EXHIBIT 10.5
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(the "Amendment"), dated as of August 29, 2003 is among HORIZON HEALTH
CORPORATION, a Delaware Corporation (the "Parent"), HORIZON MENTAL HEALTH
MANAGEMENT, INC., a Texas Corporation (the "Borrower"), each of the banks or
other lending institutions party hereto, and JPMORGAN CHASE BANK (formerly known
as The Chase Manhattan Bank, who was the successor in interest by merger to
Chase Bank of Texas, National Association, formerly known as Texas Commerce Bank
National Association), as the agent (the "Agent").
RECITALS:
A. The Parent, the Borrower, the Agent, and certain banks and other
lending institutions have entered into that certain Second Amended and Restated
Credit Agreement dated as of May 23, 2002 (as amended by that certain First
Amendment to Second Amended and Restated Credit Agreement dated as of September
25, 2002, that certain Second Amendment to Second Amended and Restated Credit
Agreement dated as of October 4, 2002 (the "Second Amendment"), that certain
Third Amendment to Second Amended and Restated Credit Agreement dated as of
April 4, 2003 (the "Third Amendment"), and as the same may hereafter be further
amended or otherwise modified, herein the "Agreement").
B. On June 1, 2003, the Parent transferred 1,000 shares of Mental
Health Outcomes, Inc. to the Borrower.
C. Effective as of June 30, 2003, Employee Assistance Programs
International, Inc. was converted into Employee Assistance Programs
International, LLC and Occupational Health Consultants of America, Inc. was
converted into Occupational Health Consultants of America, LLC.
D. Effective as of June 30, 2003, Horizon Behavioral Services of
Florida, Inc. merged into HBS-FL Acquisition, LLC and HBS-FL Acquisition, LLC
changed its name to Horizon Behavioral Services of Florida, LLC.
E. Effective as of June 30, 2003, Florida Psychiatric Associates, Inc.
merged into FPA-FL Acquisition, LLC and FPA-FL Acquisition, LLC changed its name
to Florida Psychiatric Associates, LLC.
F. Pursuant to the terms of that certain Lease Agreement dated as of
December 20, 1995 between North Central Development Company ("North Central")
and the Parent (as amended or otherwise modified, the "Lease Agreement"), by
deed dated July 31, 2003 the Parent exercised its right to purchase North
Central's interest in the Leased Premises (as defined in the Lease Agreement).
G. The Parent wishes to repurchase shares of its stock on the open
market or through privately negotiated transactions, in addition to those shares
that were repurchased pursuant to the Second Amendment and the Third Amendment,
in an amount not to exceed $7,500,000.
H. The Borrower has requested that the Revolving Commitments be
increased by an aggregate amount equal to $30,000,000. Pursuant to the terms of
this Amendment and in consideration for, among other consideration, the
Obligated Parties' agreement to grant to the Agent, for the benefit of itself
and the other Banks, a security interest in all owned real property of the
Obligated Parties, including, without limitation, the real property described in
that certain Deed of Trust, Absolute Assignment of Rents, Security Agreement and
Financing Statement dated as of the date hereof executed
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 1
by the Parent for the benefit of the Agent, as agent for itself and the other
Banks (attached hereto as Exhibit A, the "Deed of Trust"), each of Bank of
America, National Association and JPMorgan Chase Bank have agreed to increase
their respective Revolving Commitment by $5,000,000 and Xxxxx Fargo Bank Texas,
National Association has agreed to be added as a "Bank" under the Agreement with
a Revolving Commitment of $20,000,000.
I. In connection with the Parent's repurchase of shares of its stock
and the Borrower's request for an increase in the Revolving Commitments, the
Parent and the Borrower have requested that the Agent and the Banks amend
certain provisions of the Agreement. Subject to satisfaction of the conditions
set forth herein, the Agent and the Banks party hereto are willing to amend the
Agreement as herein set forth
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows effective as of the
date hereof unless otherwise indicated:
ARTICLE I.
Definitions
Section 1.1. Definitions. Capitalized terms used in this
Amendment, to the extent not otherwise defined herein, shall have the same
meanings as in the Agreement, as amended hereby.
ARTICLE II.
Amendments
Section 2.1. Amendment to Section 1.1 - DEFINITIONS. Section 1.1
of the Agreement is amended as follows:
(a) To amend the first sentence of the definition of
"Interest Period" in its entirety to read as follows:
"Interest Period" means with respect to any
Eurodollar Accounts, each period commencing on the date such
Account is established or Converted from a Base Rate Account
or the last day of the next preceding Interest Period with
respect to such Eurodollar Account, and ending on the
numerically corresponding day in the first, second, third,
sixth or twelfth calendar month thereafter, as Borrower may
select as provided in Section 4.5 or 5.3, except that each
such Interest Period which commences on the last Business Day
of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month.
(b) to add each of the following definitions, in
alphabetical order, thereto:
"Mortgage" means a mortgage, deed of trust,
assignment of leases and rents, leasehold mortgage or other
security document granting a Lien on any Mortgaged Property to
secure the Obligations, including, without limitation, that
certain Deed of Trust, Absolute Assignment of Rents, Security
Agreement and Financing Statement dated as of August 29, 2003
executed by the Parent for the
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 2
benefit of the Agent, as agent for itself and the other Banks.
Each Mortgage shall be satisfactory in form and substance to
the Agent.
"Mortgaged Property" means, initially, each parcel of
real property and the improvements thereto owned by an
Obligated Party and identified on Schedule 8.6, and includes
each other parcel of owned real property and improvements
thereto with respect to which a Mortgage is granted pursuant
to Section 9.10(f).
(c) to amend each of the following definitions in its
entirety to read as follows:
"Collateral" means the property in which Liens have
been granted pursuant to the Parent Security Agreement, the
Parent Pledge Agreement, the Subsidiary Security Agreement,
the Subsidiary Pledge Agreements, and the Mortgages whether
such Liens are now existing or hereafter arise.
"Revolving Commitment" means, as to each Bank, the
obligation of such Bank to make advances of funds and to
acquire participations in Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate
amount of such Bank's Revolving Exposure hereunder, as such
commitment may be reduced or terminated pursuant to Sections
2.6, 5.4(b), or 12.2. The amount of each Bank's Revolving
Commitment is set forth opposite the name of such Bank on
Schedule 1.1(a) hereto under the heading "Revolving
Commitment" or in the most recent Assignment and Acceptance
executed by such Bank pursuant to which such Bank shall have
assumed its Revolving Commitment. The aggregate amount of the
Revolving Commitments of all Banks as of August 29, 2003 is
equal to Sixty Million Dollars ($60,000,000).
"Security Documents" means each of the Parent Pledge
Agreement, the Parent Security Agreement, the Subsidiary
Pledge Agreements, the Subsidiary Security Agreement, the
Mortgages, and all amendments and modifications thereto.
(d) to delete the definition of "Increased Commitment
Supplement".
Section 2.2. Amendment to Section 2.6(b) - INCREASE OF REVOLVING
COMMITMENTS. Section 2.6(b) of the Agreement is amended in its entirety to read
"Reserved."
Section 2.3. Amendment to Section 2.7(k) - FEES. Clause (i) of
Section 2.7(k) is amended in its entirety to read as follows:
(i) to the Agent for the account of each Bank a participation fee with
respect to its participations in Letters of Credit, which shall accrue
on the average daily amount of such Bank's LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements), during
the period from and including the Closing Date to but excluding the
later of the date on which such Bank's Revolving Commitment terminates
and the date on which such Bank ceases to have any LC Exposure, at a
rate per annum equal to the Eurodollar Rate Margin for Interests
Periods equal to 1, 2, 3 or 6 months in effect from time to time
pursuant to Section 4.2,
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 3
Section 2.4. Amendment to Section 4.2(b) - "EURODOLLAR RATE
MARGIN". Clause (b), the table and the last paragraph of Section 4.2 of the
Agreement are amended in their respective entireties to read as follows:
(b) "Eurodollar Rate Margin" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the
first Adjustment Date, two percent (2.00%) per annum and (ii) during
each Calculation Period, for Eurodollar Accounts (A) with Interest
Periods equal to one, two, three or sixth months the percent per annum
set forth in the table below under the heading Eurodollar Rate Margin
equal to 1, 2, 3 or 6 months and (B) with Interest Periods equal to
twelve months the percent per annum set forth in the table below under
the heading Eurodollar Rate Margin equal to 12 months opposite the
Indebtedness to Adjusted EBITDA Ratio which corresponds to the
Indebtedness to Adjusted EBITDA Ratio set forth in, and as calculated
in accordance with, the applicable Compliance Certificate.
Eurodollar Rate Eurodollar Rate
Margin for Interest Margin for Interest
Indebtedness to Adjusted Periods equal to 1, 2, Periods equal to 12 Base
EBITDA Ratio 3 or 6 months months Margin
------------------------ ---------------------- ------------------- ------
Greater than or equal to 2.00 to 1.00 2.75% 2.875% 1.25%
Greater than or equal to 1.50 to 1.00 but
less than 2.00 to 1.00 2.50% 2.625% 1.00%
Greater than or equal to 1.00 but less than
1.50 to 1.00 2.25% 2.375% 0.75%
Less than 1.00 to 1.00 2.00% 2.125% 0.50%
Upon delivery of the Compliance Certificate pursuant to subsection
9.1(c) in connection with the financial statements of Parent and the
Subsidiaries required to be delivered pursuant to Section 9.1(b) at the
end of each Fiscal Quarter commencing with such Compliance Certificate
delivered with respect to the Fiscal Quarter ending on August 31, 2002,
the Base Margin and the Eurodollar Rate Margins (for Interest Periods
commencing after the applicable Adjustment Date) shall automatically be
adjusted in accordance with the Indebtedness to Adjusted EBITDA Ratio
set forth therein and the table set forth above, such automatic
adjustment to take effect as of the first Business Day after the
receipt by Agent of the related Compliance Certificate pursuant to
Section 9.1(c) (each such Business Day when such margins change
pursuant to this sentence or the next following sentence, herein an
"Adjustment Date"). If Parent fails to deliver such Compliance
Certificate which so sets forth the Indebtedness to Adjusted EBITDA
Ratio within the period of time required by subsection 9.1(c): (i) the
Base Margin shall automatically be adjusted to one and one-quarter
percent (1.25%) per annum and (ii) the Eurodollar Rate Margin (for
Interest Periods commencing after the applicable Adjustment Date) shall
automatically be adjusted for Interest Periods equal to one, two, three
or six months to two and three-quarters percent (2.75%) per annum and
for Interest Periods equal to twelve months to two and seven-eighths
percent (2.875%) per annum, such automatic adjustments to take effect
as of the first Business Day after the last day on which Parent was
required to deliver the applicable Compliance Certificate in accordance
with Section 9.1(c) and to remain in effect until subsequently adjusted
in accordance herewith upon the delivery of a Compliance Certificate.
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT - Page 4
Section 2.5. Amendment to Section 8.6 - RIGHTS IN PROPERTIES;
LIENS. Section 8.6 of the Agreement is amended in its entirety to read as
follows:
Section 8.6 Rights in Properties; Liens. Rights in Properties;
Liens. Parent and each Subsidiary have good title to or valid leasehold
interests in their respective properties and assets, real and personal,
including the properties, assets, and leasehold interests reflected in
the May 31, 2003 financial statements furnished to the Agent and each
Bank pursuant to Section 9.1 and in their respective Mortgaged
Properties described on Schedule 8.6, and none of the properties,
assets, or leasehold interests of Parent or any Subsidiary is subject
to any Lien, except as of August 29, 2003, as reflected on Schedule
10.2 and, at all times after August 29, 2003, as permitted by Section
10.2. Schedule 8.6 sets forth the address of each piece of real
property that is owned by the Parent or any of its Subsidiaries.
Section 2.6. Amendment to Section 8.9 - DEBT. Section 8.9 of the
Agreement is amended in its entirety to read as follows:
Section 8.9 Debt. Parent and the Subsidiaries have no Debt,
except, as of August 29, 2003, the Debt described on Schedule 10.1 and,
at all times after August 29, 2003, as permitted by Section 10.1.
Section 2.7. Amendment to Section 8.14 - SUBSIDIARIES. Section
8.14 of the Agreement is amended in its entirety to read as follows:
Section 8.14 Subsidiaries. As of August 29, 2003, Parent has
no Subsidiaries other than those listed on Schedule 8.14 hereto.
Schedule 8.14 sets forth the type of each Subsidiary listed thereon,
the jurisdiction of incorporation or organization of each such
Subsidiary, the percentage of Parent's or a Subsidiary's ownership of
the outstanding voting stock (or other ownership interests) of each
such Subsidiary and, the authorized, issued, and outstanding capital
stock (or other equity interests) of each such Subsidiary. All of the
outstanding capital stock (or other equity interests) of each
Subsidiary listed on Schedule 8.14 has been validly issued, is fully
paid, and is nonassessable. There are no outstanding subscriptions,
options, warrants, calls, or rights (including preemptive rights) to
acquire, and no outstanding securities or instruments convertible into,
capital stock of any Subsidiary except as disclosed on Schedule 8.14.
All of the outstanding capital stock (or other equity interests) of the
Borrower, each of the Obligated Parties (other than the Parent) and
each of the Restricted Group Members has been pledged to the Agent.
Borrower and all of the Obligated Parties are parties to either the
Subsidiary Security Agreement or the Parent Security Agreement and the
Guaranty.
Section 2.8. Amendment to Section 9.10 - FURTHER ASSURANCES AND
EXCEPTIONS TO PERFECTION. Section 9.10 of the Agreement is amended by adding a
new clause (f) which shall read in its entirety as set forth in clause (f)
below:
(f) Mortgages; Title Insurance; Surveys and Related
Documentation.
(i) Title Insurance. Within sixty (60) days following
delivery of any Mortgage (including without limitation, the
Mortgage delivered on August 29, 2003), Parent shall deliver
or cause to be delivered to Agent lender's title insurance
policies issued by title insurers satisfactory to Agent (the
"Mortgage Policies") in form and substance and in amounts
satisfactory to Agent assuring Agent that such Mortgage is a
valid and enforceable first priority
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 5
mortgage liens on the respective Mortgaged Property or
Additional Mortgaged Property (as defined below), free and
clear of all defects and encumbrances except as approved by
Agent. The Mortgage Policies shall be in form and substance
satisfactory to Agent and shall include an endorsement
insuring against the effect of future advances under this
Agreement, for mechanics' liens and for any other matter that
Agent may request, and shall provide for affirmative insurance
and such reinsurance as Agent may request.
(ii) Additional Mortgaged Property. Agent may from
time to time designate owned real property of Parent or any
Subsidiary after August 29, 2003 as "Additional Mortgaged
Property", in which case Parent shall, or shall cause the
applicable Subsidiary, as promptly as possible (and in any
event within sixty (60) days after such designation) to
deliver to Agent a fully executed Mortgage, in form and
substance satisfactory to Agent together with title insurance
policies, surveys, appraisals, environmental reports and other
documentation required by this Section 9.10. Parent and
Borrower agree that, following the taking of the actions with
respect to any Additional Mortgaged Property required by the
immediately preceding sentence, Agent shall have a valid and
enforceable first priority mortgage on the respective
Additional Mortgaged Property, free and clear of all defects
and encumbrances except as permitted by Section 10.2.
(iii) Surveys. If requested by Agent or required by
applicable law, Parent shall deliver or cause to be delivered
to Agent current surveys, certified by a licensed surveyor
meeting ALTA requirements. All such surveys shall be
sufficient to allow the issuer of the mortgage policy to issue
a lender's policy.
(iv) Appraisals. If requested by Agent or required by
applicable law, Parent shall deliver or cause to be delivered
from time to time to Agent a current appraisal of each
Mortgaged Property and each Additional Mortgaged Property,
such appraisals to be in form and substance satisfactory to
Agent.
(v) Environmental Reports. If Agent at any time has
reasonable basis to believe that there may be a material
violation of any Environmental Laws by, or any material
liability arising thereunder of, Parent or any Subsidiary or
related to any Mortgaged Property or Additional Mortgaged
Property or real property adjacent to any Mortgaged Property
or Additional Mortgaged Property, then Parent agrees, upon the
request of Agent to provide Agent with such environmental
reports and assessments, certificates, engineering studies or
other written material or data as Agent may reasonably require
relating thereto. If Agent at any time has reasonable basis to
believe that there may be a violation of any Environmental
Laws by, or any liability arising thereunder of, Parent or any
Subsidiary or related to any real property owned, leased or
operated by Parent or any Subsidiary (other than the Mortgaged
Property) or any property adjacent to such property which
violation or liability could have a Material Adverse Effect,
then Parent agrees, upon the request of Agent to provide Agent
with such environmental reports and assessments, certificates,
engineering studies or other written material or data as the
Agent may reasonably require relating thereto.
(vi) Environmental Remediation In the event that
Agent determines from the environmental reports or information
delivered pursuant to clause (f)(v) of this Section 9.10 or
pursuant to any other information, that Remedial Action is
necessary with respect to Parent or any Subsidiary or its
property, Parent shall
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 6
take such Remedial Action or other action as Agent may
reasonably require to cure, or protect against, any material
violation or potential violation of any Environmental Laws or
any material actual or potential Environmental Liability.
Section 2.9. Amendment to Section 10.4 - RESTRICTIONS ON DIVIDENDS
AND OTHER DISTRIBUTIONS. Clauses (iii) and (iv) of Section 10.4 of the Agreement
are amended in their respective entireties to read as set forth in clauses (iii)
and (iv) below:
(iii) Parent may redeem or repurchase shares of its stock issued to
employees and directors under Parent's benefit programs; provided that
(A) no Default exists or would result therefrom and (B) the aggregate
amount paid by Parent in connection with such redemptions and
repurchases during the Fiscal Year ending August 31, 2004 does not
exceed Two Million Dollars ($2,000,000) and during any Fiscal Year
thereafter does not exceed One Million Dollars ($1,000,000) (for the
purposes of this Section 10.4(iii), stock conveyed, transferred or
surrendered in connection with the exercise of stock options shall not
be considered redeemed or repurchased to the extent no cash
consideration is paid to employees or directors in connection with such
exercise); and (iv) during the period from August 29, 2003 through May
31, 2005, Parent may repurchase shares of its stock on the open market
or through privately negotiated transactions (in addition to those
purchased under clause (iii) of this Section 10.4); provided that (A)
no Default exists or would result therefrom, (B) the aggregate amount
paid by Parent for such repurchases completed during such period does
not exceed Seven Million Five Hundred Thousand Dollars ($7,500,000),
(C) as of the date of any such repurchase, the ratio of pro forma
Indebtedness outstanding as of the date of any such repurchase (after
giving effect to any borrowings made in connection therewith to fund
the purchase thereof) to the Adjusted EBITDA for the most recently
completed four (4) Fiscal Quarter period as of the date of such
repurchase, does not exceed 1.50 to 1.00, and (D) as of the date of any
such repurchase that is in an amount greater than $100,000 and, in any
event, within fifteen (15) days after the end of each month ending
during the period from August 29, 2003 through May 31, 2005, Parent
delivers to Agent a certificate completed and executed by the chief
executive or chief financial officer of Parent setting forth in
reasonable detail the calculations required to establish compliance
with clauses (B) and (C) of this clause (iv) and stating that no
Default exists or would result from any such repurchase or, if
applicable, existed during such month.
Section 2.10. Amendment to Section 11.1 - CONSOLIDATED NET WORTH.
The first sentence of Section 11.1 of the Agreement is amended in its entirety
to read as follows:
Section 11.1 Consolidated Net Worth. Parent will at all times
maintain Consolidated Net Worth in an amount not less than the sum of
(a) $55,635,045, minus (b) the lesser of (i) $500,000 or (ii) the
aggregate amount of the non-cash losses attributable to the impairment
of its goodwill and which were incurred and reported by Parent on its
financial statements during its Fiscal Year ending August 31, 2002
which have resulted from Parent's compliance with statement number 142
of the Financial Accounting Standards Board, plus (c) fifty percent
(50%) of Parent's cumulative net income determined on a consolidated
basis in accordance with GAAP for each Fiscal Quarter to have
completely elapsed since May 31, 2003, plus (d) one hundred percent
(100%) of the net cash proceeds of any sale of equity securities or
other contributions to the capital of Parent received by Parent since
May 31, 2003, minus (e) the lesser of $7,500,000 or the aggregate
amount paid by Parent for its repurchase of shares of its stock on the
open market or through privately negotiated transactions pursuant to
clause (iv) of Section 10.4, calculated without duplication.
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 7
Section 2.11. Amendment to Section 11.2 - INDEBTEDNESS TO
CAPITALIZATION. The definition of "Indebtedness" set forth in Section 11.2 is
amended in its entirety to read as follows:
"Indebtedness" means, at the time of determination, the sum of
the following determined for Parent and the Subsidiaries on a
consolidated basis (without duplication): (a) all obligations for
borrowed money; (b) all obligations of such Person evidenced by bonds,
notes, debentures, or other similar instruments; (c) all Capital Lease
Obligations; and (d) all obligations to reimburse the issuer of any
letter of credit for amounts drawn or drawable.
Section 2.12. Amendment to Section 12.1 - EVENTS OF DEFAULT.
Clause (l) of Section 12.1 is amended in its entirety to read as follows:
(l) Ninety (90) days shall have elapsed after the Management
Change Date and Xxxxx Xxx Xxxxxx shall not have been replaced as
President and Chief Executive Officer of the Parent with a qualified
individual. As used in this clause (l), the term "Management Change
Date" means the date when Xxxxx Xxx Xxxxxx (i) ceases to hold the
titles and responsibilities of President and Chief Executive Officer of
the Parent or (ii) otherwise fails to be active in the management of
the day to day operations of the Parent.
Section 2.13. Amendment to Section 12.1 - EVENTS OF DEFAULT.
Section 12.1 of the Agreement is amended by adding a new clause (n) which shall
read in its entirety as set forth in clause (n) below:
(n) Any Event of Default (as defined in any Mortgage) shall
occur.
Section 2.14. Amendment to Section 14.11 - AMENDMENTS. Section
14.11 of the Agreement is amended in its entirety to read as follows:
Section 14.11 Amendments. No amendment or waiver of any
provision of any Loan Document to which Borrower or Parent is a party,
nor any consent to any departure by Borrower or Parent therefrom, shall
in any event be effective unless the same shall be agreed or consented
to by Required Banks, Parent and Borrower and in the case of any other
Loan Document, unless the same shall be agreed or consented to by Agent
acting with the consent of the Required Banks and the other parties
thereto. Each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Notwithstanding the foregoing, no amendment, waiver, or consent shall:
(a) without the consent of each Bank affected thereby: (i) increase the
Revolving Commitment of a Bank, (ii) reduce the principal of, or
interest on, the Revolving Notes or the LC Disbursements, or any fees
or other amounts payable hereunder to such Bank; (iii) postpone any
date fixed for any payment of principal of, or interest on, the
Revolving Note payable to such Bank, the LC Disbursements, or any fees
or other amounts payable to such Bank hereunder; (b) change the
percentage of the Revolving Commitments or of the aggregate unpaid
principal amount of the Revolving Notes or the number of Banks which
shall be required for the Banks or any of them to take any action under
any Loan Document without the consent of all Banks; (c) change any
provision contained in this Section 14.11 without the consent of all
Banks; or (d) release any Collateral or release Borrower or any
Obligated Party from liability without the consent of all Banks.
Notwithstanding anything to the contrary contained in this Section, no
amendment, waiver, or consent shall be made (a) with respect to Article
XIII hereof without the prior
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 8
written consent of the Agent and (b) which affects the rights or duties
of the Issuing Bank without the prior written consent of the Issuing
Bank.
Section 2.15. Amendment to Exhibit C - COMPLIANCE CERTIFICATE.
Exhibit C to the Agreement is amended in its entirety to read as set forth on
Exhibit B attached hereto.
Section 2.16. Amendment to Exhibit D - INCREASED COMMITMENT
SUPPLEMENT. Exhibit D to the Agreement is amended in its entirety to read
"Reserved."
Section 2.17. Amendment to Schedule 1.1(a) - REVOLVING
COMMITMENTS. Schedule 1.1(a) to the Agreement is amended in its entirety to read
as set forth on Schedule 1.1(a) attached hereto.
Section 2.18. Addition of Schedule 8.6 - RIGHTS IN PROPERTIES;
LIENS. The Agreement is amended to add Schedule 8.6 thereto which shall read in
its entirety as set forth on Schedule 8.6 attached hereto.
Section 2.19. Amendment to Schedules 8.14, 8.14A, 10.1, 10.2 and
10.5 - LIST OF SUBSIDIARIES, ORGANIZATIONAL CHART, DEBT, EXISTING LIENS AND
EXISTING INVESTMENTS. Schedules 8.14, 8.14A, 10.1, 10.2 and 10.5 to the
Agreement are amended in their respective entireties as set forth on Schedules
8.14, 8.14A, 10.1, 10.2 and 10.5, respectively, attached hereto.
ARTICLE III.
Addition of Xxxxx Fargo Bank
Texas, National Association
Section 3.1. Added Bank. Xxxxx Fargo Bank
Texas, National
Association ("Added Bank") agrees that its Revolving Commitment shall be equal
to the amount set forth opposite its name on Schedule 1.1(a) to the Agreement
after giving effect to this Amendment. Added Bank (a) represents and warrants to
the Agent that it is legally authorized to enter into the Agreement, (b)
confirms that it has received a copy of the Agreement, together with copies of
the most recent financial statements delivered pursuant to Section 9.1 thereof,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into the Agreement, (c) agrees
that it will, independently and without reliance upon the Agent or any other
Bank 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 the Agreement and the other Loan Documents, (d) confirms that, upon
the approval of the Agent and the Borrower, it is an Eligible Assignee, (e)
appoints and authorizes the Agent to take such action on its behalf and to
exercise such powers under the Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto, and (f) agrees that it is a "Bank" under the Agreement and will perform
in accordance with their terms all obligations which by the terms of the
Agreement and the other Loan Documents are required to be performed by it as a
Bank.
Section 3.2. Address for Notices. For purposes of Section 14.13 of
the Agreement, the "Address for Notices" for Added Bank is as set forth below
its name on the signature pages hereof.
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 9
ARTICLE IV.
Conditions Precedent
Section 4.1. Conditions. The effectiveness of Article 2 of this
Amendment is subject to the satisfaction of the following conditions precedent:
(a) The Agent shall have received all of the following,
each dated (unless otherwise indicated) the date of this Amendment, in form and
substance satisfactory to the Agent:
(i) Amendment Fee. Payment of the amendment
fee required by Section 5.6 of this Amendment;
(ii) Upfront Fee. Payment of the upfront fee
required by Section 5.7 of this Amendment;
(iii) Revolving Notes. New Revolving Notes
duly executed by the Borrower in favor of each Bank
(including, Added Bank) in the amount of such Bank's
Revolving Commitment as set forth on Schedule 1.1(a)
of the Agreement after giving effect to this
Amendment;
(iv) Deed of Trust. Original counterparts of
the Deed of Trust duly executed by the Borrower;
(v) Title Policy. A policy or policies of
title insurance issued by a nationally recognized
title insurance company, insuring the Lien of the
Deed of Trust as a valid first Lien on the Mortgaged
Property (as defined therein), free of any other
Liens except as permitted by Section 10.2 of the
Agreement, together with endorsements, coinsurance
and reinsurance as the Agent may require;
(vi) Resolutions. Resolutions of the Board
of Directors of Parent and each Subsidiary certified
by its Secretary or an Assistant Secretary which
authorize the increase in the Revolving Commitments,
the Deed of Trust, and its execution, delivery, and
performance of the Loan Documents to which it is or
is to be a party;
(vii) Articles of Incorporation. The
articles of incorporation of Parent and each
Subsidiary certified by the Secretary of State of the
state of its incorporation (or the other appropriate
governmental officials of its jurisdiction of
organization) and dated a current date or, if
applicable, a certification that such articles of
incorporation have not changed since the certified
copies delivered under the Existing Credit Agreement
or Original Credit Agreement;
(viii) Bylaws. The bylaws of Parent and each
Subsidiary certified by its Secretary or an Assistant
Secretary or, if applicable, a certification that
such bylaws have not changed since the certified
copies delivered under the Existing Credit Agreement
or Original Credit Agreement;
(ix) Governmental Certificates. Certificates
of the appropriate government officials of the state
of incorporation of Parent and each Subsidiary as to
its existence and good standing, all dated a current
date;
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 10
(x) Additional Information. Such additional
documentation, approvals, opinions, and information
as Agent or its legal counsel Jenkens & Xxxxxxxxx, a
Professional Corporation, may request; and
(b) The representations and warranties contained herein and
in all other Loan Documents, as amended hereby, shall be true and correct in all
material respects as of the date hereof as if made on the date hereof, except
for such representations and warranties limited by their terms to a specific
date;
(c) No Default or Event of Default shall have occurred and
be continuing; and
(d) All proceedings taken in connection with the
transactions contemplated by this Amendment and all documentation and other
legal matters incident thereto shall be satisfactory to the Agent and its legal
counsel Jenkens & Xxxxxxxxx, a Professional Corporation.
ARTICLE V.
Miscellaneous
Section 5.1. Ratifications. The terms and provisions set forth in
this Amendment shall modify and supersede all inconsistent terms and provisions
set forth in the Agreement and except as expressly modified and superseded by
this Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect.
Section 5.2. Representations and Warranties. Borrower hereby
represents and warrants to the Agent and the Banks as follows: (a) after giving
effect to this Amendment, no Default exists; (b) after giving effect to this
Amendment, the representations and warranties set forth in the Loan Documents
are true and correct in all material respects on and as of the date hereof with
the same effect as though made on and as of such date except with respect to any
representations and warranties limited by their terms to a specific date; and
(c) the execution, delivery, and performance of this Amendment has been duly
authorized by all necessary action on the part of Parent, Borrower, and each
Obligated Party and does not and will not (i) violate any provision of law
applicable to the Borrower, the Parent, or any Obligated Party, the certificate
of incorporation, bylaws, partnership agreement, membership agreement, or other
applicable governing document of the Borrower, the Parent, or any Obligated
Party or any order, judgment, or decree of any court or agency of government
binding upon the Borrower, the Parent, or any Obligated Party, (ii) conflict
with, result in a breach of or constitute (with due notice of lapse of time or
both) a default under any material contractual obligation of the Borrower, the
Parent, or any Obligated Party, (iii) result in or require the creation or
imposition of any material lien upon any of the assets of the Borrower, the
Parent, or any Obligated Party, or (iv) require any approval or consent of any
Person under any material contractual obligation of the Borrower, the Parent, or
any Obligated Party.
IN ADDITION, TO INDUCE THE AGENT AND THE BANKS TO AGREE TO THE TERMS OF
THIS AMENDMENT, THE BORROWER, THE PARENT, AND EACH OBLIGATED PARTY (BY IT
EXECUTION BELOW) REPRESENTS AND WARRANTS THAT AS OF THE DATE OF ITS EXECUTION OF
THIS AMENDMENT THERE ARE NO CLAIMS OR OFFSETS AGAINST OR DEFENSES OR
COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS AND IN ACCORDANCE
THEREWITH IT:
(a) WAIVER. WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS, DEFENSES
OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE
OF ITS EXECUTION OF THIS AMENDMENT AND
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 11
(b) RELEASE. RELEASES AND DISCHARGES THE AGENT AND THE BANKS,
AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
SHAREHOLDERS, AFFILIATES AND ATTORNEYS (COLLECTIVELY THE "RELEASED
PARTIES") FROM ANY AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITIES,
CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS WHATSOEVER, WHETHER KNOWN
OR UNKNOWN, SUSPECTED OR UNSUSPECTED, IN LAW OR EQUITY, WHICH THE
BORROWER OR ANY OBLIGATED PARTY EVER HAD, NOW HAS, CLAIMS TO HAVE OR
MAY HAVE AGAINST ANY RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF
AND FROM OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
Section 5.3. Survival of Representations and Warranties. All
representations and warranties made in this Amendment shall survive the
execution and delivery of this Amendment, and no investigation by the Agent or
any Bank or any closing shall affect the representations and warranties or the
right of the Agent or any Bank to rely upon them.
Section 5.4. Reference to Agreement. Each of the Loan Documents,
including the Agreement, are hereby amended so that any reference in such Loan
Documents to the Agreement shall mean a reference to the Agreement as amended
hereby.
Section 5.5. Expenses of Agent. As provided in the Agreement, the
Borrower agrees to pay on demand all costs and expenses incurred by the Agent in
connection with the preparation, negotiation, and execution of this Amendment,
including without limitation, the costs and fees of the Agent's legal counsel.
Section 5.6. Amendment Fee. The Borrower agrees to pay to each of
JPMorgan Chase Bank and Bank of America, National Association, on the date
hereof, an amendment fee in the amount of $25,000 each, in consideration for
such Banks' agreement to enter into this Amendment.
Section 5.7. Upfront Fee. The Borrower agrees to pay to each of
JPMorgan Chase Bank and Bank of America, National Association, on the date
hereof, an upfront fee in the amount of $50,000 each, in consideration for such
Banks' agreement to increase their Revolving Commitments. The Borrower agrees to
pay to Added Bank, on the date hereof, an upfront fee in the amount of $200,000
in consideration for Added Bank's agreement to be added as a "Bank" under the
Agreement with a Revolving Commitment of $20,000,000.
Section 5.8. Tax Shelter Regulations. Notwithstanding anything in
the Agreement, in any Loan Document, or in any Commitment Letter or Fee Letter
among any of the parties hereto to the contrary, any agreement by the Agent or
any Bank to keep any information about the Borrower or any Obligated Party
confidential shall not include, and the Agent and each Bank may disclose without
limitation of any kind, any information with respect to the "tax treatment" and
"tax structure" (in each case, within the meaning of Treasury Regulation Section
1.6011-4) of the transactions contemplated by the Agreement or any other Loan
Document and all materials of any kind (including opinions or other tax
analyses) that are provided to the Agent or such Bank relating to such tax
treatment and tax structure; provided that with respect to any document or
similar item that in either case contains information concerning the tax
treatment or tax structure of the transactions as well as other information,
this sentence shall only apply to such portions of the document or similar item
that relate to the tax treatment or tax structure of the Loans, Letters of
Credit and transactions contemplated thereby.
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 12
Section 5.9. Severability. Any provision of this Amendment held by
a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Amendment and the effect thereof
shall be confined to the provision so held to be invalid or unenforceable.
Section 5.10. Applicable Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of
Texas and the
applicable laws of the United States of America.
Section 5.11. Successors and Assigns. This Amendment is binding
upon and shall inure to the benefit of the Agent, each Bank and the Borrower and
their respective successors and assigns, except the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Banks.
Section 5.12. Counterparts. This Amendment may be executed in one
or more counterparts and on telecopy counterparts, each of which when so
executed shall be deemed to be an original, but all of which when taken together
shall constitute one and the same agreement.
Section 5.13. Effect of Waiver. No consent or waiver, express or
implied, by the Agent or any Bank to or for any breach of or deviation from any
covenant, condition or duty by the Borrower or any Obligated Party shall be
deemed a consent or waiver to or of any other breach of the same or any other
covenant, condition or duty.
Section 5.14. Headings. The headings, captions, and arrangements
used in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 5.15. ENTIRE AGREEMENT. THIS AMENDMENT EMBODIES THE FINAL,
ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Executed as of the date first written above.
PARENT AND BORROWER:
HORIZON HEALTH CORPORATION
HORIZON MENTAL HEALTH MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------------------
Name: Xxxxxx X. Xxxxxx
-----------------------------------------------
Authorized Officer for both Parent and
Borrower
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 13
AGENT AND BANKS:
JPMORGAN CHASE BANK (formerly known as The Chase
Manhattan Bank, who was successor-in- interest by
merger to the Chase Bank of
Texas, National
Association who was formerly known as
TEXAS COMMERCE
BANK NATIONAL ASSOCIATION), individually as a Bank,
as Agent, and as Issuing Bank
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------------------
Name: Xxxxx X. Xxxxxxxx
-----------------------------------------------
Title: Senior Vice President
-----------------------------------------------
BANK OF AMERICA, NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------------------
Xxxxxx X. Xxxxxx, Senior Vice President
XXXXX FARGO BANK
TEXAS, NATIONAL ASSOCIATION
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------------
Xxxxxx Xxxxxx, Vice President
Address for Notices:
Mail Address:
Xxxxx Fargo Bank Texas, National Association
0000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx
Lending Office for Base Rate Accounts and
Eurodollar Accounts:
0000 Xxxxxxx Xxxxxx, 0xx Floor
MAC C7300-034
Denver, Colorado 80203
Attention: Xxxxxxxxx Xxxx-Xxxxxxxx
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 14
OBLIGATED PARTY CONSENT
Each Obligated Party (i) consents and agrees to this Fourth Amendment
to Second Amended and Restated Credit Agreement; (ii) agrees that the Guaranty,
Subsidiary Security Agreement, and the Subsidiary Pledge Agreement to which it
is a party shall remain in full force and effect and shall continue to be the
legal, valid, and binding obligation of such Obligated Party enforceable against
it in accordance with its terms; (iii) agrees that the "Obligations" as defined
in the Agreement as amended hereby (including, without limitation, all
obligations, indebtedness, and liabilities arising in connection with the
Letters of Credit and the increase in the Revolving Commitments contemplated
hereby) are "Obligations" as defined in the Guaranty; and (iv) agrees that any
reference to the "Borrower" in the Guaranty, Subsidiary Security Agreement or
Subsidiary Pledge Agreement shall mean Horizon Mental Health Management, Inc. as
the "Borrower" hereunder successor by assumption to the obligations of the
Parent.
OBLIGATED PARTIES:
MENTAL HEALTH OUTCOMES, INC.
SPECIALTY REHAB MANAGEMENT, INC.
HHMC PARTNERS, INC.
HORIZON BEHAVIORAL SERVICES, INC.
FLORIDA PSYCHIATRIC ASSOCIATES, LLC
HORIZON BEHAVIORAL SERVICES OF FLORIDA, LLC.
FPMBH OF TEXAS, INC.
HMHM OF TENNESSEE, INC.
OCCUPATIONAL HEALTH CONSULTANTS OF AMERICA, LLC
EMPLOYEE ASSISTANCE SERVICES, INC.
HORIZON BEHAVIORAL SERVICES IPA, INC.
HORIZON BEHAVIORAL SERVICES OF NEW JERSEY, INC.
HORIZON BEHAVIORAL SERVICES OF NEW YORK, INC.
PROCARE ONE NURSES, LLC
EMPLOYEE ASSISTANCE PROGRAMS INTERNATIONAL, LLC
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------------------
Name: Xxxxxx X. Xxxxxx
-----------------------------------------------
Authorized Officer for each Obligated Party
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 15
EXHIBIT A
TO
HORIZON HEALTH CORPORATION
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Deed of Trust
EXHIBIT A - Solo Page
DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT
THE STATE OF TEXAS )
)
COUNTY OF XXXXXX )
THIS DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT (this "DEED OF TRUST") is made by Horizon Health
Corporation, a corporation organized under the laws of the State of Delaware,
organizational identification number 2201568 ("MORTGAGOR"), to Xxxxx X. Xxxxxx
of Xxxxxx County, Texas, as Trustee ("TRUSTEE"), for the benefit of JPMORGAN
CHASE BANK, a New York banking corporation, as agent for itself and the other
Banks (as defined below) (in such capacity, "MORTGAGEE").
For $10 and other consideration, Mortgagor grants to Trustee the
Mortgaged Property (defined below) in trust, to secure the payment of the Debt
(defined below), and grants a security interest in, pledges and assigns to
Mortgagee all Collateral (defined below) owned by Mortgagor or in which
Mortgagor has rights or the power to transfer rights and all Collateral in which
Mortgagor later acquires ownership, other rights or the power to transfer
rights, to secure payment of the Debt. As additional consideration, Mortgagor
presently, immediately effective and absolutely assigns to Mortgagee the Rents
(defined below), subject to a license back to Mortgagor, as described in Section
8. The conveyance of the Mortgaged Property is subject to the Permitted
Encumbrances (defined below). Mortgagor agrees as follows:
ARTICLE I. Definitions.
Section 1.1. "Mortgaged Property" means:
(a) The tract or parcel of land, containing 3.537
acres, more or less, in Xxxxxx County, Texas described in Exhibit A (the
"LAND"), and including (i) all of Mortgagor's interest in the bed of any stream,
creek, or waterway or any street, road, right-of-way or easement, open or
proposed, on or adjacent to the Land; (ii) all of Mortgagor's interest in any
strips and gores between the Land and any abutting properties; and (iii) all
rights of ingress and egress, and all other present or future easements and
rights appurtenant to, serving or benefiting the Land;
(b) All improvements of every type now or later
located on the Land (the "IMPROVEMENTS");
(c) All equipment and all materials and other goods
of every type now or later situated upon the Land and (i) intended to be
incorporated into the Improvements or (ii) that are or become fixtures related
to the Land or the Improvements;
(d) All other goods of every type, including
inventory, equipment, farm equipment and farm products now owned or later
acquired by Mortgagor and now or later situated on the Land or in the
Improvements and that facilitate the use or occupancy of the Improvements; and
DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT - Page 1
(e) All plans and specifications for the
Improvements, all of Mortgagor's rights under all existing and future leases
(whether written or oral) of any of the Mortgaged Property (the "LEASES"),
construction, maintenance and other contracts relating to the Land or the
Improvements, all tenant deposits under any Leases, all licenses, permits,
certificates, accounts, instruments, documents, letter of credit rights, letters
of credit, moneys, investment property, deposit accounts, general intangibles
(including trade names and symbols used in connection with the Land or the
Improvements), supporting obligations, wastewater, fresh water and other utility
capacity and facilities available to or allocated to the Land or the
Improvements, and all other present or future rights and privileges relating to
the Land or the Improvements.
Section 1.2. "COLLATERAL" means all property described in
paragraphs (3), (4) and (5) of the definition of Mortgaged Property, to the
extent it is personal property under applicable law, and all proceeds thereof
and of any other Mortgaged Property, including but not limited to all interest,
dividends, cash, instruments and other personal property now or hereafter
received, receivable or otherwise distributed in connection with the sale,
lease, license, exchange or other disposition of any of the Mortgaged Property,
together with all books and other records of Mortgagor relating thereto.
Section 1.3. "RENTS" means all rent and other income from the
Mortgaged Property, including all rent and other income under all existing or
future Leases.
Section 1.4. "DEBT" means (1) all obligations under the Second
Amended and Restated Agreement dated May 23, 2002 (as such agreement has been
and may further be amended or otherwise modified, the "CREDIT AGREEMENT") among
each of the banks or other lending institutions from time to time a party
thereto (individually a "Bank" and, collectively, the "BANKS"), Mortgagor,
Horizon Mental Health Management, Inc. ("BORROWER") and Mortgagee, and the
Revolving Notes, as defined in the Credit Agreement (individually a "NOTE" and
collectively the "NOTES"); (2) all amounts for which Mortgagor may become
obligated to Mortgagee pursuant to this Deed of Trust; (3) all obligations of
Borrower and Mortgagor under any other documents from time to time evidencing,
securing or relating to the debt evidenced by the Credit Agreement and the Notes
(collectively, including the Credit Agreement and the Notes, the "LOAN
DOCUMENTS"); and (4) all other Obligations (as defined in the Credit Agreement).
Debt includes all extensions, renewals and modifications of the Notes, whether
or not evidenced by new promissory notes or other instruments or other records.
A portion of the Debt secured hereby is a revolving credit facility under which,
by reason of borrowings, repayments and reborrowings, the principal amount
outstanding may fluctuate upward and downward from time to time. By reason of
such repayments and/or prepayments, there may be times during which no
indebtedness is outstanding under such revolving credit facility but,
notwithstanding such times, the lien and all of the provisions of this Deed of
Trust shall continue to secure and apply to any subsequent borrowing or
reborrowing under such facility as fully and with same force, effect, dignity
and priority as is provided by this Deed of Trust with respect to borrowings
outstanding prior to such times.
Section 1.5. "PERMITTED ENCUMBRANCES" means the liens,
easements and encumbrances to title described on Exhibit B, to the extent each
is valid, subsisting and affects title to the Mortgaged Property.
Section 1.6. All terms used herein shall have the same
definitions herein as specified in the Uniform Commercial Code as enacted in the
State of Texas and as the same may be amended from time to time (the "UCC")
unless otherwise defined herein.
DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT - Page 2
ARTICLE II. Mortgagor's Representations and Agreements.
Section 2.1. Taxes and Other Impositions. Mortgagor will pay
all taxes, assessments, standby fees, homeowners' or condominium association
assessments and other impositions (collectively, "IMPOSITIONS") levied or
assessed against any of the Mortgaged Property by any governmental authority or
any other person, before the Impositions become delinquent, and Mortgagor will
provide receipts of all Impositions payments to Mortgagee promptly upon request.
Section 2.2. Insurance. Mortgagor will keep the Mortgaged
Property insured against loss by fire, storm, gas explosion (if gas is used on
the Mortgaged Property) and all other hazards contemplated by a standard
all-risk extended coverage endorsement for an amount at least equal to the full
insurable value (replacement cost) of the Improvements, and also insured against
any other risks, including flood, mudslide and where required by Mortgagee,
windstorm, in such amounts and with such endorsements and other terms as
Mortgagee requires from time to time The casualty policy will also cover loss of
rents from the Mortgaged Property for the time that the Mortgaged Property is
unavailable due to any casualty. If the Mortgaged Property is presently located
in or is later determined to be in a "special flood hazard area" as set out in
the National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of
1973, as amended by the National Flood Insurance Reform Act of 1994, as each may
be amended, or any successor law (the "ACTS"), Mortgagor agrees to purchase a
flood insurance policy in an amount equal to the greater of (a) the full
insurable value of the Improvements and (b) the maximum limit of coverage
available for the Mortgaged Property under the Acts in form complying with the
"insurance purchase requirement" of the Acts, and provide Mortgagee with
evidence of such coverage. Mortgagor will additionally maintain liability
insurance and worker's compensation insurance against claims for bodily injury,
death or property damage on or around the Mortgaged Property in such amounts and
with such endorsements and other terms acceptable to Mortgagee. Mortgagor will
provide such other additional insurance as Mortgagee may require from time to
time. All required insurance policies must (i) be issued by companies reasonably
acceptable to Mortgagee, (ii) name the owner of the Mortgaged Property as either
the named insured on the policy or as an additional named insured on an
endorsement to the policy; (iii) be indorsed to be payable to Mortgagee as
mortgagee insured and loss payee, and (iv) expressly prohibit cancellation or
modification without 10 days written notice to Mortgagee. Mortgagor will
promptly deliver to Mortgagee the original policies of all required insurance or
other evidence of such insurance acceptable to Mortgagee.
Section 2.3. Maintenance of Property. Mortgagor will maintain
the Mortgaged Property in good condition. If the Mortgaged Property is damaged
by any cause, Mortgagor will promptly restore the Mortgaged Property to
substantially its condition prior to such damage. Mortgagor will not allow any
part of the Mortgaged Property to be torn down, removed or materially altered
without Mortgagee's prior written consent.
Section 2.4. Title to Property. Mortgagor will warrant and
defend Trustee's title to and Mortgagee's security interest in the Mortgaged
Property against any person who claims any of it. No person owns any lien or
other interest in the Mortgaged Property except the lien and security interest
created by this Deed of Trust, other liens and security interests for the
benefit of Mortgagee, Permitted Encumbrances and the statutory lien for taxes
not yet due. No person other than Mortgagee owns any interest in the Rents. No
lien document or financing statement affecting any Mortgaged Property or the
Rents, other than lien documents and financing statements in favor of Mortgagee
and Permitted Encumbrances, is on file in any public office. If any person
claims any interest or encumbrance, except for Permitted Encumbrances, Mortgagor
will promptly remove any such adverse claim, lien or encumbrance from the
Mortgaged Property or the Rents. Mortgagor will give Mortgagee prompt notice
DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT - Page 3
of an assertion by any person of any interest or encumbrance affecting, or any
legal proceeding affecting, any part of the Mortgaged Property or the Rents.
Mortgagor will take any action Mortgagee requires to protect, assure or enforce
the lien and security interest of this Deed of Trust and the assignment of the
Rents. This paragraph will survive termination or foreclosure of this Deed of
Trust.
Section 2.5. Books and Records. Mortgagor will maintain
accurate and complete books and other records regarding the Mortgaged Property,
including finances, leases and the physical condition of the Mortgaged Property.
All financial accounting records will be maintained consistent with generally
accepted accounting principles, consistently applied, as set forth in Opinions
of the Accounting Principles Board of the American Institute of Certified Public
Accounts and/or in statements of the Financial Accounting Standards Board and/or
their respective successors and which are applicable as of the date in
question..
Section 2.6. Inspection. Upon two (2) Business Day's (as
defined in the Credit Agreement) prior notice to Mortgagor, Mortgagor will (i)
during normal business hours permit representatives of Mortgagee to go upon,
examine and inspect the Mortgaged Property, including making appraisals and
environmental assessments, (ii) furnish all information Mortgagee reasonably
requests relating to the development and operation of the Mortgaged Property,
(iii) permit Mortgagee to make copies of such information and (iv) permit
Mortgagee to perform environmental assessments of the Mortgaged Property and in
connection therewith to take away samples of air, building materials, soil and
water. When an Event of Default exists, the prior notice described in the first
sentence of this clause (f) shall not be required. The representatives of any
Bank may accompany Mortgagee during any examination, visit, inspection or
discussions under this clause (f).
Section 2.7. Indemnity. Mortgagor shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified
Parties (as defined below) from and against any and all claims, suits,
liabilities (including, without limitation, strict liabilities), actions,
proceedings, obligations, debts, damages, losses, costs, expenses, fines,
penalties, charges, fees, judgments, awards, amounts paid in settlement,
punitive damages, foreseeable and unforeseeable consequential damages, of
whatever kind or nature (including but not limited to attorneys' fees and other
costs of defense) (the "LOSSES") imposed upon or incurred by or asserted against
any Indemnified Parties and directly or indirectly arising out of or in any way
relating to any one or more of the following: (i) ownership of this Deed of
Trust, the Mortgaged Property or any interest therein or receipt of any Rents;
(ii) any and all lawful action that may be taken by Mortgagee or any Bank in
connection with the enforcement of the provisions of this Deed of Trust, the
Notes or any of the other Loan Documents, whether or not suit is filed in
connection with same, or in connection with Mortgagor, Borrower, any guarantor
and/or any member, partner, joint venturer or shareholder thereof becoming a
party to a voluntary or involuntary federal or state bankruptcy, insolvency or
similar proceeding; (iii) any accident, injury to or death of persons or loss of
or damage to property occurring in, on or about the Mortgaged Property or any
part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (iv) any use, nonuse or condition in, on or
about the Mortgaged Property or any part thereof or on the adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or ways; (v) any
failure on the part of Mortgagor to perform or be in compliance with any of the
terms of this Deed of Trust; (vi) performance of any labor or services or the
furnishing of any materials or other property in respect of the Mortgaged
Property or any part thereof; (vii) the failure of any person to file timely
with the Internal Revenue Service an accurate Form 0000-X, Xxxxxxxxx for
Recipients of Proceeds from Real Estate, Broker and Barter Exchange
Transactions, which may be required in connection with this Deed of Trust, or to
supply a copy thereof in a timely fashion to the recipient of the proceeds of
the transaction in connection with which this Deed of Trust is made; (viii) any
failure of the Mortgaged Property or any use
DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT - Page 4
thereof to be in compliance with any Applicable Laws (as defined in Section 5
hereof); (ix) the enforcement by any Indemnified Party of the provisions of this
Section 2(g); (x) any and all claims and demands whatsoever which may be
asserted against Mortgagee or any Bank by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms, covenants, or
agreements contained in any Lease; (xi) the payment of any commission, charge or
brokerage fee to anyone which may be payable in connection with the funding of
the Debt evidenced by the Notes and secured by this Deed of Trust or any other
Debt; (xii) any misrepresentation made by Mortgagor in this Deed of Trust or any
other Loan Document; or (n) THE NEGLIGENCE OF ANY INDEMNIFIED PARTY, EXCEPT TO
THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY
INDEMNIFIED PARTY. Any amounts payable to Mortgagee by reason of the application
of this Section 2(g) shall become immediately due and payable upon demand and
shall bear interest at the rate provided in the Notes for past due amounts from
the date of demand to the date of payment. For purposes of this Section 2(g),
the term "INDEMNIFIED PARTIES" means Mortgagee, the Banks and any person or
entity who is or will have been involved in the origination of the Debt, any
person or entity who is or will have been involved in the servicing of the Debt,
any person or entity in whose name the encumbrances and security interests
created by this Deed of Trust is or will have been recorded, persons and
entities who may hold or acquire or will have held a full or partial interest in
the Debt as well as the respective directors, officers, shareholders, partners,
members, employees, agents, servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants, successors and assigns
of any and all of the foregoing (including but not limited to any other person
or entity who holds or acquires or will have held a participation or other full
or partial interest in the Debt or the Mortgaged Property, whether during the
term of the loan evidenced by the Notes or as a part of or following a
foreclosure of this Deed of Trust and including, but not limited to, any
successors by merger, consolidation or acquisition of all or a substantial
portion of Mortgagee's and the Banks' assets and business). This paragraph will
survive the termination or foreclosure of this Deed of Trust.
Section 2.8. Mortgagee's Rights. If Mortgagor fails to perform
any obligation under this Deed of Trust, Mortgagee may perform, but Mortgagee's
performance will not waive Mortgagor's default. Without limiting the generality
of the foregoing, if at any time Mortgagee is not in receipt of written evidence
that all insurance required hereunder is in full force and effect, Mortgagee
shall have the right, without notice to Mortgagor, Borrower or any other party
to take such action as Mortgagee deems necessary to protect its interest in the
Mortgaged Property, including without limitation, the obtaining of such
insurance coverage as Mortgagee in its sole discretion deems appropriate. If
Mortgagee secures required insurance, Mortgagee may secure the insurance only in
its own name and may insure only its interest in the Mortgaged Property.
Section 2.9. Mortgagor's Location and Name. The address set
forth in Section 17 of this Deed of Trust is: (i) Mortgagor's chief executive
office, if Mortgagor is not an individual and has more than one place of
business; or (ii) Mortgagor's place of business if Mortgagor is not an
individual and has only one place of business. If Mortgagor is a registered
organization, it is organized under the laws of the state or foreign
jurisdiction set forth under Mortgagor's certification below. If Mortgagor is a
registered organization, Mortgagor's name as set forth above in this Deed of
Trust is its correct name as indicated on the public record of Mortgagor's
jurisdiction of organization which shows Mortgagor to have been organized. If
Mortgagor uses any trade or assumed names, Mortgagor has properly filed of
record in the appropriate filing offices all those trade names and has delivered
to Mortgagee a list of all of Mortgagor's assumed or trade names. Mortgagor will
promptly notify Mortgagee of any change in Mortgagor's location, name, identity,
organizational structure or jurisdiction of organization.
ARTICLE III. Collection and Application of Insurance and Condemnation
Proceeds. Mortgagor assigns to Mortgagee all amounts received by Mortgagor or
Mortgagee as proceeds of insurance and
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AND FINANCING STATEMENT - Page 5
proceeds of condemnation proceedings as additional security for the Debt.
Mortgagor will promptly give Mortgagee notice of any material damage to or
condemnation proceeding affecting the Mortgaged Property. Mortgagee may file or
prosecute (or both) any insurance or condemnation claim. Mortgagee may collect
and give receipts for any money payable under any insurance policy by reason of
loss of or damage to the Improvements. Mortgagee may settle or compromise, on
any terms and for any amount it selects, the liability of any insurance company
or companies on any policy, and execute and deliver releases and discharges of
liability binding Mortgagor and Mortgagee. Mortgagee may collect and give
receipts for any money payable to Mortgagor because of condemnation proceedings
affecting any Mortgaged Property. Mortgagor RELEASES Mortgagee and the Banks
from any liability in connection with any settlement or compromise of any
insurance or condemnation claim. Mortgagee may apply all insurance or
condemnation proceeds, first to Mortgagee's expenses in connection with the
insurance or condemnation claim, and second, at Mortgagee's discretion, either
(i) to the Debt in any order Mortgagee selects, or (ii) to the repair or
improvement of the Mortgaged Property in any manner Mortgagee selects, applying
the remaining money to the Debt in any order Mortgagee selects.
ARTICLE IV. Environmental Matters.
Section 4.1. Definitions.
(I) "ENVIRONMENTAL REQUIREMENT" means any statute,
common law rule, rule, regulation, order, authorization
(including any permit) or policy of any governmental authority
relating to the environment, pollution, natural resources,
health or safety, including the federal Clean Air Act,
Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), Water Pollution Control Act,
Resource Conservation and Recovery Act of 1976 ("RCRA"),
Occupational Safety and Health Act, and the Texas Water Code
and Texas Health & Safety Code, as each of such statutes and
codes has been amended to date and may be amended from time to
time.
(II) "HAZARDOUS MATERIAL" means any material, waste
or substance that is regulated, considered or identified as
hazardous or toxic or as a pollutant or contaminant under any
Environmental Requirement, including any "hazardous substance"
under CERCLA, "solid waste" or "hazardous waste" under RCRA,
petroleum, petroleum product, asbestos, polychlorinated
biphenyls and radioactive materials.
(III) "ENVIRONMENTAL CLAIM" means any governmental or
private claim or action pursuant to any Environmental
Requirement instituted or threatened against Mortgagor or
relating to the Mortgaged Property, including any
investigative, enforcement, cleanup, removal, containment or
remedial action.
Section 4.2. Representation and Agreement. Mortgagor has
conducted all customary or appropriate due diligence review of the Mortgaged
Property relating to Environmental Requirements
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AND FINANCING STATEMENT - Page 6
and Hazardous Materials. Mortgagor will comply with all Environmental
Requirements. Mortgagor will keep the Mortgaged Property free of all Hazardous
Materials and will not permit any Hazardous Materials to be placed (in a storage
tank or otherwise), installed, disposed of or released on the Mortgaged
Property. If Mortgagor ever becomes aware that any Hazardous Material is located
on, in, above or under the Mortgaged Property, Mortgagor will at Mortgagor's
cost promptly remove all such Hazardous Materials in accordance with
Environmental Requirements. Mortgagor will promptly notify Mortgagee if it
becomes aware of any violation of the provisions of this paragraph or if any
person or governmental entity notifies Mortgagor of any Environmental Claim.
Section 4.3. Indemnity. Mortgagor will indemnify Mortgagee and
the Banks and hold Mortgagee and the Banks harmless against all liability, loss,
cost or expense of any kind directly or indirectly relating to any Environmental
Claim relating to the Mortgaged Property, any Environmental Requirement
affecting the Mortgaged Property, and the presence of Hazardous Materials on the
Mortgaged Property (whether or not the placement of the Hazardous Materials on
the Mortgaged Property was within the control of Mortgagor or any affiliate).
This paragraph will survive termination or foreclosure of this Deed of Trust.
ARTICLE V. Compliance with Laws. Mortgagor shall promptly comply with
all existing and future federal, state and local laws, orders, ordinances,
governmental rules and regulations or court orders affecting or which may be
interpreted to affect the Mortgaged Property, or the use thereof ("APPLICABLE
LAWS"). Mortgagor shall from time to time, upon Mortgagee's request, provide
Mortgagee with evidence satisfactory to Mortgagee that the Mortgaged Property
and the use thereof comply with all Applicable Laws or are exempt from
compliance with Applicable Laws. Mortgagor shall give prompt notice to Mortgagee
of the receipt by Mortgagor of any notice related to a violation of any
Applicable Laws and of the commencement of any proceedings or investigations
which relate to compliance with Applicable Laws.
ARTICLE VI. Advances and Attorneys' Fees. Mortgagor will pay, or
reimburse Mortgagee for, all costs and expenses of every character incurred from
time to time in connection with this Deed of Trust and the Debt, including costs
and expenses incurred (a) for mortgage or recording taxes, (b) to satisfy any
obligation of Mortgagor under this Deed of Trust or to protect the Mortgaged
Property, (c) in connection with the evaluation, monitoring or administration of
the Debt or the Mortgaged Property (whether or not an Event of Default has
occurred), and (d) in connection with the exercise of Mortgagee's rights and
remedies. Costs and expenses include reasonable fees and expenses of outside
counsel and other outside professionals and charges imposed for the services of
attorneys and other professionals employed by Mortgagee or its affiliates. Any
amount owing under this Section will be due and payable on demand and will bear
interest from the date of expenditure by Mortgagee until paid at the rate
provided in the Notes for past due principal.
ARTICLE VII. Events of Default; Acceleration; Appointment of Receiver.
Each of the following events is called an "EVENT OF DEFAULT":
Section 7.1. Any "Event of Default," as defined in the Credit
Agreement or any other Loan Document, occurs;
Section 7.2. Mortgagor fails to comply with or becomes subject
to any administrative or judicial proceeding under any federal, state or local
hazardous waste or environmental law, asset forfeiture or similar law which may
result in the forfeiture of property, or other law where non-
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AND FINANCING STATEMENT - Page 7
compliance may have a significant effect on the Mortgaged Property or on
Mortgagor's ability to pay any Debt;
Section 7.3. Mortgagee reasonably believes that there is a
defect in Mortgagor's title to any of the Mortgaged Property, or any person
(including Mortgagor) alleges that (i) a lien or encumbrance exists on any
Mortgaged Property equal or superior to the lien of this Deed of Trust, other
than Permitted Encumbrances, or (ii) the lien of this Deed of Trust is subject
to a homestead claim or other claim, and in any such case Mortgagor fails,
within 15 days after written demand by Mortgagee, to correct such title defect
or to remove said lien, encumbrance, homestead claim or other claim, or a writ
of execution is levied against the interest of Mortgagor in the Mortgaged
Property; or
Section 7.4. Mortgagor sells, transfers, pledges, encumbers,
grants a security interest in, or otherwise disposes of all or any part of or
interest in the Land or the Improvements (including the granting of any
easement), or if the title to all or any of the Mortgaged Property (other than
items of personalty that have become obsolete or worn beyond practical use and
that have been replaced by adequate substitutes owned by Mortgagor and having a
value equal to or greater than the replaced items when new) becomes vested in
any party other than Mortgagor, whether by operation of law or otherwise.
Mortgagee may consent to any action under this paragraph in its discretion, and
if it consents it may impose any requirements for consent that it wishes.
If any Event of Default occurs, Mortgagee may, without demand,
presentment or notice of any kind (including notice of default, notice of intent
to accelerate the maturity of the Debt, or notice of actual acceleration), all
of which Mortgagor waives, declare all of the Debt immediately due and payable,
and may request that Trustee exercise any of Trustee's remedies under this Deed
of Trust. In addition, if an Event of Default occurs, Trustee will be entitled
as a matter of right to the appointment of a receiver or receivers of the
Mortgaged Property, and of all its rent and other income. Notwithstanding the
appointment of any receiver, Trustee will be entitled to the possession and
control of any cash or instruments that this Deed of Trust requires Mortgagor to
deliver or pay to Trustee. If an Event of Default occurs, Mortgagee may demand
that Mortgagor surrender possession of the Mortgaged Property to Mortgagee. If
Mortgagee takes possession of the Mortgaged Property, neither Mortgagee nor any
Bank will be liable to Mortgagor for any rental of the Mortgaged Property, nor
for any failure to rent or inadequacy of rental of the Mortgaged Property, nor
for any damage to or waste of the Mortgaged Property, WHETHER OR NOT DUE TO
MORTGAGEE'S OR ANY BANK'S NEGLIGENCE, except as a result of the gross negligence
or willful misconduct of Mortgagee or such Bank.
ARTICLE VIII. Terms of Assignment of Rents; Collection and Application
of Rents. The transfer and assignment of the Rents provided for in this Deed of
Trust is irrevocable. Mortgagee grants to Mortgagor a limited license (the
"LICENSE") to possess and use the Leases and the Rents. If an Event of Default
occurs, the License will automatically terminate. Thereafter, Mortgagee will
have the absolute and continuing right (but not the obligation) to collect,
demand, xxx for, recover, receive and give receipts for any Rent. Neither
Mortgagee nor any Bank has any responsibility to exercise diligence in
collecting Rents. After deducting the expenses of collection, Mortgagee will
apply the net proceeds of collection as a credit upon any portion of the Debt
selected by Mortgagee, whether or not that portion of the Debt is due and
payable. Mortgagor authorizes and directs any lessee of the Mortgaged Property
to deliver any such payment to Mortgagee, and any lessee's obligation to
Mortgagor will be absolutely discharged to the extent of its payment to
Mortgagee. If Mortgagor receives any Rents after the termination of Mortgagor's
license, Mortgagor will hold the Rents in trust for Mortgagee and immediately
pay them to Mortgagee. Mortgagor will keep Rents segregated from all other
funds. Mortgagee is not required to give any credit against the Debt for the
assignment of rents until rents are actually paid to Mortgagee. Mortgagor's
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AND FINANCING STATEMENT - Page 8
obligations to Mortgagee will be discharged only to the extent that net Rents
are received by Mortgagee and not disbursed to Mortgagor or paid by Mortgagee
for expenses relating to the Land and Improvements. The assignment of rents will
not cause Mortgagee to be a mortgagee-in-possession. If the License is
terminated, Mortgagee's possession of the Rents will not act as a waiver of any
default by Mortgagor or as an affirmance of any Lease by Mortgagee or any Bank
if Mortgagee or any Bank later becomes the purchaser of the Mortgaged Property
at any foreclosure sale. Mortgagee may at its option subordinate the lien of
this Deed of Trust to any Lease. The assignment of rents will terminate upon
termination of this Deed of Trust. If the Mortgaged Property is sold pursuant to
the terms of this Deed of Trust, the assignment of rents will terminate and the
purchaser of the Mortgaged Property will have the right to all Rents free of the
assignment.
ARTICLE IX. Trustee's Sale.
Section 9.1. If an Event of Default occurs, Trustee will, at
the request of Mortgagee, sell all or any part of the Mortgaged Property as an
entirety or in parcels, by one sale or by several sales held at one time or at
different times, all as Trustee in Trustee's discretion elects. The sale will be
made in accordance with Texas Property Code Section 51.002 or any successor
statute. If the Land is situated in more than one county, then required notices
will be given in both or all of such counties, the Mortgaged Property may be
sold in either or any such county, and such notices shall designate the county
where the Mortgaged Property will be sold. The affidavit of any person having
knowledge of the facts to the effect that required notices were posted, filed or
mailed will be prima facie evidence of the facts recited in the affidavit. The
Trustee's deed at any such sale will be with general warranty, and Mortgagor
will warrant and forever defend the title of the purchaser or purchasers.
Mortgagee or any Bank may be the purchaser at any sale made hereunder, and
credit the sale price against the Debt. Any deed so executed by Trustee will be
prima facie proof of all factual matters stated in it. The purchaser or
purchasers named in any such deed, and all persons subsequently dealing with the
property purported to be thereby conveyed, will be fully protected in relying
upon the truthfulness of factual matters stated in the deed. After any Trustee's
sale, Mortgagor will surrender immediate possession and control of the property
purchased to the purchaser. If Mortgagor fails to surrender possession,
Mortgagor will be a tenant at will.
Section 9.2. Mortgagee may at any time before the sale direct
Trustee to abandon the sale, and may at any time thereafter direct Trustee to
again commence foreclosure. Whether or not foreclosure is commenced by Trustee,
Mortgagee may at any time after an Event of Default occurs institute suit for
collection of all or any part of the Debt or foreclosure of the lien of this
Deed of Trust or both. If Mortgagee institutes suit for collection of the Debt
and foreclosure of the lien of this Deed of Trust, Mortgagee may at any time
before the entry of final judgment dismiss the same, and require Trustee to sell
the Mortgaged Property in accordance with the provisions of this Deed of Trust.
No single sale or series of sales under this Deed of Trust or by judicial
foreclosure will extinguish the lien or exhaust the power of sale under this
Deed of Trust except with respect to the items of property sold.
Section 9.3. Trustee will apply the proceeds of sale, first to
the payment of all expenses of the sale, second to the payment of the Debt in
any order Mortgagee chooses and third the balance, if any, to any person who is
entitled to it. THIS PARAGRAPH DOES NOT GIVE ANY RIGHT, REMEDY OR CLAIM TO ANY
HOLDER OF ANY OBLIGATION OR LIEN, OTHER THAN MORTGAGEE AND THE BANKS.
ARTICLE X. Alternative Procedures under UCC. In addition to all other
rights and remedies granted in this Deed of Trust, after an Event of Default
occurs, Mortgagee will have all rights and remedies of a secured party after
default under the UCC and other applicable law, including without limitation,
the right to take possession of the Collateral, and for that purpose Mortgagee
may enter upon
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AND FINANCING STATEMENT - Page 9
the Mortgaged Property and lawfully remove any Collateral. Mortgagee may require
Mortgagor to assemble the Collateral and make it available to Mortgagee at a
reasonably convenient place Mortgagee designates. Mortgagee may provide a copy
of this Deed of Trust to any account debtor or other person liable on or having
any interest in any Collateral. Except for the reasonable safe custody of any
Collateral in its possession and accounting for moneys actually received by it
and except as expressly provided in the UCC, Mortgagee will have no duty as to
any Collateral, including any duty to preserve rights against prior parties.
Mortgagee is not required to take possession of any Collateral prior to any
sale, or to have any Collateral present at any sale. Mortgagee may sell part of
the Collateral without waiving its right to proceed against the remaining
Collateral. If any sale is not completed or is defective in the opinion of
Mortgagee, Mortgagee may make a subsequent sale of the same Collateral. Any xxxx
of sale or other record evidencing any foreclosure sale will be prima facie
evidence of the factual matters recorded therein. If a sale of Collateral is
conducted in conformity with customary practices of banks disposing of similar
property, the sale will be deemed commercially reasonable, but Mortgagee will
have no obligation to advertise or to sell Collateral on credit. However, if
Mortgagee sells any of the Collateral upon credit, Mortgagor will be credited
only with payments actually made by the purchaser, received by Mortgagee and
applied to the indebtedness of the purchaser with respect to the sale. In the
event the purchaser fails to pay for the Collateral, Mortgagee may resell the
Collateral and Mortgagor shall be credited with the proceeds of the sale. In
addition, Mortgagor waives any and all rights that Mortgagor may have to a
judicial hearing in advance of the enforcement of any of Mortgagee's or any
Bank's rights hereunder, including without limitation, its rights following an
Event of Default to take immediate possession of the Collateral and to exercise
its rights with respect thereto. By exercising its rights, neither Mortgagee nor
any Bank will become liable for, and Mortgagor will not be released from, any of
Mortgagor's duties or obligations under any accounts, general intangibles or
Leases included in the Collateral. All remedies in this Deed of Trust are
cumulative of any and all other legal, equitable or contractual remedies
available to Mortgagee and the other Banks and any such remedies may be
exercised simultaneously or in any order as determined by Mortgagee. Mortgagor
irrevocably appoints Mortgagee as its attorney-in-fact to do all things
Mortgagor is required to do under this Deed of Trust. This appointment is
coupled with an interest and shall survive the death or disability of Mortgagor.
ARTICLE XI. Standards for Exercising Remedies. To the extent that
applicable law imposes duties on Mortgagee to exercise remedies in a
commercially reasonable manner, Mortgagor acknowledges and agrees that it is not
commercially unreasonable for Mortgagee (a) to fail to incur expenses reasonably
deemed significant by Mortgagee to prepare any Collateral for disposition or
otherwise to complete raw material for work-in-process into finished goods or
other finished products for disposition, (b) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or if not
required by other law, to fail to obtain governmental or third party consents
for the collection or disposition of the Collateral to be collected or disposed
of, (c) to fail to exercise collection remedies against account debtors or other
persons obligated on Collateral or to remove liens on or any adverse claims
against the Collateral, (d) to exercise collection remedies against account
debtors and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
persons, whether or not in the same business as Mortgagor, for expressions of
interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the Collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
(k) to purchase insurance or credit enhancements to insure Mortgagee against
risks of loss, collection or disposition of Collateral or to provide Mortgagee a
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AND FINANCING STATEMENT - Page 10
guaranteed return from the collection or disposition of Collateral, (l) to the
extent deemed appropriate by Mortgagee, to obtain the services of brokers,
investment bankers, consultants and other professionals (including Mortgagee and
its affiliates) to assist Mortgagee in the collection or disposition of any of
the Collateral or (m) to comply with any applicable state or federal law
requirement in connection with the disposition or collection of the Collateral.
Mortgagor acknowledges that this Section is intended to provide non-exhaustive
indications of what actions or omissions by Mortgagee would not be commercially
unreasonable in Mortgagee's exercise of remedies against the Collateral and that
other actions or omissions by Mortgagee shall not be deemed commercially
unreasonable solely by not being included in this Section. Without limitation
upon the foregoing, nothing contained in this Section shall be construed to
grant any rights to Mortgagor or to impose any duties upon Mortgagee that would
not have been granted or imposed by this Deed of Trust or by applicable law in
the absence of this Section.
ARTICLE XII. Change of Trustee. Trustee may be removed at any time with
or without cause, at the option of Mortgagee, by written declaration of removal
executed by Mortgagee, without any notice to or demand upon Trustee, Mortgagor
or any other person. If at any time Trustee is removed, dies or refuses, fails
or is unable to act as Trustee, Mortgagee may appoint any person as successor
Trustee hereunder, without any formality other than a written declaration of
appointment executed by Mortgagee. Immediately upon appointment, the successor
Trustee so appointed automatically will be vested with all the estate and title
in the Mortgaged Property, and with all of the rights, powers, privileges,
authority, options and discretions, and charged with all of the duties and
liabilities, vested in or imposed upon Trustee by this instrument, and any
conveyance executed by any successor Trustee will have the same effect and
validity as if executed by the Trustee named in this Deed of Trust.
ARTICLE XIII. Fair Market Value for Calculating Deficiencies. If
Mortgagee sues Mortgagor, Borrower, any other party obligated on the Debt or any
guarantor of any Debt to collect any deficiency owing after foreclosure of the
Mortgaged Property, "fair market value" of the Mortgaged Property under Sections
51.003, 51.004, and 51.005 of the Texas Property Code (as amended from time to
time) (the "Deficiency Statutes") will be determined as follows:
Section 13.1. Any valuation of the Mortgaged Property will be
based on "as is" condition on the foreclosure date, without any assumption or
expectation that the Mortgaged Property will be repaired or improved in any
manner before a resale of the Mortgaged Property after foreclosure.
Section 13.2. Any valuation will assume that the foreclosure
purchaser desires resale of the Mortgaged Property for cash promptly (but no
later than twelve months) following the foreclosure sale.
Section 13.3. All reasonable closing costs customarily borne
by the seller in a commercial real estate transaction, including brokerage
commissions, title insurance, a survey of the Mortgaged Property, tax
prorations, attorney's fees, and marketing costs, will be deducted from the
gross fair market value of the Mortgaged Property.
Section 13.4. Any valuation will further discount the gross
fair market value of the Mortgaged Property to account for any estimated holding
costs associated with maintaining the Mortgaged Property pending sale, including
utilities expenses, property management fees, taxes and assessments, and other
maintenance expenses.
Section 13.5. Any expert opinion testimony given or considered
in connection with a determination of the fair market value of the Mortgaged
Property must be given by persons who have at
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AND FINANCING STATEMENT - Page 11
least five years experience in appraising property similar to the Mortgaged
Property and who have conducted and prepared a complete written appraisal of the
Mortgaged Property taking into consideration the factors set forth above.
ARTICLE XIV. All Security Cumulative; Subrogation; Waiver of
Marshaling. The execution of this Deed of Trust does not impair any other
security for the payment of any Debt. Mortgagee may take additional security for
any Debt in the future without altering or impairing the lien of this Deed of
Trust. Mortgagee may release any Mortgaged Property or any other security for
the Debt without altering or impairing the lien of this Deed of Trust as to the
Mortgaged Property not released. All present and future security will be
cumulative. Mortgagee and the Banks shall be subrogated to all rights, liens or
interests in any of the Mortgaged Property securing the payment of any
obligation satisfied or paid off out of the proceeds of the loans evidenced by
the Notes. Mortgagor waives any right of marshaling of assets or sale in inverse
order of alienation, and all present or future appraisal rights and equity of
redemption rights.
ARTICLE XV. Limitations on Amount of Interest. Mortgagor and Mortgagee
intend to conform strictly to applicable usury laws. Therefore, the total amount
of interest (as defined under applicable law) contracted for, charged or
collected under the Debt or this Deed of Trust will never exceed the highest
amount permitted by applicable law. If Mortgagee contracts for, charges or
receives any excess interest, it will be deemed a mistake. Any unlawful contract
or charge will be automatically reformed to conform to applicable law, and if
Mortgagee has received excess interest, Mortgagee will either refund the excess
to Mortgagor or credit the excess on the unpaid amounts owing under the Debt or
this Deed of Trust. All amounts constituting interest will be spread throughout
the full term of the Debt in determining whether interest exceeds lawful
amounts.
ARTICLE XVI. Financing Statement; Mortgagor's Covenants; Further
Assurances. This Deed of Trust covers, among other Collateral, goods that are or
are to become fixtures related to the Land and the Improvements. This Deed of
Trust is to be filed in the real property records as a fixture filing, and may
be filed as an initial financing statement in any other place which is necessary
or desirable to perfect the security interests granted herein. The secured party
is Mortgagee and the mailing address of the secured party is set forth in
Section 17. The debtor is Mortgagor and the mailing address of the debtor is set
forth in Section 17. The first paragraph of this Deed of Trust indicates whether
Mortgagor is an individual or an organization and if Mortgagor is an
organization, its jurisdiction of organization and organizational identification
number, if any. Mortgagor is the record owner of the Land and the Improvements.
Mortgagee may file this Deed of Trust, or any financing statements or amendments
thereto or other record wherever Mortgagee believes necessary or appropriate to
perfect the security interests granted herein, including but not limited to any
official filing office, or in any other recording or registration system. The
financing statement or other record may (a) indicate the Collateral as being of
an equal or lesser scope or with greater detail than set forth in this Deed of
Trust and (b) contain any other information required by the UCC or other law
regarding the notification of a security interest, lien, assignment or other
right to direct disposition, for the sufficiency of the filing office's or other
registrar's acceptance of any financing statement or amendments thereto or other
record including (i) if Mortgagor is an organization, the type of organization
and any organization identification number issued to Mortgagor and (ii) in the
case of a financing statement filed as a fixture filing, a sufficient
description of real property to which the Collateral relates. Mortgagor ratifies
its authorization for Mortgagee's filing of any financing statements covering
the Collateral in any jurisdiction prior to the date hereof. A photographic or
other reproduction of this Deed of Trust or any financing statement relating to
this Deed of Trust will be sufficient as a financing statement. Mortgagor will
take any action requested by Mortgagee to establish and maintain control by
Mortgagee of any Collateral consisting of deposit accounts, letter of credit
rights and investment property and to create, attach, perfect, protect, assure
the first priority of and to enforce the liens and security interests granted
hereunder.
DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT - Page 12
ARTICLE XVII. Notices. Except as otherwise provided, any notice,
request or demand under this Deed of Trust must be in writing and will be
sufficient if either delivered personally or deposited in the United States mail
in a postpaid envelope addressed to the mailing address set forth below. A party
may designate a different address by notice given in compliance with this
Section. Any notice to Mortgagee must be sent or delivered to the officer named
below or to another officer designated for receipt of such notices by Mortgagee.
The names and mailing addresses of Mortgagor and Mortgagee are as follows:
Mortgagor: Mortgagee:
----------------------------- -----------------------------
Horizon Health Corporation JPMorgan Chase Bank, as Agent
0000 Xxxxxx Xxxxx Xxxxx 0000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000
Attn: Chief Financial Officer Attn.: Xxxxx Xxxxx
ARTICLE XVIII. Additional Agreements. This Deed of Trust benefits the
successors, assigns and legal representatives of Trustee, Mortgagee and the
Banks and binds any successors or transferees of Mortgagor (however, this
provision does not permit Mortgagor to transfer the Mortgaged Property). Each
reference to Mortgagor, Trustee, Mortgagee or any Bank includes their respective
successors, assigns and legal representatives. No modification or waiver of this
Deed of Trust will be effective unless in writing and signed by Mortgagee.
Mortgagee and the Banks may waive any default without waiving any other prior or
subsequent default. Neither Mortgagee's nor any Bank's failure to exercise or
delay in exercising any rights under this Deed of Trust will not operate as a
waiver of those rights. If any provision of this Deed of Trust is unenforceable
or invalid, that provision will not affect the enforceability or validity of any
other provision. If the application of any provision of this Deed of Trust to
any person or circumstance is illegal or unenforceable, that application will
not affect the legality or enforceability of the provision as to any other
person or circumstance. If more than one person executes this Deed of Trust as
Mortgagor, their obligations under this Deed of Trust are joint and several.
ARTICLE XIX. Rules of Construction. The section headings or captions in
this instrument are for convenience and are not a part of this Deed of Trust for
any purpose. Any action permitted to Mortgagee or any Bank may be taken by any
authorized officer, employee or agent of Mortgagee or such Bank, or any
attorney, accountant, environmental consultant or other advisor or professional
retained by Mortgagee or such Bank. Use of the term "including" does not imply
any limitation on (but may expand) the antecedent reference. Unless the context
clearly requires otherwise, the term "may" does not imply any obligation to act.
Any reference to exhibits or schedules means the exhibits or schedules to this
Deed of Trust, which are fully incorporated by reference into this Deed of
Trust. Any reference to a particular document includes all modifications,
supplements, replacements, renewals or extensions of that document, but this
rule of construction does not authorize amendment of any document without
Mortgagee's consent.
ARTICLE XX. Security Interest Absolute. All rights of Mortgagee and the
liens and security interests granted by this Deed of Trust, and all obligations
of Mortgagor hereunder, are and will be absolute and unconditional, irrespective
of: (i) any lack of validity or enforceability of the Credit Agreement, the
Notes or any other Loan Document; (ii) any change in the time, manner, or place
of payment of, or in any other term of, all or any of the Debt or any other
amendment or waiver of or any consent to any departure from the Credit Agreement
or the Notes or any other Loan Document; (iii) any exchange, release or
non-perfection of any other collateral, or any release or amendment or waiver of
or consent to departure from any guaranty, for all or any of the Debt; or (iv)
any other circumstance which
DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT - Page 13
might otherwise constitute a defense available to, or a discharge of, any person
liable for the Debt, the Borrower or a third party grantor of any lien or
security interest.
ARTICLE XXI. Waivers. Mortgagor waives all suretyship defenses that may
lawfully be waived, including but not limited to notice of acceptance of this
Deed of Trust, notice of the incurrence, acquisition or subordination of any
Debt, credit extended, collateral received or delivered or other action taken in
reliance on this Deed of Trust, notices and all other demands and notices of any
description. With respect to both Debt and the Mortgaged Property, Mortgagor
assents to any extension or postponement of the time of payment or any other
indulgence, to any substitution, exchange or release of or failure to perfect
Mortgagee's security interest or lien in any of the Mortgaged Property, to the
addition or release of any person primarily or secondarily liable, to the
acceptance of partial payment thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as
Mortgagee may deem advisable. To the extent not prohibited by applicable law,
Mortgagor further waives (i) diligence and promptness in preserving liability of
any person on the Debt, and in collecting or bringing suit to collect the Debt;
(ii) all rights, if any, of Mortgagor under Rule 31, Texas Rules of Civil
Procedure, or Chapter 34 of the Texas Business and Commerce Code, or Section
17.001 of the Texas Civil Practice and Remedies Code; (iii) to the extent
Mortgagor is subject to the Texas Revised Partnership Act ("TRPA"), compliance
by Mortgagee with Section 3.05(d) of TRPA; (iv) notice of extensions, renewals,
modifications, rearrangements and substitutions of the Debt; (v) failure to pay
any of the Debt as it matures, any other default, adverse change in any
obligor's or any Mortgagor's financial condition, release or substitution of
collateral, subordination of Mortgagee's rights in any collateral, and every
other notice of every kind. Nothing in this Deed of Trust is intended to waive
or vary the duties of Mortgagee or the rights of Mortgagor or any obligor in
violation of Section 9.602 of the UCC.
ARTICLE XXII. No Oral Agreements. THIS WRITTEN AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
ARTICLE XXIII. JURY TRIAL WAIVER. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW, MORTGAGOR AND MORTGAGEE HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY THAT MORTGAGOR OR MORTGAGEE MAY
HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
DEED OF TRUST OR THE DEBT. MORTGAGOR REPRESENTS AND WARRANTS THAT NO
REPRESENTATIVE OR AGENT OF MORTGAGEE HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT MORTGAGEE WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS RIGHT
TO JURY TRIAL WAIVER. MORTGAGOR ACKNOWLEDGES THAT MORTGAGEE HAS BEEN INDUCED TO
ENTER INTO THIS DEED OF TRUST BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS
SECTION.
Mortgagor has executed this Deed of Trust on the date set forth in the
acknowledgment below to be effective as of August 29, 2003.
DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT - Page 14
Mortgagor certification for all Non-individuals: Mortgagor certifies
that it is organized under the laws of the State of Delaware.
HORIZON HEALTH CORPORATION
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
Date Signed:
----------------------------------
Mortgagee is executing this Deed of Trust solely to acknowledge its
agreement to the Jury Waiver above, the notice given under Section 26.02 of the
Texas Business and Commerce Code and to comply with the waiver requirement of
TRPA. Mortgagee's failure to execute or authenticate this Deed of Trust will not
invalidate this Deed of Trust.
JPMORGAN CHASE BANK, as Agent
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
Exhibit A - Description of Land
Exhibit B - Permitted Encumbrances
THE STATE OF TEXAS )
)
COUNTY OF XXXXXX )
This instrument was acknowledged before me on the 29th day of August,
2003, by ______________________________, a __________________ of Horizon Health
Corporation, a Delaware corporation, on behalf of said corporation.
---------------------------------------------------
NOTARY PUBLIC, State of Texas
Printed Name of Notary:
----------------------------
My commission expires:
----------------------
DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT - Page 00
XXX XXXXX XX XXXXX )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on the 29th day of August,
2003 by __________, a ____________________ of JPMORGAN CHASE BANK, a New York
banking corporation on behalf of said banking corporation.
---------------------------------------------------
NOTARY PUBLIC, State of Texas
Printed Name of Notary:
----------------------------
My commission expires:
----------------------
Return to:
JPMorgan Chase Bank
Collateral Processing Unit
0000 Xxxxxx Xxxxxx
Mail Stop 0000 X 000
Xxxxxxx, XX 00000
DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT - Page 16
Exhibit A
Description of Land
Being Xxx 0X, xx Xxxxx X, xx XXXXXX XXXXX ADDITION, PHASE 1, an Addition to the
City of Lewisville, Xxxxxx County, Texas, according to the Map thereof recorded
in Cabinet L, Page 365, of the Plat Records of Xxxxxx County, Texas.
EXHIBIT A - Solo Page
Exhibit B
Permitted Encumbrances
1. 43' building line, 10' building lines, 5' building lines, 30' setback
line, 5' sidewalk and utility easement, 25' electric easement, 7.5'
utility easements, 3' radius blanket fire hydrant easements, 2' radius
blanket other appurtenances easements and 20' drainage easement as
shown on the plat recorded in Cabinet L, Page 365, Plat Records of
Xxxxxx County, Texas. [10]
2. Mineral estate and interest described in instrument filed 06/13/1952,
recorded in Volume 380, Page 347, Deed Records of Xxxxxx County, Texas.
Title to said interest not checked subsequent to the date thereof. [6]
3. Mineral estate and interest described in instrument filed 05/10/1972,
recorded in Volume 645, Page 174, Deed Records of Xxxxxx County, Texas.
Title to said interest not checked subsequent to the date thereof. [7]
4. 48" R.C.P. on the East and West lines of the lot as shown on survey
dated October 5, 1995, prepared by Xxxxxxx X. Xxxxxx, RPLS #5084. [16]
EXHIBIT B - Solo Page
EXHIBIT B
TO
HORIZON HEALTH CORPORATION
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Compliance Certificate
EXHIBIT B - Cover Page
COMPLIANCE CERTIFICATE
for the
Fiscal Quarter ending ________ __, ____
To: JPMorgan Chase Bank
X.X. Xxx 000000
Xxxxxx, Xxxxx 00000-0000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: D. Xxxxx Xxxxxx
Xxxxx Xxxxx
Ladies and Gentlemen:
This Compliance Certificate (the "Certificate") is being delivered
pursuant to Section 9.1(c) of that certain Second Amended and Restated Credit
Agreement (as amended, the "Agreement") dated as of May 23, 2002, among the
Horizon Health Corporation ("Parent"), Horizon Mental Health Management, Inc.
("Borrower"), the banks and lending institutions named therein (the "Banks") and
JPMorgan Chase Bank, as agent for the Banks ("Agent"). All capitalized terms,
unless otherwise defined herein, shall have the same meanings as in the
Agreement. All the calculations set forth below shall be made pursuant to the
terms of the Agreement.
The undersigned, as an authorized financial officer of Parent, and not
individually, does hereby certify to the Agents and the Banks that:
1. DEFAULT.
No Default has occurred and is continuing or if a Default has occurred
and is continuing, I have described on the attached Exhibit A the
nature thereof and the steps taken or proposed to remedy such Default.
2. SECTION 9.1 - FINANCIAL STATEMENTS AND RECORDS
(a) Annual audited financial statements of Parent Yes No N/A
and the Subsidiaries on or before ninety (90)
days after the end of each Fiscal Year.
(b) Quarterly unaudited financial statements of Yes No N/A
Parent and the Subsidiaries within forty-five
(45) days after the end of each Fiscal Quarter
(c) Financial Projections of Parent and Subsidiaries Yes No N/A
within forty-five (45) days after the beginning
of each Fiscal Year.
3. SECTION 9.10(d) - INSIGNIFICANT SUBSIDIARIES
EBITDA for the Insignificant Subsidiaries for the
most recently completed four Fiscal Quarter period
not to exceed: $ 250,000
Actual EBITDA for the Insignificant Subsidiaries for
the most recently completed four Fiscal Quarter
period: $ Yes No
---------
Compliance Certificate - Page 1
4. SECTION 9.10(e) - RESTRICTED SUBSIDIARIES
EBITDA for the Restricted Subsidiaries for the most
recently completed four Fiscal Quarter period not to
exceed 10% of line 12(f): $
---------
Actual EBITDA for the Restricted Subsidiaries for
the most recently completed four Fiscal Quarter
period: $ Yes No
---------
5. SECTION 10.1 - DEBT
(a) Purchase money not to exceed: $ 500,000
Actual Outstanding: $ Yes No
---------
(b) Guarantees of surety, appeal bonds, etc. $1,000,000
not to exceed: $ Yes No
Actual Outstanding: ---------
(c) Aggregate Debt of newly acquired or
merged Subsidiaries not to exceed: $1,000,000
Actual Outstanding: $ Yes No
---------
(d) Other Debt not to exceed: $ 250,000
Actual Outstanding: $ Yes No
---------
6. SECTION 10.4 - RESTRICTIONS ON DIVIDENDS
AND OTHER DISTRIBUTIONS
The total aggregate amount of redemptions or
repurchases exercised by employees and directors
in connection with the exercise by such Person of
stock options granted to such Person under
Parent's benefit programs shall not exceed:
During the Fiscal Year ending August 31, 2004 $2,000,000
During any Fiscal Year thereafter $1,000,000
Actual Expended: $ Yes No
---------
7. SECTION 10.5 - INVESTMENTS
(a) Aggregate amount of loans to physicians
employed by a Subsidiary not to exceed
(calculated net of bad debt reserve): $ 500,000
Actual Outstanding: $ Yes No
---------
(b) Aggregate amount of investments in or
contributions to wholly owned Subsidiaries
not to exceed: $ 250,000
Actual Outstanding: $ Yes No
---------
(c) Gross aggregate amount of loans, advances,
and investments in or contributions to
Valley Rehabilitation Hospital, LLP
not to exceed: $ 250,000
Actual Aggregate Amount: $ Yes No
---------
(d) Aggregate amount of investments in HBS CA
not to exceed the lesser of $1,500,000 or
the minimum amount for compliance $ with
minimum net worth
Compliance Certificate - Page 2
requirements under Xxxx Xxxxx Act: $ Yes No
----------
Actual Aggregate Amount:
(e) Aggregate amount of investments in Insights
in addition to the Purchase Price paid for
Insights not to exceed: $ 1,000,000
$ Yes No
----------
Actual Aggregate Amount:
8. SECTION 10.8 - ASSET DISPOSITIONS
(a) Aggregate book value of assets disposed
during any 12-month period not to exceed: $ 500,000
(b) Total book value of asset dispositions for $ Yes No
12-month period most recently ending: ----------
9. SECTION 10.11 - PREPAYMENT OF DEBT
(a) Aggregate amount of Debt, other than the
Obligations, prepaid or optionally redeemed
during period from the Closing Date to the
Termination Date not to exceed: $ 300,000
$ Yes No
(b) Total amount of Debt, other than the ----------
Obligations, prepaid or optionally redeemed:
10. SECTION 11.1 - CONSOLIDATED NET WORTH
(a) Base Consolidated Net Worth $55,635,045
(b) The lesser of (i) $500,000 or (ii) aggregate $
amount of $ non-cash losses attributable to ----------
impairment of goodwill and incurred and
reported on Parent's 8/31/02 financial
statement for such fiscal year which have
resulted from Parent's compliance with
statement number 142 of FASB
(c) Cumulative positive Net Income since 5/31/03 $
Fiscal Quarter end ----------
(d) 50% of 10(c) $
----------
(e) Aggregate amount of net cash proceeds or $
other Capital Contribution to Parent since ----------
5/31/03
(f) the lesser of $7,500,000 or the aggregate $
amount paid by $ Parent for its repurchase ----------
of shares of its stock on the open market or
through privately negotiated transactions
pursuant to clause (iv) of Section 10.4
(g) Required Consolidated Net Worth: 10(a) minus $
10(b) plus 10(d) plus 10(e) minus 10(f) ----------
(h) Actual Consolidated Net Worth $ Yes No
----------
11. SECTION 11.2 - INDEBTEDNESS TO CAPITALIZATION
(a) Debt for borrowed money $
----------
Compliance Certificate - Page 3
(b) Debt evidenced by bonds, notes, etc. $
----------
(c) Capital Lease Obligations $
----------
(d) Reimbursement obligations for letters of $
credit ----------
(e) Sum of 11(a) through 11(d) $
----------
(f) Actual Consolidated Net Worth $
(from Section 11.1) ----------
(g) 11(e) plus 11(f) $
----------
(h) 11(f) : 11 (g) = :1.00
-----
(i) Maximum Indebtedness to Capitalization 0.50:1.00 Yes No
12. SECTION 11.3 - FIXED CHARGE COVERAGE
(a) Parent and the Subsidiaries' Consolidated
Net Income for last four Fiscal Quarters $
(from Schedule 1) ----------
(b) Plus provisions for tax $
----------
(c) less benefit from tax $
----------
(d) Plus interest expense $
----------
(e) Plus amortization and depreciation $
----------
(f) Parent and the Subsidiaries' EBITDA: $
(12(a) plus 12(b) minus 12(c) plus ----------
12(d) plus 12 (e))
(g) provisions for taxes $
----------
(h) plus benefit from taxes $
----------
(i) minus cash dividends and other $
distributions made on account of ----------
the Parent's capital stock
(j) aggregate amount of non-cash losses which $
have not already been excluded in ----------
determining Consolidated Net Income and
which are attributable to impairment of
Parent's goodwill incurred and reported by
Parent on its financial statements which
have resulted from Parent's compliance with
statement number 142 of FASB
(k) Cash Flow $
----------
(12(f) plus 12(h) minus 12(g) minus 12(i) plus
12(j))
Compliance Certificate - Page 4
(l) Fixed Charges
(i) Cash interest expense for last four
Fiscal Quarters $
----------
(ii) as of each date of determination (A)
prior to the Revolving Termination
Date, one-fifth of the outstanding
balance of Loans and (B) on and after
the Revolving Termination Date,
current maturities of long term debt
reflected on Parent's consolidated
balance sheet, excluding 2/3 of the
final principal installment due on the
Termination Date $
----------
(iii) Aggregate amount of Capital
Expenditures for last four Fiscal $
Quarters ----------
(iv) Payments made pursuant to Capital
Lease Obligations for last four Fiscal $
Quarters ----------
(v) Sum of 12(l)(i) through (iv) $
----------
(m) Actual Fixed Charge Coverage
(12(k) : 12(l)(v))= :1.00
-----
(n) Minimum Fixed Charge Coverage 1.20:1.00 Yes No
13. SECTION 11.4 - INDEBTEDNESS TO ADJUSTED EBITDA
(a) Indebtedness (from 11(e)) $
----------
(b) Actual EBITDA (from 12(f)) $
----------
(c) Goodwill Impairment (from 12(j)) $
----------
(d) Prior Period/Prior Target EBITDA; provided $
that, (i) the EBITDA for a Prior Target will ----------
not be included unless it can be established
in a manner satisfactory to Agent based on
financial statements of the Prior Target
prepared in accordance with GAAP without
adjustment for expense or other charges that
will be eliminated after the acquisition;
and (ii) if such Prior Target has become a
Restricted Subsidiary, then in calculating
its pro forma EBITDA, any income which could
not be distributed to its parent as a result
of restrictions arising under governing
documents, agreement, applicable law or
otherwise shall not be included
(e) Adjusted EBITDA (13(b) plus 13(c) plus $
13(d)) ----------
(f) 13(a) : 13(e) :1.00
-----
(g) Maximum Indebtedness to Adjusted EBITDA
allowed by Credit Agreement 2.25:1.00 Yes No
14. SECTION 11.6 - MANAGED CARE CONTRACTS
(a) Gross revenue during the immediately $
preceding 12 month period from contracts ----------
providing exclusively for managed care
(b) Gross revenue during the immediately $
preceding 12 month $ period from the managed ----------
care portions of contracts providing for EAS
and managed care
(c) Total Managed Care Gross Revenue (14(a) plus $
(14(b)) ----------
Compliance Certificate - Page 5
(d) Total Gross Revenue during such 12 month $
period ----------
(e) 35% of 14(d) $
----------
(f) Maximum Permitted Gross Revenue from
Managed Care Contracts 14(c) > 14(e) Yes No
15. ATTACHED SCHEDULES
Attached hereto as schedules are the calculations supporting the
computation set forth above in this Certificate. All information
contained herein and on the attached schedules is true and correct.
16. FINANCIAL STATEMENTS
The unaudited financial statements attached hereto were prepared in
accordance with GAAP (excluding footnotes) and fairly present (subject
to year end audit adjustments) the financial conditions and the results
of the operations of the Persons reflected thereon, at the date and for
the periods indicated therein.
17. CONFLICT
In the event of any conflict between the definitions or covenants
contained in the Credit Agreement and as they may be interpreted or
abbreviated in the Compliance Certificate, the Credit Agreement shall
control.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
effective this _______ day of ______________, ______.
HORIZON HEALTH CORPORATION
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
Compliance Certificate - Page 6
Schedule 1
to
Compliance Certificate
Parent Consolidated Net Income
for period ______________ to _________________
1. GAAP for Parent (the "Subject Person") excluding the following
consolidated net income $
----------
(a) extraordinary gains or losses or nonrecurring revenue or
expenses ----------
(b) gains on sale of securities
----------
(c) losses on sale of securities
----------
(d) any gains or losses in respect of the write-up of any asset
at greater than original cost or write-down at less than
original cost; ----------
(e) any gains or losses realized upon the sale or other
disposition of property, plant, equipment or intangible
assets which is not sold or otherwise disposed of in the
ordinary course of business; ----------
(f) any gains or losses from the disposal of a discontinued
business; ----------
(g) any net gains or losses arising from the extinguishment of
any debt; ----------
(h) any restoration to income of any contingency reserve for
long term asset or long term liabilities, except to the
extent that provision for such reserve was made out of
income accrued during such period; ----------
(i) the cumulative effect of any change in an accounting
principle on income of prior periods; ----------
(j) any deferred credit representing the excess of equity in any
acquired company or assets at the date of acquisition over
the cost of the investment in such company or asset; ----------
(k) the income from any sale of assets in which the book value
of such assets prior to their sale had been the book value
inherited; ----------
(l) the income (or loss) of any Person (other than a subsidiary)
in which the Subject Person or a subsidiary has an ownership
interest; provided, however, that (i) Consolidated Net
Income shall include amounts in respect of the income of
such Person when actually received in cash by the Subject
Person or such subsidiary in the form of dividends or
similar distributions and (ii) Consolidated Net Income shall
be reduced by the aggregate amount of all investments,
regardless of the form thereof, made by the Subject Person
or any of its subsidiaries in such Person for the purpose of
funding any deficit or loss of such Person; ----------
Schedule 1 to Compliance Certificate - Page 1
(m) the income (or loss) of any Restricted Subsidiary; provided,
however, that (i) Consolidated Net Income shall include
amounts in respect of the income of such Restricted
Subsidiary when actually received in cash by the Parent in
the form of dividends or similar distributions and (ii)
Consolidated Net Income shall be reduced by the aggregate
amount of all investments, regardless of the form thereof,
made by the Parent or any of its Subsidiaries in such
Restricted Subsidiaries for the purpose of funding any
deficit or loss of such Restricted Subsidiary; ----------
(n) the income of any subsidiaries to the extent the payment of
such income in the form of a distribution or repayment of
any Debt to the Subject Person or a Subsidiary is not
permitted, whether on account of any restriction in by-laws,
articles of incorporation or similar governing document, any
agreement or any law, statute, judgment, decree or
governmental order, rule or regulation applicable to such
Subsidiary; ----------
(o) any reduction in or addition to income tax expense resulting
from an increase or decrease in a deferred income tax asset
due to the anticipation of future income tax benefits; ----------
(p) any reduction in or addition to income tax expense due to
the change in a statutory tax rate resulting in an increase
or decrease in a deferred income tax asset or in a deferred
income tax liability; ----------
(q) any gains or losses attributable to returned surplus assets
of any pension-benefit plan or any pension credit
attributable to the excess of (i) the return on pension-plan
assets over (ii) the pension obligation's service cost and
interest cost; ----------
(r) the income or loss of any Person acquired by the Subject
Person or a subsidiary for any period prior to the date of
such acquisition; and ----------
(s) the income from any sale of assets in which the accounting
basis of such assets had been the book value of any Person
acquired by the Subject Person or a subsidiary prior to the
date such Person became a subsidiary or was merged into or
consolidated with the Subject Person or a subsidiary. ----------
TOTAL:
==========
Schedule 1 to Compliance Certificate - Page 2
SCHEDULE 1.1(a)
TO
HORIZON HEALTH CORPORATION
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Revolving Commitments
BANK AMOUNT
---- ------
1. JPMorgan Chase Bank $20,000,000
2. Bank of America, National Association $20,000,000
3. Xxxxx Fargo Bank Texas, National Association $20,000,000
-----------
Total $60,000,000
===========
Schedule 1.1(a) to Fourth Amendment to Second Amended and Restated Credit
Agreement - Solo Page
SCHEDULE 8.6
TO
HORIZON HEALTH CORPORATION
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Rights in Properties; Liens
Owned Locations:
Name of Obligated Party Street Address City State Zip Code
----------------------- ----------------------- ---------- ----- --------
Horizon Health 0000 Xxxxxx Xxxxx Xxxxx Xxxxxxxxxx Xxxxx 00000
Corporation
Real Property Descriptions:
Description for 0000 Xxxxxx Xxxxx Xxxxx, Xxxxxxxxxx, Xxxxx 00000
Being Xxx 0X, xx Xxxxx X, xx XXXXXX XXXXX ADDITION, PHASE 1, an Addition to the
City of Lewisville, Xxxxxx County, Texas, according to the Map thereof recorded
in Cabinet L, Page 365, of the Plat Records of Xxxxxx County, Texas.
Schedule 1.1(a) to Fourth Amendment to Second Amended and Restated Credit
Agreement - Solo Page
SCHEDULE 8.14
TO
HORIZON HEALTH CORPORATION
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
List of Subsidiaries
I. FIRST TIER SUBSIDIARIES
Equity Equity Issued
Subsidiary Parent % Ownership Type Jurisdiction Type Authorized and Outstanding
---------- ------ ----------- ---- ------------ ---- ---------- ---------------
1. Mental Health Outcomes,
Inc. Borrower 100% Corporation Delaware Common stock 10,000 1,000
$.01 par value
2. Specialty Rehab
Management, Inc. Parent 100% Corporation Delaware Common stock 10,000 9,494
$.01 par value
3. Horizon Mental Health
Management, Inc.
("Borrower") Parent 100% Corporation Texas Common stock 1,000 1,000
$.01 par value
4. Horizon Behavioral
Services, Inc. ("HBS") Parent 100% Corporation Delaware Common stock 1,000 1,000
$.01 par value
5. ProCare One Nurses, LLC Parent 100% Limited Delaware Membership N/A N/A
liability Interest
company
Schedule 8.14 to Fourth Amendment to Second Amended and Restated Credit
Agreement - List of Subsidiaries
SECOND TIER SUBSIDIARIES
Equity Equity Issued
Subsidiary Parent % Ownership Type Jurisdiction Type Authorized and Outstanding
---------- ------ ----------- ---- ------------ ---- ---------- ---------------
6. HHMC Partners, Inc.
("HHMC") Borrower 100% Corporation Delaware Common stock 10,000 1,000
$.10 par value
7. HMHM of Tennessee, Inc. Borrower 100% Corporation Tennessee Common stock 10,000 1,000
$.01
par value
8. FPMBH of Texas, Inc. HBS 100% Corporation Delaware Common stock 1,000 1,000
("Texas") $.01 par value
9. Florida Psychiatric
Associates, LLC
HBS 100% Limited Florida Membership N/A N/A
liability Interest
company
10. Horizon Behavioral
Services of California,
Inc. HBS 100% Corporation California N/A 10,000 1,000
11. Occupational Health
Consultants of America,
LLC ("OHCA") HBS 100% Limited Tennessee Membership N/A N/A
liability Interest
company
12. Horizon Behavioral
Services IPA, Inc. HBS 100% Corporation New York Common stock 200 100
$.01 par value
13. Horizon Behavioral
Services of New Jersey,
Inc. HBS 100% Corporation New Jersey Common stock 10,000 1,000
$.01 par value
14. Horizon Behavioral
Services of New York,
Inc. HBS 100% Corporation New York Common stock 200 100
$.01 par value
Schedule 8.14 to Fourth Amendment to Second Amended and Restated Credit
Agreement - List of Subsidiaries
II. THIRD TIER SUBSIDIARIES
Equity Equity Issued
Subsidiary Parent % Ownership Type Jurisdiction Type Authorized and Outstanding
---------- ------ ----------- ---- ------------ ---- ---------- ---------------
15. FPM Behavioral Health
Services, Inc. Texas 100% Non-Profit Delaware Membership None None
Corporation Interest
16. AHG Partnership HHMC 60% General Texas General N/A N/A
Partnership partner
Interest
17 Employee Assistance
Services, Inc. OHCA 100% Corporation Kentucky Common 2,000 100
No par value
18. Horizon Behavioral
Services of Florida,
LLC HBS 100% Limited Florida Membership N/A N/A
liability Interest
company
19. Health and Human
Resource Center, Inc.
d/b/a Integrated
Insights HBS 100% Corporation California Common stock 10,000 1,000
20. Employee Assistance
Programs International,
LLC HBS 100% Limited Colorado Membership Interest N/A NA
liability
company
The organizational structure of Parent and the Subsidiaries can be graphically
depicted as reflected on Schedule 8.14A.
Schedule 8.14 to Fourth Amendment to Second Amended and Restated Credit
Agreement - List of Subsidiaries
SCHEDULE 8.14A
TO
HORIZON HEALTH CORPORATION
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Organizational Chart
(CHART)
Schedule 8.14A to Fourth Amendment to Second Amended and Restated Credit
Agreement - List of Subsidiaries
SCHEDULE 10.1
TO
HORIZON HEALTH CORPORATION
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Debt
NONE.
Schedule 10.1 to Fourth Amendment to Second Amended and Restated Credit
Agreement - Debt - Solo Page
SCHEDULE 10.2
TO
HORIZON HEALTH CORPORATION
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Existing Liens
NONE.
Schedule 10.2 to Fourth Amendment to Second Amended and Restated Credit
Agreement - Solo Page
SCHEDULE 10.5
TO
HORIZON HEALTH CORPORATION
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Existing Investments
NONE.
Schedule 10.5 to Fourth Amendment to Second Amended and Restated Credit
Agreement - Existing Investments - Solo Page
