EXHIBIT 10.2
EXECUTION COPY
AMENDMENT NO. 1 AND CONSENT
Dated as of June 11, 2004
to
CREDIT AGREEMENT
Dated as of December 31, 2003
THIS AMENDMENT NO. 1 AND CONSENT ("Amendment") is made as of June 11, 2004
by and among Res-Care, Inc., a Kentucky corporation (the "Borrower"), the
financial institutions listed on the signature pages hereof (the "Lenders") and
Bank One, NA (Main Office Chicago), as Administrative Agent (the "Agent"), under
that certain Credit Agreement dated as of December 31, 2003 by and among the
Borrower, the Lenders and the Agent (the "Credit Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
given to them in the Credit Agreement.
WHEREAS, the Borrower has requested that the Lenders and the Agent consent
to certain transactions and agree to certain amendments to the Credit Agreement;
WHEREAS, the Lenders party hereto and the Agent have agreed to so consent
and agree to such amendments on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrowers, the Lenders party hereto and the Agent have agreed to enter into this
Amendment.
1. Consents. The Borrower has informed the Agent and the Lenders that (a)
the Borrower has entered into an agreement with Onex Partners LP and its
affiliates (the "Equity Investor") pursuant to which (i) the Equity Investor has
agreed to invest (the "Onex Equity Investment") $50,500,000 in consideration for
certain Series A convertible preferred stock of the Borrower (the "Preferred
Stock"), (ii) the Equity Investor will acquire 3,700,000 shares of common stock
of the Borrower from certain directors of the Borrowers and their affiliates and
(iii) the Equity Investor will initially designate three of the nine directors
of the Borrower and the Borrower's current board of directors will appoint the
fourth director to fill one of the vacancies created by certain retiring
directors (the foregoing proposed changes to the Borrower's board of directors
being referred to herein as the "Proposed Board Changes") and (b) a subsidiary
of the Borrower intends to acquire 100% of the outstanding capital stock of
Habilitation Opportunities of Ohio, Inc. pursuant to an Acquisition with a
Purchase Price not to exceed $6,250,000 (the "Specified Acquisition"). Effective
as of June 11, 2004 (the "Effective Date") but subject to the satisfaction of
the conditions precedent set forth in Section 3 below, the Lenders party hereto
(1) consent to the Onex Equity Investment and the Specified Acquisition and (2)
acknowledge and agree that (aa) the changes in the Borrower's board of directors
as contemplated by the Proposed Board Changes shall not constitute a Change of
Control, (bb) the Onex Equity Investment shall not constitute a Financing and
therefore the requirement for the mandatory prepayment which would otherwise be
applicable under Section 2.2(c) of the Credit Agreement is hereby waived, (cc)
any conversion of the Preferred Stock into common stock of the Borrower shall
not constitute a Financing, and (dd) the Specified Acquisition shall be
considered a Permitted Acquisition in addition to the Acquisitions otherwise
permitted under the Credit Agreement, and the Specified Acquisition shall be
excluded in determining the limitation of Section 6.13.9(v) of the Credit
Agreement (as amended herein).
2. Amendments to Credit Agreement. Effective as of the Effective
Date but subject to the satisfaction of the conditions precedent set forth in
Section 3 below, the Credit Agreement is amended as follows:
(a) Section 1.1 is amended to insert the following definition in
alphabetical order:
""Leverage Ratio" is defined in Section 6.21 hereof."
(b) The definition of "Asset Sale" appearing in Section 1.1 is
amended to delete the reference to "$50,000" appearing therein and insert
"$500,000" in lieu thereof.
(c) The definition of "CapEx Base Amount" appearing in Section 1.1
is amended and restated in its entirety to read as follows:
""CapEx Base Amount" means (i) $19,000,000 during the
Borrower's 2004 fiscal year, (ii) $22,000,000 during the
Borrower's 2005 fiscal year, (iii) $24,000,000 during the
Borrower's 2006 fiscal year and (iv) $25,000,000 during each
fiscal year thereafter."
(d) The definition of "Consolidated Current Maturities" appearing in
Section 1.1 is amended and restated in its entirety to read as follows:
""Consolidated Current Maturities" means, with reference
to any period, all payments of principal and interest due
within twelve (12) calendar months on and after the last day
of such period with respect to all Consolidated Indebtedness
(other than (i) Indebtedness under the Convertible
Subordinated Notes and (ii) the Revolving Loans) of the
Borrower and its Subsidiaries."
(e) The definition of "Consolidated EBITDA" appearing in Section 1.1
is amended to insert the following sentence at the end thereof:
"Notwithstanding anything herein, in any financial
statements of the Borrower or in Agreement Accounting
Principles to the contrary, for purposes of calculating
Consolidated EBITDA, any Permitted Acquisition with a Purchase
Price in excess of $2,000,000 and consummated during the
period for which such Consolidated EBITDA was calculated shall
be deemed to have occurred on the first day of the relevant
period for which such Consolidated EBITDA was calculated on a
pro forma basis reasonably acceptable to the Administrative
Agent, but without giving effect to any projected cost savings
or synergies resulting from such Permitted Acquisition."
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(f) The definition of "Continuing Director" appearing in Section 1.1
is amended and restated in its entirety to read as follows:
""Continuing Director" means, with respect to any Person as of
any date of determination, any member of the board of directors of
such Person who (i) was a member of such board of directors on the
Closing Date, (ii) was nominated for election or elected to such
board of directors with the approval of the holders of the
Borrower's Series A convertible preferred stock, or (iii) was
nominated for election or elected to such board of directors with
the approval of the required majority of the Continuing Directors
who were members of such board at the time of such nomination or
election; provided that any individual who is so elected or
nominated in connection with a merger, consolidation, acquisition or
similar transaction shall not be a Continuing Director unless such
individual was a Continuing Director prior thereto or such
individual was elected in connection with a Permitted Acquisition or
any other acquisition consented to hereunder."
(g) The definition of "Rentals Maximum Amount" appearing in Section
1.1 is amended and restated in its entirety to read as follows:
""Rentals Maximum Amount" means (i) $50,000,000 during the
Borrower's 2004 fiscal year, (ii) $52,500,000 during the Borrower's
2005 fiscal year, (iii) $55,000,000 during the Borrower's 2006
fiscal year and (iv) $57,500,000 during each fiscal year thereafter;
provided that the Rentals Maximum Amount shall be increased as
follows: if any Permitted Acquisition with a Purchase Price in
excess of $2,000,000 has occurred during the period for which such
Rentals Maximum Amount was calculated, such Permitted Acquisition
shall be deemed to have occurred on the first day of the relevant
period for which such Rentals Maximum Amount was calculated (on a
pro forma basis reasonably acceptable to the Administrative Agent)
and such Rentals Maximum Amount for such period and all future
periods shall be increased by the incremental amount of such
projected Rentals."
(h) The definition of "Swing Line Commitment" appearing in Section
1.1 is amended to delete the reference to "$5,000,000" appearing therein and
insert "$10,000,000" in lieu thereof.
(i) Section 2.20.1 is amended to delete the reference to
"$65,000,000" appearing therein and insert "$75,000,000" in lieu thereof.
(j) Section 6.10(ii)(B) is amended and restated in its entirety to
read as follows:
"(B) the Borrower may redeem its capital stock, and redeem the
Indebtedness evidenced by the then outstanding principal balance
under the Senior Unsecured Notes, in an aggregate amount for all
such redemptions of stock and Indebtedness not to exceed
$20,000,000; provided that the aggregate amount for all such
redemptions of such stock shall not exceed $5,000,000."
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(k) Section 6.13.9(v) is amended and restated in its entirety to
read as follows:
"(v) the Purchase Price for each such Acquisition together
with the Purchase Price of all other Permitted Acquisitions shall
not exceed the sum of (i) $50,000,000 plus (ii) on and after the
consummation of Acquisitions with a Purchase Price up to (but not in
excess of) $50,000,000, an amount equal to $7,500,000 during any
fiscal year of the Borrower (it being understood and agreed that
compliance with this Section shall be calculated in a manner such
that the Purchase Price for Acquisitions shall be allocated first to
the foregoing $50,000,000 limit and, after satisfaction thereof, to
the annual $7,500,000 limit);"
(l) Section 6.13.9(vi) is amended to delete the reference to
"Section 6.1.1" appearing therein and insert "Sections 6.1.1 or 6.1.2" in lieu
thereof
(m) Section 6.14.11 is amended to delete the reference to
"$5,000,000" appearing therein and insert "$7,500,000" in lieu thereof.
3. Conditions of Effectiveness. The effectiveness of this Amendment
is subject to the conditions precedent that the Agent shall have received (a)
counterparts of this Amendment duly executed by the Borrower, the Required
Lenders and the Agent and the Consent and Reaffirmation attached hereto duly
executed by the Guarantors, (b) evidence satisfactory to the Agent of the
consummation of the Onex Equity Investment by no later than July 7, 2004, (c)
for the ratable account of each Lender signatory hereto by such time as is
requested by the Agent, an amendment fee in an amount equal to 0.05% of the sum
of such Lender's (i) Revolving Loan Commitment plus (ii) principal amount of
Term Loans outstanding on the Effective Date, (d) payment and/or reimbursement
of all of the fees and expenses (including reasonable attorneys' fees and
expenses) due or payable to the Agent in connection with this Amendment and (e)
such other instruments and documents as are reasonably requested by the Agent.
4. Representations and Warranties of the Borrower. The Borrower
hereby represents and warrants as follows:
(a) This Amendment and the Credit Agreement as amended hereby
constitute legal, valid and binding obligations of the Borrower and are
enforceable against the Borrower in accordance with their terms.
(b) As of the date hereof and giving effect to the terms of this
Amendment, (i) there exists no Default or Unmatured Default and (ii) the
representations and warranties contained in Article V of the Credit Agreement,
as amended hereby, are true and correct, except for representations and
warranties made with reference solely to an earlier date.
5. Reference to and Effect on the Credit Agreement.
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(a) Upon the effectiveness hereof, each reference to the Credit
Agreement in the Credit Agreement or any other Loan Document shall mean and be a
reference to the Credit Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement and
all other documents, instruments and agreements executed and/or delivered in
connection therewith shall remain in full force and effect and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Agent or the
Lenders, nor constitute a waiver of any provision of the Credit Agreement or any
other documents, instruments and agreements executed and/or delivered in
connection therewith.
6. Governing Law. This Amendment shall be governed by and construed
in accordance with the internal laws of the Commonwealth of Kentucky, but giving
effect to federal laws applicable to national banks.
7. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
8. Counterparts. This Amendment may be executed by one or more of
the parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
[Signature Pages Follow]
5
IN WITNESS WHEREOF, this Amendment has been duly executed as of the
day and year first above written.
RES-CARE, INC.,
as the Borrower
By:____________________________________________
Name:
Title:
BANK ONE, NA (MAIN OFFICE CHICAGO),
as Administrative Agent, as Swing Line Lender,
as LC Issuer and as a Lender
By:____________________________________________
Name:
Title:
XXXXXXX XXXXX CAPITAL,
as Syndication Agent and as a Lender
By:____________________________________________
Name:
Title:
NATIONAL CITY BANK OF KENTUCKY,
as Syndication Agent and as a Lender
By:____________________________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Documentation Agent and as a Lender
By:____________________________________________
Name:
Title:
Signature Page to Amendment No.1 and Consent
Res-Care, Inc.
Credit Agreement dated as of December 31, 2003
U.S. BANK NATIONAL ASSOCIATION,
as a Lender
By:___________________________________________
Name:
Title:
FIFTH THIRD BANK, KENTUCKY, INC.,
as a Lender
By:___________________________________________
Name:
Title:
BRANCH BANKING AND TRUST COMPANY,
as a Lender
By:___________________________________________
Name:
Title:
OLD NATIONAL BANK,
as a Lender
By:___________________________________________
Name:
Title:
Signature Page to Amendment No.1 and Consent
Res-Care, Inc.
Credit Agreement dated as of December 31, 2003
CONSENT AND REAFFIRMATION
Each of the undersigned hereby acknowledges receipt of a copy of the
foregoing Amendment No. 1 to the Credit Agreement dated as of December 31, 2003
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement") by and among Res-Care, Inc. (the
"Borrower"), the financial institutions from time to time party thereto (the
"Lenders") and Bank One, NA (Main Office Chicago), in its individual capacity as
a Lender and in its capacity as contractual representative (the "Agent"), which
Amendment No. 1 is dated as of June 11, 2004 (the "Amendment"). Capitalized
terms used in this Consent and Reaffirmation and not defined herein shall have
the meanings given to them in the Credit Agreement. Without in any way
establishing a course of dealing by the Agent or any Lender, each of the
undersigned consents to the Amendment and reaffirms the terms and conditions of
the Guaranty Agreement, the Pledge and Security Agreement and any other Loan
Document executed by it and acknowledges and agrees that such agreement and each
and every such Loan Document executed by the undersigned in connection with the
Credit Agreement remains in full force and effect and is hereby reaffirmed,
ratified and confirmed. All references to the Credit Agreement contained in the
above-referenced documents shall be a reference to the Credit Agreement as so
modified by the Amendment and as the same may from time to time hereafter be
amended, modified or restated.
Dated: June 11, 2004
ALTERNATIVE XXXXXXX, XXX.
BALD EAGLE ENTERPRISES, INC.
CAPITAL TX INVESTMENTS, INC.
CATX PROPERTIES, INC.
CNC/ACCESS, INC.
COMMUNITY ADVANTAGE, INC.
COMMUNITY ALTERNATIVES ILLINOIS, INC.
COMMUNITY ALTERNATIVES INDIANA, INC.
COMMUNITY ALTERNATIVES KENTUCKY, INC.
COMMUNITY ALTERNATIVES MISSOURI, INC.
COMMUNITY ALTERNATIVES NEBRASKA, INC.
COMMUNITY ALTERNATIVES TEXAS PARTNER, INC.
COMMUNITY ALTERNATIVES VIRGINIA, INC.
EDUCARE COMMUNITY LIVING-
TEXAS LIVING CENTERS, INC.
J. & J. CARE CENTERS, INC.
Signature Page to Amendment No.1 and Consent
Res-Care, Inc.
Credit Agreement dated as of December 31, 2003
NORMAL LIFE, INC.
PEOPLESERVE, INC.
RAISE GEAUGA, INC.
RES-CARE ALABAMA, INC.
RES-CARE CALIFORNIA, INC. d/b/a
RCCA SERVICES
RES-CARE ILLINOIS, INC.
RES-CARE KANSAS, INC.
RES-CARE NEW JERSEY, INC.
RES-CARE NEW MEXICO, INC.
RES-CARE OHIO, INC.
RES-CARE OKLAHOMA, INC.
RES-CARE OTHER OPTIONS, INC.
RES-CARE PREMIER, INC.
RES-CARE TRAINING TECHNOLOGIES, INC.
RES-CARE WASHINGTON, INC.
ROCKCREEK, INC.
RSCR CALIFORNIA, INC.
RSCR INLAND, INC.
RSCR WEST VIRGINIA, INC.
SOUTHERN HOME CARE SERVICES, INC.
TANGRAM REHABILITATION NETWORK, INC.
TEXAS HOME MANAGEMENT, INC.
THM HOMES, INC.
XXXXXXXX GROUP HOMES, INC.
XXXXX MANAGEMENT, INC.
BOLIVAR DEVELOPMENTAL TRAINING CENTER, INC.
BOLIVAR ESTATES, INC.
EBENEZER ESTATES, INC.
FORT XXXXX ESTATES, INC.
HILLSIDE ESTATES, INC.
HYDESBURG ESTATES, INC.
INDIVIDUALIZED SUPPORTED LIVING, INC.
MEADOW LANE ESTATES, INC.
MISSOURI PROGRESSIVE SERVICES, INC.
OAK WOOD SUITES OF BOLIVAR, INC.
OAKVIEW ESTATES OF BOLIVAR, INC.
XXXXXX XXXXX XXXXXXX, XXX.
XXXXX XXXXX XXXXXXX, INC.
Signature Page to Amendment No.1 and Consent
Res-Care, Inc.
Credit Agreement dated as of December 31, 0000
XXX-XXX XXXXXXX, XXX.
XXXXXXX XXXXXXX, INC.
UPWARD BOUND, INC.
XXXXXXX ESTATES, INC.
CAREERS IN PROGRESS, INC.
EDUCARE COMMUNITY LIVING-NORMAL LIFE, INC.
NORMAL LIFE OF CALIFORNIA, INC.
NORMAL LIFE OF CENTRAL INDIANA, INC.
NORMAL LIFE FAMILY SERVICES, INC.
NORMAL LIFE OF GEORGIA, INC.
NORMAL LIFE OF LAFAYETTE, INC.
NORMAL LIFE OF LAKE XXXXXXX, INC.
NORMAL LIFE OF LOUISIANA, INC.
NORMAL LIFE OF SOUTHERN INDIANA, INC.
RES-CARE FLORIDA, INC.
EDUCARE COMMUNITY LIVING CORPORATION-AMERICA
PSI HOLDINGS, INC.
VOCA CORPORATION OF AMERICA
VOCA RESIDENTAL SERVICES, INC.
B.W.J. OPPORTUNITY CENTERS, INC.
THE CITADEL GROUP, INC.
EDUCARE COMMUNITY LIVING CORPORATION-GULF COAST
EDUCARE COMMUNITY LIVING CORPORATION-MISSOURI
EDUCARE COMMUNITY LIVING CORPORATION-NEVADA
EDUCARE COMMUNITY LIVING CORPORATION-NEW MEXICO
EDUCARECOMMUNITY LIVING CORPORATION-NORTH CAROLINA
EDUCARE COMMUNITY LIVING CORPORATION-TEXAS
VOCA CORP.
VOCA CORPORATION OF FLORIDA
VOCA CORPORATION OF INDIANA
VOCA CORPORATION OF MARYLAND
VOCA CORPORATION OF NEW JERSEY
Signature Page to Amendment No.1 and Consent
Res-Care, Inc.
Credit Agreement dated as of December 31, 2003
VOCA CORPORATION OF NORTH CAROLINA
VOCA CORPORATION OF OHIO
VOCA CORPORATION OF WASHINGTON, D.C.
VOCA CORPORATION OF WEST VIRGINIA, INC.
By: ________________________________________
L. Xxxxx Xxxxx
Title: Assistant Treasurer
THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC.
ALTERNATIVE YOUTH SERVICES, INC.
GENERAL HEALTH CORPORATION
NEW SUMMIT SCHOOL CORPORATION
YOUTHTRACK, INC.
ARBOR e&t, llC
EMPLOY-ABILITY UNLIMITED, INC.
By: ________________________________________
L. Xxxxx Xxxxx
Title: Treasurer
EDUCARE COMMUNITY LIVING LIMITED PARTNERSHIP
By: Community Alternatives Texas
Partner, Inc.
Its: General Partner
By: ________________________________________
L. Xxxxx Xxxxx
Title: Assistant Treasurer
Signature Page to Amendment No.1 and Consent
Res-Care, Inc.
Credit Agreement dated as of December 31, 2003
NORMAL LIFE OF INDIANA
By: Normal Life of Central Indiana, Inc.
one of its General Partners
By: ________________________________________
L. Xxxxx Xxxxx
Title: Assistant Treasurer
and
By: Normal Life of Southern Indiana, Inc.
the other General Partner
By: ________________________________________
L. Xxxxx Xxxxx
Title: Assistant Treasurer
VOCA OF INDIANA, LLC, a limited
liability company
By: ________________________________________
L. Xxxxx Xxxxx
Title: Assistant Treasurer
CREATIVE NETWORKS, LLC
By: ________________________________________
L. Xxxxx Xxxxx
Title: Manager
Signature Page to Amendment No.1 and Consent
Res-Care, Inc.
Credit Agreement dated as of December 31, 2003
