EXHIBIT 10.3
WAIVER AND SECOND AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
This WAIVER AND SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT (this "Agreement") dated as of November 13, 2001 by and among AMERICA
SERVICE GROUP INC., a Delaware corporation (the "Borrower"), the subsidiaries of
the Borrower who are parties to the Credit Agreement ("Guarantors"), and BANK OF
AMERICA, N.A., a national banking association as administrative agent and
issuing bank ("Agent") for itself, AMSOUTH BANK, XXXXXX TRUST AND SAVINGS BANK,
AND COMERICA BANK (collectively the "Lenders") (as defined in the Credit
Agreement described below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower, the Lenders, and the Agent are parties to a
certain Amended and Restated Credit Agreement dated as of August 1, 2000 as
amended by that Amendment No. 1 dated August 28, 2001 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"; capitalized
terms used herein without definition shall have the meaning ascribed to such
terms in the Credit Agreement);
WHEREAS, the Borrower is in default under the terms of the Credit
Agreement; and
WHEREAS, pursuant to the terms and conditions contained herein the
Agent, on behalf of the Lenders, is willing to waive that default;
NOW THEREFORE, for and in consideration of the mutual covenants
contained herein and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
SECTION 1. Waiver. The Borrower acknowledges that it failed to comply
with (i) the Fixed Charge Coverage Ratio, (ii) the Leverage Ratio, and (iii)
EBITDA covenant for the Fiscal Quarter ending September 30, 2001 ("Third Fiscal
Quarter"), all of which are required by Article 10.1 of the Credit Agreement. As
requested by the Borrower, the Lenders hereby waive any Default or Event of
Default caused by such failure of the Borrower to comply with Section 10.1.2,
10.1.3 and 10.1.5 for the Third Fiscal Quarter. The waivers provided herein
shall extend to and cover only the matters expressly described herein, and shall
be effective and limited to the time period specifically provided herein, and
shall not act as or constitute waivers of or consents to any other Defaults or
Events of Default or to any other transaction, act or omission, whether related
or unrelated to the foregoing. Further, said waivers shall not extend to or
affect any obligation, covenant, agreement, Default or Event of Default not
expressly waived hereby.
SECTION 2. Amendments to Credit Agreement. Effective as of the Effective
Date (as herein defined), the Credit Agreement is hereby amended as follows:
(a) Section 2.1.3(b) is hereby amended to provide for an additional
payment reduction of $1,000,000.00, payable on the Effective Date. Such payment
shall be a permanent reduction of the Commitments.
(b) The definition of "Maturity Date" is amended to provide that
Maturity Date shall mean April 1, 2003, or such earlier date to which the
maturity of the Obligations may be accelerated pursuant to the terms of the
Agreement.
(c) Notwithstanding any provision to the contrary in the Credit
Agreement as of the Effective Date, the Applicable Base Rate Margin shall be
3.00% and the Applicable Letter of Credit Fee Percentage shall be 4.50%.
(d) Section 9.5 - Restricted Payments shall be amended to delete all
exceptions except subsection 9.5(a) to the restrictions on payments. Borrower
and Guarantors shall not declare, pay or make, or permit any of their respective
Subsidiaries to declare, pay or make any Restricted Payments.
(e) LIBOR pricing and borrowing shall not be available to Borrower after
Effective Date. All Loans shall accrue interest prior to an Event of Default at
the Base Rate plus the applicable Base Rate Margin.
SECTION 3. Additional Permanent Reduction. In addition to the
mandatory reductions of commitments required in Section 2.1.3, the Borrower
additionally agrees to pay 100% of any proceeds received on account of any tax
refund to Agent immediately upon receipt. The tax refund proceeds shall be
applied as a permanent reduction to the Commitments. Borrower expects to receive
a tax refund during the First Fiscal Quarter of 2002.
SECTION 4. Full Dominion. The following provision shall be added as
a new provision 3.7 - Full Dominion:
(a) Borrower and Guarantors will, at the Agent's direction, take such
action as the Agent, in its exclusive, reasonable judgment may deem necessary to
enforce collection or performance of the accounts which are Collateral (the
"Accounts"), and Borrower shall by November 30, 2001 direct and arrange (and
cause each of their respective Subsidiaries to direct and arrange), at the sole
cost and expense of the Borrower, for remittances on all Accounts to be made (i)
directly to one or more lockboxes designated by the Agent under the terms of a
lockbox agreement or (ii) in such other manner as the Agent may direct.
(b) All remittances on all Accounts processed in accordance with this
section and received by the Agent shall be promptly deposited in one or more
Controlled Disbursement Accounts as defined below designated by the Agent,
subject to withdrawal by the Agent only, as provided below. In connection
therewith, the Agent is irrevocably authorized to cause all remittances on all
Accounts and any net proceeds or other collections on any other Collateral
received by the Agent from whatever means, whether pursuant to a lockbox
agreement or
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otherwise, to be promptly deposited in such Controlled Disbursement Account(s)
designated by the Agent. All amounts and proceeds (including instruments)
received by any Borrower or any Guarantor in respect of the Accounts shall be
received in trust for the benefit of the Agent for itself and the benefit of the
Lenders, shall be segregated from other funds of Borrower (or such Guarantor, if
applicable) and shall be forthwith paid over to the Agent for itself and the
benefit of the Lenders in the same form as so received (with any necessary
endorsement) to be deposited in the lockbox account, held as cash collateral and
applied as specified in the Credit Agreement.
(c) All collections or proceeds of Accounts and other Collateral
received by the Agent from the lockbox agreement shall be applied automatically
by the Agent to reduce the outstanding balances of the Loans (first to cost and
expenses, then to interest accrued and due, with the balance to principal),
subject to the continued accrual of interest on the Loans to which such
remittances and payments are applied for one (1) Business Day (or for two (2)
Business Days in the case of remittances and payments received after _________
p.m., Charlotte, North Carolina time) and in any event subject to final
collection in cash of the item deposited.
(d) For purposes of this section, Controlled Disbursement Account shall
mean any controlled disbursement account or any other accounts designated by
Agent, subject to withdrawal by Agent only, maintained by Borrower or Guarantors
with the Agent or another bank in connection with, and linked to, a lockbox
account.
(e) Borrower and Guarantors shall disclose to Agent on or before
November 16, 2001, the name, the location and account number of all depository
accounts which are not with Agent. Borrower and Guarantors agree to execute such
further documentation as Agent may reasonably require to implement the
provisions of this section.
SECTION 5. Effective Date. This Agreement shall be deemed effective
(the "Effective Date") when this Amendment shall have been executed by Borrower
and the Lenders and delivered to the Agent.
SECTION 6. Additional Financial Reporting. Borrowers and Guarantors
agree to cooperate with the Agent and its professionals to provide such
additional information and report as Agent may request regarding their financial
condition and the status of the Collateral.
SECTION 7. Representations and Warranties of Borrower. Borrower,
without limiting the representations and warranties provided in the Credit
Agreement, represents and warrants to the Lenders and the Agent as follows:
(a) The execution, delivery and performance by Borrower of this
Agreement is within Borrower's corporate powers, have been duly authorized by
all necessary corporate action (including any necessary shareholder action) and
do not and will not (i) violate any provision of any law, rule or regulation,
any judgment, order or ruling of any court or governmental agency, the articles
of incorporation or by-laws of Borrower or any indenture, agreement or other
instrument to which Borrower is a party or by which Borrower or any of its
properties is bound
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or (ii) be in conflict with, result in a breach of, or constitute with notice or
lapse of time or both a default under any such indenture, agreement or other
instrument.
(b) This Agreement constitutes the legal, valid and binding obligations
of Borrower, enforceable against Borrower in accordance with their respective
terms.
(c) No Default or Event of Default, which has not been waived by this
Agreement, has occurred and is continuing as of the Effective Date.
SECTION 8. Survival. Each of the foregoing representations and
warranties and each of the representations and warranties made in the Credit
Agreement shall be made at and as of the Effective Date. Each of the foregoing
representations and warranties shall constitute a representation and warranty of
Borrower under the Credit Agreement, and it shall be an Event of Default if any
such representation and warranty shall prove to have been incorrect or false in
any material respect at the time when made. Each of the representations and
warranties made under the Credit Agreement (including those made herein) shall
survive and not be waived by the execution and delivery of this Amendment or any
investigation by the Lenders or the Agent.
SECTION 9. No Waiver, Etc. Except as otherwise provided herein,
Borrower hereby agrees that nothing herein shall constitute a waiver by the
Lenders of any Default or Event of Default, whether known or unknown, which may
exist under the Credit Agreement. Borrower hereby further agrees that no action,
inaction or agreement by the Lenders, including without limitation, any
indulgence, waiver, consent or agreement altering the provisions of the Credit
Agreement which may have occurred with respect to the non-payment of any
obligation during the terms of the Credit Agreement or any portion thereof, or
any other matter relating to the Credit Agreement, shall require or imply any
future indulgence, waiver, or agreement by the Lenders.
SECTION 10. Release and Waiver. The Borrower and the Guarantors
hereby stipulate, acknowledge and agree that they have no claims or causes of
action of any kind whatsoever against the Lenders, the Administrative Agent or
the Issuing Bank. The Borrower and the Guarantors hereby release the Lenders,
the Administrative Agent and the Issuing Bank from any and all claims, causes of
action, demands and liabilities of any kind whatsoever, whether direct or
indirect, fixed or contingent, liquidated or unliquidated, disputed or
undisputed, known or unknown, that the Borrower or the Guarantors may now or
hereafter have relating in any way to any event, circumstance, action or failure
to act on or before the date of this Amendment. The release by the Borrower and
the Guarantors herein, together with the other terms and provisions of this
Amendment, are entered into by Borrower and Guarantors advisedly and without
compulsion, coercion or duress, the Borrower and Guarantors having determined
that this Amendment and all its terms, conditions and provisions are in the
economic best interests of the Borrower and Guarantors. The Borrower and
Guarantors represent that they are entering into this Amendment freely and with
the advice of counsel as to their legal alternatives.
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SECTION 11. Affirmation of Covenants. Borrower hereby affirms and
restates as of the date hereof all covenants set forth in the Credit Agreement
and the other Loan Documents shall remain in full force and effect, and the
parties hereto do expressly ratify and confirm the Credit Agreement as amended
herein. All future references to the Credit Agreement shall be deemed to refer
to the Credit Agreement as amended hereby.
SECTION 12. Ratification of Credit Agreement. Except as expressly
amended herein, all terms, covenants and conditions of the Credit Agreement and
the other Loan Documents shall remain in full force and effect, and the parties
hereto do expressly ratify and confirm the Credit Agreement as amended herein.
All future references to the Credit Agreement shall be deemed to refer to the
Credit Agreement as amended hereby.
SECTION 13. Binding Nature. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective heirs, successors,
successors-in-titles, and assigns.
SECTION 14. Waiver Fee. Borrower agrees to pay to Agent on behalf of
Lenders a fee of $65,000 simultaneously with the execution of this Agreement.
SECTION 15. Costs, Expenses and Taxes. Borrower agrees to pay
within five (5) Business Days of the date of the Agent's demand all reasonable
costs and expenses of the Agent in connection with the preparation, execution
and delivery of this Agreement and the other instruments and documents to be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of professionals for the Agent with respect thereto and
with respect to advising the Agent as to its rights and responsibilities
hereunder and thereunder. In addition, Borrower shall pay any and all stamp and
other taxes payable or determined to be payable in connection with the execution
and delivery of this Agreement and the other instruments and documents to be
delivered hereunder, and agrees to save the Agent and each Lender harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes.
SECTION 16. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Tennessee.
SECTION 17. Entire Understanding. This Agreement sets forth the
entire understanding of the parties with respect to the matters set forth
herein, and shall supercede any prior negotiations or agreements, whether
written or oral, with respect thereto.
SECTION 18. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts
and may be delivered by telecopier. Each counterpart so executed and delivered
shall be deemed an original and all of which taken together shall constitute but
one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Waiver and Second
Amendment to the Amended and Restated Credit Agreement through their authorized
officers as of the date first written above.
BORROWER:
AMERICA SERVICE GROUP INC.
By:________________________________
Name:
Title:
GUARANTORS:
PRISON HEALTH SERVICES INC.,
A DELAWARE CORPORATION
By:________________________________
Name:
Title:
PRISON HEALTH SERVICES OF
INDIANA, LLC, AN INDIANA LIMITED
LIABILITY COMPANY
By:________________________________
Prison Health Services Inc., a
Delaware Corporation being the
duly authorized General Manager
thereof
EMSA GOVERNMENT SERVICES INC.,
A FLORIDA CORPORATION
By:________________________________
Name:
Title:
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EMSA CORRECTIONAL CARE, INC.,
A FLORIDA CORPORATION
By:________________________________
Name:
Title:
EMSA MILITARY SERVICES, INC.,
A FLORIDA CORPORATION
By:________________________________
Name:
Title:
EMSA LIMITED PARTNERSHIP,
A FLORIDA CORPORATION
By:________________________________
EMSA Correctional Care, Inc.,
a Florida Corporation being the
duly authorized General Partner
thereof
CORRECTIONAL HEALTH SERVICES, INC.,
A NEW JERSEY CORPORATION
By:________________________________
Name:
Title:
[SIGNATURE PAGE TO WAIVER AND SECOND AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT]
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BANK OF AMERICA, N.A., AS A LENDER
AND AS AGENT
By:________________________________
Name:
Title:
[SIGNATURE PAGE TO WAIVER AND SECOND AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT]
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XXXXXX BANK AND TRUST COMPANY,
AS A LENDER AND CO-AGENT
By:________________________________
Name:
Title:
[SIGNATURE PAGE TO WAIVER AND SECOND AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT]
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COMERICA BANK, AS A LENDER
By:________________________________
Name:
Title:
[SIGNATURE PAGE TO WAIVER AND SECOND AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT]
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AMSOUTH BANK, AS LENDER AND
CO-AGENT
By:________________________________
Name:
Title:
[SIGNATURE PAGE TO WAIVER AND SECOND AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT]
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