FIRST AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
THIS FIRST AMENDMENT TO CREDIT AGREEMENT is made as of the 10th day of
November, 2000 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,
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 SUMMIT BANK, a New Jersey banking corporation, 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:
-------------------
WHEREAS, the Company, the Subsidiary Guarantors, the Lenders and the
Syndication Agent entered into a Credit Agreement dated August 31, 1999
(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 of the
Credit Agreement are hereby amended to read in their entirety as follows:
"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
<PAGE>
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:
<TABLE>
<CAPTION>
Applicable Margin for Applicable Margin for
Ratio of Total Revolving Credit Revolving Credit Loans
Funded Debt to Loans that are that are
Level Adjusted EBITDA Base Rate Loans LIBOR Loans
----- --------------- --------------- -----------
<S> <C> <C> <C>
I >3.75:1 2.00% 3.50%
-
II <3.75:1 and 1.75% 3.25%
>3.25:1
-
III <3.25:1 and 1.50% 3.00%
>2.75:1
-
IV <2.75:1 and 1.25% 2.75%
>2.25:1
-
V <2.25:1 1.00% 2.50%
</TABLE>
(ii) with reference to DD Loans that are Base Rate
Loans, an amount equal to 1.00%.
Notwithstanding the foregoing, if, as a result of prevailing
market conditions and despite a good faith effort by Summit Bank
to sell down a portion of its Commitments and Loans, Summit Bank
has been unable by August 31, 2001 to reduce its Commitment to
less than 50% of the sum of all Commitments, then the Syndication
Agent and the Company shall in good faith negotiate an increase
in the Applicable Margin to facilitate a sell down by Summit Bank
of its Commitment and Loans.
"Capital Event" shall mean (i) an Equity Issuance, (ii) a
Disposition, other than a Contemplated Disposition, or (iii) an
issuance by any Obligor of any Indebtedness described in clause
(a) or (b) of the definition "Indebtedness."
"EBITDA" shall mean, for any period, for the Company and its
Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), the sum of (a) Consolidated
Net Income, PLUS (b) depreciation and amortization expense
deducted in the determination of such Consolidated Net Income,
PLUS (c) Consolidated Interest Expense deducted in the
determination of such Consolidated Net Income, PLUS (d) federal
and state income taxes as determined in accordance with GAAP and
deducted in the determination of such Consolidated Net Income,
MINUS (e) any items of gain which are extraordinary items as
defined in GAAP to the extent reflected in the determination of
<PAGE> 2
Consolidated Net Income, PLUS (f) any losses which are
extraordinary items as defined in GAAP to the extent reflected in
the determination of Consolidated Net Income PLUS (g) non-cash
compensation and accruals, PLUS (h) non-cash contributions or
accruals to or with respect to deferred profit sharing plans PLUS
(i) subject to the approval of the Agent in its reasonable
discretion, non-recurring, non-cash expenses.
"Excess Cash Flow" shall mean:
(i) the sum of the following: (A) EBITDA PLUS (B)
proceeds of business interruption or similar insurance PLUS (C)
decreases in working capital (but excluding from the calculation
thereof (1) any change in working capital resulting solely from a
change in the aggregate outstanding Revolving Credit Loans for
the period during which Excess Cash Flow is being calculated and
(2) the portion of the DD Loans that would be deemed a current
liability for the period during which Excess Cash Flow is being
calculated) PLUS (D) cash payments received as a result of tax
refunds; MINUS
(ii) the sum of the following: (A) Consolidated
Interest Expense plus scheduled payments of principal on term
loans PLUS (B) Capital Expenditures that are not funded with debt
or equity PLUS (C) increases in working capital (but excluding
from the calculation thereof (1) any change in working capital
resulting solely from a change in the aggregate outstanding
Revolving Credit Loans for the period during which Excess Cash
Flow is being calculated and (2) the portion of the DD Loans
that would be deemed a current liability for the period during
which Excess Cash Flow is being calculated) PLUS (D) cash
payments for taxes.
Notwithstanding the foregoing, in no event shall the proceeds
of a Capital Event or a Contemplated Disposition be included in
the calculation of Excess Cash Flow.
"Permitted Investments" shall mean (a) direct obligations of
the United States of America, or of any agency thereof, or
obligations guaranteed as to principal and interest by the United
States of America, or of any agency thereof, in either case
maturing not more than 90 days from the date of acquisition
thereof; (b) certificates of deposit issued by any Lender or by
any bank or trust company organized under the laws of the United
States of America or any state thereof and having capital,
surplus and undivided profits of at least $500,000,000, maturing
not more than 90 days from the date of acquisition thereof;
(c) commercial paper rated A-1 or better or P-1 by Standard &
Poor's Corporation or Moody's Investors Services, Inc.,
respectively, maturing not more than six months from the date of
acquisition thereof; (d) commercial paper of any Lender (or any
Affiliate thereof located in the United States of America) that
is rated A-1 or better or P-1 by Standard and Poor's Corporation
or Moody's Investors Services, Inc., respectively, maturing not
more than six months from the date of acquisition thereof;
(e) repurchase agreements entered into with any Lender or with
any bank or trust company satisfying the conditions of clause (b)
hereof that are secured by any obligation of the type described
in clauses (a) through (d) of this definition; (f) money market
<PAGE> 3
funds acceptable to the Required Lenders; and (g) Permitted Stock
Repurchases.
"Required Lenders" shall mean (i) until such time as Summit
Bank's Commitment constitutes less than 50% of the sum of all
Commitments, Lenders holding 100% of the Commitments (or, if the
Commitments have terminated or expired, 100% of the aggregate
unpaid principal amount of the Loans), and (ii) from and after
the date on which Summit Bank's Commitment constitutes less than
50% of the sum of all Commitments, Lenders holding 66-2/3% of the
Commitments (or, if the Commitments have terminated or expired,
66-2/3% of the aggregate unpaid principal amount of the Loans).
"Revolving Credit Commitment" shall mean, for each Lender,
the obligation of such Lender to make Loans in an aggregate
principal amount at any one time outstanding up to but not
exceeding the amount set forth opposite the name of such Lender
on Schedule 1 under the caption "Amount of Commitment for
Revolving Credit Loan" (as the same may be reduced from time to
time pursuant to Section 2.3 hereof). The aggregate principal
amount of the Revolving Credit Commitments was originally
$30,000,000 and, from and after November 10, 2000, shall be
$25,000,000.
"Senior Debt" shall mean Total Funded Debt of the Company
and its Subsidiaries MINUS Subordinated Debt.
"UCC" shall mean the Uniform Commercial Code as in effect
from time to time in any applicable jurisdiction, including, as
and when adopted, the revisions to Article 9 thereof.
(b) The following definitions are hereby added to Section 1 of
the Credit Agreement:
"Available Excess Cash Flow" shall mean (i) for the fiscal
quarter ending September 30, 2000, 25% of the Excess Cash Flow of
the Company for such fiscal quarter, (ii) for the fiscal quarter
ending December 31, 2000, the difference between (A) 25% of the
Excess Cash Flow of the Company for the six-month period then
ended and (B) the aggregate amount of Permitted Stock Repurchases
(other than Permitted Stock Repurchases made with the net
proceeds of a Contemplated Disposition) made by the Company
during such six-month period, (iii) for the fiscal quarter ending
March 31, 2001, the difference between (A) 25% of the Excess Cash
Flow of the Company for the nine-month period then ended and (B)
the aggregate amount of Permitted Stock Repurchases (other than
Permitted Stock Repurchases made with the net proceeds of a
Contemplated Disposition) made by the Company during such nine-
month period, and (iv) for the fiscal quarter ending June 30,
2001 and each of the Company's fiscal quarters thereafter, the
difference between (A) 25% of the Excess Cash Flow of the Company
for the 12-month period then ended and (B) the aggregate amount
of Permitted Stock Repurchases (other than Permitted Stock
Repurchases made with the net proceeds of a Contemplated
Disposition) made by the Company during such 12-month period.
<PAGE> 4
"Contemplated Dispositions" shall collectively mean (i) the
sale of the Company's Tampa Bay Academy, (ii) the sale of certain
undeveloped land owned by the Company and located in the State of
Washington and (iii) the assignment to, and assumption by,
Dominion Management Group of the contracts for the Crowley and
McLoud facilities.
"Permitted Stock Repurchase" shall mean a repurchase by the
Company on the open market of its publicly traded capital stock,
so long as (i) such repurchases do not exceed $10,000,000 in the
aggregate, (ii) the amount of such repurchases made from time to
time with the net proceeds of the Contemplated Dispositions
received by the Company does not exceed the lesser of (A)
$4,000,000 or (B) 50% of the net proceeds received by the Company
from the Contemplated Dispositions, as certified by a senior
financial officer of the Company in a certificate delivered to
the Syndication Agent prior to each such repurchase, (iii) each
repurchase other than the repurchases described in the preceding
clause (ii) is in an amount that does not exceed 25% of the
Available Excess Cash Flow of the Company, as demonstrated in the
Compliance Certificate delivered by the Company as at the end of
each of its fiscal quarters and (iv) no Event of Default exists
at the time of, or would result from, such repurchase.
"Total Funded Debt" shall mean, for any Person at any date,
without duplication, (a) all indebtedness of such Person for
borrowed money (whether by loan or the issuance and sale of debt
securities) or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with
customary practices), (b) any other indebtedness of such Person
which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under Capital
Leases, (d) all obligations of such Person in respect of letters
of credit, acceptances or similar instruments issued or created
for the account of such Person, (e) the principal balance
outstanding under any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet
financing product to which such Person is a party, where such
transaction is considered borrowed money indebtedness for tax
purposes but is classified as an operating lease in accordance
with GAAP.
(c) Each of the definitions "Applicable Commitment Fee Rate,"
"Consolidated Debt Service," "Consolidated Interest Expense" and
"Subordinated Debt" appearing in Section 1 of the Credit Agreement is
hereby amended by substituting the term "Total Funded Debt" for the term
"Indebtedness," wherever "Indebtedness" appears in the foregoing
definitions.
(d) Section 2.10.2 of the Credit Agreement is hereby amended to
read in its entirety as follows:
<PAGE> 5
2.10.2 Excess Cash Flow.
Not later than 90 days after the end of each fiscal year,
commencing with the fiscal year ending December 31, 2000, the
Company shall prepay the DD Loans in an aggregate amount equal to
(i) 25% of the Excess Cash Flow for such fiscal year (computed on
the basis of the financial statements provided to the Syndication
Agent pursuant to Section 9.1(c) hereof); PROVIDED, HOWEVER, such
prepayment shall only be required if the ratio of Total Funded
Debt to EBITDA as at the end of such fiscal year equals or
exceeds 2.0 to 1.0 PLUS (ii) the amount, if any, by which (A) the
aggregate amount of Permitted Stock Repurchases (but excluding
therefrom Permitted Stock Repurchases made with the net proceeds
of a Contemplated Disposition) made by the Company during the
immediately preceding fiscal year (or, in the case of the
Company's fiscal year ending December 31, 2000, during the
immediately preceding six-month period) exceeds (B) the Excess
Cash Flow of the Company for such fiscal year (or, in the case of
the Company's fiscal year ending December 31, 2000, for such six-
month period). The Company shall demonstrate its computation of
Excess Cash Flow and its prepayment of the DD Loans in its annual
Compliance Certificate for such year.
(e) Section 8.1.26 of the Credit Agreement is hereby amended to
read in its entirety as follows:
8.1.26 Default Of Total Funded Debt, Use Permits, Orders and
Other Agreements.
No Obligor is in breach or default of, and no event of
default or event, which with the passage of time or giving of
notice or both, would constitute, mature into or become a default
or event of default, has occurred and is continuing with respect
to (i) any Total Funded Debt of any kind or nature, (ii) any Use
Permit, (iii) any judgment, order, award or decree issued by any
court or governmental or administrative agency, or (iv) any
agreement to which it is a party, which breach or default might
have a Material Adverse Effect.
(f) Section 9.1.6(f) of the Credit Agreement is hereby amended
to read in its entirety as follows:
(f) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness described in clauses (a)
through (d) or (h) of the definition of Indebtedness), leases,
statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary
course of business;
(g) Section 9.1.7 of the Credit Agreement is hereby amended to
read in its entirety as follows:
9.1.7 Total Funded Debt.
<PAGE> 6
The Company will not, nor will it permit any of its
Subsidiaries to, create, incur or suffer to exist any Total
Funded Debt except (without duplication):
(a) Total Funded Debt arising pursuant to the Basic
Documents or the Operative Documents;
(b) Total Funded Debt outstanding on the date hereof
and listed in Part A of SCHEDULE 8.1.12 hereto;
(c) Total Funded Debt of Subsidiaries of the Company to
the Company or to other Subsidiaries of the Company;
(d) Total Funded Debt of the Company and its
Subsidiaries secured by Liens permitted under Section 9.1.6
(other than Section 9.1.6(h)) hereof up to but not exceeding
$500,000 at any one time outstanding;
(e) Total Funded Debt of one or more Special Purpose
Subsidiaries in an aggregate amount not exceeding $20,000,000 at
any one time outstanding;
(f) Total Funded Debt consisting of any future
Synthetic Lease Financing; and
(g) additional Total Funded Debt of the Company and its
Subsidiaries (including, without limitation, Capital Lease
obligations) up to but not exceeding $500,000 at any one time
outstanding.
(h) Section 9.1.9 of the Credit Agreement is hereby amended to
read in its entirety as follows:
9.1.9 Dividend Payments.
The Company will not, nor will it permit any of its
Subsidiaries to, declare or make any Dividend Payment at any
time, except a Dividend Payment (i) from a Subsidiary to the
Company in order to fund the mandatory prepayment required under
Section 2.1.10 hereof upon the occurrence of a Capital Event
involving such Subsidiary and (ii) constituting a Permitted Stock
Repurchase.
(i) 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
<PAGE> 7
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, 2000 3.25:1
December 31, 2000 2.50:1
and thereafter
(j) Section 9.1.11 of the Credit Agreement is hereby amended to
read in its entirety as follows:
9.1.11 Senior Debt to Adjusted EBITDA Ratio. [deleted]
(k) Section 9.1.12 of the Credit Agreement is hereby amended to
read in its entirety as follows:
9.1.1 Consolidated Net Worth.
The Company will not permit its Consolidated Net Worth to be
less than its Consolidated Net Worth as at June 30, 2000 PLUS (i)
90% of the Company's cumulative, positive (any loss shall be
treated as zero) Consolidated Net Income earned from July 1, 2000
through the date of determination PLUS, (ii) 100% of the net
proceeds of Equity Issuances from July 1, 2000 through such date
of determination MINUS (iii) the aggregate amount of Permitted
Stock Repurchases made from July 1, 2000 through such date of
determination.
(l) Section 9.1.13 of the Credit Agreement is hereby amended to
read in its entirety as follows:
9.1.13 Consolidated Total Funded Debt to Net Worth Ratio.
The Company will not permit the ratio of (i) the
consolidated Total Funded Debt of the Company and its
Subsidiaries to (ii) the sum of the consolidated Total Funded
Debt of the Company and its Subsidiaries PLUS Consolidated Net
Worth to exceed 70% at any time prior to December 31, 2001 or 65%
from and after such date.
(m) Section 10.1(b) of the Credit Agreement is hereby amended to
read in its entirety as follows:
(b) The Company or any of its Subsidiaries shall default in
the payment when due of any principal of or interest on any of
its other Total Funded Debt aggregating $250,000 or more, or in
the payment when due of any amount under any Interest Rate
Protection Agreement, or any event specified in any note,
<PAGE> 8
agreement, indenture or other document evidencing or relating to
any such Total Funded Debt or any event specified in any Interest
Rate Protection Agreement shall occur if the effect of such event
is to cause, or (with the giving of any notice or the lapse of
time or both) to permit the holder or holders of such Total
Funded Debt (or a trustee or agent on behalf of such holder or
holders) to cause, such Total Funded Debt to become due, or to be
prepaid in full (whether by redemption, purchase, offer to
purchase or otherwise), prior to its stated maturity; or in the
case of any Interest Rate Protection Agreement, to permit the
payments owing under such Interest Rate Protection Agreement to
be liquidated or the Company shall be in default in or obligated
to pay any "Recourse Deficiency Amount" (as that term is defined
in the Master Agreement) in respect of the 1999 Synthetic Lease
Financing; or
(n) Section 12.6(b) of the Credit Agreement is hereby amended to
read in its entirety as follows:
(b) Each Lender may, with the consent of the
Syndication Agent and (in the case of a Revolving Credit Lender)
the Letter of Credit Issuer, assign any of its Loans, its Notes,
its Letter of Credit Liabilities and its Commitments to an
Eligible Assignee PROVIDED that (i) no such consent by the
Syndication Agent shall be required in the case of any assignment
to another Lender or an Affiliate of an assigning Lender; (ii)
any such partial assignment shall be in an amount at least equal
to $5,000,000 and, after giving effect thereto, the Commitment of
both the assignor and the assignee is at least $1,000,000, unless
the assignee is an Affiliate of an assigning Lender; and (iii)
each such assignment by a Lender of its Loans, Letter of Credit
Liabilities or Commitment shall be made in such manner so that
the same portion of its Loans, Letter of Credit Liabilities and
Commitment is assigned to the respective assignee. Upon
execution and delivery by the assignor and the assignee to the
Syndication Agent of an Assignment and Assumption Agreement
substantially in the form of EXHIBIT C hereto (the "ASSIGNMENT
AND ASSUMPTION AGREEMENT") pursuant to which such assignee agrees
to become a "Lender" hereunder (if not already a Lender) having
the Commitment(s), Letter of Credit Liabilities and Loans
specified in such Assignment and Assumption Agreement, and upon
the consent thereto by the Syndication Agent, to the extent
required above, the assignee shall have, to the extent of such
assignment (unless otherwise provided in such assignment with the
consent of the Syndication Agent), the obligations, rights and
benefits of a Lender hereunder holding the Commitment(s), Letter
of Credit Liabilities and Loans (or portion thereof) assigned to
it (in addition to the Commitment(s), Letter of Credit
Liabilities and Loans, if any, theretofore held by such assignee)
and the assigning Lender shall, to the extent of such assignment,
be released from the Commitment(s) (or portion(s) thereof) so
assigned. Upon each such assignment, (x) the assigning Lender
shall pay the Syndication Agent an assignment fee of $3,500, and
(y) the assignee shall for all purposes be deemed a party to the
Intercreditor Agreement. Within five Business Days after receipt
by the Company of (i) notice from the Syndication Agent of any
assignment made pursuant to this Section 12.6(b) and (ii)
<PAGE> 9
Substitute Notes reflecting the Commitments and Loans assigned
hereunder, the Company shall execute and deliver such Notes to
the Syndication Agent for distribution to the appropriate
parties.
(o) Schedule 1 to the Credit Agreement is hereby deleted
and replaced with Schedule 1 to this Agreement.
(p) Part A of Schedule 8.1.12 to the Credit Agreement is
hereby deleted and replaced with Schedule 8.1.12 to this Agreement.
(q) Exhibit B to the Credit Agreement is hereby deleted and
replaced with Exhibit B to this Agreement.
3. 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 and the documents
being executed and delivered pursuant hereto. 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.
4. Substitute Notes. To evidence the decrease in the aggregate
Revolving Credit Commitment from $30,000,000 to $25,000,000, the Company
is, concurrently herewith, executing and delivering to each of the
Revolving Credit Lenders a substitute Revolving Credit Note (each a
"Substitute Note") in substitution for, but not repayment of, the Revolving
Credit Note (each a "Prior Note") heretofore issued to each such Revolving
Credit Lender. The parties acknowledge and agree that the execution and
delivery of the Substitute Notes shall not constitute a repayment,
refinancing, accord and satisfaction or novation of the Prior Notes or the
indebtedness evidenced thereby.
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) 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.
<PAGE> 10
(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.
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 and the other Amendment Documents and the transactions referenced
herein.
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.
<PAGE> 11
9. 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: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
YOUTH SERVICES INTERNATIONAL, INC.
a Maryland corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
FF&E, INC., a New Jersey corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
COMMUNITY CORRECTIONS, INC., a
Texas corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
(Signatures continued on next page)
<PAGE> 12
YOUTH SERVICES INTERNATIONAL
OF NORTHERN IOWA, INC., an
Iowa corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
YOUTH SERVICES INTERNATIONAL
OF BALTIMORE, INC., a Maryland
corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
YOUTH SERVICES INTERNATIONAL
OF VIRGINIA, INC., a Virginia
corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
YOUTH SERVICES INTERNATIONAL
HOLDINGS, INC., a Delaware corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
(Signatures continued on next page)
<PAGE> 13
YOUTH SERVICES INTERNATIONAL
REAL PROPERTY PARTNERSHIP, LLP,
a Maryland limited liability partnership
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President of Both
Partners
YOUTH SERVICES INTERNATIONAL
OF DELAWARE, INC., a Delaware
corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
YOUTH SERVICES INTERNATIONAL
OF ILLINOIS, INC., a Maryland
corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
YOUTH SERVICES INTERNATIONAL
OF MARYLAND, INC., a Maryland
corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
(Signatures continued on next page)
<PAGE> 14
YOUTH SERVICES INTERNATIONAL
OF MINNESOTA, INC., a Maryland
corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
YOUTH SERVICES INTERNATIONAL
OF SOUTH DAKOTA, INC., a South Dakota
corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
YOUTH SERVICES INTERNATIONAL
OF TEXAS, INC., a Texas
corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
YSI OF CENTRAL IOWA, INC.,
an Iowa corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
(Signatures continued on next page)
<PAGE> 15
YOUTH SERVICES INTERNATIONAL
OF IOWA, INC., a Maryland
corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
YOUTH SERVICES INTERNATIONAL
OF MICHIGAN, INC., a Michigan
corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
YOUTH SERVICES INTERNATIONAL
OF MISSOURI, INC., a Missouri
corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
YOUTH SERVICES INTERNATIONAL
OF TENNESSEE, INC., a Maryland
corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
(Signatures continued on next page)
<PAGE> 16
YOUTH SERVICES INTERNATIONAL
SOUTHEASTERN PROGRAMS, INC.,
a Maryland corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
CSC MANAGEMENT DE PUERTO RICO, INC.,
a Puerto Rico corporation
By: /s/ Ira M. Cotler
----------------------------
Ira M. Cotler
Executive Vice President
SUMMIT BANK,
as the Syndication Agent and a Lender
By: /s/ Lisa Cohen
___________________________
Lisa Cohen
Vice President
SUNTRUST BANK, NASHVILLE, N.A.,
as a Lender
By: /s/ William H. Crawford
___________________________
William H. Crawford
Vice President
BANCO POPULAR NORTH AMERICA
By: /s/ Ronald B. Goldberg
___________________________
Ronald B. Goldberg
Vice President
