akijiro Yoshino
Title: Executive Vice President
NATIONSBANK, N.A., as a Lender
By /s/ CHRIS BARTON
-------------------------------------------------
Name: Chris Barton
Title: VP
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