Exhibit 10.6
FIRST AMENDMENT TO NOTE AND EQUITY PURCHASE AGREEMENT
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This First Amendment to Note and Equity Purchase Agreement (this
"AMENDMENT"), dated as of August 9, 2001, is entered into by and among
CORNELL COMPANIES, INC., a Delaware corporation (the "COMPANY"), its
Subsidiaries signatories hereto (the "SUBSIDIARIES", and together with the
Company, the "LOAN PARTIES") AMERICAN CAPITAL STRATEGIES, LTD., a Delaware
corporation ("ACS"), ACAS BUSINESS LOAN TRUST 2000-1 ("ACAS 2001"), ACAS
FUNDING TRUST I ("ACAS I") and TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF
AMERICA, a New York corporation ("TIAA"). ACS, ACAS 2001, ACAS I and TIAA are
referred to collectively as the "PURCHASERS" and individually as "PURCHASER".
Capitalized terms used and not defined elsewhere in this Agreement are
defined in Article 1, below.
RECITALS
A. The Company, ACS and TIAA have entered into that certain Note and
Equity Purchase Agreement, dated as of July 21, 2000 (as amended from time to
time, the "NOTE AGREEMENT").
B. The Company has entered into that certain (i) Indenture issued by
Municipal Corrections Finance, L.P. (the "LANDLORD"), dated as of August 1, 2001
with The Chase Manhattan Bank, as Trustee and Securities Intermediary (the
"TRUSTEE"); (ii) First Series Supplement to Indenture, dated as of August 1,
2001 for $197,400,000 of 8.47% Taxable Revenue Bonds, due August 1, 2016; (iii)
Master Lease Agreement by and between Landlord and the Company, dated as of
August 14, 2001; and (iv) Reserve Fund Agreement by and among the Landlord,
Trustee and Xxxxxx Brothers Special Financing, Inc., (collectively, the "2001
MUNICIPAL TRANSACTION DOCUMENTS") pursuant to which the Loan Parties agreed to
participate in the transactions contemplated therein (collectively, the "2001
MUNICIPAL TRANSACTION").
C. The Company has requested that the Purchasers make certain amendments
to the Note Agreement, and the Purchasers are willing to do so subject to the
terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. DEFINITIONS. All capitalized terms used but not otherwise defined in
this Amendment shall have the meanings ascribed to them in the Note Agreement.
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2. AMENDMENTS. Effective as of the date hereof, the Note Agreement is
hereby amended as follows:
2.1 DEFINITION OF "EBITDAR." The definitions of "EBITDAR" in SECTION 1.1
of the Note Agreement shall be amended by adding the word "PLUS" at the end of
clause (j) thereof, and by adding the following new clauses (k) and (l):
"(k) rent expense in respect of the Municipal Transaction
(determined in accordance with GAAP) for such period, MINUS
(l) the aggregate amount of cash rent payments made by
the Obligors during such period in respect of the Municipal
Transaction;"
2.2 DEFINITION OF "EBITDAR RATIO I." The definitions of "EBITDAR Ratio
I" in SECTION 1.1 of the Note Agreement shall be amended by inserting the
following at the end of clause (a) thereof:
"MINUS the aggregate credit balance of the Restricted Account on
such date,"
2.3 DEFINITION OF "EBITDAR RATIO II." The definitions of "EBITDAR
Ratio II" in SECTION 1.1 of the Note Agreement shall be amended by inserting
the following at the end of clause (a) thereof:
"MINUS the aggregate credit balance of the Restricted Account on
such date."
2.4 DEFINITION OF "ELIGIBLE ACQUISITION." The definition of "Eligible
Acquisition" in Section 1.1 of the Note Agreement shall be amended by replacing
the dollar amount "$20,000,000" therein with "$5,000,000" in lieu thereof.
2.5 DEFINITION OF "FIXED CHARGES RATIO." The definitions of "Fixed
Charges Ratio" in Section 1.1 of the Note Agreement shall be amended in its
entirety to read as follows:
"`Fixed Charges Ratio' shall mean, for any Measurement Period, the ratio
of: (a) the sum of (i) EBITDAR for the period of 12-consecutive months ending on
or most recently ended prior to such Measurement Period, PLUS (ii) the aggregate
amount of cash rent payments made by all Loan Parties in respect of the
Municipal Transaction during such period (to the extent deducted in determining
EBITDAR for such period), MINUS (iii) Capital Expenditures made by the Company
and its Subsidiaries during such Measurement Period to the extent not financed
with the proceeds of the Senior Debt, MINUS (iv) taxes paid in cash during such
Measurement Period (other than any Municipal Transaction Taxes paid with
proceeds in the Restricted Account), to (b) the sum of (i) Debt Service for such
Measurement Period, PLUS (ii) the aggregate amount of cash rent payments made by
the Loan Parties in respect of the Municipal Transaction during such period.
2.6 DEFINITION OF "INTEREST EXPENSE." The definition of "Interest
Expense in SECTION 1.1 of the Note Agreement shall be amended by adding the
following clause (e):
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"minus (e) the aggregate amount of interest income in respect of the
Restricted Account accrued during such period."
2.7 DEFINITION OF "MUNICIPAL TRANSACTION TAXES." The following new
definition of "Municipal Transaction Taxes" shall be added to SECTION 1.1 of
the Note Agreement in the appropriate alphabetical location:
"`Municipal Transaction Taxes' shall mean cash income taxes paid by
the Company during 2001, in an aggregate amount not to exceed $5,000,000, in
respect of gains as a result of the consummation of the 2001 Municipal
Transaction."
2.8 DEFINITION OF "RESTRICTED ACCOUNT." The following new definition
of "Restricted Account" shall be added to SECTION 1.1 of the Note Agreement
in the appropriate alphabetic location.
"`Restricted Account' shall have the meaning ascribed to such term
in SECTION 2.09(f) of the Credit Agreement."
2.9 ADDITION OF SECTION 3.8. A new SECTION 3.8 is hereby added to the
Agreement immediately following the existing SECTION 3.7, which shall provide as
follows:
3.8 CERTAIN WAIVERS. The Company unconditionally waives (i) any
rights to presentment, demand, protest or (except as expressly
required hereby) notice of any kind, and (ii) any rights of
recission, setoff, counterclaim or defense to payment under the
Notes or otherwise that the Company may have or claim against any
Purchaser or prior Purchaser.
2.10 AMENDMENT TO SECTION 7.3. SECTIONS 7.3 (a), (b), (d) and (e) of
the Note Agreement are hereby deleted in its entirety and the following
substituted in lieu thereof:
"(a) EBITDAR RATIO I. The Company will not permit the EBITDAR Ratio
I with respect to any period ending on a date that falls within any period
set forth below under the column entitled "Period" to exceed the
applicable ratio set forth under the caption "Ratio" opposite such period:
Period Ratio
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August 1, 2001 through and
including June 30, 2003 3.0 to 1
July 1, 2003 through and
including June 30, 2004 2.75 to 1
July 1, 2004 through and
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Period Ratio
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all times thereafter 2.5 to 1
(b) EBITDAR RATIO II. The Company will not permit the EBITDAR
Ratio II to exceed 3.6 to 1 at any time.
(d) INTEREST COVERAGE RATIO. The Company will not permit the
Interest Coverage Ratio with respect to any period ending on a date that falls
within any period set forth under the column entitled "Period" to be less than
the applicable ratio set forth under the caption "Ratio" opposite such period:
Period Ratio
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August 1, 2001 through and
including March 31, 2003 1.50 to 1
April 1, 2003 through and
including December 31, 2004 1.80 to 1
January 1, 2005 and all times thereafter 2.25 to 1
(e) FIXED CHARGES RATIO. The Company will not permit the Fixed
Charges Ratio with respect to any period ending on a date that falls
within any period set forth under the column entitled "Period" to be less
than the applicable ratio set forth under the caption "Ratio" opposite
such period:
Period Ratio
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August 1, 2001 through and
including September 30, 2001 1.2 to 1
October 1, 2001 through and including
December 31, 2001 1.0 to 1
January 1, 2002 through and
including March 31, 2003 1.0 to 1
April 1, 2003 and all times thereafter 1.0 to 1"
3. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent, unless
specifically waived in writing by the Purchasers:
3.1. The Purchasers shall have received (a) this Amendment, duly executed
by the Company; (b) a true, correct and complete copy of that certain Amendment
No. 2 to Credit
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Agreement and Amendment No. 1 to Master Agreement, dated as of August 9, 2001
and each document relating thereto; (c) true, correct and complete copies of
the 2001 Municipal Transactions Documents; and (d) such additional documents,
instruments and information as the Purchasers or their legal counsel may
request.
3.2. No Default or Event of Default under the Note Agreement, as
amended hereby, shall have occurred and be continuing, unless such Default or
Event of Default has been specifically waived in writing by the Purchasers.
3.3 The amendment to Credit Agreement shall have been duly executed and
delivered by the parties thereto and shall be on terms and conditions
satisfactory to the Purchasers, and all conditions precedent therein shall
have been satisfied or waived.
3.4 The representations and warranties contained herein and in the Note
Agreement and the other Note Documents, as amended hereby, shall be true and
correct on and as of the date hereof after giving effect to the 2001
Municipal Transaction to be consummated on or about the date hereof.
3.5 The 2001 Municipal Transactions Documents shall have been duly
executed and delivered by the parties thereto, all conditions to the
consummation of the 2001 Municipal Transaction shall have been satisfied or
waived with the Purchasers' consent, and the terms and provisions of the 2001
Municipal Transactions Documents shall be satisfactory to the Purchasers.
4. RATIFICATIONS, REPRESENTATIONS AND WARRANTIES.
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4.1. The terms and provisions set forth in this Amendment shall modify
and supersede all inconsistent terms and provisions set forth in the Note
Documents and, except as expressly modified and superseded by this Amendment,
the terms and provisions of the Note Documents are ratified and confirmed and
shall continue in full force and effect. The Company and the Purchasers agree
that the Note Documents, as amended hereby, shall continue to be legal,
valid, binding and enforceable in accordance with their respective terms.
4.2. The Company hereby represents and warrants to the Purchasers that
(a) the execution, delivery and performance of this Amendment and any and all
other agreements executed and/or delivered in connection herewith or
therewith have been authorized by all requisite corporate action on the part
of the Company and will not violate the Articles of Incorporation or Bylaws
of the Company; (b) the representations and warranties contained in the Note
Documents, as amended hereby, are true and correct on and as of the date
hereof as though made on and as of such date; (c) no Default or Event of
Default under the Note Agreement, as amended hereby, has occurred and is
continuing, unless such Default or Event of Default has been specifically
waived in writing by the Purchasers; (d) the Company is in full compliance
with all covenants and agreements contained in the Note Agreement, as amended
hereby, and the other Note Documents; and (e) the Company has not amended its
Articles of Incorporation or its Bylaws since July 21, 2000, except for such
amendments, if any, as are attached to the Company General Certificate.
5. LIMITED WAIVER AND CONSENT.
5.1. By execution of this Amendment, the Purchasers (a) consent to the
2001 Municipal Transaction, on the terms set forth in the copies of the 2001
Municipal Transaction Documents delivered to the Purchasers in executed form
on or prior to the date of this Amendment, (b) consent to that certain
Amendment No. 2 to Credit Agreement and Amendment No. 1 to Master Agreement,
dated as of August 9, 2001, on the terms set forth in the copies of such
document delivered to the Purchasers in executed form on or prior to the date
of this Amendment and (c) hereby waive any Default or Event of Default which
would otherwise occur or exist under any of the Note Documents solely as a
result of (i) the execution or performance by the Company of the 2001
Municipal Transactions Documents, or (ii) the consummation of the 2001
Municipal Transaction. The failure of any of the Purchasers at any time or
times hereafter to require strict performance by Company of any provision
thereof shall not waive, affect or diminish any right of any of the
Purchasers to thereafter demand strict compliance therewith. The Purchasers
hereby reserve all rights granted under the Note Agreement, the other Note
Documents, this Amendment and any other contract or instrument between
Company and the Purchasers.
5.2 Except as specifically amended hereby, the Note Agreement and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
5.3 Except as specifically provided in this Amendment or the Note
Agreement, the execution, delivery and effectiveness of this Amendment shall not
(i) operate as a waiver of any
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right, power or remedy of any Purchaser, whether created by contract, at law
or in equity, (ii) constitute a waiver of, or consent to and departure from,
any provision of the Note Agreement, the other Note Documents, or any other
documents, instruments and agreements executed and/or delivered in connection
therewith, or (iii) be construed or deemed to be a satisfaction, novation,
cure, modification, amendment or release of the Notes, the Agreement and the
other Note Documents.
6. MISCELLANEOUS.
6.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in the Note Agreement or any other Note Documents,
including, without limitation, any document furnished in connection with this
Amendment, shall survive the execution and delivery of this Amendment and the
other Note Documents, and no investigation by any Purchaser or any closing
shall affect the representations and warranties or the right of such
Purchaser to rely upon them.
6.2. REFERENCE TO NOTE AGREEMENT. Each of the Note Agreement and the
other Note Documents, and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms
hereof or pursuant to the terms of the Note Agreement, as amended hereby, are
hereby amended so that any reference in the Note Agreement and such other
Note Documents to the Note Agreement shall mean a reference to the Note
Agreement as amended hereby.
6.3. EXPENSES OF THE PURCHASERS. As provided in the Note Agreement, the
Company agrees to pay on demand all costs and expenses incurred by the
Purchasers in connection with the preparation, negotiation and execution of
this Amendment and any other agreements executed pursuant hereto, including,
without limitation, the reasonable costs and fees of the Purchasers' legal
counsel.
6.4. 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.
6.5. SUCCESSORS AND ASSIGNS. This Amendment will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns.
6.6. HEADINGS. The headings of the sections and subsections of this
Amendment are inserted for convenience only and do not constitute a part of
this Amendment.
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6.7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, which shall collectively constitute one agreement.
6.8. LAW GOVERNING. THIS AMENDMENT SHALL BE DEEMED TO HAVE BEEN
SUBSTANTIALLY NEGOTIATED AND MADE IN THE STATE OF
TEXAS AND SHALL BE
INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE UNITED STATES APPLICABLE THERETO AND THE INTERNAL LAWS OF THE
STATE OF
TEXAS APPLICABLE TO AN AGREEMENT EXECUTED, DELIVERED AND PERFORMED
THEREIN, WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW RULES THEREOF OR ANY
OTHER PRINCIPLE THAT COULD REQUIRE THE APPLICATION OF THE SUBSTANTIVE LAW OF
ANY OTHER JURISDICTION.
6.9. WAIVER; MODIFICATION. NO PROVISION OF THIS AMENDMENT MAY BE
WAIVED, CHANGED OR MODIFIED, OR THE DISCHARGE THEREOF ACKNOWLEDGED, ORALLY,
BUT ONLY BY AN AGREEMENT IN WRITING SIGNED BY THE PARTY AGAINST WHOM THE
ENFORCEMENT OF ANY WAIVER, CHANGE, MODIFICATION OR DISCHARGE IS SOUGHT.
6.10. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY AND THE PURCHASERS HEREBY IRREVOCABLY AND
EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE
ACTIONS OF THE PURCHASERS IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT
THEREOF.
6.11. FINAL AGREEMENT. THE NOTE AGREEMENT, AS AMENDED HEREBY, AND THE
OTHER NOTE DOCUMENTS REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED.
THE NOTE AGREEMENT, AS AMENDED HEREBY, AND THE OTHER NOTE DOCUMENTS MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
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IN WITNESS WHEREOF, the Company and the Purchasers have caused this First
Amendment to be executed and delivered as of the date first written.
LOAN PARTIES:
CORNELL COMPANIES, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
CORNELL CORRECTIONS MANAGEMENT, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
CORNELL CORRECTIONS OF
TEXAS, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
CORNELL CORRECTIONS OF CALIFORNIA, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
CORNELL CORRECTIONS OF RHODE ISLAND, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
CORNELL CORRECTIONS OF OKLAHOMA, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
CORNELL CORRECTIONS OF GEORGIA, L.P.
By: CCGI Corporation, its general partner
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
CORNELL CORRECTIONS OF ALASKA, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
CORNELL ABRAXAS GROUP, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
WBP LEASING, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
CORNELL INTERVENTIONS, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
CCGI CORPORATION
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
CORNELL CORRECTIONS CONSULTING, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
THE XXXXXXX XXX GROUP, L.P.
By: Cornell Corrections of North America, Inc.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
CORNELL CORRECTIONS OF NORTH AMERICA, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
INTERNATIONAL SELF HELP SERVICES, INC.
By:
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Xxxx X. Xxxxxxx
Chief Financial Officer
PURCHASER:
ACAS BUSINESS LOAN TRUST 2000-1
By: AMERICAN CAPITAL STRATEGIES, LTD.,
As Servicer
By:
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Xxxxx Xxxx
Senior Vice President
ACAS FUNDING TRUST I
By: AMERICAN CAPITAL STRATEGIES, LTD.,
As Servicer
By:
------------------------------
Xxxxx Xxxx
Senior Vice President
AMERICAN CAPITAL STRATEGIES,
LTD.
By:
-------------------------------
Xxxxx Xxxx
Senior Vice President
PURCHASER:
TEACHERS INSURANCE and ANNUITY
ASSOCIATION of AMERICA
By:
----------------------------------
Xxxxxxx Xxxxxxx
Director - Private Placement
