EXHIBIT 10.72.3
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THIRD AMENDMENT TO CREDIT AGREEMENT
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:
Applicable Commitment
Ratio of Total Funded Debt to Fee Rate for Revolving
Adjusted EBITDA Credit Commitments
Level
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 for Revolving Applicable Margin for Revolving
Ratio of Total Credit Loans that are Credit Loans that are
Funded Debt to Base Rate Loans LIBOR Loans
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Level Adjusted EBITDA
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 Ratio
Quarters Ending -----
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.
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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.
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(a) Notwithstanding any other provision contained
herein, the Borrower shall use its best efforts to sell its Property
located in Phoenix, Arizona, 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.
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.
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
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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.
(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.
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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)
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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)
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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)
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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
By:_________________________________
Name:
Title:
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