Exhibit 10.17
FIRST AMENDMENT AGREEMENT
This First Amendment Agreement is made as of the 22nd day of March,
2002, by and among RES-CARE, INC., a Kentucky corporation ("Res-Care"), those
subsidiaries of Res-Care named in SCHEDULE 1 to the Credit and Security
Agreement, as defined herein, (together with Res-Care, collectively "Borrowers",
and individually, "Borrower"), the lending institutions named in SCHEDULE 2 to
the Credit and Security Agreement, as defined herein (collectively, "Banks", and
individually, "Bank"), NATIONAL CITY BANK OF KENTUCKY, as Agent for the Banks
under the Credit and Security Agreement ("Agent"), BANK ONE, KENTUCKY, N.A., as
syndication agent for the Banks under the Credit and Security Agreement
("Syndication Agent"), and U.S. BANK, NATIONAL ASSOCIATION, as documentation
agent for the Banks under the Credit and Security Agreement ("Documentation
Agent").
WHEREAS, Borrowers, Banks, Agent, Syndication Agent and Documentation
Agent are parties to a certain Credit and Security Agreement dated as of
November 15, 2001, as it may from time to time be amended, restated or otherwise
modified (the "Credit and Security Agreement");
WHEREAS, Borrowers, Banks, Agent, Syndication Agent and Documentation
Agent desire to amend the Credit and Security Agreement to modify certain
provisions thereof; and
WHEREAS, each term used herein shall be defined in accordance with the
Credit and Security Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein and for other valuable considerations, Borrowers, Banks, Agent,
Syndication Agent and Documentation Agent agree as follows:
1. Article I of the Credit and Security Agreement is hereby
amended to delete the definition of "Borrowing Base" therefrom in its entirety
with the following being inserted in place thereof:
"Borrowing Base" shall mean an amount not in excess of eighty
percent (80%) of the amount due and owing on Eligible Accounts
Receivable.
2. Article I of the Credit and Security Agreement is hereby
amended to delete the definition of "Consolidated EBITDA" therefrom in its
entirety with the following being inserted in place thereof:
"Consolidated EBITDA" shall mean, for any period, on a
Consolidated basis and in accordance with GAAP, Consolidated Net
Earnings minus any interest income for such period plus the aggregate
amounts deducted in determining such Consolidated Net Earnings in
respect of (a) income taxes, (b) Consolidated Interest Expense, and (c)
Consolidated Depreciation and Amortization Charges. For purposes of
determining Consolidated EBITDA for any rolling period of four (4)
fiscal quarters, (i) a special charge in the amount of One Million
Seven Hundred Twenty-Nine Thousand Dollars ($1,729,000) should be added
to Consolidated Net Earnings, provided that the One Million Seven
Hundred Twenty-Nine Thousand Dollars ($1,729,000) charge shall not be
added to Consolidated Net Earnings after the quarter ended December 31,
2001; (ii) extraordinary loss taken by Res-Care in the amount of Three
Thousand Dollars ($3,000) in connection with the extraordinary loss on
debt extinguishment (net of taxes) and the extraordinary gain on
redemption of the convertible subordinated notes (net of taxes) should
be added to Consolidated Net Earnings, (iii) a one-time non-recurring
Receivable reserve charge of Fifteen Million Five Hundred Thousand
Dollars ($15,500,000) should be added to Consolidated Net Earnings, and
(iv) a one-time non-recurring insurance reserve charge of Six Million
Five Hundred Thousand Dollars ($6,500,000) should be added to
Consolidated Net Earnings; provided that any charges pursuant (ii),
(iii) or (iv) above shall not be added to Consolidated Net Earnings
after the quarter ending September 30, 2002.
3. Article I of the Credit and Security Agreement is hereby
amended to delete the definition of "Eligible Accounts Receivable" therefrom in
its entirety with the following being inserted in place thereof:
"Eligible Account Receivable" shall mean an account receivable
of a Borrower to the extent arising out of sales and services performed
by such Borrower, that, at all times until it is collected in full,
continuously meets the following requirements: (a) arose in the
ordinary course of a Borrower's business from the performance of
services or bona fide sale of goods that have been performed for or
shipped to the Account Debtor; (b) is not due from any Account Debtor
with respect to which a Borrower has received any written notice of the
filing of a bankruptcy; (c) is not subject to an assignment, pledge,
claim, mortgage, lien, or security interest of any type except that
granted to or in favor of Agent and the Banks; (d) is not the subject
of any instrument or chattel paper offered in payment thereof unless
such instrument or chattel paper is pledged to Agent on terms
satisfactory to Agent; (e) is not an account receivable due from any
affiliate, shareholder or employee of a Borrower; (f) is not a Foreign
Account Receivable unless such Foreign Account Receivable is backed by
a letter of credit on terms satisfactory to Agent; (g) is not evidenced
by a promissory note or any other negotiable instrument unless such
promissory note or negotiable instrument is pledged to Agent on terms
satisfactory to Agent; (h) is not a Health Care Receivable unless such
Health Care Receivable is subject to (1) procedures for cash management
and (2) perfection under the UCC, each satisfactory to Agent in its
reasonable discretion; (i) has not been identified as greater than one
hundred twenty (120) days on the accounts receivable aging report
furnished to Agent pursuant to Section 5.3(j); (j) is not an account
receivable which represents reconciliation items; and (k) Agent, for
the benefit of the Banks, has a valid and enforceable first security
interest in the Account. Agent agrees that, as of the Closing Date,
procedures exist that are acceptable to Agent with respect to cash
management and perfection under the UCC for Health Care Receivables in
existence on the Closing Date. Notwithstanding anything to the contrary
contained in this Agreement, Agent shall have the continuing right, to
be reasonably exercised, to require Borrowers to comply with the
Federal Assignment of Claims Act or any comparable state or local
government statute or regulation with respect to any Borrower's
Government Accounts Receivable.
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4. The Credit and Security Agreement is hereby amended by
inserting the following new definition into Article I thereof:
"Outlook America Acquisition" shall mean the acquisition by
RSCR West Virginia, Inc. of Outlook America of West Virginia, Inc.
which closed on or about January 9, 2002.
5. Section 5.3(a) of the Credit and Security Agreement is hereby
amended to delete the word "thirty (30)" in the first sentence thereof, and by
inserting in place thereof "thirty-five (35)".
6. Section 5.3 of the Credit and Security Agreement is hereby
further amended to delete the word "and" at the end of subparagraph (h) thereof,
to replace the "." at the end of subparagraph (i) thereof with a "; and" and by
inserting a new subparagraph (j) thereof as follows:
(j) within thirty-five (35) days after the end of each month,
an accounts receivable aging report in form and substance satisfactory
to Agent and signed by a Financial Officer of Res-Care.
7. Section 5.11 of the Credit and Security Agreement is hereby
amended to delete the word "or" at the end of subparagraph (xvii) thereof, to
replace the "." at the end of subparagraph (xviii) thereof with a "; or" and by
inserting a new subparagraph (xix) thereof as follows:
(xix) a loan from Alternative Youth Services, Inc., to
Children and Family Services Corporation for a period not to exceed
five (5) years and in a maximum aggregate amount of not more than One
Million Two Hundred Thousand Dollars ($1,200,000).
8. The Credit and Security Agreement is hereby amended by
inserting the following sentence at the end of Section 5.13:
Notwithstanding anything to the contrary contained in this
Section 5.13, the Banks acknowledge and consent to the Outlook America
Acquisition, and the consideration paid for the Outlook America
Acquisition shall not be included in the maximum acquisition
consideration calculation in this Section 5.13.
9. On or before forty-five (45) days after the effective date of
this First Amendment Agreement, Borrowers shall engage an independent third
party firm, reasonably acceptable to the Required Banks, to review and report on
the condition of the Borrowers' Receivable billing, documentation, collection
and monitoring control systems and such other issues related to Receivables
booked within the past twelve (12) months, the scope and form of such review and
report shall be in the reasonable discretion of the Required Banks ("Systems
Report").
10. As a condition precedent to the effectiveness of this First
Amendment Agreement, Borrowers shall:
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(a) pay to Agent for the benefit of each Bank approving this
First Amendment Agreement, an amendment fee equal to fifteen (15) basis
points payable on the respective Commitment amount of such Bank; and
(b) pay all reasonable legal fees and expenses of Agent
incurred in connection with this First Amendment Agreement.
11. Upon receipt of the Systems Report and meeting with the
Borrowers, Agent, at the direction of the Required Banks, may either (a) with
the consent of the Borrowers, such consent not to be unreasonably withheld,
modify the Borrowing Base, as deemed necessary by the Required Banks in their
reasonable discretion, or (b) modify the Borrowing Base without the Borrowers'
consent, if the Required Banks determine in their reasonable discretion that the
Systems Report demonstrates a material adverse change to the Banks' Collateral
position. Any modification to the Borrowing Base attributable to Agent and the
Required Banks exercising their rights pursuant to this Section 11(b) shall
become effective one hundred eighty (180) days from the date notice is provided
to Borrowers of such modification by Agent on behalf of the Required Banks.
12. Each Borrower hereby represents and warrants to Agent and the
Banks that (a) such Borrower has the legal power and authority to execute and
deliver this First Amendment Agreement; (b) the officers executing this First
Amendment Agreement have been duly authorized to execute and deliver the same
and bind such Borrower with respect to the provisions hereof; (c) the execution
and delivery hereof by such Borrower and the performance and observance by such
Borrower of the provisions hereof do not violate or conflict with the
organizational agreements of such Borrower or any law applicable to such
Borrower or result in a breach of any provision of or constitute a default under
any other agreement, instrument or document binding upon or enforceable against
such Borrower; (d) no Default or Event of Default exists, nor will any occur
immediately after the execution and delivery of this First Amendment Agreement
or by the performance or observance of any provision hereof; (e) no Borrower is
aware of any claim or offset against, or defense or counterclaim to, any
Borrowers' obligations or liabilities under the Credit and Security Agreement or
any Related Writing; and (f) this First Amendment Agreement constitutes a valid
and binding obligation of each Borrower in every respect, enforceable in
accordance with its terms.
13. In consideration of this First Amendment Agreement, each
Borrower hereby waives and releases Agent and each Bank and their respective
directors, officers, employees, attorneys, affiliates and subsidiaries from any
and all such claims, offsets, defenses and counterclaims of which such Borrower
is aware, such waiver and release being with full knowledge and understanding of
the circumstances and effect thereof and after having consulted legal counsel
with respect thereto.
14. Each reference that is made in the Credit and Security
Agreement or any other writing to the Credit and Security Agreement shall
hereafter be construed as a reference to the Credit and Security Agreement as
amended hereby. Except as herein otherwise specifically provided, all provisions
of the Credit and Security Agreement shall remain in full force and effect and
be unaffected hereby. This First Amendment Agreement is a Related Writing as
defined in the Credit and Security Agreement.
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15. This First Amendment Agreement may be executed in any number
of counterparts, by different parties hereto in separate counterparts and by
facsimile signature, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
16. The rights and obligations of all parties hereto shall be
governed by the laws of the State of Ohio, without regard to principles of
conflicts of laws.
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17. JURY TRIAL WAIVER. BORROWERS, AGENT AND EACH OF THE BANKS
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWERS, AGENT AND THE BANKS,
OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO. THIS WAIVER SHALL NOT
IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY AGENT'S OR ANY BANK'S ABILITY
TO PURSUE REMEDIES PURSUANT TO ANY PROVISION CONTAINED IN ANY NOTE OR OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT AMONG BORROWERS, AGENT AND THE BANKS, OR ANY
THEREOF.
Address: 000 Xxxxx Xxxxx Xxxxxx NATIONAL CITY BANK OF KENTUCKY,
Xxxxxxxxxx, Xxxxxxxx 00000 as Agent and as a Bank
Attn: Xxxxx Xxxxx
By:
--------------------------------
Title:
------------------------------
Address: 000 X. Xxxxxxxxx Xxxxxx, 2nd Floor BANK ONE, KENTUCKY, N.A.,
Xxxxxxxxxx, Xxxxxxxx 00000 as Syndication Agent
Attn:
-----------------------------
By:
--------------------------------
Title:
-----------------------------
Address: 0 Xxxxxxxxx Xxxxxx X.X. BANK, NATIONAL ASSOCIATION,
Xxxxxxxxxx, Xxxxxxxx 00000-0000 as Documentation Agent
Attn:
----------------------------
By:
-------------------------------
Title:
----------------------------
Address: 000 Xxxxxxxxxx Xxxxxxxxx UBS AG, Stamford Branch
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: By:
---------------------------- --------------------------------
Title:
-----------------------------
and by:
----------------------------
Title:
----------------------------
Address: 000 Xxxxxxxxx Xxxxxx XXXXXX COMMERCIAL PAPER INC.
Xxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxx By:
--------------------------------
Title:
----------------------------
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Address: 10140 Linn Station Road RES-CARE, INC.
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: By:
----------------------------- -------------------------------
L. Xxxxx Xxxxx
Title: Executive Vice President
of Finance and
Administration, Chief
Financial Officer &
Assistant Treasurer
ALTERNATIVE XXXXXXX, XXX.
BALD EAGLE ENTERPRISES, INC.
CAPITAL TX INVESTMENTS, INC.
CATX PROPERTIES, INC.
CNC/ACCESS, INC.
COMMUNITY ADVANTAGE, INC.
COMMUNITY ALTERNATIVES ILLINOIS, INC.
COMMUNITY ALTERNATIVES INDIANA, INC.
COMMUNITY ALTERNATIVES KENTUCKY, INC.
COMMUNITY ALTERNATIVES MISSOURI, INC.
COMMUNITY ALTERNATIVES NEBRASKA, INC.
COMMUNITY ALTERNATIVES TEXAS PARTNER, INC.
COMMUNITY ALTERNATIVES VIRGINIA, INC.
EDUCARE COMMUNITY LIVING-TEXAS LIVING CENTERS, INC.
J. & J. CARE CENTERS, INC.
NORMAL LIFE, INC.
PEOPLESERVE, INC.
RAISE GEAUGA, INC.
RES-CARE ALABAMA, INC.
RES-CARE CALIFORNIA, INC. d/b/a RCCA SERVICES
RES-CARE ILLINOIS, INC.
RES-CARE KANSAS, INC.
RES-CARE NEW JERSEY, INC.
RES-CARE NEW MEXICO, INC.
RES-CARE OHIO, INC.
RES-CARE OKLAHOMA, INC.
RES-CARE OTHER OPTIONS, INC.
RES-CARE PREMIER, INC.
RES-CARE PREMIER CANADA, INC.
RES-CARE TENNESSEE, INC.
RES-CARE TRAINING TECHNOLOGIES, INC.
RES-CARE WASHINGTON, INC.
ROCKCREEK, INC.
RSCR CALIFORNIA, INC.
RSCR INLAND, INC.
RSCR WEST VIRGINIA, INC.
SOUTHERN HOME CARE SERVICES, INC.
TANGRAM REHABILITATION NETWORK, INC.
TEXAS HOME MANAGEMENT, INC.
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THM HOMES, INC.
XXXXXXXX GROUP HOMES, INC.
XXXXX MANAGEMENT, INC.
BOLIVAR DEVELOPMENTAL TRAINING CENTER, INC.
BOLIVAR ESTATES, INC.
EBENEZER ESTATES, INC.
FORT XXXXX ESTATES, INC.
HILLSIDE ESTATES, INC.
HYDESBURG ESTATES, INC.
INDIVIDUALIZED SUPPORTED LIVING, INC.
MEADOW LANE ESTATES, INC.
MISSOURI PROGRESSIVE SERVICES, INC.
OAK WOOD SUITES OF BOLIVAR, INC.
OAKVIEW ESTATES OF BOLIVAR, INC.
XXXXXX XXXXX XXXXXXX, XXX.
XXXXX XXXXX XXXXXXX, INC.
SHA-REE ESTATES, INC.
SKYVIEW ESTATES, INC.
UPWARD BOUND, INC.
XXXXXXX ESTATES, INC.
CAREERS IN PROGRESS, INC.
EDUCARE COMMUNITY LIVING-NORMAL LIFE, INC.
NORMAL LIFE OF CALIFORNIA, INC.
NORMAL LIFE OF CENTRAL INDIANA, INC.
NORMAL LIFE FAMILY SERVICES, INC.
NORMAL LIFE OF GEORGIA, INC.
NORMAL LIFE OF LAFAYETTE, INC.
NORMAL LIFE OF LAKE XXXXXXX, INC.
NORMAL LIFE OF LOUISIANA, INC.
NORMAL LIFE OF SOUTHERN INDIANA, INC.
RES-CARE FLORIDA, INC.
EDUCARE COMMUNITY LIVING CORPORATION-AMERICA
PSI HOLDINGS, INC.
VOCA CORPORATION OF AMERICA
VOCA RESIDENTAL SERVICES, INC.
B.W.J. OPPORTUNITY CENTERS, INC.
THE CITADEL GROUP, INC.
EDUCARE COMMUNITY LIVING CORPORATION-GULF COAST EDUCARE COMMUNITY LIVING
CORPORATION-MISSOURI EDUCARE COMMUNITY LIVING CORPORATION-NEVADA EDUCARE
COMMUNITY LIVING CORPORATION-NEW MEXICO EDUCARECOMMUNITY LIVING
CORPORATION-NORTH CAROLINA EDUCARE COMMUNITY LIVING CORPORATION-TEXAS VOCA CORP.
VOCA CORPORATION OF FLORIDA
VOCA CORPORATION OF INDIANA
VOCA CORPORATION OF MARYLAND
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VOCA CORPORATION OF NEW JERSEY
VOCA CORPORATION OF NORTH CAROLINA
VOCA CORPORATION OF OHIO
VOCA CORPORATION OF WASHINGTON, D.C.
VOCA CORPORATION OF WEST VIRGINIA, INC.
By:
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L. Xxxxx Xxxxx
Title: Assistant Treasurer
THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC.
ALTERNATIVE YOUTH SERVICES, INC.
RES-CARE AVIATION, INC.
GENERAL HEALTH CORPORATION
YOUTHTRACK, INC.
EMPLOY-ABILITY UNLIMITED, INC.
By:
-----------------------------------------
L. Xxxxx Xxxxx
Title: Treasurer
EDUCARE COMMUNITY LIVING LIMITED PARTNERSHIP
By: Community Alternatives Texas Partner, Inc.
Its: General Partner
By:
-----------------------------------------
L. Xxxxx Xxxxx
Title: Assistant Treasurer
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NORMAL LIFE OF INDIANA
By: Normal Life of Central Indiana, Inc.
one of its General Partners
By:
-----------------------------------------
L. Xxxxx Xxxxx
Title: Assistant Treasurer
and
By: Normal Life of Southern Indiana, Inc.
the other General Partner
By:
-----------------------------------------
L. Xxxxx Xxxxx
Title: Assistant Treasurer
VOCA OF INDIANA, LLC, a limited liability company
By:
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L. Xxxxx Xxxxx
Title: Assistant Treasurer
CREATIVE NETWORKS, LLC
By:
-----------------------------------------
L. Xxxxx Xxxxx
Title: Manager
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