Document:

Ex-10.1

 

Exhibit 10.1

Amendment No. 2

to

Second Amended and Restated Credit Agreement

          This Amendment No. 2 to Second Amended and Restated Credit Agreement,
dated as of May 31, 2007, (this “Amendment”), is entered into among Psychiatric Solutions,
Inc., a Delaware corporation (“PSI”), BHC Holdings, Inc., a Delaware corporation (“BHC”), Premier
Behavioral Solutions, Inc., a Delaware corporation (“PBS”), Alternative Behavioral Services, Inc.,
a Virginia corporation (“ABS”), Horizon Health Corporation, a Delaware corporation (“Horizon”),
ABS LINCS PR, Inc., a Virginia corporation (“LINCS PR”), First Hospital Panamericano, Inc., a
Virginia corporation (“FHP”), FHCHS of Puerto Rico, Inc., a Virginia corporation (“FHCHS”), First
Corrections – Puerto-Rico, Inc., a Virginia corporation (“FCPR” and together with PSI, BHC, PBS,
ABS, Horizon, LINCS PR, FHP and FHCHS, collectively, the “Borrowers” and each a “Borrower”), the
Subsidiaries of PSI listed on the signature pages hereof as guarantors (the “Guarantors”), Citicorp
North America, Inc. (“CNAI”), as Term Loan Facility Administrative Agent (as defined below) on
behalf of each Term Loan Lender executing a Lender Consent (as defined below), co-syndication agent
and lender, Bank of America, N.A. (“Bank of America”), as Revolving Credit Facility Administrative
Agent (as defined below) on behalf of each Revolving Credit Lender executing a Lender Consent,
Citigroup Global Markets Inc. (“CGMI”) and Merrill Lynch, Pierce Fenner & Smith Incorporated
(“MLPF&S”), as joint lead arrangers and joint book-running managers (together, in such capacities,
the “Arrangers” and each an “Arranger”), Merrill Lynch Capital Corporation (“MLCC”), as lender, and
MLPF&S, as co-syndication agent, and amends the Second Amended and Restated Credit Agreement, dated
as of July 1, 2005 (as the same has been amended, amended and restated, supplemented or otherwise
modified up to the date hereof, including Amendment No. 1 thereto dated as of December 1, 2006, the
“Credit Agreement”), among the Borrowers, the Guarantors, the Lenders and L/C Issuer (in each case
as defined therein) party thereto, CNAI, as administrative agent for the Term Loan Facility (in
such capacity, the “Term Loan Facility Administrative Agent”), Bank of America, as administrative
agent for the Revolving Credit Lenders (in such capacity, the “Revolving Credit Facility
Administrative Agent” and together with the Term Loan Facility Administrative Agent, the
“Administrative Agents”) and collateral agent for the Lenders and the L/C Issuer (in such capacity,
the “Collateral Agent”), CNAI and Bank of America, as co-syndication agents for the Revolving
Credit Facility and the Term Loan Facility, and MLPF&S and JPMorgan Chase Bank, N.A., as
co-documentation agents for the Revolving Credit Facility and the Term Loan Facility. Capitalized
terms used herein but not defined herein are used as defined in the Credit Agreement.

W
i t n e s s e t h: 

          Whereas, the Borrowers, the Guarantors (as defined in the Credit Agreement), the
Lenders, the L/C Issuer and the Administrative Agents are party to the Credit Agreement;

          Whereas, the Lenders party to the attached Consent of Lenders to this Amendment (the
“Lenders’ Consent”) constituting (a) 100% of the Term Loan Lenders and (b) the Required Lenders and
the Administrative Agents agree, subject to the limitations and conditions set forth herein, to
amend the Credit Agreement as set forth herein;

 

 

Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

          Whereas, PSI desires to (a) increase the Term Loan Commitments to a stated
aggregate
principal amount of $700,000,000 (of which $125,000,000 has been permanently repaid and is no
longer outstanding) and borrow $225,000,000 of Term Loans on the Amendment No. 2 Effective Date (as
defined below) to finance the Horizon Acquisition (as defined below) and (b) amend certain other
terms and conditions of the Credit Agreement as set forth herein (collectively, the “Specified
Transactions”) and has requested that the Administrative Agents, 100% of the Term Loan Lenders and
the Required Lenders consent to the Specified Transactions;

          Whereas, Horizon, LINCS PR, FHP, FHCHS and FCPR each desire to become a Borrower
under the Credit Agreement (as amended by this Amendment) and each of them and the other Borrowers
agree to be jointly and severally liable for the payment and performance of all obligations and
covenants of any Borrower thereunder or under any other Loan Document; and

          Whereas, the Lenders party to the Lenders’ Consent (constituting (a) 100%
of the Term
Loan Lenders and (b) the Required Lenders) and the Administrative Agents agree, subject to the
limitations and conditions set forth herein, to consent to the Specified Transactions (and waive
any Events of Default resulting solely therefrom).

          Now, Therefore, in consideration of the premises and the covenants and obligations
contained herein the parties hereto agree as follows:

     Section 1. Amendments to the Credit Agreement

          The Credit Agreement is, effective as of the Amendment No. 2 Effective Date (as defined below)
and subject to the satisfaction (or due waiver) of the conditions set forth in Section 3
(Conditions Precedent to the Effectiveness of this Amendment) hereof, hereby amended as follows:

          (a) Amendments to Introductory Paragraph. The introductory paragraph of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:

          “This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of July 1, 2005,
among PSYCHIATRIC SOLUTIONS, INC., a Delaware corporation (“PSI”), BHC HOLDINGS, INC., a
Delaware corporation (“BHC”), PREMIER BEHAVIORAL SOLUTIONS, INC., a Delaware corporation
(“PBS”), ALTERNATIVE BEHAVIORAL SERVICES, INC., a Virginia corporation (“ABS”), HORIZON
HEALTH CORPORATION, a Delaware corporation (“Horizon”), ABS LINCS PR, Inc., a Virginia
corporation (“LINCS PR”), FIRST HOSPITAL PANAMERICANO, INC., a Virginia corporation
(“FHP”), FHCHS OF PUERTO RICO, INC., a Virginia corporation (“FHCHS”), FIRST CORRECTIONS –
PUERTO-RICO, INC., a Virginia corporation (“FCPR” and together with PSI, BHC, PBS, ABS,
Horizon, LINCS PR, FHP and FHCHS, collectively, the “Borrowers” and each a “Borrower”), the
Guarantors (as defined below), the Lenders (as defined below), the L/C Issuer (as defined
below) and CITICORP NORTH AMERICA, INC. (“CNAI”), as administrative agent for the Term Loan
Facility (as defined below) (in such capacity, the “Term Loan Facility Administrative
Agent”), BANK OF AMERICA, N.A. (“Bank of America”), as administrative agent for the
Revolving Credit Facility (in such capacity, the “Revolving Credit Facility Administrative
Agent”) and as collateral agent for the Lenders and the L/C Issuer (in such capacity, the
“Collateral Agent”), CNAI and Bank of America, as co-

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 Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

syndication agents for the Revolving Credit Facility and the Term Loan Facility, CNAI,
as documentation agent for the Revolving Credit Facility and the Term Loan Facility.”

          (b) Amendments to Article I (Definitions, Interpretation and Accounting Terms).
Section 1.01 (Defined Terms) of the Credit Agreement is hereby amended as follows:

          (i) The following definitions are hereby inserted in Section 1.01 (Defined Terms) of
the Credit Agreement in the appropriate place to preserve the alphabetical order of the
definitions in such section:

          “Amendment No. 2 Effective Date” has the meaning specified in Amendment No. 2,
dated as of May 31, 2007, by and among the Borrowers, the Guarantors, the
Administrative Agents, CGMI, MLPF&S and the Lenders party thereto.

          “Cash Collateral Account” means any Deposit Account or Securities Account that
is (a) established by the applicable Agent from time to time in its sole discretion
to receive cash and Cash Equivalents (or purchase cash or Cash Equivalents with
funds received) from the Loan Parties or Persons acting on their behalf pursuant to
the Loan Documents, (b) with such depositaries and securities intermediaries as the
applicable Agent may determine in its sole discretion, (c) in the name of the
applicable Agent (although such account may also have words referring to the
Borrower and the account’s purpose), (d) under the control of the applicable Agent
and (e) in the case of a Securities Account, with respect to which the applicable
Agent shall be the Entitlement Holder and the only Person authorized to give
Entitlement Orders with respect thereto.

          “Horizon Acquisition” means the acquisition by PSI directly or indirectly
through one of its wholly owned subsidiaries of all of the Capital Stock of Horizon
Health Corporation, a Delaware corporation.

          “Second Additional Term Loan” has the meaning specified in Section 2.01(b)
(Term Loan Commitments).

          “Second Additional Term Loan Arrangers” means each of Citigroup Global Markets
Inc. and Merrill Lynch, Pierce Fenner & Smith Incorporated, in their capacities as
joint lead arrangers and joint book-running managers in respect of the Second
Additional Term Loans.

          “Second Additional Term Loan Commitment” means, with respect to each Lender,
the commitment of such Lender to make a Second Additional Term Loan to the Borrower
in the aggregate principal amount outstanding not to exceed the amount set forth
opposite such Lender’s name on Schedule I-B (Second Additional Term Loan
Commitments) under the caption “Second Additional Term Loan Commitment” as amended
to reflect each Assignment and Assumption executed by such Lender and as such
amount may be reduced pursuant to this Agreement.

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Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

          “Second Additional Term Loan Lender” means each Lender that has a Second
Additional Term Loan Commitment or that holds a Second Additional Term Loan.

          “Securities Act” means the Securities Act of 1933, as amended from time to
time, and any successor statute.

          “Specified Entity” means each Unrestricted Subsidiary and each Joint Venture
that, individually or taken together with all other Unrestricted Subsidiaries and
Joint Ventures, does not have outstanding Indebtedness in an aggregate principal
amount in excess of the greater of (i) $20,000,000 and (ii) an amount equal to 50%
of the aggregate amount of all Investments made by Loan Parties in Unrestricted
Subsidiaries and Joint Ventures.

          “Unrestricted Subsidiary” means each Subsidiary identified to the
Administrative Agents in writing to have been designated as an “Unrestricted
Subsidiary” by PSI in accordance with the provisions of, and as such term is
defined by, the Senior Subordinated Notes Indentures.

          (ii) The following definitions set forth in Section 1.01 (Defined Terms) of the Credit
Agreement are amended as follows:

          “Applicable Margin” is hereby amended by deleting clause (a) thereof in its
entirety and replacing such text with the following:

“(a) with respect to Term Loans, (x) for Base Rate Loans, a rate equal to
0.75% per annum and (y) for Eurodollar Rate Loans, a rate equal to 1.75%
per annum; and”

          “Debt Issuance” is hereby amended by replacing the text
“Section 8.03(k)(ii)
(Indebtedness)” therein with the text “Section 8.03(k)(i)(B) (Indebtedness)”.

          “Disposition” is hereby amended by inserting after the text “including the
Capital Stock of any Subsidiary” the phrase “, but excluding the issuance by PSI or
a Subsidiary of shares of its respective Capital Stock”.

          “Equity Issuance Deferred Amount” is hereby amended by inserting after the
text “arising from an Equity Issuance to finance a proposed Permitted Acquisition”
the phrase “or in connection with a joint venture Investment permitted by Section
8.02(o)”.

          “Permitted Acquisitions” is hereby amended by (A) deleting clause (a) thereof
in its entirety and replacing such text with the following:

“(a) the Ardent Acquisition, the ABS Acquisition and the Horizon
Acquisition and”

(B) deleting clause (b)(vi) thereof in its entirety and replacing such text with
the following:

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Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

“(vi) with respect to any Permitted Acquisition, (A) upon giving effect to
such Acquisition on a Pro Forma Basis, the Loan Parties would be in
compliance with the financial covenants set forth in Section 8.11
(Financial Covenants) as of the most recent fiscal quarter for which the
Borrower has delivered financial statements pursuant to Section 7.01(a) or
(b) (Financial Statements) and (B) with respect to any such Acquisition in
which the Total Consideration exceeds $25,000,000, the Borrower shall have
delivered to the Administrative Agents on or prior to the date of such
proposed Acquisition or such later time as the Administrative Agent may
permit a Pro Forma Compliance Certificate, demonstrating compliance with
the foregoing subclause (A);”

and (C) deleting clause (b)(x) thereof in its entirety.

          “Pro Forma Basis” is hereby amended by inserting at the end of such definition
the following new sentence:

“Calculations made pursuant to the definition of “Pro Forma Basis” may
include adjustments, in the reasonable determination of PSI as set forth
in a certificate of a Responsible Officer of PSI, to reflect operating
expense reductions reasonably expected to result from any Disposition,
Involuntary Disposition or Acquisition to the extent determined on a basis
consistent with Article 11 of Regulation S-X promulgated under the
Securities Act.”

          “Reinvestment Notice” is hereby amended by deleting clause (ii) thereof in its
entirety and replacing such text with the following:

(ii) in the case of any such Equity Issuance by PSI, that PSI (directly
or indirectly through one of its Subsidiaries) intends and expects to use
all or a specified portion of the Net Cash Proceeds of such Equity
Issuance to finance all or a portion of a Permitted Acquisition and in the
case of an Equity Issuance by any Subsidiary in connection with a joint
venture Investment permitted by Section 8.02(o), that any Net Cash
Proceeds will be used to acquire assets useful in the business of the
Borrower or any of its Subsidiaries.

          “Reinvestment Prepayment Amount” is hereby amended by deleting clause (ii)
thereof in its entirety and replacing such text with the following:

(ii) in the case of any Equity Issuance by PSI, to consummate the
applicable Permitted Acquisition, and in the case of an Equity Issuance by
any Subsidiary, to acquire assets useful in the business of the Borrower
or any of its Subsidiaries.

          “Reinvestment Prepayment Date” is hereby amended by deleting clause (ii)(b)
thereof in its entirety and replacing such text with the following:

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Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

(b) the date that is five Business Days after the date on which the
Borrower shall have notified the Administrative Agents of the Borrower’s
determination (x) not to consummate the applicable Permitted Acquisition,
in the case of an Equity Issuance by PSI, or (y) not to acquire
replacement assets useful in the Borrower’s or a Subsidiary’s business, in
the case of an Equity Issuance by any Subsidiary, as applicable.

          “Subsidiary” is hereby amended by inserting after the text “(unless, such
control is held jointly with one or more joint venture partners” the text “,
without consideration of or giving effect to provisions designed to break a
deadlock”.

          “Swing Line Sublimit” is hereby amended by replacing the text “$5,000,000” in
clause (a) thereof with the text “$15,000,000”.

          (iii) The following definitions set forth in Section 1.01 (Defined Terms) of the
Credit Agreement are hereby deleted in their entirety and are replaced as follows:

          “Excluded Subsidiaries” means, collectively, (i) PSI Surety, (ii) each HUD
Financing Subsidiary, (iii) Health and Human Resource Center, Inc., (iv) Friends
Behavioral Health System, L.P., (v) Friends GP, LLC, (vi) HHC Pennsylvania, Inc.,
(vii) AHG Partnership, (viii) HHMC Partners, Inc., (ix) Rolling Hills Hospital,
LLC, (x) Laurelwood Associates Trust and (xi) each Immaterial Subsidiary.

          “Reinvestment Event” means any Equity Issuance (either by PSI in connection
with a proposed Permitted Acquisition or by a Subsidiary in connection with a joint
venture Investment permitted by Section 8.02(o)), Disposition or Involuntary
Disposition in respect of which the Borrower has delivered a Reinvestment Notice.

          “Term Loan Lender” means each Original Term Loan Lender, each Additional Term
Loan Lender and each Second Additional Term Loan Lender.

          (iv) The following definition “Consolidated Interest Coverage Ratio” set forth in
Section 1.01 (Defined Terms) of the Credit Agreement is hereby deleted in its entirety.

(c) Amendments to Article II (The Commitments and Credit Extensions).

          (i) Clause (b) of Section 2.01 (The Commitments) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:

          “(b) Term Loan Commitments. On the terms and subject to the conditions
contained in this Agreement, (i) the Original Term Loan Lenders made loans in an
aggregate principal amount of $325,000,000 (each, an “Original Term Loan”) to the
Borrower on the Closing Date, of which

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 Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

$125,000,000 has been prepaid and is no longer outstanding, (ii) the
Additional Term Loan Lenders made additional loans in an aggregate principal amount
of $150,000,000 (each, an “Additional Term Loan”) to the Borrower on the Amendment
Effective Date, and (iii) the Second Additional Term Loan Lenders severally agree
to make additional loans in an aggregate principal amount of $225,000,000 (each, a
“Second Additional Term Loan”) to the Borrower on the Amendment No. 2 Effective
Date. On the Amendment No. 2 Effective Date, all Original Term Loans which remain
outstanding, all Additional Term Loans which remain outstanding and all Second
Additional Term Loans shall be “Term Loans” under this Agreement. Amounts of Term
Loans repaid or prepaid may not be reborrowed.”

          (ii) Section 2.02 (Borrowings, Conversions and Continuations of Loans) of the Credit
Agreement is hereby amended by (A) amending and restating the text of part (A) of clause
(a) thereof in its entirety to read as follows:

          “(A) the date of such proposed Borrowing (which (i) in the case of the Term
Loan Borrowing, shall be the Closing Date, (ii) in the case of the Additional Term
Loans, shall be the Amendment Effective Date, or (iii) in the case of the Second
Additional Term Loans, shall be the Amendment No. 2 Effective Date),”

and (B) inserting the following at the end of the last sentence of clause (a)(ii) thereof:

          “; provided, further, that, in the case of Borrowings in respect of Second
Additional Term Loans, the applicable conditions set forth in Section 5.02
(Conditions Precedent to Each Credit Extension) be fulfilled (or duly waived in
accordance with Section 11.01 (Amendments, Etc.) on the Amendment No. 2 Effective
Date.”

     (iii) Clause (C) of Section 2.08(a)(ii)(Mandatory Prepayments) is amended by deleting
subclause (I) in its entirety and replacing it with the following:

          “(I) Equity Issuance by PSI made to finance a Permitted Acquisition or by any
Subsidiary in connection with a joint venture Investment permitted by Section
8.02(o),”.

     (iv) Clause (c) of Section 2.06 (Repayment of Loans) of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:

          “(c) The Borrower promises to repay the Term Loans at the dates and in the
amounts set forth below, provided, however, that such repayments with respect to
the Original Term Loans shall be reduced by any optional prepayments of the
Original Term Loans made prior to the Amendment Effective Date in accordance with
Section 2.07(b) (Optional Prepayments):

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Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

	 	 	 	 	 
	              Date	 	Amount
	June 30, 2007
	 	$	1,187,500	 
	September 30, 2007
	 	$	1,750,000	 
	December 31, 2007
	 	$	1,750,000	 
	March 31, 2008
	 	$	1,750,000	 
	June 30, 2008
	 	$	1,750,000	 
	September 30, 2008
	 	$	1,750,000	 
	December 31, 2008
	 	$	1,750,000	 
	March 31, 2009
	 	$	1,750,000	 
	June 30, 2009
	 	$	1,750,000	 
	September 30, 2009
	 	$	1,750,000	 
	December 31, 2009
	 	$	1,750,000	 
	March 31, 2010
	 	$	1,750,000	 
	June 30, 2010
	 	$	1,750,000	 
	September 30, 2010
	 	$	1,750,000	 
	December 31, 2010
	 	$	1,750,000	 
	March 31, 2011
	 	$	1,750,000	 
	June 30, 2011
	 	$	1,750,000	 
	September 30, 2011
	 	$	1,750,000	 
	December 31, 2011
	 	$	1,750,000	 
	March 31, 2012
	 	$	1,750,000	 
	July 1, 2012
	 	$	659,500,000	 

provided, however, that (i) the above installment due on June 30, 2007 shall be
applied pro rata to the outstanding principal amount of the Original Term Loans and
the Additional Term Loans only, and all other installments thereafter shall be
applied pro rata to the outstanding principal amount of the Original Term Loans,
the Additional Term Loans and the Second Additional Term Loans and (ii) the
Borrower shall repay the entire unpaid principal amount of the Term Loans on the
Term Loan Maturity Date.”

          (d) Amendments to Article VI (Representations and Warranties). Clause (b) of Section
6.19 (Use of Proceeds) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

          “(b) The proceeds of the Term Loans are being used by the Borrower solely (i)
to finance the Ardent Acquisition and for the payment of related transaction costs,
fees and expenses, (ii) to finance the ABS Acquisition

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 Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

and for the payment of related transaction costs, fees and expenses, (iii) to
finance the Horizon Acquisition and for the payment of related transaction costs,
fees and expenses and (iv) for the payment of transaction costs, fees and expenses
incurred in connection with this Agreement and the transactions contemplated hereby
on or prior to the Amendment No. 2 Effective Date.”

          (e) Amendments to Article VII (Affirmative Covenants). Section 7.15 (Additional
Collateral) of the Credit Agreement is hereby amended by (i) replacing the text “Amendment
Effective Date” where used in clause (a) thereof with “Amendment No. 2 Effective Date” and (ii)
inserting after the text “(a) 100% of the issued and outstanding Capital Stock of each Domestic
Subsidiary” in clause (b) thereof the text “(unless a Lien on such Capital Stock is prohibited by
the terms of such Domestic Subsidiary’s Organization Documents or by Law, but only to the extent
that (i) any such prohibition could not be rendered unenforceable or otherwise deemed ineffective
pursuant to the UCC or any other applicable Law (including Debtor Relief Laws) or principals of
equity) and (ii) in the case of each Domestic Subsidiary other than (x) Health and Human Resource
Center, Inc., Friends Behavioral Health System, L.P., Friends GP, LLC and AHG Partnership, after
reasonable efforts, consent from the relevant party or parties has not been obtained to permit such
Lien and (y) Laurelwood Associates, Inc., and”.

     (f) Amendments to Article VIII (Negative Covenants).

          (i) Section 8.03 (Indebtedness) of the Credit Agreement is hereby amended by (A)
amending and restating in their entirety clauses (k) and (l) thereof to read as follows:

          “(k) Permitted Subordinated Indebtedness (on terms and conditions acceptable
to the Administrative Agents) issued after the Closing Date (i) to the extent the
proceeds thereof are used for a purpose other than directly financing Permitted
Acquisitions, (A) in an aggregate principal amount not to exceed $75,000,000 at any
one time outstanding and (B) in an aggregate principal amount in excess of
$75,000,000 solely to the extent that the Net Cash Proceeds of such Indebtedness
are applied to prepay the Loans as provided in Section 2.08 (Mandatory Prepayments)
and (ii) to the extent the proceeds thereof are directly used to finance Permitted
Acquisitions and PSI is in pro forma compliance with the financial covenants set
forth in Section 8.11 (Financial Covenants) immediately prior to and upon giving
effect to the issuance of such Permitted Subordinated Indebtedness, in an unlimited
amount;

          (l) subject to Section 8.13 (c) (Prepayment of Other Indebtedness;
Modification of Debt Agreements), renewals, refinancings and extensions (including
by way of repurchase or redemption pursuant to a tender offer or otherwise) of
Indebtedness permitted under clauses (b), (c) and (f) (and in the case of such
clause (f), with respect to the New Senior Subordinated Notes or any other
Indebtedness which refinances the Senior Bridge Facility (including any Exchange
Securities) and satisfies the requirements of such clause (f)) on terms and
conditions not materially less favorable to the applicable obligors or the Lenders;
provided, that the principal amount of such Indebtedness so renewed, refinanced or
extended shall not be renewed, refinanced or extended for a principal amount in
excess of the principal balance outstanding thereof at the time of such renewal,
refinancing or extension;”,

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Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

(B) deleting the word “and” at the end of clause (n) thereof, (C) amending and restating in
its entirety clause (o) thereof to read as follows:

          “(o) additional Indebtedness of any Subsidiary that is not a Guarantor in an
aggregate principal amount not to exceed $50,000,000 at any one time outstanding;
and”

and (D) inserting after clause (o) thereof a new clause (p) as follows:

          “(p) Guarantees constituting Investments permitted by Section 8.02(o)
(Investments).”

          (ii) Clause (a) of Section 8.04 (Fundamental Changes) of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:

          “(a) the Borrower may merge or consolidate with any Subsidiary, provided that
(i) the Borrower shall be the continuing or surviving corporation of such merger or
consolidation or (ii) if such Subsidiary shall be the continuing or surviving
corporation of such merger or consolidation, prior to or simultaneous with such
merger or consolidation such Subsidiary shall have executed and delivered such
joinder and other agreements as the Administrative Agents shall reasonably request
to evidence such Subsidiary’s assumption of such Borrower’s obligations under the
Agreement and each other Loan Document to which it is a party,”

          (iii) Section 8.05 (Dispositions) of the Credit Agreement is hereby amended by (A)
amending and restating in its entirety clause (c) thereof to read as follows:

          “(c) such transaction does not involve the sale or other disposition of a
minority equity interest in any Subsidiary, except in connection with an Investment
in a joint venture permitted by Section 8.02(o);”

and (B) amending and restating in its entirety clause (f) thereof to read as
follows:

          “(f) the consideration paid in connection therewith shall be cash or Cash
Equivalents received contemporaneous with the consummation of such Disposition and
shall be in an amount not less than the fair market value of the Property disposed
of; provided, that in the case of a Disposition made in connection with an
Investment in a joint venture permitted by Section 8.02(o), such consideration
shall not be required to be in cash or Cash Equivalents; and”

          (iv) Clause (a) of Section 8.11 (Financial Covenants) of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:

          “(a) Maximum Consolidated Total Leverage Ratio. At any time, permit the
Consolidated Total Leverage Ratio as of the last day of any four consecutive fiscal
quarter period, taken together as one accounting period, of PSI and its
Subsidiaries to be greater than 5.50 to 1.00.”

          (v) Clause (b) (Minimum Consolidated Interest Coverage Ratio) of

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 Amendment No. 2 to Credit Agreement

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Section 8.11 (Financial Covenants) of the Credit Agreement is hereby deleted in its
entirety.

          (vi) Section 8.13 (Prepayment of Other Indebtedness; Modification of Debt Agreements)
of the Credit Agreement is hereby amended by (A) amending and restating in its entirety
clause (c) thereof to read as follows:

          “(c) Make any optional principal prepayment with respect to Indebtedness
arising under the Senior Bridge Credit Facility or any Exchange Securities prior to
the scheduled maturity thereof; provided, however, that the foregoing shall not
restrict a refinancing or repayment (including by a repurchase or redemption
pursuant to a tender offer or otherwise) thereof directly with the proceeds of (i)
any Equity Issuance and (ii) any Indebtedness issued under Section 8.03 (f) or (l)
(Indebtedness) which satisfies the requirements of such sections.”

and (B) amending and restating in its entirety subclause (i) of clause (d) thereof to read
as follows:

          “(i) the redemption or purchase of the Existing Senior Subordinated Notes
pursuant to a cash tender offer approved by and on terms acceptable to the Second
Additional Term Loan Arrangers made on or after the Amendment No. 2 Effective Date
to purchase all of the Existing Senior Subordinated Notes so long as at the time of
any such redemption or purchase no Default or Event of Default has occurred and is
continuing or would result therefrom; and”

          (vii) Section 8.16 (Sale and Leaseback Transactions; Operating Leases) of the Credit
Agreement is hereby amended by amending and restating in its entirety subclause (i) of
clause (b) thereof to read as follows:

          “(i) leases in existence as of the Closing Date (or otherwise permitted
pursuant to Section 8.03(c) (Existing Indebtedness)), and any renewal, refunding,
extension or refinancing thereof; provided that with respect to Capital Leases and
Synthetic Leases (A) the amount of such Capital Lease or Synthetic Lease is not
increased at the time of such refinancing, refunding, renewal or extension except
by an amount equal to the fees and expenses reasonably incurred in connection with
such refinancing (except to the extent permitted pursuant to Section 8.03(c)
(Existing Indebtedness)), and (B) none of the instruments and agreements evidencing
or governing such Capital Lease or Synthetic Lease shall be amended, modified or
supplemented after the Closing Date, including in connection with any refinancing,
refunding, renewal or extension, to change any terms of subordination, repayment or
rights of enforcement, conversion, put, exchange or other rights, or to make any
covenants or events of default materially more restrictive or in any event more
restrictive than as set forth herein, from such terms and rights as in effect on
the Closing Date (except to the extent permitted pursuant to Section 8.03(c)
(Existing Indebtedness)); and”

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 Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

          (g) Amendments to Article IX (Events of Default and Remedies). Clause (e)
(Cross-Default) of Section 9.01 (Events of Default) of the Credit Agreement is hereby amended by
inserting after each reference to “Subsidiary” therein the following text “(other than any
Specified Entity)”.

          (h) Insertion of Schedule I-B (Second Additional Term Loan Commitments). A new
Schedule I-B (Second Additional Term Loan Commitments) to the Credit Agreement in the form attached
hereto as Exhibit A is hereby inserted immediately following the existing Schedule I-A (Additional
Commitments) to the Credit Agreement.

          (i) Amendment of Schedule 8.01 (Existing Liens). Schedule 8.03 (Existing Liens) to
the Credit Agreement is hereby amended and restated in its entirety to read as attached hereto as
Exhibit B.

          (j) Amendment of Schedule 8.03 (Existing Indebtedness). Schedule 8.03 (Existing
Indebtedness) to the Credit Agreement is hereby amended and restated in its entirety to read as
attached hereto as Exhibit C.

     Section 2. Release of Guarantor and Liens

          Effective as of the date hereof, each of the Lenders party to the Lenders’ Consent (a) hereby
consents to the release and hereby directs the Administrative Agents, at their option and on terms
and conditions satisfactory to the Administrative Agents, to release Rolling Hills Hospital, LLC
(“Rolling Hills”) from its Obligations under the Guaranty (the “Release”) and (b) together with
each of the Administrative Agents, hereby directs the Collateral Agent to execute and deliver or
file such termination and release statements and do such other things as necessary to release Liens
held by the Collateral Agent for the benefit of the Secured Parties against the assets and the
Capital Stock of Rolling Hills promptly upon effectiveness of the Release.

     Section 3. Conditions Precedent to the Effectiveness of this Amendment

          This Amendment shall become effective when, and only when, each of the following conditions
precedent shall have been satisfied (the “Amendment No. 2 Effective Date”) or duly waived by the
Administrative Agents:

          (a) Certain Documents. The Administrative Agents shall have received each of the
following, each dated the Amendment No. 2 Effective Date (unless otherwise provided below or agreed
by the Administrative Agents), in form and substance satisfactory to the Administrative Agents:

          (i) this Amendment, duly executed by the Borrowers, the Guarantors, the Arrangers and
the Administrative Agents;

          (ii) the Lenders’ Consent executed by (x) the number of Lenders which, when combined,
constitute the Required Lenders and (y) 100% of the Term Loan Lenders;

          (iii) a copy of the Agreement and Plan of Merger, dated as of December 20, 2006, by
and between PSI, Panther Acquisition Sub, Inc. and Horizon (as amended, supplemented and
otherwise modified from time to time up to the date hereof,

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Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

together with all schedules and exhibits thereto, the “Horizon Acquisition
Documentation”) certified as being complete and correct by a Responsible Officer of PSI;

          (iv) closing of the Horizon Acquisition on terms and structure consistent with the
Horizon Acquisition Documentation without any material waiver or amendment thereto not
consented to by the Arrangers;

          (v) a favorable opinion of Waller Landsen Dortch & Davis, counsel to the Loan Parties,
addressed to the Administrative Agents, the Collateral Agent, the Lenders and the L/C
Issuer and addressing such other matters as any Lender or L/C Issuer through the
Administrative Agents may reasonably request;

          (vi) a certificate of the Secretary or an Assistant Secretary of each Loan Party
certifying as follows:

               (A) that each officer of such Loan Party that was authorized to execute and deliver
any Loan Document or any other document required under the Credit Agreement to be executed
and delivered by or on behalf of such Loan Party on the Closing Date or thereafter is
authorized to execute and deliver any Loan Document or any other document required under
this Amendment to be executed and delivered by or on behalf of such Loan Party, other than
as may be attached to such certificate of the Secretary or Assistant Secretary which
attachment shall certify the names and true signatures of each additional officer of such
Loan Party that has been authorized to execute and deliver any Loan Document or any other
document required under this Amendment to be executed and delivered by or on behalf of such
Loan Party,

               (B) that there have been no changes to the articles or certificate of incorporation
(or equivalent Organization Document) of each Loan Party delivered pursuant to the Credit
Agreement on the Closing Date or thereafter, other than as may be attached to such
certificate of the Secretary or Assistant Secretary which attached articles or certificate
of incorporation (or equivalent Organization Document) shall have been certified as of a
recent date by the Secretary of State of the State of organization of such Loan Party,

               (C) that there have been no changes to the by-laws (or equivalent Organization
Document) of each Loan Party delivered pursuant to the Credit Agreement on the Closing Date
or thereafter, other than as may be attached to such certificate of the Secretary or
Assistant Secretary, and

               (D) the resolutions of each Loan Party’s Board of Directors (or equivalent
governing
body) approving and authorizing the execution, delivery and performance of this Amendment
and the other Loan Documents to which such Loan Party is a party;

          (vii) certificates of the Secretary of State of the State of organization of each
Borrower and each of PSI’s Subsidiaries that becomes a Guarantor on the Amendment No. 2
Effective Date attesting to the good standing of each such Loan Party in such State as of a
recent date;

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 Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

          (viii) Guarantees, joinder agreements, other supplements to Security Agreements and
other documents required pursuant to Section 7.12 (Additional Subsidiaries and Guarantees)
of the Credit Agreement with respect to Subsidiaries whose capital stock is acquired by or
issued to any Loan Party pursuant to the Horizon Acquisition;

          (ix) Mortgages in favor of the Collateral Agent for all of the owned Real Properties
of the Loan Parties (including currently owned Real Properties and those acquired pursuant
to the Horizon Acquisition), together with (A) all Mortgage Supporting Documents, in each
case to the extent required by Section 7.15 (Additional Collateral) of the Credit Agreement
(as amended by this Amendment) and (B) a favorable opinion of counsel to the Loan Parties
in each jurisdiction for which the Administrative Agents requires a legal opinion in
connection with the delivery of Mortgages in respect of Real Properties acquired by PSI in
the Horizon Acquisition addressed to the Administrative Agents, the Collateral Agent, the
Lenders and the L/C Issuer and addressing such other matters as any Lender or L/C Issuer
through any Administrative Agent may reasonably request; provided, that if PSI and its
Subsidiaries have used reasonable best efforts to execute and deliver (or cause to be
executed and delivered) such documents and opinions to the Administrative Agents on the
Amendment No. 2 Effective Date and such documents and opinions are not so executed and
delivered, then within 30 days of the Amendment No. 2 Effective Date, or such longer time
as the Administrative Agents may allow;

          (x) a certificate of a Responsible Officer of PSI, in form and substance satisfactory
to the Arrangers, together with such other evidence reasonably requested by the Lenders,
confirming that PSI and its Subsidiaries are Solvent on a consolidated basis after giving
effect to the Specified Transactions;

          (xi) a certificate of a Responsible Officer of each Borrower to the effect that (A)
the conditions set forth in Section 5.02(b) (Conditions Precedent to Each Credit Extension)
of the Credit Agreement have been satisfied, (B) there shall be no action, investigation or
proceeding (whether an individual proceeding or a series of related proceedings) or
development in any action, investigation or proceeding (whether an individual proceeding or
a series of related proceedings) that has had or could reasonably be expected to have a
Material Adverse Effect or have a material adverse effect on the ability of the parties to
consummate the Horizon Acquisition, the funding of the Credit Extensions to be made on the
Amendment No. 2 Effective Date under the Credit Agreement as amended by this Amendment or
under any of the other transactions contemplated hereby and (C) the condition set forth in
clause (a)(iv) above has been satisfied;

          (xii) a certificate of a Responsible Officer of each Borrower specifying all
information necessary for the Administrative Agents and the Lenders to issue wire transfer
instructions on behalf of each of the Loan Parties for the subsequent Credit Extensions to
be made on the Amendment No. 2 Effective Date under the Credit Agreement as amended by this
Amendment, including sources and application of funds, disbursement authorizations, in form
reasonably acceptable to the Arrangers; and

          (xiii) such additional documentation as the Lenders party to the Lenders’ Consent or
the Arrangers may reasonably require;

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 Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

          (b) Corporate and Other Proceedings. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the Horizon Acquisition and the
other transactions contemplated by this Amendment shall be satisfactory in all respects to the
Administrative Agents and each Lender;

          (c) Representations and Warranties. Each of the representations and warranties
contained in Article VI (Representations and Warranties) of the Credit Agreement, the other Loan
Documents or in any certificate, document or financial or other statement furnished at any time
under or in connection therewith are true and correct in all material respects on and as of the
date hereof and the Amendment No. 2 Effective Date, in each case as if made on and as of such date
and except to the extent that such representations and warranties specifically relate to a specific
date, in which case such representations and warranties shall be true and correct in all material
respects as of such specific date; provided, however, that references therein to the “Credit
Agreement” shall be deemed to refer to the Credit Agreement as amended by this Amendment and after
giving effect to the consents and waivers set forth herein;

          (d) No Default or Event of Default. After giving effect to this Amendment, no Default
or Event of Default (except for those that may have been duly waived) shall have occurred and be
continuing, either on the date hereof or on the Amendment No. 2 Effective Date; and

          (e) Fees and Expenses Paid. The Borrowers shall have paid all Obligations due, after
giving effect to this Amendment, on or before the later of the date hereof and the Amendment No. 2
Effective Date including, without limitation, the fees set forth in Section 6 (Fees and Expenses)
hereof, the fees set forth in that certain fee letter agreement, dated as of January 19, 2007,
among PSI, CGMI, MLCC and MLPF&S, and all costs and expenses of the Administrative Agents in
connection with the preparation, reproduction, execution and delivery of this Amendment and all
other Loan Documents entered into in connection herewith (including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Administrative Agents with respect
thereto and all other Loan Documents) and all other costs, expenses and fees due under any Loan
Document.

          (f) Financial Statements of PSI. Not later than 15 days before the Amendment No. 2
Effective Date, the Lenders shall have received (a) audited consolidated and consolidating balance
sheets and related statements of income, stockholders’ equity and cash flows of (i) PSI and its
Subsidiaries (other than Horizon and its Subsidiaries) and (ii) Horizon and its Subsidiaries, in
each case, for the fiscal years 2004, 2005 and 2006, prepared in accordance with generally accepted
accounting principles in the United States and prepared in accordance with Regulation S-X under the
Securities Act and (b) to the extent available, unaudited consolidated and consolidating balance
sheets and related statements of income, stockholders’ equity and cash flows of (i) PSI and its
Subsidiaries (other than Horizon and its Subsidiaries) and (ii) Horizon and its Subsidiaries, in
each case, for each completed fiscal quarter since the date of such audited financial statements
and in the case of clauses (a) and (b), which audited and unaudited financial statements (x) shall
be in form and scope satisfactory to the Lenders and (y) shall not be materially inconsistent with
the financial statements previously provided to the Lenders.

          (g) Pro Forma Financial Statements; Projections.

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Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

          (i) The Lenders shall have received a pro forma consolidated and consolidating balance
sheet of PSI and its Subsidiaries as of the Amendment No. 2 Effective Date, after giving
effect to the Specified Transactions, together with a certificate of a Responsible Officer
of PSI to the effect that such financial statements accurately present the pro forma
financial position of PSI and its Subsidiaries on a basis consistent with pro forma
financial statements set forth in a registration statement filed with the SEC, and the
Lenders shall be satisfied that such balance sheets are not materially inconsistent with
the forecasts previously provided to the Lenders.

          (ii) PSI shall have delivered its then most recent projections through the 2013 fiscal
year for PSI and each of its Subsidiaries, prepared on a quarterly basis through the end of
2007, which projections shall be satisfactory to the Arrangers.

          (h) Maximum Consolidated Total Leverage Ratio. Each Arranger shall have received
reasonably satisfactory evidence to it (including a certificate of a Responsible Officer of PSI
accompanied by satisfactory supporting schedules and other data) that the Consolidated Total
Leverage Ratio, on a Pro Forma Basis after giving effect to the Specified Transactions, is less
than or equal to 5.5 to 1.

          (i) No Conflicts. The consummation of the Specified Transactions shall not (a)
violate any applicable law, statute, rule or regulation or (b) conflict with, or result in a
default or event of default or an acceleration of any rights or benefits under any material
agreement of PSI or any of its Subsidiaries.

          (j) Consents. All requisite governmental authorities and third parties shall have
approved or consented to the Specified Transactions to the extent required, all applicable appeal
periods shall have expired and there shall be no judicial or regulatory action by a governmental
agency, actual or threatened, that could reasonably be expected to restrain, prevent or impose
materially burdensome conditions on the Specified Transactions.

          (k) Refinancing of Horizon’s Existing Indebtedness. (i) All obligations under the
Third Amended and Restated Credit Agreement dated June 10, 2005 among Horizon, Horizon Mental
Health Management, Inc., as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the
other financial institutions from time to time party thereto (as amended or otherwise modified from
time to time, the “Existing Credit Agreement”) shall have been repaid in full, (ii) the Existing
Credit Agreement and all Loan Documents (as defined therein) shall have been terminated on term
satisfactory to each Arranger and (iii) each Arranger shall be satisfied that Horizon and its
Subsidiaries shall have no other Indebtedness for borrowed money or Liens outstanding on the
Amendment No. 2 Effective Date (other than Indebtedness and Liens which are permitted pursuant to
the Credit Agreement), in each case, unless otherwise agreed by the Administrative Agents.

     Section 4. Representations and Warranties

          On and as of the date hereof and as of the Amendment No. 2 Effective Date, after giving effect
to this Amendment, each Borrower hereby represents and warrants to the Administrative Agents and
each Lender as follows:

          (a) this Amendment has been duly authorized, executed and delivered by each Borrower and each
Guarantor and constitutes a legal, valid and binding obligation of each

- 16 -

 

 Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

Borrower and each Guarantor, enforceable against each Borrower and each Guarantor in
accordance with its terms, and the Credit Agreement as amended by this Amendment constitutes the
legal, valid and binding obligation of each Borrower and each Guarantor, enforceable against each
Borrower and each Guarantor in accordance with its terms, in each case, except as enforceability
may be limited by applicable Debtor Relief Laws or by equitable principles relating to
enforceability;

          (b) each of the representations and warranties contained in Article VI (Representations and
Warranties) of the Credit Agreement, the other Loan Documents or in any certificate, document or
financial or other statement furnished at any time under or in connection therewith are true and
correct in all material respects on and as of the date hereof and the Amendment No. 2 Effective
Date, in each case as if made on and as of such date and except to the extent that such
representations and warranties specifically relate to a specific date, in which case such
representations and warranties shall be true and correct in all material respects as of such
specific date; provided, however, that references therein to the “Credit Agreement” shall be deemed
to refer to the Credit Agreement as amended hereby and after giving effect to the consents and
waivers set forth herein;

          (c) no Default or Event of Default has occurred and is continuing (except for those that are
duly waived); and

          (d) there is no action, investigation or proceeding (whether an individual proceeding or a
series of related proceedings) or development in any action, investigation or proceeding (whether
an individual proceeding or a series of related proceedings) that has had or could reasonably be
expected to have a Material Adverse Effect or have a material adverse effect on the ability of the
parties to consummate the Horizon Acquisition, the funding of the Credit Extensions to be made on
the Amendment No. 2 Effective Date under the Credit Agreement as amended by this Amendment or under
any of the other transactions contemplated hereby.

     Section 5. Reaffirmation

          (a) Each Loan Party hereby acknowledges and agrees that, after giving effect to this
Amendment, all of its respective obligations and liabilities under the Loan Documents to which it
is a party are reaffirmed, and remain in full force and effect.

          (b) After giving effect to this Amendment, each Loan Party reaffirms each Lien granted by it
to the Collateral Agent for the benefit of the Secured Parties under each of the Loan Documents to
which it is a party, which Liens shall continue in full force and effect during the term of the
Credit Agreement as amended by this Amendment, and shall continue to secure the Secured
Obligations, in each case, on and subject to the terms and conditions set forth in the Credit
Agreement as amended by this Amendment.

     Section 6. Fees and Expenses

          Each Borrower and each other Loan Party agrees, jointly and severally, to pay on demand in
accordance with the terms of Section 11.4 (Attorney Costs, Expenses and Taxes) of the Credit
Agreement all costs and expenses of the Administrative Agents in connection with the preparation,
reproduction, execution and delivery of this Amendment and all other Loan Documents entered into in
connection herewith (including, without limitation, the reasonable fees

- 17 -

 

 Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

and out-of-pocket expenses of counsel for the Administrative Agents with respect thereto and
all other Loan Documents).

     Section 7. Reference to the Effect on the Loan Documents

          (a) As of the Amendment No. 2 Effective Date, each reference in the Credit Agreement to “this
Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the
other Loan Documents to the Credit Agreement (including, without limitation, by means of words like
“thereunder”, “thereof” and words of like import), shall mean and be a reference to the Credit
Agreement as amended hereby, and this Amendment and the Credit Agreement shall be read together and
construed as a single instrument. Each of the table of contents and lists of Exhibits and
Schedules of the Credit Agreement shall be amended to reflect the changes made in this Amendment as
of the Amendment No. 2 Effective Date.

          (b) Except as expressly amended hereby or specifically waived above, all of the terms and
provisions of the Credit Agreement and all other Loan Documents are and shall remain in full force
and effect and are hereby ratified and confirmed.

          (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of the Lenders, L/C Issuer,
Arrangers, Collateral Agent or the Administrative Agents under any of the Loan Documents, nor
constitute a waiver or amendment of any other provision of any of the Loan Documents or for any
purpose except as expressly set forth herein.

          (d) This Amendment is a Loan Document.

     Section 8. Execution in Counterparts

          This Amendment may be executed in any number of counterparts and by different parties in
separate counterparts, each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so that all signature
pages are attached to the same document. Delivery of an executed counterpart by telecopy shall be
effective as delivery of a manually executed counterpart of this Amendment.

     Section 9. Governing Law

          This Amendment shall be governed by and construed in accordance with the law of the State of
New York.

     Section 10. Section Titles

          The section titles contained in this Amendment are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the parties hereto,
except when used to reference a section. Any reference to the number of a clause, sub-clause or
subsection of any Loan Document immediately followed by a reference in parenthesis to the title of
the section of such Loan Document containing such clause, sub-clause or subsection is a reference
to such clause, sub-clause or subsection and not to the entire section; provided, however, that, in
case of direct conflict between the reference to the title and

- 18 -

 

Amendment No. 2 to Credit Agreement

Psychiatric Solutions, Inc.

the reference to the number of such section, the reference to the title shall govern absent
manifest error. If any reference to the number of a section (but not to any clause, sub-clause or
subsection thereof) of any Loan Document is followed immediately by a reference in parenthesis to
the title of a section of any Loan Document, the title reference shall govern in case of direct
conflict absent manifest error.

     Section 11. Notices

          All communications and notices hereunder shall be given as provided in the Credit Agreement.

     Section 12. Severability

          The fact that any term or provision of this Amendment is held invalid, illegal or
unenforceable as to any person in any situation in any jurisdiction shall not affect the validity,
enforceability or legality of the remaining terms or provisions hereof or the validity,
enforceability or legality of such offending term or provision in any other situation or
jurisdiction or as applied to any person

     Section 13. Successors

          The terms of this Amendment shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective successors and assigns.

     Section 14. Waiver of Jury Trial

          Each of the parties hereto irrevocably waives trial by jury in any action or proceeding
with respect to this Amendment or any other Loan Document.

[Signature Pages Follow]

- 19 -

 

          In Witness Whereof, the parties hereto have caused this Amendment to
be executed
by their respective officers, general partners or partners thereunto duly authorized, as of the
date first written above.

BORROWERS AND GUARANTORS:

PSYCHIATRIC SOLUTIONS, INC., a Delaware corporation

	 	 	 	 	 
	By: 

Name:

	 	/s/ Brent Turner
 

Brent Turner
	 	 
	Title:

	 	Executive Vice President, Finance and Administration	 	 

BHC HOLDINGS, INC., a Delaware corporation

PREMIER BEHAVIORAL SOLUTIONS, INC., a Delaware corporation

ALTERNATIVE BEHAVIORAL SERVICES, INC., a Virginia corporation

HORIZON HEALTH CORPORATION, a Delaware corporation

ABS LINCS PR, INC., a Virginia corporation

FHCHS OF PUERTO RICO, INC., a Virginia corporation

FIRST CORRECTIONS—PUERTO-RICO, INC., a Virginia corporation

FIRST HOSPITAL PANAMERICANO, INC., a Virginia corporation

	 	 	 	 	 
	By: 

Name:

	 	/s/ Brent Turner
 

Brent Turner
	 	 
	Title:

	 	Vice President of each of the foregoing Borrowers	 	 

GUARANTORS:

RIVEREDGE HOSPITAL HOLDINGS, INC., a Delaware corporation

RIVEREDGE HOSPITAL, INC., an Illinois corporation

BENCHMARK BEHAVIORAL HEALTH SYSTEM, INC., a Utah corporation

BRENTWOOD ACQUISITION, INC., a Tennessee corporation

BRENTWOOD ACQUISITION–SHREVEPORT, INC., a Delaware corporation

COLLABORATIVE CARE LLC, a Tennessee limited liability company

BRYNN MARR HOSPITAL, INC., a North Carolina corporation

FORT LAUDERDALE HOSPITAL, INC., a Florida corporation

GREAT PLAINS HOSPITAL, INC., a Missouri corporation

GULF COAST TREATMENT CENTER, INC., a Florida corporation

H. C. CORPORATION, an Alabama corporation

HAVENWYCK HOSPITAL INC., a Michigan corporation

HSA HILL CREST CORPORATION, an Alabama corporation

HSA OF OKLAHOMA, INC., an Oklahoma corporation

INFOSCRIBER CORPORATION, a Delaware corporation

ALLIANCE HEALTH CENTER, INC., a Mississippi corporation

MICHIGAN PSYCHIATRIC SERVICES, INC., a Michigan corporation

PEAK BEHAVIORAL HEALTH SERVICES, LLC, a Delaware limited liability company

LAUREL OAKS BEHAVIORAL HEALTH CENTER, INC., a Delaware corporation

CEDAR SPRINGS HOSPITAL, INC., a Delaware corporation

TEXAS HOSPITAL HOLDINGS, INC., a Delaware corporation

PRIDE INSTITUTE, INC., a Minnesota corporation

 

 

SUMMIT OAKS HOSPITAL, INC., a New Jersey corporation

	 	 	 	 	 
	By: 

Name:

	 	/s/ Brent Turner
 

Brent Turner
	 	 
	Title:

	 	Vice President of each of the foregoing Guarantors	 	 

PSYCHIATRIC MANAGEMENT RESOURCES, INC., a California corporation

PSYCHIATRIC SOLUTIONS HOSPITALS, LLC, a Delaware limited liability company

CALVARY CENTER, INC., a Delaware corporation

NORTH SPRING BEHAVIORAL HEALTHCARE, INC., a Tennessee corporation

HOLLY HILL HOSPITAL, LLC, a Tennessee limited liability company

SHADOW MOUNTAIN BEHAVIORAL HEALTH SYSTEM, LLC, a Delaware limited liability company

PALMETTO BEHAVIORAL HEALTH HOLDINGS, LLC, a Delaware limited liability company

PSYCHIATRIC SOLUTIONS OF VIRGINIA, INC., a Tennessee corporation

RAMSAY MANAGED CARE, LLC, a Delaware limited liability company

BEHAVIORAL EDUCATIONAL SERVICES, INC., a Delaware corporation

RAMSAY YOUTH SERVICES OF GEORGIA, INC., a Delaware corporation

MISSION VISTA BEHAVIORAL HEALTH SERVICES, INC., a Delaware corporation

SUNSTONE BEHAVIORAL HEALTH, LLC, a Tennessee limited liability company

THE COUNSELING CENTER OF MIDDLE TENNESSEE, INC., a Tennessee corporation

TRANSITIONAL CARE VENTURES, INC., a Delaware corporation

COMPASS HOSPITAL, INC., a Delaware corporation

TEXAS HOSPITAL HOLDINGS, LLC, a Texas limited liability company

THERAPEUTIC SCHOOL SERVICES, L.L.C., an Oklahoma limited liability company

	 	 	 	 	 
	By: 

Name:

	 	/s/ Brent Turner
 

Brent Turner
	 	 
	Title:

	 	Vice President of each of the foregoing Guarantors	 	 

HICKORY TRAIL HOSPITAL, L.P., a Delaware limited partnership

HIGH PLAINS BEHAVIORAL HEALTH, L.P., a Delaware limited partnership

MILLWOOD HOSPITAL, L.P., a Texas limited partnership

NEURO INSTITUTE OF AUSTIN, L.P., a Texas limited partnership

TEXAS CYPRESS CREEK HOSPITAL, L.P., a Texas limited partnership

TEXAS LAUREL RIDGE HOSPITAL, L.P., a Texas limited partnership

TEXAS OAKS PSYCHIATRIC HOSPITAL, L.P., a Texas limited partnership

TEXAS SAN MARCOS TREATMENT CENTER, L.P., a Texas limited partnership

TEXAS WEST OAKS HOSPITAL, L.P., a Texas limited partnership

	 	 	 	 	 	 	 
	By:	 	TEXAS HOSPITAL HOLDINGS, LLC, its general partner
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Brent Turner
 

Brent Turner
	 	 
	 

	 	Title:
	 	Vice President	 	 

 

 

H. C. PARTNERSHIP, an Alabama general partnership

	 	 	 	 	 	 	 
	By:	 	H. C. CORPORATION

HSA HILL CREST CORPORATION, its partners	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Brent Turner
 

Brent Turner
	 	 
	 

	 	Title:
	 	Vice President	 	 

BHC OF INDIANA, GENERAL PARTNERSHIP, a Tennessee general partnership

	 	 	 	 	 	 	 
	By:	 	COLUMBUS HOSPITAL PARTNERS, LLC

LEBANON HOSPITAL PARNTERS, LLC

NORTHERN INDIANA PARTNERS, LLC

VALLE VISTA HOSPITAL PARTNERS, LLC, its partners	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Brent Turner
 

Brent Turner
	 	 
	 

	 	Title:
	 	Vice President	 	 

	 	 	 	 	 	 	 	 	 
	BLOOMINGTON MEADOWS, GENERAL PARTNERSHIP, a Delaware general partnership
	 
	 	 	 	 	 	 	 	 
	By:	 	BHC OF INDIANA, GENERAL PARTNERSHIP, its partner
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	COLUMBUS HOSPITAL PARTNERS, LLC

LEBANON HOSPITAL PARTNERS, LLC

NORTHERN INDIANA PARTNERS, LLC

VALLE VISTA HOSPITAL PARTNERS, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:

Name:
	 	/s/ Brent Turner
 

Brent Turner
	 	 
	 

	 	 	 	Title:
	 	Vice President	 	 

	 	 	 	 	 	 	 
	By:	 	INDIANA PSYCHIATRIC INSTITUTES, LLC, its partner
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Brent Turner
 

Brent Turner
	 	 
	 

	 	Title:
	 	Vice President	 	 

CANYON RIDGE HOSPITAL, INC., a California corporation

TUCSON HEALTH SYSTEMS, INC., a Delaware corporation

WELLSTONE HOLDINGS, INC., a Delaware corporation

WELLSTONE REGIONAL HOSPITAL ACQUISITION, LLC, an Indiana limited liability company

LIBERTY POINT BEHAVIORAL HEALTHCARE, LLC, a Delaware limited liability company

 

 

PREMIER BEHAVIORAL SOLUTIONS OF FLORIDA, INC., a Delaware corporation

ALLIANCE CROSSINGS, LLC, a Delaware limited liability company

RAMSAY YOUTH SERVICES PUERTO RICO, INC., a Puerto Rico corporation

PALMETTO BEHAVIORAL HEALTH SYSTEM, L.L.C., a South Carolina limited liability company

PALMETTO LOWCOUNTRY BEHAVIORAL HEALTH, L.L.C., a South Carolina limited liability company

PALMETTO PEE DEE BEHAVIORAL HEALTH, L.L.C., a South Carolina limited liability company

CUMBERLAND HOSPITAL, LLC, a Virginia limited liability company

BEHAVIORAL HEALTHCARE LLC, a Delaware limited liability company

BHC ALHAMBRA HOSPITAL, INC., a Tennessee corporation

BHC BELMONT PINES HOSPITAL, INC., a Tennessee corporation

BHC CEDAR VISTA HOSPITAL, INC., a California corporation

COLUMBUS HOSPITAL PARTNERS, LLC, a Tennessee limited liability company

BHC FAIRFAX HOSPITAL, INC., a Tennessee corporation

BHC FORT LAUDERDALE HOSPITAL, INC., a Tennessee corporation

BHC FOX RUN HOSPITAL, INC., a Tennessee corporation

BHC FREMONT HOSPITAL, INC., a Tennessee corporation

BHC HEALTH SERVICES OF NEVADA, INC., a Nevada corporation

BHC HERITAGE OAKS HOSPITAL, INC., a Tennessee corporation

BHC INTERMOUNTAIN HOSPITAL, INC., a Tennessee corporation

	 	 	 	 	 
	By: 

Name:

	 	/s/ Brent Turner
 

Brent Turner
	 	 
	Title:

	 	Vice President of each of the foregoing Guarantors	 	 

LEBANON HOSPITAL PARTNERS, LLC, a Tennessee limited liability company

BHC MANAGEMENT SERVICES OF LOUISIANA, LLC, a Delaware limited liability company

BHC MANAGEMENT SERVICES OF NEW MEXICO, LLC, a Delaware limited liability company

BHC MANAGEMENT SERVICES OF STREAMWOOD, LLC, a Delaware limited liability company

BHC MONTEVISTA HOSPITAL, INC., a Nevada corporation

BHC MESILLA VALLEY HOSPITAL, LLC, a Delaware limited liability company

BHC NEWCO 2, LLC, a Delaware limited liability company

BHC NEWCO 3, LLC, a Delaware limited liability company

BHC NEWCO 4, LLC, a Delaware limited liability company

BHC NEWCO 5, LLC, a Delaware limited liability company

BHC NEWCO 6, LLC, a Delaware limited liability company

BHC NEWCO 7, LLC, a Delaware limited liability company

BHC NEWCO 8, LLC, a Delaware limited liability company

BHC NEWCO 9, LLC, a Delaware limited liability company

BHC NEWCO 10, LLC, a Delaware limited liability company

BHC NORTHWEST PSYCHIATRIC HOSPITAL, LLC, a Delaware limited liability company

NORTHERN INDIANA PARTNERS, LLC, a Tennessee limited liability company

BHC PINNACLE POINTE HOSPITAL, INC., a Tennessee corporation

 

 

BHC PROPERTIES, LLC, a Tennessee limited liability company

BHC SIERRA VISTA HOSPITAL, INC., a Tennessee corporation

BHC SPIRIT OF ST. LOUIS HOSPITAL, INC., a Tennessee corporation

BHC STREAMWOOD HOSPITAL, INC., a Tennessee corporation

VALLE VISTA HOSPITAL PARTNERS LLC, a Tennessee limited liability company

BHC WINDSOR HOSPITAL, INC., a Ohio corporation

COLUMBUS HOSPITAL, LLC, a Delaware limited liability company

	 	 	 	 	 
	By: 

Name:

	 	/s/ Brent Turner
 

Brent Turner
	 	 
	Title:

	 	Vice President of each of the foregoing Guarantors	 	 

INDIANA PSYCHIATRIC INSTITUTES, LLC a Delaware limited liability company

MESILLA VALLEY HOSPITAL, INC., a New Mexico corporation

MESILLA VALLEY MENTAL HEALTH ASSOCIATES, INC., a New Mexico corporation

VALLE VISTA, LLC, a Delaware limited liability company

WILLOW SPRINGS, LLC, a Delaware limited liability company

SOMERSET, INCORPORATED, a California corporation

SP BEHAVIORAL, LLC, a Florida limited liability company

UNIVERSITY BEHAVIORAL, LLC, a Florida limited liability company

LAKELAND BEHAVIORAL, LLC, a Florida limited liability company

ZEUS ENDEAVORS, LLC, a Florida limited liability company

THE NATIONAL DEAF ACADEMY, LLC, a Florida limited liability company

SAMSON PROPERTIES, LLC, a Florida limited liability company

RED ROCK BEHAVIORAL HEALTH LLC, a Delaware limited liability company

DIAMOND GROVE CENTER, LLC, a Delaware limited liability company

ATLANTIC SHORES HOSPITAL, LLC, a Delaware limited liability company

WINDMOOR HEALTHCARE INC., a Florida corporation

WINDMOOR HEALTHCARE OF PINELLAS PARK, INC., a Delaware corporation

RED ROCK SOLUTIONS, LLC, a Delaware limited liability company

	 	 	 	 	 
	By: 

Name:

	 	/s/ Brent Turner
 

Brent Turner
	 	 
	Title:

	 	Vice President of each of the foregoing Guarantors	 	 

ABS-FIRST STEP, INC., a Virginia corporation

ABS LINCS, LLC, a Virginia limited liability company

ABS LINCS DC, LLC, a Virginia limited liability company

ABS LINCS KY, LLC, a Virginia limited liability company

ABS LINCS NJ, LLC, a Virginia limited liability company

ABS LINCS PA, INC., a Virginia corporation

ABS LINCS SC, INC. a South Carolina corporation

ABS LINCS TN, INC., a Virginia corporation

ABS LINCS TX, INC., a Kentucky corporation

ABS LINCS VA, INC., a Virginia corporation

ABS LINCS VI, INC., a Virginia corporation

ABS NEW HOPE, MIDLANDS, INC., a South Carolina corporation

 

 

CRAWFORD FIRST EDUCATION, INC., a Virginia corporation

FIRST HOSPITAL CORPORATION OF NASHVILLE, a Virginia corporation

FIRST HOSPITAL CORPORATION OF VIRGINIA BEACH, a Virginia corporation

THE PINES RESIDENTIAL TREATMENT CENTER, INC., a Virginia corporation

ROLLING HILLS HOSPITAL, LLC, a Tennessee limited liability company

THREE RIVERS HEALTHCARE GROUP, LLC, a South Carolina limited liability company

THREE RIVERS SPE HOLDING, LLC, a South Carolina limited liability company

THREE RIVERS SPE MANAGER, INC., a South Carolina corporation

THREE RIVERS SPE, LLC, a South Carolina limited liability company

THREE RIVERS BEHAVIORAL HEALTH, LLC, a South Carolina limited liability company

	 	 	 	 	 
	By: 

Name:

	 	/s/ Brent Turner
 

Brent Turner
	 	 
	Title:

	 	Vice President of each of the foregoing Guarantors	 	 

 

 

	 	 	 	 	 
	CITICORP NORTH AMERICA, INC.,

as Term Loan Facility Administrative Agent and a Lender	 	 
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Allen Fisher
 

Allen Fisher
	 	 
	Title:

	 	Vice President	 	 
	 
	 	 	 	 
	CITIGROUP GLOBAL MARKETS INC.,

as Arranger	 	 
	 
	 	 	 	 
	By:

	 	/s/ Allen Fisher	 	 
	 

	 	 	 	 
	Name:

	 	Allen Fisher	 	 
	Title:

	 	Vice President	 	 

 

 

	 	 	 	 	 
	BANK OF AMERICA, N.A.,

as Revolving Credit Facility Administrative Agent 
and a Lender	 	 
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Suzanne B. Smith
 

Suzanne B. Smith
	 	 
	Title:

	 	Senior Vice President	 	 

 

 

	 	 	 	 	 
	MERRILL LYNCH CAPITAL CORPORATION,

as a Lender	 	 
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Michael E. O’Brien
 

Michael E. O’Brien
	 	 
	Title:

	 	Vice President	 	 
	 
	 	 	 	 
	MERRILL LYNCH, PIERCE FENNER & SMITH INCORPORATED,

as Arranger	 	 
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Michael E. O’Brien
 

Michael E. O’Brien
	 	 
	Title:

	 	DirectorEX-4.3 Third Deed of Amendment of Option Deed

 

EXHIBIT 4.3

THIRD DEED OF AMENDMENT OF OPTION DEED

THIS DEED is made the 30th day of May, 2007

	 	 	 
	 
	 	 

	BETWEEN:
	 	CONSOLIDATED WATER CO. LTD. (formerly CAYMAN WATER COMPANY
LIMITED), a Cayman Islands company having its registered office
at Regatta Office Park, Windward Three, Fourth Floor, P.O. Box
1114, Grand Cayman KY1-1102, Cayman Islands (the “Company”)

	 
	 	 

	AND:
	 	AMERICAN STOCK TRANSFER & TRUST COMPANY of 40 Wall Street, New
York, New York 10005, United States of America (the “Option
Agent”)

RECITALS:-

	(1)	 	By an Option Deed dated as of August 6, 1997 (the “Option Deed”) the Directors of the Company
granted to the holders of its Ordinary and Redeemable Preference Shares at any time before the
Distribution Date options to subscribe for one one-hundredth of a Class B Share for each
Ordinary or Redeemable Preference Share held (as that number may afterwards be adjusted
pursuant to Section 11(b) of the Option Deed) on the terms set out in the Option Deed;
	 
	(2)	 	By a Deed of Amendment of Option Deed dated the 8th day of August 2005, the
Company and the Option Agent amended the Option Deed as stated therein;
	 
	(3)	 	By a second Deed of Amendment of Option Deed dated the 27th day of September 2005
(“the Second Amendment Deed”), the Company and the Option Agent amended the Option Deed as
stated therein;
	 
	(4)	 	The Option Deed expires on the 31st day of July 2007 and the Company wishes to
further amend the Option Deed to extend it for a further ten years and to further change the
initial exercise price of each one one-hundredth of a Class B share to US$100;
	 
	(5)	 	Under Section 26 of the Option Deed the Company and the Option Agent are empowered on the
Company’s direction to amend the Option Deed before the Distribution Date without the approval
of the holders of the certificates representing Ordinary Shares and Redeemable Performance
Shares; and
	 
	(6)	 	The Distribution Date has not yet occurred.

 

 

NOW THIS DEED WITNESSES as follows:

	 	1.	 	For the purposes of this Deed:-

	 	(i)	 	capitalized words not otherwise defined in it have the meanings assigned to
them in the Option Deed; and
	 
	 	(ii)	 	references to Sections and paragraphs are references to Sections and paragraphs
of the Option Deed;

	 	2.	 	The Company and the Option Agent now RE-AMEND the Option Deed as follows:-

	 	(i)	 	By deleting the date “31st July 2007” wherever it appears in Section
1(m), Exhibit B and Exhibit C and substituting therefor in each case the date
“31st July 2017”;
	 
	 	(ii)	 	by deleting the expression “US$50.00” where it appears pursuant to the Second
Amendment Deed in:

	 	a.	 	Section 7, paragraph (b); and
	 
	 	b.	 	Exhibit B; and
	 
	 	c.	 	the first paragraph of Exhibit C

	 	 	 	and substituting therefor in each case the expression “US$100.00”; and
	 
	 	(iii)	 	by deleting the sixth paragraph of Exhibit C and substituting therefor the
following:-

     “For example, at an exercise price of US$100.00 per Option, each Option not
owned by an Acquiring Person (or by certain related parties) following an
event set out in the preceding paragraph would entitle its holder to
purchase US$200.00 worth of Ordinary Shares (or other consideration, as
noted above) for US$100.00. Assuming that the Ordinary Shares had a per
share value of US$40.00 at such time, the holder of each valid Option would
be entitled to purchase 5 Ordinary Shares for US$100.00.”

	 	3.	 	In all other respects the Company and the Option Agent confirm the Option Deed.

IN WITNESS WHEREOF, the parties have caused this Deed to be duly executed and delivered as such as
of the day and year first above written.

	 	 	 	 	 	 	 
	EXECUTED as a deed and delivered on

	 	 	)	 	 	CONSOLIDATED WATER CO. LTD.
	behalf of CONSOLIDATED WATER CO.

	 	 	)	 	 	 
	LTD. by Frederick McTaggart, Director

	 	 	)	 	 	 
	in the presence of:-

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	Per     /s/ Frederick W. McTaggart          
	 

	 	 	}	 	 	          Director
	/s/ Tracey Ebanks                    

	 	 	)	 	 	 
	Witness
	 	 	 	 	 	 

-2-

 

	 	 	 	 	 	 	 
	EXECUTED as a deed and delivered on

	 	 	)	 	 	AMERICAN STOCK TRANSFER &
	behalf of AMERICAN STOCK

	 	 	)	 	 	TRUST COMPANY
	TRANSFER & TRUST COMPANY by

	 	 	)	 	 	 
	Isaac Kagan, Vice-President

	 	 	)	 	 	 
	in the presence of:-

	 	 	)	 	 	 
	 

	 	 	)	 	 	Per     /s/ Herbert J. Lemmer          
	 

	 	 	)	 	 	          Vice-President
	/s/ Isaac Kagan          

	 	 	)	 	 	 
	Witness
	 	 	 	 	 	 

-3-

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