AMENDMENT NO. 1 TO THE PARTICIPATION AGREEMENT,
THE CREDIT AGREEMENT, THE TRUST AGREEMENT
AND OTHER OPERATIVE AGREEMENTS
THIS AMENDMENT NO. 1 (this "Amendment") dated as of October 16,
1998, is by and among CORRECTIONAL SERVICES CORPORATION, a Delaware
corporation (the "Lessee" or the "Construction Agent"); the
various parties listed on the signature pages hereto as
guarantors (subject to the definition of Guarantors in Appendix A
to the Participation Agreement referenced below, individually, a
"Guarantor" and collectively, the "Guarantors"); FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually but solely as the Owner Trustee
under the CSC Trust 1997-1 (the "Owner Trustee" or the
"Lessor"); the various banks and other lending institutions
listed on the signature pages hereto (subject to the definition
of Lenders in Appendix A to the Participation Agreement
referenced below, individually, a "Lender" and collectively,
the "Lenders"); NATIONSBANK, N.A., a national banking
association, as the agent for the Lenders and respecting the
Security Documents, as the agent for the Lenders and the Holders,
to the extent of their interests (in such capacity, the
"Agent"); and the various banks and other lending institutions
listed on the signature pages hereto as holders of certificates
issued with respect to the CSC Trust 1997-1 (subject to the
definition of Holders in Appendix A to the Participation
Agreement referenced below, individually, a "Holder" and
collectively, the "Holders"). Capitalized terms used in this
Amendment but not otherwise defined herein shall have the
meanings set forth in Appendix A to the Participation Agreement
(hereinafter defined).
W I T N E S S E T H
WHEREAS, the parties to this Amendment are parties to that
certain Participation Agreement dated as of March 30, 1998 (the
"Participation Agreement"), certain of the parties to this Amendment
are parties to that certain Credit Agreement dated as of March 30,
1998 (the "Credit Agreement"), certain of the parties to this
Amendment are parties to that certain Trust Agreement dated as of
March 30, 1998 (the "Trust Agreement") and certain of the parties to
this Amendment are parties to the other Operative Agreements relating
to a $20 million tax retention operating lease facility (the
"Facility") that has been established in favor of the Lessee;
WHEREAS, the Lessee has requested certain modifications to the
Participation Agreement, the Credit Agreement, the Trust Agreement and
the other Operative Agreements in connection with the Facility;
WHEREAS, certain of the requested modifications require the
unanimous consent of the Financing Parties;
WHEREAS, the Financing Parties have agreed to the requested
modifications on the terms and conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
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1. Appendix A to the Participation Agreement shall be amended
to add or modify the following defined terms as follows:
"Holder Commitments" shall mean $600,000; provided, in the
event the Lessee has received at $17,500,000 in proceeds from new
Subordinated Debt during the Interim Period, the term Holder
Commitments shall mean $1,050,000; provided, further, if there shall
be more than one (1) Holder, the Holder Commitment of each Holder
shall be as set forth in Schedule I to the Trust Agreement as such
Schedule I may be amended and replaced from time to time.
"Interim Period" shall mean the period from the date of
this Amendment until the earlier of (i) the date on which Borrower has
received at least $17,500,000 in proceeds from new Subordinated Debt,
or (ii) April 16, 1999.
"Lender Commitments" shall mean $19,400,000; provided, in
the event the Lessee has received at least $17,500,000 in proceeds
from new Subordinated Debt during the Interim Period, the term Lender
Commitments shall mean $33,950,000; provided, further, if there shall
be more than one (1) Lender, the Lender Commitment of each Lender
shall be as set forth in Schedule 1.1 to the Credit Agreement as such
Schedule 1.1 may be amended and replaced from time to time.
"Subordinated Debt" means any Indebtedness of a Credit
Party which by its terms is expressly subordinated in right of payment
to the prior payment of the obligations under the Lessee Credit
Agreement and the other Credit Documents (as defined in the Lessee
Credit Agreement) on terms and conditions satisfactory to the Majority
Lenders.
2. Notwithstanding any provision in any Operative Agreement to
the contrary, during the Interim Period, the Applicable Percentage for
Eurodollar Loans shall be equal to 3.00%, the Applicable Percentage
for ABR Loans shall be 1.5%, the Eurodollar Holder Advance Applicable
Percentage shall be equal to 3.75% and the ABR Holder Advance
Applicable Percentage shall be 2.25%.
3. If the Lessee receives at least $17,500,000 in proceeds from
new Subordinated Debt during the Interim Period, Schedule 1.1 of the
Credit Agreement shall be deemed amended and restated in its entirety
on the Business Day following confirmation by the Agent that such
proceeds have been received to read as Schedule 1.1 attached hereto
and Schedule I of the Trust Agreement shall be deemed amended and
restated in its entirety on the Business Day following confirmation by
the Agent that such proceeds have been received to read as Schedule I
attached hereto.
4. As of the effective date of this Amendment, the Loans shall
no longer be amortized, all Loans shall be due and payable in full on
the Expiration Date, and Schedule 2 to the Participation Agreement
shall be amended and restated in its entirety to read as Schedule 2
attached hereto.
5. This Amendment shall be effective upon satisfaction of the
following conditions:
(a) execution of this Amendment by the Credit Parties and
the Lenders; and
(b) receipt by the Agent of legal opinions of counsel to
the Credit Parties relating to this Amendment in form and substance reasonably
satisfactory to the Agent.
6. Except as modified hereby, all of the terms and provisions
of the Operative Agreements (including Schedules and Exhibits) shall
remain in full force and effect.
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7. The Borrower agree to pay all reasonable costs and expenses
of the Agent in connection with the preparation, execution and
delivery of this Amendment, including without limitation the
reasonable fees and expenses of ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇, PLLC.
8. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be
deemed an original and it shall not be necessary in making proof of
this Amendment to produce or account for more than one such
counterpart.
9. This Amendment shall be deemed to be a contract made under,
and for all purposes shall be construed in accordance with the laws of
the State of Florida.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of
the date first above written.
CORRECTIONAL SERVICES CORPORATION, as
the Construction Agent, as the Lessee
and as a Tranche A Guarantor
By:
Name:
Title:
ESMOR NEW JERSEY, INC., as a Guarantor
By:
Name:
Title:
CSC MANAGEMENT DE PUERTO RICO, INC.,
as a Guarantor
By:
Name:
Title:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, except
as expressly stated herein, but
solely as the Owner Trustee under the
CSC Trust 1997-1
By:
Name:
Title:
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NATIONSBANK, N.A., as a Holder, as a
Lender and as the Agent
By:
Name:
Title:
SOUTH TRUST BANK, NATIONAL
ASSOCIATION, as Lender and Holder
By:
Name:
Title:
BANQUE PARIBAS, as Lender
By:
Name:
Title:
By:
Name:
Title:
SUMMIT BANK, as Lender
By:
Name:
Title:
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AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 (this "Amendment") dated as of October 16, 1998,
to the Credit Agreement referenced below, is by and among CORRECTIONAL
SERVICES CORPORATION, a Delaware corporation, the subsidiaries and affiliates
identified herein, the lenders identified herein, and NATIONSBANK, N.A., as
Administrative Agent. Terms used but not otherwise defined shall have the
meanings provided in the Credit Agreement.
W I T N E S S E T H
WHEREAS, a $10 million credit facility has been established in favor of
CORRECTIONAL SERVICES CORPORATION, a Delaware corporation (the "Borrower"),
pursuant to the terms of that Credit Agreement dated as of March 30, 1998 (as
amended and modified, the "Credit Agreement") among the Borrower, the
Guarantors and Lenders identified therein, and NationsBank, N.A., as
Administrative Agent;
WHEREAS, the Borrower has requested certain modifications to the Credit
Agreement in connection therewith;
WHEREAS, certain of the requested modifications require the unanimous
consent of the Lenders;
WHEREAS, the Lenders have agreed to the requested modifications on the
terms and conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Section 1.1 shall be amended to add or modify the following
defined terms as follows:
"Aggregate Revolving Committed Amount" means, (i) during the
Interim Period, TWENTY-SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS
($27,500,000), and (ii) after the Interim Period, TEN MILLION DOLLARS
($10,000,000); provided, in the event Borrower has received at least
$17,500,000 in proceeds from new Subordinated Debt during the Interim Period,
the term Aggregate Revolving Committed Amount after the Interim Period means
TWELVE MILLION FIVE HUNDRED THOUSAND DOLLARS ($12,500,000).
"Borrowing Base" means, as of any day, the sum of (a) eighty-
five percent (85%) of Eligible Receivables for the Consolidated Group plus
(b)(i) during the Interim Period, $17,500,000, and (ii) after the Interim
Period, $0.
"Interim Period" shall mean the period from the date of this
Amendment until the earlier of (i) the date on which Borrower has received at
least $17,500,000 in proceeds from new Subordinated Debt, or (ii) April 16,
1999.
2. As of the effective date of this Amendment, the financial
covenants of Section 7.9 are amended and modified to read as follows:
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"7.9. Financial Covenants.
(a) Consolidated Net Worth. As of the end of each fiscal
quarter, Consolidated Net Worth shall be not less than the sum of $30,000,000
plus on the last day of each fiscal quarter (commencing with the fiscal
quarter ending December 31, 1997), ninety percent (90%) of Consolidated Net
Income for the fiscal quarter then ended, such increases to be cumulative and
without deductions for losses, if any, plus one hundred percent (100%) of the
net proceeds from Equity Transactions occurring after the Closing Date.
(b) Consolidated Senior Leverage Ratio. As of the end of each
fiscal quarter to occur during the periods shown, the Consolidated Senior
Leverage Ratio shall be not greater than:
Closing Date through December 31, 1998 3.5:1.0
January 1, 1999 through December 31, 1999 3.25:1.0
January 1, 2000 and thereafter 3.0:1.0
(c) Consolidated Total Leverage Ratio. As of the end of each
fiscal quarter to occur during the periods shown, the Consolidated Total
Leverage Ratio shall be not greater than:
Closing Date through December 31, 1998 4.25:1.0
January 1, 1999 and thereafter 4.0:1.0
(d) Consolidated Debt to Capitalization Ratio. As of the end of
each fiscal quarter, the Consolidated Debt to Capitalization Ratio shall be
not greater than seventy percent (70%).
(e) Consolidated Fixed Charge Coverage Ratio. As of the end of
each fiscal quarter, the Consolidated Fixed Charge Coverage Ratio shall be not
less than 1.5:1.0.
(f) Capital Expenditures. Capital Expenditures for the
Consolidated Group shall not exceed $35,000,000 in any fiscal year.
(g) Current Ratio. As of the end of each fiscal quarter, the
ratio of Current Assets to Current Liabilities shall be not less than 1.3 to
1.0."
3. Schedule 2.1(a) of the Credit Agreement is hereby amended and
restated in its entirety to read as Schedule 2.1(a) attached hereto.
4. Notwithstanding any provision in the Credit Agreement to the
contrary, during the Interim Period the Applicable Percentage for Eurodollar
Loans shall be equal to 3.00% and the Applicable Percentage for Base Rate
Loans shall be equal to 1.50%.
5. In the event that the Borrower has not received at leased
$17,500,000 in proceeds from new Subordinated Debt during the Interim Period,
all outstanding Obligations in excess of the lesser of $10,000,000 or the
Borrowing Base, together with any interest thereon, shall be due and payable
in full on the first Business Day after the end of the Interim Period.
6. This Amendment shall be effective upon satisfaction of the
following conditions:
(a) execution of this Amendment by the Credit Parties and the
Lenders; and
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(b) receipt by the Administrative Agent of legal opinions of
counsel to the Credit Parties relating to this Amendment in form and
substance reasonably satisfactory to the Administrative Agent.
7. Except as modified hereby, all of the terms and provisions of the
Credit Agreement (including Schedules and Exhibits) shall remain in full force
and effect.
8. The Borrower agree to pay all reasonable costs and expenses of the
Administrative Agent in connection with the preparation, execution and
delivery of this Amendment, including without limitation the reasonable fees
and expenses of ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇, PLLC.
9. This Amendment may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original and it
shall not be necessary in making proof of this Amendment to produce or account
for more than one such counterpart.
10. This Amendment shall be deemed to be a contract made under, and
for all purposes shall be construed in accordance with the laws of the State
of Florida.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered as of the date first above
written.
BORROWER: CORRECTIONAL SERVICES CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇
Title: EVP/CFO
GUARANTORS: ESMOR NEW JERSEY, INC.,
a New Jersey corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Attorney-In-Fact
CSC MANAGEMENT DE PUERTO RICO, INC.,
a Puerto Rico corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇
Title: CFO
LENDERS: NATIONSBANK, N.A.,
individually in its capacity as a Lender
and in its capacity as Administrative Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
BANQUE PARIBAS, as Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
SOUTHTRUST BANK, NATIONAL
ASSOCIATION, as Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Group Vice President
SUMMIT BANK, as Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
