EXHIBIT 4.10
November 23, 1998
________________________
________________________
________________________
Dear Sirs:
You are currently a holder of a total of $_________ of 7% Convertible
Subordinated Debentures Due 2006 of YSI (the "Debentures") issued under an
Indenture dated October 15, 1996 between Youth Services International, Inc.
("YSI") and The Chase Manhattan Bank, as Trustee (the "Indenture"). Capitalized
terms not otherwise defined herein shall have the meanings assigned to them in
the Indenture.
YSI has entered into an Agreement and Plan of Merger dated as of
September 23, 1998 by and among YSI, Correctional Services Corporation ("CSC")
and Palm Merger Corp., a wholly-owned subsidiary of CSC ("Merger Subsidiary),
which contemplates the merger of Merger Subsidiary with and into YSI (the
"Merger"). As structured, the Merger, when completed, will constitute a
Designated Event under the terms of the Indenture, triggering your right to
require YSI to redeem the Debentures on the Holder Redemption Date, which is
approximately 90 days after the date of the closing of the Merger (the "Closing
Date"). YSI and CSC have considered restructuring the transaction in a manner
that would not constitute a Designated Event and thereby not trigger your
redemption right. In lieu of restructuring the transaction, CSC has requested
that XXX enter into this letter agreement with you.
In consideration for YSI's agreement not to restructure the Merger in
a manner that would not constitute a Designated Event, and of the other
covenants and agreements set forth herein, you hereby agree as follows:
1. You hereby waive your right to, and agree that you will not,
surrender any of the Debentures, deliver a Redemption Notice or take any other
action to exercise your right to require YSI to redeem the Debentures on the
Holder Redemption Date relating to the Merger.
2. XXX will not consent to any restructuring of the Merger in a
manner that would not constitute a Designated Event under the Indenture.
3. YSI will, at your option, repurchase the Debentures from you for
cash, at 100% of the principal amount of the Debentures, plus accrued and unpaid
interest to the date of repurchase (and Additional Amounts, if any), on the date
that is one year from the Closing Date
(the "Repurchase Date"). In order to exercise your option hereunder, and as a
condition to such repurchase, on or before the close of business on the fifth
business day prior to the Repurchase Date, you will surrender the Debentures to
be redeemed, together with the Redemption Notice, at Youth Services
International, Inc. 0 Xxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxx
00000, or such other place as designated by YSI in writing to you in advance of
the fifth business day prior to the Repurchase Date.
4. You agree that, beginning on the date hereof and ending on the
first day following the Holder Redemption Date with respect to the merger, you
will not, directly or indirectly, sell, offer to sell, grant any option for the
sale of, or otherwise dispose of, any Debentures, unless the transferee agrees
to be bound by the terms hereof (including this paragraph 4) and evidences such
agreement by executing a counterpart to this letter agreement, (which will
thereupon also be binding on YSI on behalf of the transferee) or an identical
agreement with YSI. XXX agrees that from the period beginning on the second day
after the Holder Redemption Date with respect to the merger and ending on the
Repurchase Date, YSI will execute a counterpart to this agreement, or an
identical agreement, on behalf of any transferee of the Debentures who so
requests. It is understood and agreed that any transferee after the Holder
Redemption Date that does not execute a counterpart or identical agreement will
have no right to redeem with respect to the Merger.
5. You hereby represent and warrant to YSI that:
a. you have such knowledge and experience in financial and business
matters that you are capable of evaluating the merits and risks of the waiver
and repurchase contemplated hereby;
b. you are an "Accredited Investor" within the meaning of one or
more paragraphs (1), (2), (3) or (8) of Rule 501(a) under the Securities Act of
1933; and
c. You understand and are able to bear any economic risks associated
with the waiver and repurchase contemplated hereby.
6. It is understood that XXX's obligation to make payments of
principal, interest and Additional Amounts (if any) to you in connection with
the repurchase of the Debentures hereunder shall be subordinated and subject in
right of payment to the priority rights of holders of Senior Indebtedness to the
extent and in the manner set forth in Section 8 of the Indenture.
7. All terms of the Indenture not contrary to the provisions hereof
shall remain outstanding and in full force and effect.
8. YSI covenants that no other holder of the Company's 7% Convertible
Subordinated Debentures due 2006 who agrees to waive its right to deliver a
Redemption Notice to require YSI to redeem the Debentures on the Holder
Redemption Date relating to the Merger
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has received or will receive in exchange therefor any right that is more
favorable to such holder than the rights received by you.
Please indicate your agreement to the terms hereof by causing this
letter agreement to be duly executed on your behalf where indicated below.
Sincerely,
______________________________________
Xxxx X. Xxxxxxx
Senior Vice President General Counsel
and Acting Chief Financial Officer
Youth Services International, Inc.
ACCEPTED AND AGREED TO:
By: _______________________________
Name: _______________________________
Title: _______________________________
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CORRECTIONAL SERVICES CORPORATION
GUARANTY
Guaranty, dated as of November 23, 1998, by Correctional Services
Corporation, a Delaware corporation ( the "Guarantor"), in favor of
__________________ ("Holder").
WHEREAS, Guarantor has entered into an Agreement and Plan of Merger dated
as of September 23, 1998, by and among Youth Services International, Inc.
("Guarantied Party"), Guarantor and Palm Merger Corp., a wholly-owned subsidiary
of Guarantor, providing for the merger (the "Merger") of Palm Merger Corp. with
and into Guarantied Party. Upon consummation of the Merger, Guarantied Party
will become a wholly-owned subsidiary of Guarantor. In connection with the
Merger, Guarantor has requested that Guarantied Party obtain Xxxxxx's consent to
waive certain rights it has as a holder of Guarantied Party's 7% Convertible
Subordinated Debentures Due 2006 (the "Debentures"). Guarantied Party has
promised to redeem the Debentures on the first anniversary of the Merger, for
cash.
1. Guaranty. To induce Holder to enter into a letter agreement with
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Guarantied Party, dated as of November 12, 1998, pursuant to which
Holder will waive certain rights under the Debentures (the
"Modification Agreement"), and provided the Merger shall have
occurred in the manner contemplated in the Modification Agreement,
Guarantor unconditionally and irrevocably guaranties to Holder, its
successors, endorsees, and assigns, the prompt payment when due of
all present and future obligations and liabilities of all kinds of
Guarantied Party to Holder arising out of or relating to the
Modification Agreement (the "Obligations").
2. Absolute Guaranty. Guarantor's obligations hereunder shall not
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be affected by the genuineness, validity, regularity, or
enforceability (except to the extent the lack of enforceability
relates to an action or inaction of Holder) of the Obligations or
of any instrument evidencing the Obligations, or by the existence,
validity, enforceability, perfection or extent of any collateral
therefor, or by any other circumstance relating to the Obligations
which might otherwise constitute a defense to this Guaranty. Holder
shall not be obligated to file any claim relating to the
Obligations in the event that Guarantied Party becomes subject to a
bankruptcy, reorganization, or similar proceeding, and the failure
of Holder so to file shall not affect Guarantor's obligations
hereunder. In the event that any payment of Guarantied Party to
Holder in respect of any Obligations is rescinded or must otherwise
be returned for any reason whatsoever, Guarantor shall remain
liable hereunder in respect to such Obligations as if such payment
had not been made. Guarantor agrees that its obligations under this
Guaranty constitute a guaranty of payment and performance and not
of collection.
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3. Consents, Waiver Agreements, and Renewals. Guarantor agrees that
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Holder may at any time and from time to time, either before or
after the maturity thereof, without notice to or further consent of
Guarantor, extend the time of payment of, exchange or surrender any
collateral for, or renew, any of the Obligations, and may also make
any agreement with Guarantied Party or with any other party to or
person liable on any of the Obligations, or interested therein, for
the extension, renewal, payment, compromise, discharge, or release
thereof, in whole or in part, or for any modification of the terms
thereof, or of any agreement between Holder and Guarantied Party or
any such other party or person, without in any way impairing or
affecting this Guaranty. Guarantor agrees that Holder may resort to
Guarantor for payment of any of the Obligations, whether or not
Holder shall have resorted to any collateral or shall have
proceeded against any other obligor principally or secondarily
obligated with respect to any of the Obligations.
4. Expenses. Guarantor agrees to pay on demand all out-of-pocket
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expenses (including the reasonable fees and expenses of Holder's
attorneys) in any way relating to any action taken following
Guarantor's default hereunder for the enforcement or protection of
the rights of Holder hereunder.
5. Subrogation. Guarantor shall not exercise any rights which it may
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acquire by way of subrogation until all of the Obligations to
Holder shall have been paid in full. If any amount shall be paid to
Guarantor in violation of the preceding sentence, such amount shall
be held in trust for the benefit of Holder and shall forthwith be
paid to Holder to be credited and applied to the Obligations,
whether matured or unmatured. Subject to the foregoing, upon
payment of all of the Obligations, Guarantor shall be subrogated to
the rights of Holder against Guarantied Party, and Xxxxxx agrees to
take at Guarantor's expense such steps as Guarantor may reasonably
request to implement such subrogation.
6. Continuing Guaranty. This Guaranty is absolute, unconditional, and
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irrevocable and shall remain in full force and effect and be
binding upon Guarantor, its successors and assigns, until all of
the Obligations have been satisfied in full. If any of the present
or future Obligations are guarantied by individuals or entities in
addition to Guarantor, the death, release, or discharge, in whole
or in part, or the bankruptcy, liquidation, termination, or
dissolution of one or more of them shall not discharge or affect
the liabilities of Guarantor under this Guaranty.
7. No Waiver: Cumulative Rights. No failure on the part of Holder to
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exercise, and no delay in exercising, any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise by Holder of any right, remedy, or power
hereunder preclude any other or
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future exercise of any right, remedy, or power. Each and every
right, remedy, and power hereby granted to Holder or allowed it by
law or other agreement shall be cumulative and not exclusive of any
other, and may be exercised by Holder from time to time.
8. Waiver of Notice. Guarantor waives notice of the acceptance of
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this Guaranty, notice of the Obligations, presentment to or demand
of payment from anyone whomsoever liable upon any of the
Obligations, presentment, demand, notice of dishonor or non-
payment, protest, diligence, suit, notice of any sale of any
collateral, notice of the taking of other action by Holder against
Guarantied Party, Guarantor, or others, and any and all other
notices whatsoever.
9. Representations and Warranties.
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(a) Guarantor is duly organized, validly existing, and in good
standing under the law of the jurisdiction of its formation
and has full corporate power and authority to execute,
deliver, and perform this Guaranty.
(b) The execution, delivery, and performance of this Guaranty
have been and remain duly authorized by all necessary
action and do not contravene any provision of Guarantor's
certificate of incorporation, as amended to date, or any
law, rule, regulation, decree, order, judgment, guideline,
policy, or resolution, or any contractual restriction
binding on Guarantor or its assets.
(c) All consents, licenses, clearances, authorizations, and
approvals of, and registrations and declarations with, any
governmental or regulatory authority necessary for the due
execution, delivery, and performance of this Guaranty have
been obtained and remain in full force and effect and all
conditions thereof have been duly complied with, and no
other action by, and no notice to or filing with, any
governmental or regulatory authority is required in
connection with the execution, delivery, or performance of
this Guaranty.
(d) This Guaranty constitutes the legal, valid, and binding
obligation of Guarantor, enforceable against Guarantor in
accordance with its terms.
10. Assignment. Neither Guarantor nor Holder may assign its rights,
-----------
interests, or obligations under this Guaranty to any other person
without the prior written consent of Guarantor or Holder, as the
case may be, except that Holder (or its permitted assignee) may
assign its rights, interests, or obligations under this Guaranty
to any transferee of the Debentures provided
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Holder (or its permitted assignee) has complied with the
provisions of paragraph 4 of the Modification Agreement.
11. Governing Law. This Guaranty shall be governed by, and construed
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and enforced in accordance with, the law of the State of Texas
applicable to contracts made and to be performed within such State
without reference to choice of law doctrine.
12. Partial Invalidity. In the event that any provision of this
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Guaranty is declared to be illegal, invalid, or otherwise
unenforceable by a court of competent jurisdiction or regulatory
authority, the remainder of this Guaranty shall not be affected
except to the extent necessary to delete such illegal, invalid, or
unenforceable provision unless the deletion of such provision
would substantially impair the respective benefits of the
remaining portions of this Guaranty.
IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered by
Guarantor to Holder as of the date first written above.
CORRECTIONAL SERVICES CORPORATION
By:
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Xxx X. Xxxxxx
Executive Vice President, Chief
Financial Officer
ACCEPTED and AGREED,
By:____________________________
Name:__________________________
Title:___________________________
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