EXHIBIT 10.28
FIRST AMENDMENT TO REVOLVING CREDIT
AND TERM LOAN AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT (this
"Amendment") is made and entered into as of this 30th day of April, 2002, by and
among PSYCHIATRIC SOLUTIONS, INC., a Delaware corporation ("PSI"), PSYCHIATRIC
SOLUTIONS OF ALABAMA, INC., a Tennessee corporation ("PS ALABAMA"), PSYCHIATRIC
SOLUTIONS OF FLORIDA, INC., a Tennessee corporation ("PS FLORIDA"), PSYCHIATRIC
SOLUTIONS OF TENNESSEE, INC., a Tennessee corporation ("PS TENNESSEE"),
SOLUTIONS CENTER OF LITTLE ROCK, INC., a Tennessee corporation ("LITTLE ROCK"),
PSYCHIATRIC SOLUTIONS OF NORTH CAROLINA, INC., a Tennessee corporation ("PS
NORTH CAROLINA"), PSI COMMUNITY MENTAL HEALTH AGENCY MANAGEMENT, INC., a
Tennessee corporation ("PSI COMMUNITY"), PSI-EAP, INC., a Delaware corporation
("PSI-EAP"), SUNSTONE BEHAVIORAL HEALTH, INC., a Tennessee corporation
("SUNSTONE"), THE COUNSELING CENTER OF MIDDLE TENNESSEE, INC., a Tennessee
corporation ("COUNSELING CENTER"), PSI HOSPITALS, INC., a Delaware corporation
("PSI HOSPITALS"), PSI TEXAS HOSPITALS, LLC, a Texas limited liability company
("TEXAS HOSPITALS"), PSYCHIATRIC PRACTICE MANAGEMENT OF ARKANSAS, INC., a
Tennessee corporation ("PPM ARKANSAS"), TEXAS CYPRESS CREEK HOSPITAL, L.P., a
Texas limited partnership ("CYPRESS CREEK"), TEXAS WEST OAKS HOSPITAL, L.P., a
Texas limited partnership ("WEST OAKS"), NEURO INSTITUTE OF AUSTIN, L.P., a
Texas limited partnership ("NEURO INSTITUTE") (individually and collectively,
the "BORROWER"), CAPITALSOURCE FINANCE LLC, a Delaware limited liability company
("CAPITALSOURCE"), as administrative agent and collateral agent for Lenders (in
such capacities, the "AGENT"), and the Lenders.
RECITALS
A. WHEREAS, pursuant to the terms and subject to the conditions of that
certain Revolving Credit and Term Loan Agreement, dated as of November 30, 2001
among Agent, the Lenders and Borrower (such Revolving Credit and Term Loan
Agreement, as the same is hereby amended and may hereafter be amended from time
to time, being hereinafter referred to as the "LOAN AGREEMENT"), the Borrower
was provided a Term Loan in the amount of $15,656,305 and a Revolving Loan
Facility in an aggregate amount not to exceed $17,500,000;
B. WHEREAS, Borrower has requested Lenders to add a $1,200,000 Bridge
Facility as a sub-facility of the Revolving Loan Facility; and
C. WHEREAS, in furtherance of the foregoing and to evidence the agreements
of the parties hereto in relation thereto the parties hereto desire to amend the
Loan Agreement as hereinafter provided.
AGREEMENT
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, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
1.01 Capitalized terms used in this Amendment are defined in the Loan
Agreement, as amended hereby, unless otherwise stated.
ARTICLE II
AMENDMENTS TO LOAN AGREEMENT
The Loan Agreement is hereby amended as follows:
2.01 AMENDMENT TO VARIOUS SECTIONS. Effective as of the date of this
Amendment, each reference in the Loan Agreement to "the Enterprise Facility and
the Overadvance Facility" and "Enterprise Facility and Overadvance Facility"
shall be a reference to "the Enterprise Facility, the Overadvance Facility and
the Bridge Facility." Each reference in the Loan Agreement to "Enterprise
Facility or Overadvance Facility" and "Overadvance Facility or Enterprise
Facility" shall be a reference to "Enterprise Facility, Overadvance Facility or
Bridge Facility."
2.02 NEW SECTION 2.17. Effective as of the date of this Amendment, a new
Section 2.17 shall be added to the Loan Agreement to read in its entirety as
follows:
2.17 Bridge Facility Any contrary provision of this Agreement
notwithstanding, each Lender agrees to make its Pro Rata Share of one
Advance to Borrower under the Bridge Facility in the amount of $1,200,000
on April 30, 2002, so long as the proceeds of the Advance pursuant to this
Section 2.17 are used solely for the repayment of Subordinated Debt
payable to Acacia Venture Partners, L.P., South Pointe Venture Partners,
L.P., Oak Investment Partners VII, L.P., Oak VII Affiliates Fund, L.P. and
FCA Venture Partners II, L.P. (the "BRIDGE FACILITY"). The Advance
pursuant to the Bridge Facility shall be subject to the same terms and
conditions as any other Advance under the Revolving Facility, except that
(i) the rate of interest applicable thereto shall be payable monthly in
arrears on the first day of each calendar month at an annual rate of Prime
Rate plus 6.0%; provided, however, that, notwithstanding any provision of
any Loan Document, the interest rate on the outstanding Advance under the
Bridge Facility shall be not less than 11.0%, (ii) the Advance under the
Bridge Facility must be fully repaid by Borrower on or before July 30,
2002, and (iii) the Advance under the Bridge Facility is not a revolving
credit facility and any repayment thereof may not be reborrowed.
2.03 AMENDMENT TO UNUSED LINE FEE. Effective as of the date of this
Amendment, Section 3.2 shall be amended and restated as follows:
3.2 Unused Line Fee. Borrower shall pay to Agent, for the ratable
benefit of Lenders, an unused line fee (the "UNUSED LINE FEE") in an
amount equal to 0.05% (per month) of the difference derived by subtracting
(a) the daily average
amount of the balances under the Revolving Facility (excluding the unpaid
balance of the Bridge Facility) outstanding during the preceding month,
from (b) the Facility Cap. The Unused Line Fee shall be payable monthly in
arrears on the first day of each successive calendar month (starting with
the month in which the Closing Date occurs).
2.04 AMENDMENT OF DEFINITION OF "ADVANCES". Effective as of the date of
this Amendment, the definition of "Advances" set forth in Appendix A to the Loan
Agreement shall be amended and restated as follows:
ADVANCES shall mean, individually and/or collectively, (a) a
borrowing under the Revolving Facility, (b) a borrowing under the
Enterprise Facility, (c) a borrowing under the Overadvance Facility, and
(d) the borrowing under the Bridge Facility. Any amounts paid by Agent or
any Lender on behalf of Borrower or any Guarantor under any Loan Document
shall be an Advance for purposes of the Agreement.
2.05 FINANCIAL COVENANTS. Effective as of the date of this Amendment,
Paragraphs 4 and 5 of Annex I are hereby amended and restated to read as set
forth on Annex I attached hereto.
ARTICLE III
CONDITIONS PRECEDENT
3.01 CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent in a manner
satisfactory to Agent, unless specifically waived in writing by Lender:
(a) Agent shall have received each of the following, each in form
and substance satisfactory to Agent, in its sole discretion, and, where
applicable, each duly executed by each party thereto:
(i) This Amendment, duly executed by Borrower;
(ii) certified copies of the resolutions of the Board of
Directors of Borrower authorizing the execution, delivery and
performance of this Amendment and any and all other Loan Documents
executed by Borrower in connection herewith, along with a
certificate of incumbency certified by the secretary of Borrower
with specimen signatures of the officers of the Borrower who are
authorized to sign such documents, all in form and substance
satisfactory to Agent; and
(iii) All other documents Agent may request with respect to
any matter relevant to this Amendment or the transactions
contemplated hereby.
(b) The representations and warranties contained herein and in the
Loan Agreement and the other documents executed in connection with the
Loan Agreement (herein referred to as "LOAN DOCUMENTS"), as each is
amended hereby, shall be true and correct as of the date hereof, as if
made on the date hereof, except for such representations and warranties as
are by their express terms limited to a specific date.
(c) No Default or Event of Default shall have occurred and be
continuing, unless such Default or Event of Default has been otherwise
specifically waived in writing by Lender.
(d) Borrower shall pay to Lenders a commitment fee of $12,000, and
deliver to CapitalSource Holdings LLC the Warrant attached hereto as
Exhibit "A," for providing the Bridge Facility.
(e) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents, instruments
and other legal matters incident thereto shall be satisfactory to Lender.
ARTICLE IV
LIMITED CONSENT
4.01 LIMITED CONSENT. Subject to the satisfaction of the conditions
precedent in Article III of this Amendment and to the other terms, conditions
and provisions of this Amendment, Agent and Lenders hereby consent to the
payment of the Subordinated Debt payable to Acacia Venture Partners, L.P., South
Pointe Venture Partners, L.P., Oak Investment Partners VII, L.P., Oak VII
Affiliates Fund, L.P. and FCA Venture Partners II, L.P. with the proceeds of the
Advance under the Bridge Facility.
4.02 NO OTHER CONSENT OR WAIVER. Except as otherwise specifically provided
for in this Amendment, nothing contained herein shall be construed as a consent
or waiver by Agent or Lenders of any covenant or provision of the Loan
Agreement, the other Loan Documents, this Amendment or any other contract or
instrument among the Borrower, Agent and Lenders, and the failure of Agent or
Lenders at any time or times hereafter to require strict performance by the
Borrower of any provision thereof shall not waive, affect or diminish any right
of Agent or Lenders to thereafter demand strict compliance therewith.
ARTICLE V
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
5.01 RATIFICATIONS. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Loan Agreement and the other Loan Documents, and, except as expressly
modified and superseded by this Amendment, the terms and provisions of the Loan
Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect. The Borrower, the Agent and Lenders agree
that the Loan Agreement and the other Loan Documents, as amended hereby, shall
continue to be legal, valid, binding and enforceable in accordance with their
respective terms.
5.02 REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to Lenders that (a) the execution, delivery and performance of this
Amendment and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate or limited
partnership or limited liability company action (as applicable) on the part of
the Borrower and will not violate the Articles (or Certificates) of
Incorporation or Bylaws of the Borrower that are corporations or the limited
partnership agreements or certificates of limited partnership of the Borrower
that are limited partnerships or the articles of formation/organization,
regulations or limited liability company agreements of the Borrower that are
limited liability companies; (b) each of the Borrower's Board of Directors (or
the general partner of the applicable limited partnership) or the members or the
Board of Managers of the applicable limited liability company has authorized the
execution, delivery and performance of this Amendment and any and all other Loan
Documents executed and/or delivered in connection herewith; (c) the
representations and warranties contained in the Loan Agreement, as amended
hereby, and any other Loan Document are true and correct on and as of the date
hereof and on and as of the date of execution hereof as though made on and as of
each such date; (d) no Default or Event of Default under the Loan Agreement, as
amended hereby, has occurred and is continuing, unless such Default or Event of
Default has been specifically waived in writing by Lenders; (e) the Borrower is
in full compliance with all covenants and agreements contained in the Loan
Agreement and the other Loan Documents, as amended hereby; and (f) the Borrower
has not amended their Articles (or Certificates) of Incorporation or their
Bylaws or similar organizational documents since the date of the Loan Agreement,
except as otherwise disclosed to Agent.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in the Loan Agreement or any other Loan Document, including,
without limitation, any document furnished in connection with this Amendment,
shall survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Agent and Lenders or any closing shall affect
the representations and warranties or the right of Agent and Lenders to rely
upon them.
6.02 REFERENCE TO LOAN AGREEMENT. Each of the Loan Agreement and the other
Loan Documents, and any and all other Loan Documents, documents or instruments
now or hereafter executed and delivered pursuant to the terms hereof or pursuant
to the terms of the Loan Agreement, as amended hereby, are hereby amended so
that any reference in the Loan Agreement and such other Loan Documents to the
Loan Agreement shall mean a reference to the Loan Agreement, as amended hereby.
6.03 EXPENSES OF AGENT AND LENDERS. As provided in the Loan Agreement,
Borrower agrees to pay on demand all costs and expenses incurred by Agent and
Lenders, or their Affiliates, in connection with the preparation, negotiation,
and execution of this Amendment and the other Loan Documents executed pursuant
hereto and any and all amendments, modifications, and supplements thereto,
including, without limitation, the costs and fees of legal counsel, and all
costs and expenses incurred by Agent and Lenders in connection with the
enforcement or preservation of any rights under the Loan Agreement, as amended
hereby, or any other Loan Documents, including, without, limitation, the costs
and fees of legal counsel.
6.04 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.
6.05 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and shall
inure to the benefit of Agent, Lenders and Borrower and their respective
successors and assigns, except that Borrower may not assign or transfer any of
their rights or obligations hereunder without the prior written consent of Agent
and Lenders.
6.06 COUNTERPARTS. This Amendment may be executed in one or more
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
instrument. This Amendment may be executed by facsimile transmission, which
facsimile signatures shall be considered original executed counterparts for
purposes of this Section 6.06, and each party to this Amendment agrees that it
will be bound by its own facsimile signature and that it accepts the facsimile
signature of each other party to this Amendment.
6.07 EFFECT OF WAIVER. No consent or waiver, express or implied, by Agent
or Lenders to or for any breach of or deviation from any covenant or condition
by Borrower shall be deemed a consent to or waiver of any other breach of the
same or any other covenant, condition or duty.
6.08 HEADINGS. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
6.09 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED
PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MARYLAND.
6.10 FINAL AGREEMENT. THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS,
EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE
LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWER AND
LENDER.
6.11 RELEASE BY THE BORROWER. THE BORROWER HEREBY ACKNOWLEDGES THAT THEY
HAVE NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY
KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY
PART OF ITS LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF
OR DAMAGES OF ANY KIND OR NATURE FROM AGENT OR LENDERS. THE BORROWER HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES AGENT AND LENDERS AND
THEIR PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE
"RELEASED PARTIES"), FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF
ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN,
ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT
LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS
AMENDMENT IS EXECUTED, WHICH THE BORROWER MAY NOW OR HEREAFTER HAVE AGAINST THE
RELEASED PARTIES, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT
OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING
FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING,
TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST
LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN
AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS
AMENDMENT.
[The Remainder of this Page Intentionally Left Blank]
IN WITNESS WHEREOF, this Amendment has been executed and is effective as
of the date first above-written.
BORROWER:
PSYCHIATRIC SOLUTIONS, INC.
PSYCHIATRIC SOLUTIONS OF ALABAMA, INC.
PSYCHIATRIC SOLUTIONS OF FLORIDA, INC.
PSYCHIATRIC SOLUTIONS OF TENNESSEE, INC.
SOLUTIONS CENTER OF LITTLE ROCK, INC.
PSYCHIATRIC SOLUTIONS OF NORTH CAROLINA, INC.
PSI COMMUNITY MENTAL HEALTH AGENCY MANAGEMENT, INC.
PSI-EAP, INC.
SUNSTONE BEHAVIORAL HEALTH, INC.
THE COUNSELING CENTER OF MIDDLE TENNESSEE, INC.
PSI HOSPITALS, INC.
PSI TEXAS HOSPITALS, LLC
PSYCHIATRIC PRACTICE MANAGEMENT OF ARKANSAS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Vice President
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TEXAS CYPRESS CREEK HOSPITAL, L.P.
By: PSI Texas Hospitals, LLC, its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Vice President
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TEXAS WEST OAKS HOSPITAL, L.P.
By: PSI Texas Hospitals, LLC, its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Vice President
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NEURO INSTITUTE OF AUSTIN, L.P.
By: PSI Texas Hospitals, LLC, its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Vice President
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AGENT AND LENDER:
CAPITALSOURCE FINANCE LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Director
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ANNEX I
FINANCIAL COVENANTS
1) MINIMUM DEBT SERVICE COVERAGE
At the time of the Closing, the making of the Initial Advance and the
funding of the Term Loan and as of the last day of each Monthly Test Period
before May 1, 2002 and after July 31, 2002, the Debt Service Coverage Ratio
Coverage shall not be less than 1.90:1.00. As of the last day of each Monthly
Test Period from May 1, 2002 through and including July 31, 2002, the Debt
Service Coverage Ratio shall not be less than 2.0:1.00.
2) MINIMUM EBITDA
At the time of Closing, the making of the Initial Advance, the funding of
the Term Loan and as of the last day of each Monthly Test Period through and
including April 30, 2002 and after July 31, 2002, Borrower shall not permit its
EBITDA for each Monthly Test Period, to be less than an annualized amount equal
to $3,500,000. As of the last day of each Monthly Test Period from May 1, 2002
through and including July 31, 2002, Borrower shall not permit its EBITDA for
each Monthly Test Period to be less than an annualized amount equal to
$5,500,000. For purposes of this financial covenant, the term "EBITDA" of any
Person shall relate solely to the Unit Management Division and shall be
calculated giving effect to overhead allocated to the Unit Management Division.
EXHIBIT "A"
WARRANT
(See Attached)