CONSENT AND FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT

Exhibit 10.1

CONSENT AND FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT

THIS CONSENT AND FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (the ”Amendment”), dated effective as of November 14, 2005 is among HORIZON HEALTH CORPORATION, a Delaware Corporation (the “Parent”), HORIZON MENTAL HEALTH MANAGEMENT, INC., a Texas Corporation (the “Borrower”), each of the banks or other lending institutions party hereto, and JPMORGAN CHASE BANK, N.A. (formerly known as JPMorgan Chase Bank, who was formerly known as The Chase Manhattan Bank, who was the successor in interest by merger to Chase Bank of Texas, National Association, formerly known as Texas Commerce Bank National Association), as the agent (the “Agent”).

RECITALS:

A. The Parent, the Borrower, the Agent, and certain banks and other lending institutions have entered into that certain Third Amended and Restated Credit Agreement dated as of June 10, 2005 (as the same may be further amended or otherwise modified, herein the “Agreement”).

B. On August 1, 2005, HHC River Park, Inc. and PsychManagement Group, LLC joined the Agreement as Obligated Parties.

C. On or about August 19, 2005, Employee Assistance Programs International, LLC, Florida Psychiatric Associates, LLC, Horizon Behavioral Services of Florida, LLC, and Occupational Health Consultants of America, Inc. merged with and into Horizon Behavioral Services, Inc.

D. The Borrower and the other Obligated Parties have advised the Agent and the Banks that the Borrower desires to purchase certain of the assets of Focus Healthcare, LLC, Lighthouse Care Centers, LLC, and related entities through existing Obligated Parties or Subsidiaries of the Parent who will become Obligated Parties (the “Focus Acquisition”). The total consideration to be paid by the Obligated Parties in connection with the Focus Acquisition shall not exceed $100,000,000.

E. On September 14, 2005, Parent formed a new Subsidiary, HHC Services, LLC, a Texas limited liability company (“HHC Services”), to acquire an ownership interest in an aircraft. On September 30, 2005, HHC Services entered into that Purchase & Interim Lease Agreement with CitationShares Sales, Inc. pursuant to which HHC Services acquired an ownership interest in an aircraft. In accordance with the Agreement, the Borrower and the other Obligated Parties have requested that the Required Banks consent to:

1) HHC Services executing and delivering a Subsidiary Joinder Agreement and granting the Agent a Lien on certain of its assets on or before December 15, 2005 which is later than the deadline specified for such joinder in Section 8.10(b) of the Agreement;

2) HHC Services not pledging its ownership interest in any aircraft, now owned or hereafter acquired, which HHC Services does not wholly-own, as required by Section 8.10(b) of the Agreement and the Subsidiary Security Agreement; and

3) Parent pledging its membership interest in HHC Services on or before December 15, 2005 which is later than the deadline specified for such pledge in Section 8.10(c) of the Agreement.

The specifically described provisions of the Agreement described in this paragraph, are herein referred to as the “Applicable Covenants.”

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F. The Parent and the Borrower have requested that the Agent and the Banks amend certain provisions of the Agreement and consent to the departure from the Applicable Covenants. Subject to satisfaction of the conditions set forth herein, the Agent and the Banks party hereto are willing to amend the Agreement as herein set forth.

NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows effective as of the date hereof unless otherwise indicated:

ARTICLE I.

Definitions

Section 1.1. Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Agreement, as amended hereby.

ARTICLE II.

Amendments

Section 2.1. Amendment to Section 1.1 – Definitions. Section 1.1 of the Agreement is amended to add the following definition, in proper alphabetical order, thereto:

“Focus Acquisition” means the purchase of certain assets of Focus Healthcare, LLC, Lighthouse Care Centers, LLC, and related entities through existing Obligated Parties or Subsidiaries of the Parent who will become Obligated Parties pursuant to Section 8.10(b) for an aggregate purchase price not to exceed $100,000,000.

Section 2.2. Amendment to Section 3.2 – Determinations of Margins and Fees. The table set forth in Section 3.2 of the Agreement is amended in its entirety to read as follows:

Section 2.3. Amendment to Section 9.1 – Debt. Clause (h) of Section 9.1 of the Agreement is amended in its entirety to read as follows:

(h) Debt of any Person (or any of such Person’s subsidiaries) existing at the time such Person becomes a Subsidiary (or is merged into or consolidated with Parent or any of the Subsidiaries), but only to the extent that such Debt was not incurred in

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connection with, as a result of or in contemplation of such Person becoming a Subsidiary (or being merged into or consolidated with Parent or any Subsidiary); provided, however, that (i) in no event shall the aggregate amount of such Debt outstanding at any time that is Capital Lease Obligations exceed Ten Million Dollars ($10,000,000); (ii) in no event shall the aggregate amount of such Debt outstanding at any time that is not (A) Capital Lease Obligations or (B) Debt assumed in connection with the Focus Acquisition exceed Five Million Dollars ($5,000,000); and (iii) immediately after such acquired Person becomes a Subsidiary (or is merged into or consolidated with Parent or any Subsidiary), no Default exists;

Section 2.4. Amendment to Section 9.5 – Investments. Subclauses (ii) and (iii) of Section 9.5(a) of the Agreement are amended in their respective entireties to read as follows:

(ii) Indebtedness to Adjusted EBITDA. The ratio of Indebtedness outstanding as of the date of determination (which shall not be more than thirty (30) days prior to the acquisition date) to Adjusted EBITDA (as defined in Section 10.3) for the most recent four (4) Fiscal Quarter period then ended as of such date is less than the lesser of (A) the Indebtedness to Adjusted EBITDA Ratio then in effect under Section 10.3 reduced by 0.25 and (B) an Indebtedness to Adjusted EBITDA Ratio of 3.00 to 1.00, calculated on a pro forma basis as if the acquisition had occurred as of the first day of such four (4) Fiscal Quarters and including in the ratio calculation any Debt incurred or assumed in connection therewith as if the Target were a “Prior Target” for purposes of calculating Adjusted EBITDA;

(iii) Purchase Price. The ratio of Indebtedness outstanding as of the date of determination (which shall not be more than thirty (30) days prior to the acquisition date) to Adjusted EBITDA (as defined in Section 10.3) for the most recent four (4) Fiscal Quarter period then ended as of such date calculated on a pro forma basis as if the acquisition had occurred as of the first day of such four (4) Fiscal Quarters and including in the ratio calculation any Debt incurred or assumed in connection therewith as if the Target were a “Prior Target” for purposes of calculating Adjusted EBITDA is: (A) less than or equal to 2.00 to 1.00; or (B) is more than 2.00 to 1.00 but less than the Indebtedness to Adjusted EBITDA Ratio then in effect under Section 10.3 reduced by 0.25, and (1) the Required Banks shall have provided their prior approval, (2) the proposed acquisition is the Focus Acquisition, or (3) after giving effect to such acquisition, the aggregate of the Purchase Prices for all Permitted Acquisitions (other than the Focus Acquisition) that have occurred during the then current Fiscal Year (including the Purchase Price for the acquisition in question) is less than Twenty-Five Million Dollars ($25,000,000) (as used above, the phrase “Purchase Price” means, as of any date of determination and with respect to a proposed acquisition, the purchase price to be paid for the Target or its assets, including all cash consideration paid (whether classified as purchase price, non-compete, consulting or post-closing performance based payments or otherwise) or to be paid (based on the estimated amount thereof), the value of all other assets to be transferred by the purchaser in connection with such acquisition to the seller (but specifically excluding any stock of Parent issued to the seller which shall not be part of the Purchase Price for purposes of this clause (iii)) all valued in accordance with the applicable purchase agreement and the outstanding principal amount of all Debt of the Target or the seller assumed or acquired in connection with such acquisition);

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Section 2.5. Amendment to Section 10.2 – Fixed Charge Coverage. Clause (s) of the definition of “Consolidated Net Income” contained in Section 10.2 of the Agreement is amended in its entirety to read as follows:

(s) the one time loss related to the reorganization of certain employees, locations and services of Employee Assistance Programs International, LLC in an amount not to exceed $5,700,000;

Section 2.6. Amendment to Section 10.3 – Indebtedness to Adjusted EBITDA. The first sentence of Section 10.3 of the Agreement is amended in its entirety to read as follows:

As of the last day of each Fiscal Quarter, Parent shall not permit the ratio of Indebtedness outstanding as of such day to Adjusted EBITDA for the four (4) Fiscal Quarter period then ended to exceed: (a) 3.00 to 1.00 for the Fiscal Quarter ended November 30, 2005; (b) 3.50 to 1.00 for the Fiscal Quarter ended February 28, 2006; (c) 3.25 to 1.00 for the Fiscal Quarter ended May 31, 2006; and (d) 3.00 to 1.00 for the Fiscal Quarter ended August 31, 2006 and all Fiscal Quarters thereafter.

Section 2.7. Amendment to Exhibit C – Compliance Certificate. Exhibit C to the Agreement is amended in its entirety to read as set forth on Exhibit A attached hereto.

ARTICLE III.

Consent

Section 3.1. Consent. Subject to the satisfaction of the conditions precedent described in Article IV hereof, each of the undersigned Banks consent to the Obligated Parties’ departure from the Applicable Covenants as specifically described above for purposes described herein and agree that such departure will not result in an Event of Default under the Agreement.

Section 3.2. Limitations on Consent. The consent set forth herein shall not be deemed a consent to the departure from or waiver of (a) the Applicable Covenants for any purpose other than as described herein, (b) any other covenant or condition in any Loan Document or (c) any Event of Default that otherwise may arise as a result of the formation of HHC Services and its acquisition of aircraft. The failure to comply with the Applicable Covenants for any other purpose at any other time shall constitute an Event of Default.

Section 3.3. Joinder of HHC Services; Pledge by Parent. To induce the Banks to agree to the terms of Section 3.1, the Parent, on or before December 15, 2005, shall (a) cause HHC Services to execute and deliver a Subsidiary Joinder Agreement and such other documentation as the Agent may request to evidence, perfect, or otherwise implement the guaranty and security for repayment of the Obligations contemplated by a Guaranty and the Subsidiary Security Agreement; provided, however, in accordance with the terms hereof, HHC Services will not be required to pledge its ownership interest in any aircraft, now owned or hereafter acquired, that is not wholly-owned by HHC Services, and (b) execute and deliver to Agent an amendment to the Parent’s Pledge Agreement describing as collateral thereunder the membership interests in HHC Services.

ARTICLE IV.

Conditions Precedent

Section 4.1. Conditions. The effectiveness of Article II and Article III of this Amendment is subject to the satisfaction of the following conditions precedent:

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(a) The Agent shall have received all of the following, each dated (unless otherwise indicated) the date of this Amendment, in form and substance satisfactory to the Agent:

(i) Amendment. This Amendment duly executed by the Borrower, the other Obligated Parties and the Required Banks; and

(ii) Additional Information. Such additional documentation, approvals, opinions, and information as Agent or its legal counsel Jenkens & Gilchrist, a Professional Corporation, may request;

(b) The representations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and correct in all material respects as of the date hereof as if made on the date hereof, except for such representations and warranties limited by their terms to a specific date;

(c) No Default shall have occurred and be continuing; and

(d) All proceedings taken in connection with the transactions contemplated by this Amendment and all documentation and other legal matters incident thereto shall be satisfactory to the Agent and its legal counsel Jenkens & Gilchrist, a Professional Corporation.

ARTICLE V.

Miscellaneous

Section 5.1. Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Agreement and except as expressly modified and superseded by this Amendment, the terms and provisions of the Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect.

Section 5.2. Representations and Warranties. Borrower hereby represents and warrants to the Agent and the Banks as follows: (a) after giving effect to this Amendment, no Default exists; (b) after giving effect to this Amendment, the representations and warranties set forth in the Loan Documents are true and correct in all material respects on and as of the date hereof with the same effect as though made on and as of such date except with respect to any representations and warranties limited by their terms to a specific date; and (c) the execution, delivery, and performance of this Amendment has been duly authorized by all necessary action on the part of Parent, Borrower, and each Obligated Party and does not and will not (i) violate any provision of law applicable to the Borrower, the Parent, or any Obligated Party, the certificate of incorporation, bylaws, partnership agreement, membership agreement, or other applicable governing document of the Borrower, the Parent, or any Obligated Party or any order, judgment, or decree of any court or agency of government binding upon the Borrower, the Parent, or any Obligated Party, (ii) conflict with, result in a breach of or constitute (with due notice of lapse of time or both) a default under any material contractual obligation of the Borrower, the Parent, or any Obligated Party, (iii) result in or require the creation or imposition of any material lien upon any of the assets of the Borrower, the Parent, or any Obligated Party, or (iv) require any approval or consent of any Person under any material contractual obligation of the Borrower, the Parent, or any Obligated Party.

IN ADDITION, TO INDUCE THE AGENT AND THE BANKS TO AGREE TO THE TERMS OF THIS AMENDMENT, THE BORROWER, THE PARENT, AND EACH OBLIGATED PARTY (BY ITS EXECUTION BELOW) REPRESENTS AND WARRANTS THAT AS OF THE DATE OF ITS EXECUTION OF THIS AMENDMENT THERE ARE NO CLAIMS OR OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS AND IN ACCORDANCE THEREWITH IT:

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(a) WAIVER. WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS, DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE OF ITS EXECUTION OF THIS AMENDMENT AND

(b) RELEASE. RELEASES AND DISCHARGES THE AGENT AND THE BANKS, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, SHAREHOLDERS, AFFILIATES AND ATTORNEYS (COLLECTIVELY THE “RELEASED PARTIES”) FROM ANY AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITIES, CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, IN LAW OR EQUITY, WHICH THE BORROWER OR ANY OBLIGATED PARTY EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINST ANY RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF AND FROM OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

Section 5.3. Survival of Representations and Warranties. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by the Agent or any Bank or any closing shall affect the representations and warranties or the right of the Agent or any Bank to rely upon them.

Section 5.4. Reference to Agreement. Each of the Loan Documents, including the Agreement, are hereby amended so that any reference in such Loan Documents to the Agreement shall mean a reference to the Agreement as amended hereby.

Section 5.5. Expenses of Agent. As provided in the Agreement, the Borrower agrees to pay on demand all costs and expenses incurred by the Agent in connection with the preparation, negotiation, and execution of this Amendment, including without limitation, the costs and fees of the Agent’s legal counsel.

Section 5.6. Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.

Section 5.7. Applicable Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Texas and the applicable laws of the United States of America.

Section 5.8. Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the Agent, each Bank and the Borrower and their respective successors and assigns, except the Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Banks.

Section 5.9. Counterparts. This Amendment may be executed in one or more counterparts and on telecopy counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.

Section 5.10. Effect of Waiver. No consent or waiver, express or implied, by the Agent or any Bank to or for any breach of or deviation from any covenant, condition or duty by the Borrower or any Obligated Party shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.

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Section 5.11. Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

Section 5.12. ENTIRE AGREEMENT. THIS AMENDMENT EMBODIES THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.

Section 5.13. Required Banks. The Agreement and the Consent Letter may be modified as provided in this Amendment with the agreement of the Required Banks which means Banks having fifty—one percent (51%) or more of the sum of the total Revolving Commitments (such percentage applicable to a Bank, herein such Bank’s “Required Bank Percentage”). For purposes of determining the effectiveness of this Amendment, each Bank’s Required Bank Percentage is set forth on Schedule 5.13 hereto.

Executed as of the date first written above.

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OBLIGATED PARTY CONSENT

Each Obligated Party (i) consents and agrees to this First Amendment to Third Amended and Restated Credit Agreement; (ii) agrees that the Guaranty, Subsidiary Security Agreement, and the Subsidiary Pledge Agreement to which it is a party shall remain in full force and effect and shall continue to be the legal, valid, and binding obligation of such Obligated Party enforceable against it in accordance with its terms; (iii) agrees that the “Obligations” as defined in the Agreement as amended hereby (including, without limitation, all obligations, indebtedness, and liabilities arising in connection with the Letters of Credit and the increase in the Revolving Commitments contemplated hereby) are “Obligations” as defined in the Guaranty; and (iv) agrees that any reference to the “Borrower” in the Guaranty, Subsidiary Security Agreement or Subsidiary Pledge Agreement shall mean Horizon Mental Health Management, Inc. as the “Borrower” hereunder successor by assumption to the obligations of the Parent.

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EXHIBIT A

TO

HORIZON HEALTH CORPORATION

FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT

Compliance Certificate

EXHIBIT A, Cover Page

COMPLIANCE CERTIFICATE

for the

Fiscal Quarter ending                                  ,             

Ladies and Gentlemen:

This Compliance Certificate (the “Certificate”) is being delivered pursuant to Section 8.1(c) of that certain Third Amended and Restated Credit Agreement (as amended, the “Agreement”) dated as of June 10, 2005, among the Horizon Health Corporation (“Parent”), Horizon Mental Health Management, Inc. (“Borrower”), the banks and lending institutions named therein (the “Banks”) and JPMorgan Chase Bank, N.A., as agent for the Banks (“Agent”). All capitalized terms, unless otherwise defined herein, shall have the same meanings as in the Agreement. All the calculations set forth below shall be made pursuant to the terms of the Agreement.

The undersigned, as an authorized financial officer of Parent, and not individually, does hereby certify to the Agents and the Banks that:

COMPLIANCE CERTIFICATE, Page 1

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COMPLIANCE CERTIFICATE, Page 3

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IN WITNESS WHEREOF, the undersigned has executed this Certificate effective this          day of                         ,             .

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Schedule 1

to

Compliance Certificate

Parent Consolidated Net Income

for period                              to                             

Schedule 1 to Compliance Certificate, Page 1

Schedule 1 to Compliance Certificate, Page 2

SCHEDULE 5.13

TO

HORIZON HEALTH CORPORATION

CONSENT AND FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT

AGREEMENT

Required Banks

Schedule 4.13, Solo Page