EXHIBIT 10.72.3
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THIRD AMENDMENT TO CREDIT AGREEMENT
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THIS THIRD AMENDMENT TO CREDIT AGREEMENT is made as of the __ day of
November, 2001 by and among CORRECTIONAL SERVICES CORPORATION, a corporation
duly organized and validly existing under the laws of the State of Delaware (the
"Company"); each of the Subsidiaries of the Company that is a signatory hereto
or that, pursuant to Section 9.1.20(b) of the Credit Agreement (as hereinafter
defined), shall become a party hereto (individually, a "Subsidiary Guarantor"
and, collectively, the "Subsidiary Guarantors"; and the Subsidiary Guarantors,
collectively with the Company, are sometimes hereinafter referred to as the
"Obligors"); each of the lenders that is a signatory hereto or that, pursuant to
Section 12.6(b) of the Credit Agreement, shall become a "Lender" hereunder
(individually, a "Lender" and, collectively, the "Lenders"); and FLEET NATIONAL
BANK, a national banking association and successor by merger to Summit Bank, as
syndication agent for the Lenders (in such capacity, together with its
successors in such capacity, the "Syndication Agent").
W I T N E S S E T H:
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WHEREAS, the Company, the Subsidiary Guarantors, the Lenders and the
Syndication Agent entered into a Credit Agreement dated August 31, 1999, as
amended by a first amendment thereto dated as of November 10, 2000 and a second
amendment thereto dated in or about August, 2001 (collectively, the "Credit
Agreement"); and
WHEREAS, the Company has requested the Syndication Agent and the Lenders to
make certain amendments to the Credit Agreement as more fully described herein,
and the Syndication Agent and the Lenders have agreed to do so, subject to and
in accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Defined Terms. Except as otherwise indicated herein, all words and
terms defined in the Credit Agreement shall have the same meanings when used
herein.
2. Amendments to Credit Agreement.
(a) The following definitions appearing in Section 1.1 of the Credit
Agreement are hereby amended to read in their entirety as follows:
"Applicable Commitment Fee Rate" shall mean:
(i) with reference to the Revolving Credit Commitments, a rate
per annum, determined from time to time in accordance with the table set
forth below. The Applicable Commitment Fee Rate shall change on the fifth
Business Day following receipt by the Syndication Agent of a Compliance
Certificate of the Company demonstrating that the ratio of the consolidated
Total Funded Debt of the Company and its Subsidiaries to Adjusted EBITDA as
at the last day of the immediately preceding fiscal quarter of the Company
shall be at a different level in the table below, whereupon the Applicable
Commitment Fee Rate shall be reduced or increased to the applicable
percentage set forth in such table. Notwithstanding the foregoing, the
Applicable Commitment Fee Rate shall not be reduced at any time during
which an Event of Default shall have occurred and be continuing:
Ratio of Total Applicable Commitment Fee
Funded Debt to Rate for Revolving
Level Adjusted EBITDA Credit Commitments
----- --------------- --------------------------
I < 3.5 and .50%
-
> 3.00:1
-
II < 3.00:1 and
> 2.50:1 .50%
-
III < 2.50:1 and
> 2.00:1 .375%
-
IV < 2.00:1 .375%
"Applicable Margin" shall mean:
(i) with reference to Revolving Credit Loans that are Base Rate
Loans or LIBOR Loans, an amount in excess of the Base Rate or the LIBOR
Rate, as the case may be, determined from time to time in accordance with
the table set forth below. The Applicable Margin shall change on the fifth
Business Day following receipt by the Syndication Agent of a Compliance
Certificate of the Company demonstrating that the ratio of the consolidated
Total Funded Debt of the Company and its Subsidiaries to Adjusted EBITDA as
at the last day of the immediately preceding fiscal quarter of the Company
shall be at a different level in the table below, whereupon the Applicable
Margin shall be reduced or increased to the applicable percentage set forth
in such table. Notwithstanding the foregoing, the Applicable Margin shall
not be reduced at any time during which an Event of Default shall have
occurred and be continuing:
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Applicable Margin Applicable Margin
Ratio of Total for Revolving for Revolving
Funded Debt to Credit Loans that Credit Loans that
Level Adjusted EBITDA are Base Rate Loans are LIBOR Loans
----- --------------- ------------------- -----------------
I < 3.5 and 2.00% 3.50%
-
> 3.00:1
-
II < 3.00:1 and 1.75% 3.25%
> 2.50:1
-
III < 2.50:1 and 1.50% 3.00%
> 2.00:1
-
IV < 2.00:1 1.25% 2.75%
(b) Section 9.1.10 of the Credit Agreement is hereby amended to read
in its entirety as follows:
9.1.10 Total Funded Debt to Adjusted EBITDA Ratio.
The Company will not permit the ratio of (i) the consolidated
Total Funded Debt of the Company and its Subsidiaries as of the last day of
any fiscal quarter of the Company ending during any test period set forth
in the table below, to (ii) Adjusted EBITDA for the period of four
consecutive fiscal quarters ending on the same day, to be greater than the
ratio set forth opposite such test period below:
Four Fiscal
Quarters Ending Ratio
--------------- ------
September 30, 2001 3.50:1
December 31, 2001 and thereafter 2.50:1
(c) Section 9.1.12 of the Credit Agreement is hereby amended to read
in its entirety as follows:
9.1.12 Consolidated Net Worth.
The Company will not permit its Consolidated Net Worth to be less
than $45,000,000, plus the sum of the following through the date of
determination:
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(i) 90% of the Company's cumulative, positive (any loss shall be treated as
zero) Consolidated Net Income earned from October 1, 2001 through such date
of determination plus, (ii) 100% of the net proceeds of Equity Issuances
from October 1, 2000 through such date of determination minus (iii) the
aggregate amount of Permitted Stock Repurchases made from October 1, 2001
through such date of determination.
(d) Section 9.1.14 of the Credit Agreement is hereby amended to read
in its entirety as follows:
9.1.14 Minimum Fixed Charge Coverage Ratio.
The Company will not permit the Fixed Charge Coverage Ratio to be
less than (i) 1.25 to 1.00 as of September 30, 2001, and (ii) 1.50 to 1.00
at any time thereafter.
(e) Section 9.1 of the Credit Agreement is hereby amended by adding
the following Section 9.1.26 immediately after Section 9.1.25 thereof:
9.1.26 Sale of Phoenix Property.
(a) Notwithstanding any other provision contained herein, the
Borrower shall use its best efforts to refinance its facility located in
Phoenix, Arizona, through its sale to a special purpose vehicle (entity)
(which entity shall not be an Affiliate or a Subsidiary) which will issue
municipal bonds to fund the purchase, as promptly as possible after the
date hereof, the net proceeds of which shall be used to make mandatory
prepayments of the Loans in accordance with the provisions of Section
2.10.1 hereof and to reduce the Revolving Credit Commitments in accordance
with the provisions of Sections 2.3.2 and 2.10.1 hereof.
(b) Upon sale of the Property described in Section 9.1.26(a)
hereof, the Borrower shall negotiate in good faith to further reduce the
Revolving Credit Commitment, it being the intention of the Borrower and the
Lenders to seek to reduce the Revolving Credit Commitment to an amount
between $13,000,000 and $17,000,000.
(f) Part 2 of Schedule 1 to the Credit Agreement is hereby deleted
and replaced with Part 2 of Schedule 1 to this Agreement.
3. Amendment Fees. Concurrently herewith and in consideration for the
Syndication Agent and the Lenders entering into this Agreement, the Company is
paying the Syndication Agent (a) an amendment fee in the amount of $98,515 for
the ratable benefit of the Lenders and (b) an amendment fee in the amount of
$39,406 for the sole benefit of the Syndication Agent. The foregoing fees are
earned in full on the date hereof and not subject to rebate or reduction.
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4. Guaranty Reaffirmation. The Subsidiary Guarantors hereby acknowledge
and agree to the amendments to the Credit Agreement effected by this Agreement.
Each of the Subsidiary Guarantors hereby reaffirms all of the terms and
conditions of the guaranty set forth in Section 6 of the Credit Agreement and
agrees that such guaranty is applicable to all of the Guaranteed Obligations, as
amended by this Agreement. The Subsidiary Guarantors hereby acknowledge and
agree that they have no defenses, offsets or counterclaims with respect to the
Guaranteed Obligations and hereby waive and release all claims against the
Syndication Agent and the Lenders with respect thereto.
5. Representations and Warranties. In order to induce the Syndication
Agent and the Lenders to enter into this Agreement and amend the Credit
Agreement as provided herein, each Obligor hereby represents and warrants to the
Syndication Agent and the Lenders that:
(a) All of the representations and warranties of the Obligors set
forth in the Credit Agreement are true, complete and correct in all material
respects on and as of the date hereof with the same force and effect as if made
on and as of the date hereof and as if set forth at length herein.
(b) After giving effect to this Agreement, no Default or Event of
Default presently exists and is continuing on and as of the date hereof.
(c) Since the date of the Obligors' most recent financial statements
delivered to the Syndication Agent, no Material Adverse Effect has occurred, and
no event has occurred or failed to occur which has had or is likely to have a
Material Adverse Effect.
(d) Each Obligor has full power and authority to execute, deliver and
perform any action or step which may be necessary to carry out the terms of this
Agreement and all other agreements, documents and instruments, if any, executed
and delivered by the Obligors to the Syndication Agent and the Lenders
concurrently herewith or in connection herewith (collectively, the "Amendment
Documents"); each Amendment Document to which any of the Obligors is a party has
been duly executed and delivered by such Obligors and is the legal, valid and
binding obligation of such Obligor enforceable in accordance with its terms,
subject to any applicable bankruptcy, insolvency, general equity principles or
other similar laws affecting the enforcement of creditors' rights generally.
(e) The execution, delivery and performance of the Amendment
Documents will not (i) violate any provision of any existing law, statute, rule,
regulation or ordinance binding upon the Obligors, (ii) conflict with, result in
a breach of, or constitute a default under (A) the certificate of incorporation
or by-laws or other equivalent formation documents of any Obligor, (B) any
order, judgment, award or decree of any court, governmental authority, bureau or
agency, or (C) any mortgage, indenture, material lease, contract or other
material agreement or undertaking to which any Obligor is a party or by which
any Obligor or its properties or assets may be bound, or (iii) result in the
creation or imposition of any lien or other encumbrance upon or with respect to
any property or asset now owned or hereafter acquired by any Obligor, other than
liens in favor of the Syndication Agent for the ratable benefit of the Lenders.
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(f) No consent, license, permit, approval or authorization of,
exemption by, notice to, report to, or registration, filing or declaration with
any Person is required in connection with the execution, delivery, performance
by the Obligors of the Amendment Documents or the transactions contemplated
thereby.
6. Syndication Agent's Costs. The Company shall on demand reimburse the
Syndication Agent for all out-of-pocket costs, including legal fees and
expenses, incurred by the Syndication Agent in connection with this Agreement,
the transactions referenced herein and the administration of the facilities
described in the Credit Agreement. In the event the Company shall fail to pay
any such invoice within 10 days, the Company irrevocably authorizes the
Syndication Agent to charge the Company's account(s) with the Syndication Agent
(or its affiliate) in the amount of such out-of-pocket costs.
7. No Change. Except as expressly set forth herein or modified hereby,
all of the terms and provisions of the Credit Agreement and the other Basic
Documents are hereby reaffirmed in their entirety shall continue in full force
and effect.
8. Counterparts; Effectiveness. This Agreement may be executed in any
number of counterparts, each of which shall be an original and all of which
shall constitute one and the same instrument. This Agreement shall not be
binding upon any party until all parties hereto have executed this Agreement and
delivered it to the Syndication Agent.
9. No Defenses. The Company hereby acknowledges and agrees that it has no
defenses, offsets or counterclaims with respect to its obligations under the
Credit Agreement, the Notes, the other Basic Documents and the Operative
Documents and hereby waives and releases all claims against the Syndication
Agent and the Lenders with respect thereto.
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10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned have caused their duly authorized
representatives to execute and deliver this Agreement as of the day and year
first above written.
CORRECTIONAL SERVICES CORPORATION,
a Delaware corporation
By:_________________________________
Name:
Title:
YOUTH SERVICES INTERNATIONAL, INC.
a Maryland corporation
By:_________________________________
Name:
Title:
FF&E, INC., a New Jersey corporation
By:_________________________________
Name:
Title:
COMMUNITY CORRECTIONS, INC., a
Texas corporation
By:_________________________________
Name:
Title:
(Signatures continued on next page)
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YOUTH SERVICES INTERNATIONAL
OF NORTHERN IOWA, INC., an
Iowa corporation
By:_________________________________
Name:
Title:
YOUTH SERVICES INTERNATIONAL OF
BALTIMORE, INC., a Maryland
corporation
By:_________________________________
Name:
Title:
YOUTH SERVICES INTERNATIONAL
OF VIRGINIA, INC., a Virginia
corporation
By:_________________________________
Name:
Title:
YOUTH SERVICES INTERNATIONAL
HOLDINGS, INC., a Delaware corporation
By:_________________________________
Name:
Title:
(Signatures continued on next page)
8
YOUTH SERVICES INTERNATIONAL
REAL PROPERTY PARTNERSHIP, LLP, a
Maryland limited liability partnership
By:_________________________________
Name:
Title:
YOUTH SERVICES INTERNATIONAL
OF DELAWARE, INC., a Delaware
corporation
By:_________________________________
Name:
Title:
YOUTH SERVICES INTERNATIONAL
OF ILLINOIS, INC., a Maryland
corporation
By:_________________________________
Name:
Title:
YOUTH SERVICES INTERNATIONAL
OF MARYLAND, INC., a Maryland
corporation
By:_________________________________
Name:
Title:
(Signatures continued on next page)
9
YOUTH SERVICES INTERNATIONAL
OF MINNESOTA, INC., a Maryland
corporation
By:_________________________________
Name:
Title:
YOUTH SERVICES INTERNATIONAL
OF SOUTH DAKOTA, INC., a South Dakota
corporation
By:_________________________________
Name:
Title:
YOUTH SERVICES INTERNATIONAL
OF TEXAS, INC., a Texas corporation
By:_________________________________
Name:
Title:
YSI OF CENTRAL IOWA, INC.,
an Iowa corporation
By:_________________________________
Name:
Title:
(Signatures continued on next page)
10
YOUTH SERVICES INTERNATIONAL
OF IOWA, INC., a Maryland
corporation
By:_________________________________
Name:
Title:
YOUTH SERVICES INTERNATIONAL
OF MICHIGAN, INC., a Michigan
corporation
By:_________________________________
Name:
Title:
YOUTH SERVICES INTERNATIONAL
OF MISSOURI, INC., a Missouri
corporation
By:_________________________________
Name:
Title:
YOUTH SERVICES INTERNATIONAL
OF TENNESSEE, INC., a Maryland
corporation
By:_________________________________
Name:
Title:
(Signatures continued on next page)
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YOUTH SERVICES INTERNATIONAL
SOUTHEASTERN PROGRAMS, INC.,
a Maryland corporation
By:_________________________________
Name:
Title:
CSC MANAGEMENT DE PUERTO RICO, INC.,
a Puerto Rico corporation
By:_________________________________
Name:
Title:
FLEET NATIONAL BANK,
as the Syndication Agent and a Lender
By:_________________________________
Name:
Title:
SUNTRUST BANK, NASHVILLE, N.A.,
as a Lender
By:_________________________________
Name:
Title:
BANCO POPULAR NORTH AMERICA,
as a Lender
By:_________________________________
Name:
Title:
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SCHEDULE I
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
PART 2 - ADDRESSES FOR NOTICES TO SYNDICATION AGENT, BORROWER AND SUBSIDIARY
GUARANTORS:
SYNDICATION AGENT:
Fleet National Bank
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Heal
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
BORROWER AND EACH SUBSIDIARY GUARANTOR:
c/o Correctional Services Corporation
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxxx 00000
Attention: Skip Xxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
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