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EXHIBIT 10.131
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
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This First Amendment to Loan and Security Agreement (this "AMENDMENT")
is entered into as of the 19th day of March, 1999, among RAMSAY YOUTH SERVICES,
INC., a Delaware corporation, f/k/a RAMSAY HEALTH CARE, INC. ("HOLDINGS"), with
its principal place of business at Columbus Center, Xxx Xxxxxxxx Xxxxx, Xxxxx
000, Xxxxx Xxxxxx, Xxxxxxx 00000, each of the Subsidiaries of Holdings party to
this Amendment and listed in EXHIBIT B to the Loan Agreement referred to below
(the "HOLDINGS SUBSIDIARIES"), each of which is a corporation or other legal
entity as indicated in EXHIBIT B, is organized under the laws of the
jurisdiction indicated in EXHIBIT B, and has its principal place of business at
the location indicated in EXHIBIT B (Holdings, the Holdings Subsidiaries, and
each other Subsidiary of Holdings or of any Subsidiary of Holdings from time to
time party to the Loan Agreement referred to below are hereinafter collectively
referred to as "BORROWERS" and each individually as a "BORROWER"), and THE XXXXX
GROUP, INCORPORATED, a Florida corporation ("XXXXX"), RAMSAY YOUTH SERVICES
PUERTO RICO, INC., a Puerto Rico corporation ("RYSPR") and FLEET CAPITAL
CORPORATION, a Rhode Island corporation (in its individual capacity, "FCC"),
with offices at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000, LB 21, Xxxxxx Xxxxx
00000, as a Lender, and as agent for all Lenders, in such capacity, "AGENT"),
and such Persons who are or hereafter become parties to the Loan Agreement as
Lenders. Capitalized terms used but not defined in this Amendment have the
meanings assigned to them in Appendix A of that certain Loan and Security
Agreement dated October 30, 1998, among Borrowers, Lenders and Agent (the "LOAN
AGREEMENT").
W I T N E S S E T H:
WHEREAS, an Event of Default is in existence under the Loan Agreement
as a result of Holdings' failure to comply with the financial covenants in
Sections 8.3.1, 8.3.2 and 8.3.3 of the Loan Agreement for the fiscal quarter
ending on December 31, 1998 (the "Existing Event of Default"), and Borrowers
have requested that Agent and Lenders waive the Existing Event of Default;
WHEREAS, Ramsay Youth Services, Inc., a Delaware corporation ("XXX"),
merged with and into Ramsay Health Care, Inc. ("RHC"), and RHC, as the surviving
entity, has changed its name to Ramsay Youth Services, Inc.; and
WHEREAS, Ramsay Educational Services, Inc. ("RESI") entered into that
certain Stock Purchase Agreement, dated as of November 19, 1998, with Xxxx X.
Xxxxx, The Xxxxx Group, Incorporated, a Colorado corporation ("XXXXX-COLORADO"),
and Xxxxx, pursuant to which RESI acquired all of the issued and outstanding
capital stock of Xxxxx and Xxxxx-Colorado; and
WHEREAS, Xxxxx-Colorado merged with and into Xxxxx;
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WHEREAS, RYSPR is a subsidiary of Holdings; and
WHEREAS, Borrowers have requested that the Loan Agreement be amended
(i) to reflect the change of RHC's name to Ramsay Youth Services, Inc., (ii) to
add Xxxxx and RYSPR as Guarantors, and (iii) to amend certain defined terms
relating to the financial covenants and certain other terms; and
WHEREAS, subject to the terms and conditions herein contained, Agent
and Lenders have agreed to the Borrowers' requests.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
Borrowers, Agent and Lenders hereby agree as follows:
SECTION 1. Subject to the satisfaction of each condition precedent set
forth in SECTION 3 hereof and in reliance on the representations, warranties,
covenants and agreements contained in this Amendment, the Loan Agreement shall
be amended effective March __, 1999 (the "EFFECTIVE DATE") in the manner
provided in this SECTION 1:
1.1 REPRESENTATIONS AND WARRANTIES AND COVENANTS. Section 7.1, Section
8.1 and Section 8.2 of the Loan Agreement and the definition of "Restricted
Investment" in Appendix A are amended by deleting the word "Borrower" where it
appears in each such Section and definition and inserting the word "Loan Party"
in place thereof.
1.2 AMENDED DEFINITIONS. The definitions contained in APPENDIX A to the
Loan Agreement shall be amended as follows:
1.2.1 ADJUSTED NET EARNINGS FROM OPERATIONS (OR LOSS). The
definition of "Adjusted Net Earnings from Operations (or Loss)" shall
be amended to re-letter subparagraph (xi) as subparagraph (xii) and add
the following new subparagraph (xi):
(xi) 1998 year-end accruals arising from asserted
purchase price adjustments related to the West Virginia
University Hospital Sale and the Charter Sale; and
1.2.2 AGREEMENT. The definition of Agreement shall be amended
to read in its entirety as follows:
AGREEMENT - the Loan and Security Agreement referred
to in the first sentence of this APPENDIX A, all EXHIBITS
thereto and this APPENDIX A, all as amended by the First
Amendment to the Loan and Security Agreement, dated as of
March __, 1999, and as further amended, renewed, extended, and
restated from time to time.
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1.2.3 INTEREST COVERAGE RATIO. The definition of Interest
Coverage Ratio shall be amended to read in its entirety as follows:
INTEREST COVERAGE RATIO - with respect to any period
of determination, the ratio of (1) EBITDA for such period to
(ii) cash interest expenses for such period, all as determined
in accordance with GAAP; PROVIDED, HOWEVER cash interest
expenses shall not include a payment of $239,777 to General
Electric Capital Corporation in October, 1998.
1.3 ADDITIONAL DEFINITIONS. Appendix A to the Loan Agreement shall be
amended to add the following definitions to such Appendix:
CHARTER SALE - means the sale by Holdings to Charter
Behavioral Health Systems, L.L.C. and affiliates of Holdings'
contract management business and Bayou Oaks, Coastal Carolina,
The Haven and Desert Vista psychiatric hospitals and certain
transitional care units and other assets pursuant to that
certain Purchase Agreement and purchase and sale contracts of
even date therewith between Holdings and Charter Behavioral
Health Systems, L.L.C. and the other parties thereto dated as
of June 24, 1998, as amended by Amendment No. 1 dated as of
September 30, 1998.
WEST VIRGINIA UNIVERSITY HOSPITALS SALE - means the
sale by Holdings to West Virginia University Hospitals, Inc.
of Chestnut Ridge Hospital and other assets pursuant to that
certain Asset Purchase Agreement between Holdings, Psychiatric
Institute of West Virginia, Inc. and West Virginia University
Hospitals, Inc. dated as of July 1, 1998, as amended by
Amendment No. 1 dated as of September 30, 1998.
1.4 AMENDMENT TO EXHIBITS. Exhibits B, D through G, J through M, P, and
V to the Loan Agreement shall be amended in their entirety by substituting the
attached Exhibits B, D through G, J through M, P, and V.
1.5 CHANGE OF BORROWER NAME. All references to "Holdings" in the Loan
Documents shall be deemed to mean Xxxxxx Youth Services, Inc.
SECTION 2. WAIVER. Agent and Lenders hereby waive the Existing Event of
Default. This is a limited waiver and shall not be deemed to constitute a waiver
of any other Event of Default or any future breach of the Loan Agreement or any
of the other Loan Documents.
SECTION 3. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENTS. The
amendments to the Loan Agreement contained in SECTION 1 of this Amendment shall
be effective only upon the satisfaction of each of the conditions set forth in
this SECTION 3. If each condition set forth in this SECTION 3 has not been
satisfied by March __, 1999, this Amendment and all obligations of Lenders
contained herein shall, at the option of Lenders, terminate.
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3.1 DOCUMENTATION. Agent and Lenders shall have received, in form and
substance acceptable to Agent and Lenders and their counsel a duly executed copy
of this Amendment, that certain Security Agreement by and among Xxxxx and RYSPR
in favor of Agent for the benefit of Lenders dated the date hereof, that certain
Guaranty by and among Xxxxx and RYSPR in favor of Agent for the benefit of
Lenders dated the date hereof, that certain Pledge Agreement by and between
Ramsay Educational Services, Inc. and Agent for the benefit of Lenders dated the
date hereof, that certain Pledge Amendment by Holdings dated the date hereof,
amending that certain Pledge Agreement between Holdings and Agent for the
benefit of Lenders dated October 30, 1998, and any other Loan Documents together
with such additional documents, instruments and certificates as Agent and
Lenders and their counsel shall require in connection therewith from time to
time, all in form and substance satisfactory to Agent and Lenders and their
counsel.
3.2 CORPORATE EXISTENCE AND AUTHORITY. Agent and Lenders shall have
received such resolutions, certificates and other documents as Agent and Lenders
shall request relative to the authorization, execution and delivery by
Borrowers, Xxxxx and RYSPR of this Amendment.
3.3 NO DEFAULT. No Default or Event of Default shall exist, other than
the Existing Event of Default which is waived pursuant to this Amendment.
3.4 NO LITIGATION. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Amendment, the Agreement or the consummation of the transactions contemplated
hereby.
3.5 PERFECTION OF LIENS IN COLLATERAL. Agent and Lenders shall have
received such financing statements on Form UCC-1 or Form UCC-3 (or any other
form required by Agent and Lenders) as Agent and Lenders shall require which
shall be duly executed and delivered by the appropriate Loan Party.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BORROWER. To induce Agent
and Lenders to enter into this Amendment, Borrowers, Xxxxx and RYSPR each hereby
represent and warrant to Agent and Lenders as follows:
4.1 REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty of any Loan Party contained in the Loan Agreement
and the other Loan Documents, as amended hereby, is true and correct on the date
hereof and will be true and correct after giving effect to the amendments set
forth in SECTION 1 hereof.
4.2 CORPORATE AUTHORITY; NO CONFLICTS. The execution, delivery and
performance by Borrowers, Xxxxx and RYSPR of this Amendment and all documents,
instruments and agreements contemplated herein are within each such Loan Party's
corporate powers, have been duly authorized by necessary action, require no
action by or in respect of, or filing with, any court or agency of
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government and do not violate or constitute a default under any provision of
applicable Law or any material agreement binding upon any Loan Party or result
in the creation or imposition of any Lien upon any of the assets of any Loan
Party except as permitted in the Loan Agreement, as amended hereby.
4.3 ENFORCEABILITY. This Amendment constitutes the valid and binding
obligation of Borrowers, Xxxxx and RYSPR enforceable in accordance with its
terms, except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditor's rights generally, and (ii) the
availability of equitable remedies may be limited by equitable principles of
general application.
4.4 NO DEFENSES. No Loan Party has any defenses to payment,
counterclaims or rights of set off with respect to the Obligations.
SECTION 5. MISCELLANEOUS.
5.1 REAFFIRMATION OF LOAN DOCUMENTS; EXTENSION OF LIENS. Any and all of
the terms and provisions of the Loan Agreement and the Loan Documents shall,
except as amended and modified hereby, remain in full force and effect.
Borrowers hereby extend the Liens securing the Obligations until the Obligations
have been paid in full, and agree that the amendments and modifications herein
contained shall in no manner affect or impair the Obligations or the Liens
securing the payment and performance thereof.
5.2 PARTIES IN INTEREST. All of the terms and provisions of this
Amendment shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
5.3 LEGAL EXPENSES. The Loan Parties hereby agree to pay promptly
following receipt of an invoice detailing all reasonable fees and expenses of
counsel to Lender incurred by Lender, in connection with the preparation,
negotiation and execution of this Amendment and all related documents.
5.4 COUNTERPARTS. This Amendment may be executed in counterparts, and
all parties need not execute the same counterpart. However, no party shall be
bound by this Amendment until all parties have executed a counterpart.
Facsimiles shall be effective as originals.
5.5 COMPLETE AGREEMENT. THIS AMENDMENT, THE LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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5.6 HEADINGS. The headings, captions and arrangements used in this
Amendment are, unless specified otherwise, for convenience only and shall not be
deemed to limit, amplify or modify the terms of this Amendment, nor affect the
meaning thereof.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers on the date and year first
above written.
BORROWERS:
RAMSAY YOUTH SERVICES, INC.
XXXXXXX PSYCHIATRIC HOSPITAL, INC.
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
GREAT PLAINS HOSPITAL, INC.
GULF COAST TREATMENT CENTER, INC.
HAVENWYCK HOSPITAL, INC.
H. C. CORPORATION
HSA HILL CREST CORPORATION
HSA OF OKLAHOMA, INC.
MICHIGAN PSYCHIATRIC SERVICES, INC.
RAMSAY EDUCATIONAL SERVICES, INC.
RAMSAY LOUISIANA, INC.
RAMSAY MANAGED CARE, INC.
RAMSAY YOUTH SERVICES OF ALABAMA, INC.
RAMSAY YOUTH SERVICES OF FLORIDA, INC.
RAMSAY YOUTH SERVICES OF SOUTH CAROLINA, INC.
RHCI SAN ANTONIO, INC.
TRANSITIONAL CARE VENTURES, INC.
TRANSITIONAL CARE VENTURES (TEXAS), INC.
By:
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Xxxxx Xxxx
Vice President
H. C. PARTNERSHIP
By: H.C. CORPORATION, General Partner
By: HSA HILL CREST CORPORATION, General Partner
By:
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Xxxxx Xxxx
Vice President
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GUARANTORS:
THE XXXXX GROUP, INCORPORATED,
a Florida corporation
By:
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Xxxxx Xxxx
Vice President
RAMSAY YOUTH SERVICES PUERTO RICO, INC.,
a Puerto Rico corporation
By:
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Xxxxx Xxxx
Vice President
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Accepted in Dallas, Texas:
FLEET CAPITAL CORPORATION
("Agent" and "Lender")
By:
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Name:
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Title:
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