EXHIBIT 10.2
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(the "Amendment"), dated as of September 25, 2002 is among HORIZON HEALTH
CORPORATION, a Delaware Corporation (the "Parent"), HORIZON MENTAL HEALTH
MANAGEMENT, INC., a Delaware Corporation (the "Borrower"), each of the banks or
other lending institutions party hereto, 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 the same may hereafter be amended
or otherwise modified, herein the "Agreement").
B. The Parent entered into a Member Interests Purchase Agreement, dated
as of June 13, 2002, with Lara Mac, Xxxxx XxxXxxxxxx, Obstetrical Nurses, Inc.,
and Xxxxxx Xxxx whereby Parent purchased all of the membership interests of
ProCare One Nurses, LLC, a Delaware limited liability company ("ProCare").
ProCare entered into a Subsidiary Joinder Agreement, dated as of July 3, 2002,
joining into the Subsidiary Security Agreement and the Guaranty as a debtor and
guarantor, respectively, thereunder. The Parent entered into a Pledge Amendment,
dated as of July 3, 2002, amending Schedule 1 to the Parent Pledge Agreement to
add 100% of the membership interests of ProCare thereto.
C. Geriatric Medical Care, Inc. was merged with and into the Borrower
on August 31, 2002.
D. Horizon Behavioral Services, Inc. ("HBS") desires to purchase all of
the issued and outstanding capital stock of Health and Human Resource Center,
Inc., d/b/a Integrated Insights, a California corporation ("Insights"), pursuant
to a Stock Purchase Agreement to be entered into between HBS and Xxxxxxx Xxxxxx,
M.D. (the "Stock Purchase Agreement").
E. In connection with the acquisition of Insights (the "Acquisition"),
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.
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 1
ARTICLE II.
Amendments
Section 2.1. Amendment to Section 1.1 - DEFINITIONS. Section 1.1 of the
Agreement is amended as follows:
(a) to add each of the following definitions, in alphabetical
order, thereto:
"Insights" means Health and Human Resource Center,
Inc., d/b/a Integrated Insights, a California corporation.
"ProCare" means ProCare One Nurses, LLC, a Delaware
limited liability company.
"Restricted Group Member" means Insignificant
Subsidiaries and Restricted Subsidiaries.
"Restricted Subsidiary" means HBS CA and Insights.
(b) to amend each of the following definitions in its entirety
to read as follows:
"Chase" means JPMorgan Chase Bank in its individual
capacity and not as Agent, and its successors, formerly known
as The Chase Manhattan Bank, who was the successor in interest
by merger to Chase Bank of Texas, National Association, who
was formerly known as Texas Commerce Bank National
Association.
"Insignificant Subsidiary" means FPM.
"Obligated Party" means Parent, the Subsidiaries who
are parties to the Guaranty, the Subsidiary Security Agreement
or a Subsidiary Pledge Agreement or any other Person
(exclusive of Borrower) who is or becomes party to any
agreement that guarantees or secures payment and performance
of the Obligations or any part thereof. Not all Subsidiaries
are Obligated Parties. AHG Partnership, HBS CA, FPM, and
Insights are the only Subsidiaries of Parent that are not
Obligated Parties. As of the Closing Date, the Subsidiaries
who are Obligated Parties are listed on the Obligated Party
Consent attached hereto.
"Subsidiary Pledge Agreements" means each of the
pledge and security agreements between a Subsidiary and the
Agent for the benefit of itself and the Banks, in
substantially the form of Exhibit "F" to the Original Credit
Agreement, as the same may be amended or otherwise modified,
and includes as of the Closing Date each of the following:
(a) the Borrower Pledge Agreement;
(b) the FPMBH Pledge Agreement;
(c) the Texas Pledge Agreement; and
(d) the OHCA Pledge Agreement.
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 2
Section 2.2. Amendment to Section 2.7 - LETTERS OF CREDIT. Clause (b)
of Section 2.7 of the Agreement is amended by replacing the dollar amount
"$3,000,000" with the dollar amount "Seven Million Dollars ($7,000,000)" in the
last sentence of such clause (b).
Section 2.3. Amendment to Section 8.8 - APPROVALS. The proviso set
forth in Section 8.8 of the Agreement is amended in its entirety to read as
follows:
provided, however, pursuant to the Xxxx Xxxxx Health Care
Service Plan Act of 1975 (a) HBS's pledge of Insights' stock
will be restricted from sale or foreclosure by the Agent or
any Lender without satisfaction of the California regulations
requiring the approval of the applicable governmental agency
to a change of control of a Xxxx-Xxxxx license holder and (b)
if HBS CA obtains a Xxxx-Xxxxx License from the State of
California pursuant to the Xxxx-Xxxxx Health Care Service Plan
Act of 1975 to operate prepaid health service plans in the
State of California then HBS's pledge of HBS CA's stock will
be restricted from sale or foreclosure by the Agent or any
Lender without satisfaction of the California regulations
requiring the approval of the applicable governmental agency
to a change of control of a Xxxx-Xxxxx license holder.
Section 2.4. Amendment to Section 8.14 - SUBSIDIARIES. Section 8.14 of
the Agreement is amended by replacing the words "Insignificant Subsidiaries" in
the penultimate sentence with the words "Restricted Group Members".
Section 2.5. Amendment to Section 9.1 - POSITIVE COVENANTS. Section 9.1
of the Agreement is amended by: (a) deleting the word "and" at the end of clause
(l); (b) amending clause (m) in its entirety to read as set forth in clause (m)
below; and (c) adding a new clause (n) which shall read in its entirety as set
forth in clause (n) below:
(m) Financial Statements for Restricted Subsidiaries. As soon
as possible and in any event within five (5) Business Days after a
Restricted Subsidiary submits financial statements or other
documentation pursuant to the requirements of the Xxxx Xxxxx Health
Care Service Plan Act of 1975 or Title 10 of the California Code of
Regulations, a copy of such financial statements and documentation; and
(n) General Information. Promptly, such other information
concerning Parent or any Subsidiary as Agent or any Bank may from time
to time reasonably request.
Section 2.6. Amendment to Section 9.10 - FURTHER ASSURANCES AND
COLLATERAL MATTERS. Section 9.10 of the Agreement is amended by: (a) replacing
the words "an Insignificant Subsidiary" in clause (a), except for subsection
(a)(iv), with the words "a Restricted Group Member"; (b) deleting the words
"other than an Insignificant Subsidiary" and the commas before and after such
words set forth in subsection (a)(iv); (c) replacing the words "of the
Insignificant Subsidiaries" in clause (b) with the words "or acquisition of a
Restricted Group Member"; (d) replacing the dollar amount "Five Hundred Thousand
Dollars ($500,000)" with the dollar amount "Two Hundred Fifty Thousand Dollars
($250,000)" in clause (d); and (e) adding a new clause (e) which shall read in
its entirety as set forth in clause (e) below:
(e) Restricted Subsidiaries. If as of any date, the aggregate
amount of income of any Restricted Subsidiary as calculated in clause
(m) of the definition of
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 3
Consolidated Net Income set forth in Section 11.3 for the most recently
completed four (4) Fiscal Quarter period as of the date of
determination (the "Restricted Subsidiaries Cash Flow") exceeds ten
percent (10%) of the Parent's consolidated EBITDA (as calculated in
Section 11.3), then, within thirty (30) days after the date of
determination, the Parent and Borrower shall either (i) cause each
Restricted Subsidiary to execute and deliver such documentation as the
Agent may request to cause such Restricted Subsidiary to evidence,
perfect, or otherwise implement the guaranty of and provision of
security for the Obligations contemplated by the Guaranty and the
Subsidiary Security Agreement or (ii) provide Agent written notice that
the amount by which the Restricted Subsidiaries Cash Flow exceeds 10%
of the Parent's consolidated EBITDA (as calculated in Section 11.3)
shall be excluded from the calculation of all consolidated financial
covenants hereunder. If Parent and the Borrower elect to exclude such
excess of the Restricted Subsidiaries Cash Flow from the calculation of
all consolidated financial covenants, then without any further
amendment or other modification to the Loan Documents, such excess of
the Restricted Subsidiaries Cash Flow shall thereafter be so excluded.
In calculating compliance with the financial covenants thereafter, the
Parent will show the calculations utilized to exclude such excess of
the Restricted Subsidiaries Cash Flow from such financial covenants.
Section 2.7. Amendment to Section 10.1 - DEBT. Section 10.1 of the
Agreement is amended by: (a) replacing the words "Insignificant Subsidiaries" in
clause (b) with the words "Restricted Group Members"; (b) replacing the words
"the Insignificant Subsidiaries" in clause (c) with the words "Restricted Group
Members"; and (c) replacing the words "an Insignificant Subsidiary" in clause
(g) and clause (i) with the words "a Restricted Group Member".
Section 2.8. Amendment to Section 10.3 - MERGERS, ETC. Section 10.3 of
the Agreement is amended by: (a) replacing the words "an Insignificant
Subsidiary" in clauses (a), (b) and (c) with the words "a Restricted Group
Member"; (b) deleting the word "and" at the end of clause (b); (c) adding the
word "and" at the end of clause (c); and (d) adding a new clause (d) which shall
read in its entirety as set forth in clause (d) below:
(d) if no Default exists or would result, any Restricted Subsidiary may
merge into or consolidate with any other Restricted Subsidiary if the
surviving Restricted Subsidiary assumes the obligations of the
applicable Restricted Subsidiary under the Loan Documents, if any, is
solvent as contemplated under Section 8.20 after giving effect to such
merger or consolidation and fulfills the obligations set forth in
Section 9.10; provided that upon the occurrence of any merger or
consolidation permitted in this clause (d) the Parent's and the
Subsidiaries option to make additional capital contributions, loans,
and advances to and/or investments in or to purchase any stocks, bonds,
or other equity securities in (i) the surviving Restricted Subsidiary
as permitted pursuant to the proviso set forth in Section 10.5(l) shall
without any amendment or other modification to the Loan Documents be
limited to the amount set forth in the proviso of Section 10.5(l) for
the surviving Restricted Subsidiary minus the amount of additional
capital contributions, loans, and advances to and/or investments in or
purchases of any stocks, bonds, or other equity securities which have
already been made in the surviving Restricted Subsidiary prior to such
merger or consolidation and (ii) the non-surviving Restricted
Subsidiary as permitted pursuant to the proviso set forth in Section
10.5(l) shall without any amendment or other modification to the Loan
Documents be terminated.
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 4
Section 2.9. Amendment to Section 10.5 - INVESTMENTS. Section 10.5 of
the Agreement is amended by: (a) replacing the words "ProCare One Nurses, LLC"
in subsections (a)(ii) and (a)(iii) with the word "ProCare"; (b) replacing the
words "an Insignificant Subsidiary" in clauses (a) and (l) and subsection
(a)(vi) with the words "a Restricted Group Member"; (c) replacing the dollar
amount "Five Hundred Thousand Dollars ($500,000)" with the dollar amount "Two
Hundred Fifty Thousand Dollars ($250,000)" in clause (l); (d) replacing the
words "Insignificant Subsidiaries" in clause (l) with the words "Restricted
Group Members"; and (e) amending the proviso in clause (l) in its entirety to
read as set forth below:
provided, however, Parent and the Subsidiaries may, (i) make additional
capital contributions, loans, and advances to and/or investments in or
purchase any stocks, bonds, or other equity securities authorized to be
issued under Section 10.6 of HBS CA if the aggregate amount thereof
made during the period from the closing date under the Existing Credit
Agreement through the Termination Date does not exceed the lesser of
(A) One Million Five Hundred Thousand Dollars ($1,500,000) or (B) the
minimum amount necessary for HBS CA to maintain compliance with the
tangible net equity requirements of Fifty Thousand Dollars ($50,000)
set forth in Section 1300.76 of Title 10 of the California Code of
Regulations and (ii) in addition to the Purchase Price paid by HBS for
its acquisition of Insights in accordance with the terms of Section
10.5, make additional capital contributions, loans, and advances to
and/or investments in or purchase any stocks, bonds, or other equity
securities authorized to be issued under Section 10.6 of Insights if
the aggregate amount thereof made during the period from the closing
date under the Existing Credit Agreement through the Termination Date
does not exceed One Million Dollars ($1,000,000);
Section 2.10. Amendment to Section 11.3 - FIXED CHARGE COVERAGE. The
definition of "Consolidated Net Income" set forth in Section 11.3 of the
Agreement is amended by: (a) replacing the words "but excluding" appearing after
the third comma in such definition with the words "but excluding without
duplication"; (b) renumbering clauses (m), (n), (o), (p), and (q) to be clauses
(n), (o), (p), (q) and (r), respectively; and (c) adding a new clause (m) which
shall read in its entirety as set forth in clause (m) below:
(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;
Section 2.11. Amendment to Section 11.4 - INDEBTEDNESS TO ADJUSTED
EBITDA. Clause (c) of Section 11.4 of the Agreement is amended in its entirety
to read as follows:
(c) on a pro forma basis, the pro forma EBITDA of each Prior
Target or, as applicable, the EBITDA of a Prior Target attributable to
the assets acquired from such Prior Target, for any portion of such
Subject Period occurring prior to the date of the acquisition of such
Prior Target or the related assets; 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
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 5
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.
Section 2.12. Amendment to Exhibit C - COMPLIANCE CERTIFICATE. Exhibit
C to the Agreement is amended in its entirety to read as set forth on Exhibit A
attached hereto.
Section 2.13. Amendment to Schedules 8.14 and 8.14A - LIST OF
SUBSIDIARIES AND ORGANIZATIONAL CHART. Schedules 8.14 and 8.14A to the Agreement
is amended in its entirety to read as set forth on Schedule 1 attached hereto.
Section 2.14. Amendment to JPMorgan Chase Bank Description. Any
reference in the Agreement, the Security Documents, or any other Loan Document
to JPMorgan Chase Bank (as successor in interest by merger to The Chase
Manhattan Bank, who was the successor in interest by merger to Chase Bank of
Texas, National Association, who was formerly known as Texas Commerce Bank
National Association) is hereby amended to be a reference to 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, who was formerly known
as Texas Commerce Bank National Association).
ARTICLE III.
Conditions Precedent
Section 3.1. 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 4.6 of this Amendment.
(ii) 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, the Stock Purchase Agreement, and all
documentation and other legal matters incident thereto shall be satisfactory to
the Agent and its legal counsel Jenkens & Xxxxxxxxx, a Professional Corporation.
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 6
ARTICLE IV.
Miscellaneous
Section 4.1. 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 4.2. Representations and Warranties. Borrower hereby represents
and warrants to the Agent and the Banks as follows: (a) after giving effect to
this Amendment and the Acquisition, no Default exists; (b) after giving effect
to this Amendment and the Acquisition, 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 and the consummation of the Acquisition have 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, Insights, or any Obligated Party, the certificate of
incorporation, bylaws, partnership agreement, membership agreement, or other
applicable governing document of the Borrower, the Parent, Insights, or any
Obligated Party or any order, judgment, or decree of any court or agency of
government binding upon the Borrower, the Parent, Insights, 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, Insights, 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, Insights, or any Obligated Party, or (iv) require
any approval or consent of any Person under any material contractual obligation
of the Borrower, the Parent, Insights, 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
(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.
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 7
Section 4.3. 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 4.4. 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 4.5. 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 4.6. Amendment Fee. The Borrower agrees to pay to each Bank, on
the date hereof, an amendment fee in the amount of $10,000 each, in
consideration for the Banks' agreement to enter into this Amendment.
Section 4.7. 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 4.8. 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 4.9. 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 4.10. 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 4.11. 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 4.12. Headings. The headings, captions, and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 4.13. 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.
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 8
Executed as of the date first written above.
PARENT AND BORROWER:
HORIZON HEALTH CORPORATION
HORIZON MENTAL HEALTH MANAGEMENT, INC.
By:
---------------------------------------
Name:
-------------------------------------
Authorized Officer for both Parent and
Borrower
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:
--------------------------------------
D. Xxxxx Xxxxxx, Senior Vice President
BANK OF AMERICA, NATIONAL ASSOCIATION
By:
---------------------------------------
Xxxxxx X. Xxxxxx, Senior Vice President
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 9
OBLIGATED PARTY CONSENT
Each Obligated Party (i) consents and agrees to this First 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) 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, INC.
HORIZON BEHAVIORAL SERVICES OF FLORIDA, INC.
FPMBH OF TEXAS, INC.
HMHM OF TENNESSEE, INC.
OCCUPATIONAL HEALTH CONSULTANTS OF AMERICA, INC.
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
By:
---------------------------------------------
Name:
-------------------------------------------
Authorized Officer for each Obligated Party
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 10
EXHIBIT A
TO
HORIZON HEALTH CORPORATION
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Compliance Certificate
EXHIBIT A - 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 and the Yes No N/A
Subsidiaries on or before ninety (90) days after the end
of each Fiscal Year.
(b) Quarterly unaudited financial statements of Parent and the Yes No N/A
Subsidiaries within forty-five (45) days after the end of
each Fiscal Quarter
(c) Financial Projections of Parent and Subsidiaries within Yes No N/A
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. not to
exceed: $ 1,000,000
Actual Outstanding: $ Yes No
----------
(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 in any Fiscal Year shall not exceed: $ 1,000,000 Yes No
Actual Expended: $
----------
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: $ 1,500,000
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
requirements under Xxxx Xxxxx Act: $
----------
Compliance Certificate - Page 2
Actual Aggregate Amount: $ Yes No
----------
(e) Aggregate amount of investments in Insights in
addition to the Purchase Price paid for Insights not
to exceed: $ 1,000,000
Actual Aggregate Amount: $ Yes No
----------
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 12-month
period most recently ending: $ Yes No
----------
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
(b) Total amount of Debt, other than the Obligations,
prepaid or optionally redeemed: $ Yes No
----------
10. SECTION 11.1 - CONSOLIDATED NET WORTH
(a) Base Consolidated Net Worth $
(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 2/28/02
Fiscal Quarter end $
----------
(d) 50% of 9(c) $
----------
(e) Aggregate amount of net cash proceeds or other
Capital Contribution to Parent since 2/28/02 $
----------
(f) Required Consolidated Net Worth: $
9(a) minus 9(b) plus 9(d) plus 9(e) ----------
(g) Actual Consolidated Net Worth $ Yes No
----------
11. SECTION 11.2 - INDEBTEDNESS TO CAPITALIZATION
(a) Debt for borrowed money $
----------
(b) Debt evidenced by bonds, notes, etc. $
----------
(c) Capital Lease Obligations $
----------
(f) Reimbursement obligations for letters of credit $
----------
(e) North Central Development Company debt $
----------
(f) Sum of 10(a) through 10(e) $
----------
(g) Actual Consolidated Net Worth $
----------
Compliance Certificate - Page 3
(from Section 11.1)
(h) 10(f) plus 10(g) $
----------
(j) 10(f) : 10(h) = :1.00
-----
(k) 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: $
(11(a) plus 11(b) minus 11(c) plus 11(d) plus 11(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 $
----------
(11(f) plus 11(h) minus 11(g) minus 11(i) plus 11(j))
(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 11(l)(i) through (iv) $
----------
(m) Actual Fixed Charge Coverage (11(k) : 11(l)(v))= :1.00
-----
(n) Minimum Fixed Charge Coverage 1.20:1.00 Yes No
Compliance Certificate - Page 4
13. SECTION 11.4 - INDEBTEDNESS TO ADJUSTED EBITDA
(a) Indebtedness (from 10(f)) $
----------
(b) Actual EBITDA (from 11(f)) $
----------
(c) Goodwill Impairment (from 11(i)) $
----------
(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 (12(b) plus 12(c) plus 12(d)) $
----------
(f) 12(a) : 12(e) :1.00
-----
(g) Maximum Indebtedness to Adjusted EBITDA allowed by Credit
Agreement 2.25:1.00 Yes No
14. SECTION 11.5 - CURRENT RATIO
(a) Consolidated current assets from balance sheet of Parent $
----------
(b) Consolidated current liabilities from balance sheet of
Parent $
----------
(c) Outstanding Principal balance of the Loans to the extent
included in 13(b) $
----------
(d) Total Current Liabilities (13(b) minus 13(c)) $
----------
(e) Actual Ratio of Current Assets to Current Liabilities
(13(a) : 13(d)) :1.00
(f) Minimum Ratio of Current Assets to Current Liabilities 1.00:1.00 Yes No
15. 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)) $
----------
(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) greater Yes No
than 14(e)
Compliance Certificate - Page 5
16. 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.
17. 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.
18. 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;
----------
(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
Schedule 1 to Compliance Certificate - Page 1
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
TO
HORIZON HEALTH CORPORATION
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
List of Subsidiaries
Schedule 1 - Cover Page
SCHEDULE 8.14
TO
HORIZON HEALTH CORPORATION
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 Common stock
Outcomes, Inc. Parent 100% Corporation Delaware $.01 par value 10,000 1,000
2. Specialty Rehab Common stock
Management, Inc. Parent 100% Corporation Delaware $.01 par value 10,000 9,494
3. Horizon Mental
Health
Management, Inc. Common stock
("Borrower") Parent 100% Corporation Texas $.01 par value 1,000 1,000
4. Horizon
Behavioral
Services, Inc. Common stock
("HBS") Parent 100% Corporation Delaware $.01 par value 1,000 1,000
Limited
5. ProCare One liability Membership
Nurses, LLC Parent 100% company Delaware Interest N/A N/A
SECOND TIER SUBSIDIARIES
6. HHMC Partners, Common stock
Inc. ("HHMC") Borrower 100% Corporation Delaware $.10 par value 10,000 1,000
Schedule 8.14 - List of Subsidiaries
Equity Equity Issued
Subsidiary Parent % Ownership Type Jurisdiction Type Authorized and Outstanding
---------- ------ ----------- ---- ------------ ---- ---------- ---------------
SECOND TIER SUBSIDIARIES
7. HMHM of Common stock 10,000
Tennessee, Inc. Borrower 100% Corporation Tennessee $.01 par value 400,000: 1,000
8. Florida Psychiatric Common stock 200,000
Management, Inc. HBS 100% Corporation Florida $.10 par value Class A
Voting
200,000
CLASS B
NON-VOTING 64,956 Class A
9. FPMBH of Texas, Common stock
Inc. ("Texas") HBS 100% Corporation Delaware $.01 par value 1,000 1,000
10. Florida Psychiatric Common stock
Associates, Inc. HBS 100% Corporation Florida $1.00 par value 7,500 300
11. Horizon
Behavioral
Services of
California, Inc. HBS 100% Corporation California N/A 10,000 1,000
12. Occupational
Health Consultants
of America,
Inc. ("OHCA") HBS 100% Corporation Tennessee Common stock 1,000 1,000
13. Horizon
Behavioral Common stock
Services IPA, Inc. HBS 100% Corporation New York $.01 par value 200 100
14. Horizon
Behavioral
Services of New Common stock
Jersey, Inc. HBS 100% Corporation New Jersey $.01 par value 10,000 1,000
Schedule 8.14 - List of Subsidiaries
Equity Equity Issued
Subsidiary Parent % Ownership Type Jurisdiction Type Authorized and Outstanding
---------- ------ ----------- ---- ------------ ---- ---------- ---------------
SECOND TIER SUBSIDIARIES
15. Horizon
Behavioral
Services of New Common stock
York, Inc. HBS 100% Corporation New York $.01 par value 200 100
II. THIRD TIER SUBSIDIARIES
16. FPM Behavioral
Health Services, Non-Profit Membership
Inc. Texas 100% Corporation Delaware Interest None None
General General partner
17. AHG Partnership HHMC 60% Partnership Texas interest N/A N/A
18. Employee
Assistance Common
Services, Inc. OHCA 100% Corporation Kentucky No par value 2,000 100
19. Resources EAP, Common
Inc. OHCA 100% Corporation Florida $10 par value 20,000 10
The organizational structure of Parent and the Subsidiaries can be graphically
depicted as reflected on Schedule 8.14A.
Schedule 8.14 - List of Subsidiaries
SCHEDULE 8.14A
TO
HORIZON HEALTH CORPORATION
AMENDED AND RESTATED CREDIT AGREEMENT
Organizational Chart
As of September 25, 2002
[CHART]
Schedule 8.14A - Organizational Chart - Solo Page
