Exhibit 10.106
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
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THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Second Amendment")
made as of the 31st day of October, 1997, by SIGNET BANK, successor by merger to
SIGNET BANK/MARYLAND (the "Bank"), and YOUTH SERVICES INTERNATIONAL, INC., a
Maryland corporation ("YSI"), and certain of its wholly owned subsidiaries,
namely: YOUTH SERVICES INTERNATIONAL OF IOWA, INC., a Maryland corporation
d/b/a Clarinda Academy; YOUTH SERVICES INTERNATIONAL OF TENNESSEE, INC., a
Maryland corporation d/b/a Reflections Treatment Agency; YOUTH SERVICES
INTERNATIONAL OF MARYLAND, INC., a Maryland corporation d/b/a Xxxxxx Xxxxxx
Academy; YOUTH SERVICES INTERNATIONAL OF BALTIMORE, INC., a Maryland corporation
d/b/a Xxxxxxx X. Xxxxxx, Xx. School; YOUTH SERVICES INTERNATIONAL OF NORTHERN
IOWA, INC., an Iowa corporation d/b/a Forest Ridge; YSI OF CENTRAL IOWA, INC.,
an Iowa corporation d/b/a Xxxxxxxx Academy; YSI OF UTAH, INC., a Utah
corporation; YOUTH SERVICES INTERNATIONAL OF SOUTH DAKOTA, INC., a South Dakota
corporation d/b/a Xxxxxxxxxxx Academy, Springfield Academy and Missouri River
Academy; YOUTH SERVICES INTERNATIONAL OF MISSOURI, INC., a Missouri corporation
d/b/a Tarkio Academy; and SOUTHWESTERN CHILDREN'S HEALTH SERVICES, INC., an
Arizona corporation d/b/a Parc Place, Inc., Promise House, Inc. and Touchstone
Community, Inc. (collectively, the "Original Borrowers").
Recitals
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A. The Original Borrowers and the Bank executed a Loan and Security Agreement
dated as of June 20, 1995 (the "Loan Agreement"), which generally provided for
the extension of a line of credit facility to the Original Borrowers.
B. On July 25, 1995, YOUTH SERVICES INTERNATIONAL OF NEW MEXICO, INC., a New
Mexico corporation d/b/a Desert Hills Center for Youth and Families of New
Mexico, entered into an Assumption Agreement evidencing its entry into the Loan
Agreement and its agreement to the terms and obligations thereunder.
C. YOUTH SERVICES INTERNATIONAL OF MAMMOTH, INC., a California corporation
and an Original Borrower, has now ceased business operations, dissolved under
California law, and is no longer a party to the Loan Agreement, the Line Credit
Note, or any of the Loan Documents, except to the extent any obligation
previously undertaken expressly survives termination of the borrowing
relationship.
D. On or about December 12, 1996, YOUTH SERVICES INTERNATIONAL OF TEXAS,
INC., a Texas corporation d/b/a Desert Hills Center for Youth and Families of
Texas, YOUTH SERVICES INTERNATIONAL OF FLORIDA, INC., a Florida corporation
d/b/a Tampa Bay Academy, YOUTH SERVICES INTERNATIONAL OF VIRGINIA, INC., a
Virginia corporation d/b/a Camp Washington, DEVELOPMENTAL BEHAVIORAL
CONSULTANTS, INC., an Arizona corporation, INTROSPECT HEALTHCARE, CORPORATION,
an Arizona corporation d/b/a Desert Hills Center for Youth and Families, and
DESERT HILLS CENTER FOR YOUTH AND FAMILIES, INC., an Arizona corporation wholly-
owned by INTROSPECT HEALTHCARE, CORPORATION, each executed an Assumption
Agreement evidencing their agreement to be bound by the terms and conditions of
the Loan Agreement.
E. (The Original Borrowers (excluding YOUTH SERVICES INTERNATIONAL OF
MAMMOTH, INC.), YOUTH SERVICES INTERNATIONAL OF NEW MEXICO, INC., YOUTH SERVICES
INTERNATIONAL OF TEXAS, INC., YOUTH SERVICES INTERNATIONAL OF FLORIDA, INC.,
YOUTH SERVICES INTERNATIONAL OF VIRGINIA, INC., DEVELOPMENTAL BEHAVIORAL
CONSULTANTS, INC., INTROSPECT HEALTHCARE, CORPORATION and DESERT HILLS CENTER
FOR YOUTH AND FAMILIES, INC. are hereafter each referred to as a "Borrower,"
and collectively as the "Borrowers".)
F. The Borrowers and the Bank entered into a First Amendment to Loan and
Security Agreement on December 12, 1996 (the "First Amendment").
G. The Borrowers have requested the Bank to amend the Loan Agreement and the
Bank has agreed to do so upon the terms and conditions expressly set forth
below.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
Section 1. Defined Terms. All terms defined in the Loan Agreement shall have
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the same meaning when used in this Second Amendment. As used hereafter, the
term "Loan Agreement" shall mean the Loan and Security Agreement dated June 20,
1995 as amended by the First Amendment and this Second Amendment. The Recitals
are incorporated in and a part of this Second Amendment.
Section 2. General Description of Amendments. At the request of the
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Borrowers, the Bank agrees to extend the maturity of the Line of Credit Note,
and the parties agree to amend certain other terms of the Loan Agreement all as
set forth below. The foregoing modifications and amendments shall be effected
by the execution of this Second Amendment and certain other instruments or
documents referred to below, and
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the Loan Agreement and all other Loan Documents are hereby amended to
incorporate the terms expressly provided herein.
Section 3. Amendments. Subject to satisfaction of the conditions of this
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Second Amendment, the Loan Agreement is amended in the following respects, and
shall be construed and interpreted to give effect to the modifications and
amendments expressly set forth herein.
(a) Section 6.20 is deleted in its entirety and the following
substituted in its stead:
Section 6.20. Minimum Quarterly Tangible Capital. The Borrowers
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shall attain, on a consolidated basis, and maintain a minimum quarterly
tangible capital as of the close of each fiscal quarter of $45,000,000.
(b) The Maturity Date of the Line of Credit Note shall be extended
until November 30, 1998, and such Maturity Date shall be reflected in the First
Allonge referred to in Section 7 below.
(c) The Bank hereby acknowledges its waiver of breaches of the
positive net profit covenant provided in Sections 6.22 of the Loan Agreement for
the quarterly periods ending March 31, 1997, June 30, 1997 and September 30,
1997.
(d) The Bank (i) consents to the release and discharge of YSI OF UTAH,
INC., SOUTHWESTERN CHILDREN'S HEALTH SERVICES, INC., YOUTH SERVICES
INTERNATIONAL OF NEW MEXICO, INC., YOUTH SERVICES INTERNATIONAL OF TEXAS, INC.,
YOUTH SERVICES INTERNATIONAL OF FLORIDA, INC., DEVELOPMENTAL BEHAVIORAL
CONSULTANTS, INC., INTROSPECT HEALTHCARE, CORPORATION, and DESERT HILLS CENTER
FOR YOUTH AND FAMILIES, INC. (collectively, the "Released Subsidiaries") as
"Borrowers" under the Loan Agreement and does hereby release and discharge each
of the Released Subsidiaries of and from their respective obligations under the
Loan Agreement, the Line of Credit Note, the Assumption Agreement and all other
Loan Documents, such release to be evidenced by the execution and delivery of
termination statements terminating the security interest of the Bank as to any
properties of the Released Subsidiaries in which the Bank presently holds a
perfected security interest; and (ii) hereby does release and discharge any and
all liens and security interests of the Bank in or on any of the shares of
capital stock of any of the Released Subsidiaries or Promise House, Inc.
Hereafter, the term "Borrowers" shall mean all of the Borrowers named in Recital
D excluding the Released Subsidiaries. The Bank further acknowledges and agrees
that Promise House, Inc. is not now and never has been a party to the Loan
Agreement or the Line of Credit Note.
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(e) The Bank hereby consents to the sale and transfer by YSI and its
subsidiary corporation of all of the issued and outstanding capital stock of the
Released Subsidiaries and of Promise House, Inc. to Youth and Family Centered
Services, Inc., and hereby waives any and all Events of Default which may arise
under the terms of the Loan Agreement, as amended hereby, by reason of such sale
and transfer, including, without limitation, any and all Events of Default which
may arise by reason of any breach by the Borrowers, or the failure of the
Borrowers to comply with, any of the covenants contained in Articles VI and VII
of the Loan Agreement, including, without limitation, those contained in
Sections 6.3, 6.6, 7.1 and 7.2 thereof.
Section 4. Representations and Warranties of Borrowers. Borrowers hereby
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represent and warrant to Bank that (i) execution of this Second Amendment has
been duly authorized by all requisite action of Borrowers; (ii) no consents are
necessary from any third parties for Borrowers' execution, delivery or
performance of this Second Amendment, (iii) this Second Amendment and the Loan
Agreement as amended hereby constitute the legal, valid and binding obligations
of Borrowers enforceable against Borrowers in accordance with their terms,
except to the extent that the enforceability thereof against Borrowers may be
limited by bankruptcy, insolvency or other laws affecting the enforceability of
creditors rights generally or by equity principles of general application, (iv)
except as otherwise disclosed to the Bank in writing, all of the representations
and warranties contained in Article V of the Loan Agreement, as amended hereby,
are true and correct in all material respects with the same force and effect as
if made on and as of the effective date of this Second Amendment, except that
with respect to the representations and warranties made regarding Financial
Statements, such representations and warranties are hereby made with respect to
the most recent Financial Statements delivered by Borrowers to Bank, (v) there
exists no Default which is continuing and no Event of Default has occurred, and
(vi) no Default or Event of Default will occur immediately or with the passage
of time or giving of notice as a consequence of this Second Amendment becoming
effective.
Section 5. Chief Executive Offices. The location of each Borrower's
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original entry books and records and the place where its records relating to
Accounts are maintained is identified in Amended Schedule B to the Loan
Agreement.
Section 6. Reaffirmation. Borrowers hereby acknowledge and confirm that
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(i) except as expressly amended hereby, the Loan Agreement and other Loan
Documents remain in full force and effect, (ii) the Loan Agreement, as amended
hereby, is in full force and effect, (iii) Borrowers have no defenses to their
respective obligations under the Loan Agreement and the other Loan Documents,
(iv) except to the extent released herein, the Liens of Bank under the Loan
Documents, continue in full force and effect and have the same priority as
before this Second Amendment, and (v) Borrowers
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have no claim against Bank arising from or in connection with the Loan Agreement
or the other Loan Documents.
Section 7. Allonge to Amended and Restated Master Revolving Promissory
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Note. The terms of the Line of Credit Note shall be amended by the affixation of
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a First Allonge to the Amended and Restated Master Revolving Promissory Note
executed and delivered by the Borrowers on December 12, 1996.
Section 8. Effect of Amendment. Except as hereby amended, the terms and
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conditions of the Loan Agreement and all other Loan Documents are hereby
approved, ratified and confirmed and shall remain in force and effect until all
principal, accrued interest and all other charges and costs due under the Loan
Agreement and any and all notes have been paid, in full. The execution and
delivery of this Second Amendment shall not constitute a novation, shall not
extinguish, terminate, affect of impair the obligations of the Borrowers, and
shall not waive, extinguish, terminate, affect or impair any security, right or
remedy of the Bank against the Borrowers, the Borrowers' property or any other
person obligated under the Loan Documents. The execution an delivery of this
Second Amendment shall not constitute a waiver of any provision of the Loan
Agreement, any of the other Loan Documents or any existing Default or Event of
Default, nor act as a release or subordination of the liens or security
interests of Lender in the Collateral.
Section 9. Effective Date. Regardless of the date of execution and
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delivery of this Second Amendment or any other instrument referenced herein, it
is intended that the terms of this Second Amendment and the modification and
amendments provided for herein shall be effective as of October 31, 1997,
regardless of the date of actual execution.
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IN WITNESS WHEREOF, the parties hereto execute this Second Amendment the
date and year first above written.
WITNESS/ATTEST: SIGNET BANK
/s/ Xxxxxx X. Clash By: /s/ Xxxxxx X. Xxxxxxxxx (SEAL)
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Xxxxxx X. Xxxxxxxxx
Vice President
YOUTH SERVICES INTERNATIONAL, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
YOUTH SERVICES INTERNATIONAL OF
IOWA, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
YOUTH SERVICES INTERNATIONAL OF
TENNESSEE, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
[SIGNATURES CONTINUED]
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YOUTH SERVICES INTERNATIONAL OF
MARYLAND, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
YOUTH SERVICES INTERNATIONAL OF
BALTIMORE, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
YOUTH SERVICES INTERNATIONAL OF
NORTHERN IOWA, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
YSI OF CENTRAL IOWA, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
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YSI OF UTAH, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
YOUTH SERVICES INTERNATIONAL OF
SOUTH DAKOTA, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
YOUTH SERVICES INTERNATIONAL OF
MISSOURI, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
YOUTH SERVICES INTERNATIONAL OF
VIRGINIA, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
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SOUTHWESTERN CHILDREN'S HEALTH
SERVICES, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
YOUTH SERVICES INTERNATIONAL OF
NEW MEXICO, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
YOUTH SERVICES INTERNATIONAL OF
TEXAS, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
YOUTH SERVICES INTERNATIONAL OF
FLORIDA, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
9
DEVELOPMENTAL BEHAVIORAL
CONSULTANTS, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
INTROSPECT HEALTHCARE, CORPORATION
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
DESERT HILLS CENTER FOR YOUTH AND
FAMILIES, INC. (a wholly-owned subsidiary
of INTROSPECT HEALTHCARE,
CORPORATION)
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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Xxxx X. Xxxxxxx
Senior Vice President -
Corporate Development and
General Counsel
[SIGNATURES END]
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