EX-10.1



 





Exhibit 10.1




THIRD AMENDMENT TO AMENDED AND RESTATED REVOLVING

CREDIT AND SECURITY AGREEMENT




     THIS THIRD AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT, dated as
of October 31, 2006 (this “Third Amendment”), is entered into by and between AMERICA SERVICE GROUP
INC. (“ASG”) a Delaware corporation, PRISON HEALTH SERVICES, INC. (“PHS”), a Delaware corporation,
EMSA LIMITED PARTNERSHIP (“EMSA LP”), a Florida limited partnership, PRISON HEALTH SERVICES OF
INDIANA, L.L.C. (“PHS Indiana”), an Indiana limited liability company, SECURE PHARMACY PLUS, LLC
(“SPP”), a Tennessee limited liability company, and CORRECTIONAL HEALTH SERVICES, LLC, (“CHS”) a
New Jersey limited liability company (ASG, PHS, EMSA LP, PHS Indiana, SPP and CHS) are hereinafter
referred to, individually and collectively as the “Borrower”), CAPITALSOURCE FINANCE LLC, a
Delaware limited liability company (“CapitalSource”), as administrative agent and collateral agent
for Lenders (in such capacities, the “Agent”), and the Lenders party hereto.



RECITALS




     A. Pursuant to that certain Amended and Restated Revolving Credit and Security Agreement dated
as of October 31, 2005, (as amended, and as further amended, supplemented, or otherwise modified
from time to time, the “Loan Agreement”) and subject to the terms and conditions set forth therein,
Lender has agreed to make available to Borrower the Revolving Facility.



     B. The parties hereto desire to enter into this Third Amendment to amend the Loan Agreement in
certain respects as provided herein.



     NOW, THEREFORE, in consideration of the foregoing, the terms and conditions, premises and
other mutual covenants set forth in this Third Amendment, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound, Lender and Borrower hereby agree as follows:



     Section 1. Definitions. Unless otherwise defined herein, all capitalized terms used
and not defined herein shall have the meanings assigned to such terms in the Loan Agreement.



     Section 2. Amendments to Loan Agreement. The sections, definitions, annexes and
exhibits of and to the Loan Agreement referenced and set forth on Annex A to this Third
Amendment hereby are amended, or amended and restated, as applicable, to read as set forth on such
Annex A, which annex is incorporated herein and made a part hereof and of the Loan
Agreement.



Section 3. Representations and Warranties.




          (a) Notwithstanding any other provision of this Third Amendment, each Borrower
individually hereby (i) confirms and makes all of the representations and warranties set forth in
the Loan Agreement and other Loan Documents with respect to such Borrower and this Third Amendment
as of the date hereof and as of the Effective Date and confirms that they are true and correct,
(ii) represents and warrants that they are Affiliates of each other, and (iii) specifically
represents and warrants to Lender that it has good and marketable title to all of its respective
Collateral, free and clear of any Lien or security interest in favor of any other Person (other
than Permitted Liens).



          (b) Each Borrower individually hereby represents and warrants as of the date of this Third
Amendment and as of the Effective Date as follows: (i) it is duly incorporated or organized,
validly



 









 




existing and in good standing under the laws of its jurisdiction of organization; (ii) the
execution, delivery and performance by it of this Third Amendment are within its powers, have been
duly authorized, and do not contravene (A) its articles of organization, operating agreement, or
other organizational documents, or (B) any applicable law; (iii) no consent, license, permit,
approval or authorization of, or registration, filing or declaration with any Governmental
Authority or other Person, is required in connection with the execution, delivery, performance,
validity or enforceability of this Third Amendment by or against it; (iv) this Third Amendment has
been duly executed and delivered by it; (v) this Third Amendment constitutes its legal, valid and
binding obligations enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally or by general principles of equity; and
(vi) upon giving effect to this Third Amendment it is not in default under the Loan Agreement and
no Default or Event of Default exists, has occurred or is continuing.




     Section 4. Expenses. Borrower shall pay all costs and expenses incurred by Lender or
any of its Affiliates, including, without limitation, documentation and diligence fees and
expenses, all search, audit, appraisal, recording, professional and filing fees and expenses and
all other out-of-pocket charges and expenses (including, without limitation, UCC and judgment and
tax lien searches and UCC filings and fees for post-Closing UCC and judgment and tax lien searches)
and reasonable attorneys’ fees and expenses, in connection with entering into, negotiating,
preparing, reviewing and executing this Third Amendment contemplated hereby and all related
agreements, documents and instruments, including, without limitation, the UCC Financing Statements
and searches required hereunder and under the Loan Agreement, and all of the same may be charged to
Borrower’s account and shall be part of the Obligations. If Lender or any of its Affiliates uses
in-house counsel for any of the purposes set forth above Borrower expressly agrees that its
Obligations include reasonable charges for such work commensurate with the fees that would
otherwise be charged by outside legal counsel selected by Lender or such Affiliate in its sole
discretion for the work performed.



     Section 5. Effect on the Loan Agreement. Upon the effectiveness of this Third
Amendment, (i) each reference in the Loan Agreement to “this Agreement,” “hereunder,” “hereof,”
“herein” or words of similar import shall mean and be a reference to the Loan Agreement as amended
by this Third Amendment, and (ii) each reference in any other Loan Document to the “Loan Agreement”
shall mean and be a reference to the Loan Agreement as amended by this Third Amendment. Each
reference herein to the Loan Agreement shall be deemed to mean the Loan Agreement as amended by
this Third Amendment. Except as specifically amended hereby, the Loan Agreement and all other Loan
Documents shall remain in full force and effect and the terms thereof are expressly incorporated
herein and are ratified and confirmed in all respects. This Third Amendment is not intended to be
or to create, nor shall it be construed as or constitute, a novation or an accord and satisfaction
but shall constitute an amendment of the Loan Agreement. The parties hereto agree to be bound by
the terms and conditions of the Loan Agreement as amended by this Third Amendment as though such
terms and conditions were set forth herein in full. The execution, delivery and effectiveness of
this Third Amendment shall not, except as expressly provided in this Third Amendment, operate as a
waiver of any right, power or remedy of Lender, nor constitute a waiver of any provision of the
Loan Agreement or any other Loan Document or any other documents, instruments and agreements
executed or delivered in connection therewith or of any Default or Event of Default under any of
the foregoing whether arising before or after the Effective Date or as a result of performance
hereunder.



     Section 6 . Governing Law and Jury Trial. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS SET FORTH IN THE LOAN AGREEMENT AND SHALL BE



2









 




SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS OF THE LOAN AGREEMENT.




     Section 7. Headings and Counterparts. The captions in this Third Amendment are
intended for convenience and reference only and do not constitute and shall not be interpreted as
part of this Third Amendment and shall not affect the meaning or interpretation of this Third
Amendment. This Third Amendment may be executed in one or more counterparts, all of which taken
together shall constitute but one and the same instrument. This Third Amendment may be executed by
facsimile transmission, which facsimile signatures shall be considered original executed
counterparts for all purposes, and each party to this Third Amendment agrees that it will be bound
by its own facsimile signature and that it accepts the facsimile signature of each other party to
this Third Amendment.



     Section 8. Entire Agreement. This Third Amendment, the Loan Agreement and the other
Loan Documents constitute the entire agreement between the parties with respect to the subject
matter hereof and thereof and supersedes all prior agreements and understandings, if any, relating
to the subject matter hereof and thereof and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements between the parties. There are no unwritten oral
agreements between the parties. This Third Amendment may not be changed, modified, amended,
restated, waived, supplemented, discharged, canceled or terminated orally or by any course of
dealing or in any other manner other than by the written agreement of Lender and Borrower. This
Third Amendment shall be considered part of the Loan Agreement for all purposes under the Loan
Agreement.



     Section 9. Miscellaneous. Whenever the context and construction so require, all words
used in the singular number herein shall be deemed to have been used in the plural, and vice versa,
and the masculine gender shall include the feminine and neuter and the neuter shall include the
masculine and feminine. This Third Amendment shall inure to the benefit of Lender, all future
holders of any note, any of the Obligations or any of the Collateral and all Transferees, and each
of their respective successors and permitted assigns. Borrower may not assign, delegate or
transfer this Third Amendment or any of its rights or obligations under this Third Amendment
without the prior written consent of Lender. No rights are intended to be created under this Third
Amendment for the benefit of any third party donee, creditor or incidental beneficiary of Borrower.
Nothing contained in this Third Amendment shall be construed as a delegation to Lender of
Borrower’s duty of performance, including, without limitation, any duties under any account or
contract in which Lender has a security interest or Lien. This Third Amendment shall be binding
upon Borrower and its successors and assigns.



     Section 10. Release. Each Borrower, its officers, directors, representatives,
employees, predecessors, successors, agents and assigns, and each Guarantor, his agents,
representatives, predecessors, successors and assigns (collectively, “Releasing Parties”) each
hereby release, remise and forever discharge Lender, and its officers, directors, employees,
predecessors, successors, agents and assigns (collectively, “Released Parties”), from any and all
claims, demands, actions, cause or causes of action heretofore arising out of, or connected with or
incidental to the Loan Agreement or any Loan Documents. This general release is intended to be a
full and complete release of any such claims, demands, actions, cause or causes of action connected
in any way to the Loan Agreement and which have heretofore arisen. Releasing Parties each
acknowledge and agree that they are aware that they may hereafter discover claims presently unknown
or unsuspected, or facts in addition to or different from those which they now know or believe to
be true. Nevertheless, it is the intention of the Releasing Parties, and each of them, through
this Third Amendment, to fully, finally and forever release all such matters and claims relative
thereto, which do now exist, may exist, or heretofore have existed.



     Section 11. Effective Date. Notwithstanding the date of execution or delivery of this
Third Amendment or any other date set forth herein, the effectiveness of this Third Amendment and
the



3









 




agreement of Lender set forth herein are subject to the satisfaction of the following conditions
precedent (the date on which such conditions shall have been satisfied, the “Effective
Date”), all in form and substance satisfactory to Lender in its sole discretion: (a) the due
execution and delivery to Lender of this Third Amendment by Borrower; (b) the representations and
warranties contained herein, in the Loan Agreement and the other Loan Documents, as amended hereby,
shall be true and correct as of such date, as if made on such date, except for such representations
and warranties as are by their express terms limited to a specific date and remain true and correct
as of such date; (c) upon giving effect to this Third Amendment no Default or Event of Default
shall have occurred and be continuing; and (d) all corporate proceedings necessary in connection
with the transactions contemplated by this Third Amendment shall have been taken and all documents,
instruments and other legal matters incident thereto shall be satisfactory to Lender.




[SIGNATURES APPEAR ON NEXT PAGE]





4









 








     IN WITNESS WHEREOF, the parties have caused this Third Amendment to Amended and Restated
Revolving Credit and Security Agreement to be executed by their respective officers thereunto duly
authorized as of the date first written above.



	 	 	 	 	 
	AGENT AND LENDER:	CAPITALSOURCE FINANCE LLC

 	 
	 	By:  	/s/ J. Anthony Romero
 	 
	 	 	Name:  	J. Anthony Romero 	 
	 	 	Title:  	Chief Operating Officer - HSB 	 
	 



	 	 	 	 	 
	BORROWER:	AMERICA SERVICE GROUP INC.

 	 
	 	By:  	/s/ Michael W. Taylor
 	 
	 	 	Name:  	Mr. Michael Taylor 	 
	 	 	Title:  	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	PRISON HEALTH SERVICES, INC.

 	 
	 	By:  	/s/ Michael W. Taylor
 	 
	 	 	Name:  	Mr. Michael Taylor 	 
	 	 	Title:  	Senior Vice President 	 
	 



	 	 	 	 	 
	 	EMSA LIMITED PARTNERSHIP,

By its General Partner, PRISON HEALTH SERVICES, INC.

 	 
	 	By:  	/s/ Michael W. Taylor
 	 
	 	 	Name:  	Mr. Michael Taylor 	 
	 	 	Title:  	Senior Vice President 	 



5









 






	 	 	 	 	 



	 	 	 	 	 
	 	PRISON HEALTH SERVICES OF INDIANA, LLC

By its General Manager, PRISON HEALTH SERVICES, INC.

 	 
	 	By:  	/s/ Michael W. Taylor
 	 
	 	 	Name:  	Mr. Michael Taylor 	 
	 	 	Title:  	Senior Vice President 	 
	 



	 	 	 	 	 
	 	CORRECTIONAL HEALTH SERVICES, LLC

By its Managing Member, PRISON HEALTH SERVICES, INC.

 	 
	 	By:  	/s/ Michael W. Taylor
 	 
	 	 	Name:  	Mr. Michael Taylor 	 
	 	 	Title:  	Senior Vice President 	 
	 



	 	 	 	 	 
	 	SECURE PHARMACY PLUS, LLC

By its Managing Member, PRISON HEALTH SERVICES, INC.

 	 
	 	By:  	/s/ Michael W. Taylor
 	 
	 	 	Name:  	Mr. Michael Taylor 	 
	 	 	Title:  	Senior Vice President 	 



6









 






	 	 	 	 	 



ANNEX A

TO

THIRD AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT

AND SECURITY AGREEMENT





     Effective as of the Effective Date, the Loan Agreement is hereby amended as follows:



     1. Amendments of Annex I (Financial Covenants) of the Loan Agreement.



          (a) Amendment and Restatement of Section 1, “Minimum EBITDA” Financial Covenant. The
Minimum EBITDA financial covenant set forth in Section 1 of Annex I of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:




     1) Minimum EBITDA




     As of the end of each calendar month, commencing with the calendar
month ending March 31, 2006 through the calendar month ending August 31,
2006, at no time shall ASG (on a consolidated basis) permit its EBITDA for
the Test Period ending on the date of such determination to be less than
$3,000,000. As of the end of each calendar month, commencing with the
calendar month ending September 30, 2006 through the calendar month ending
November 30, 2006, at no time shall ASG (on a consolidated basis) permit
its EBITDA for the Test Period ending on the date of such determination to
be less than $2,250,000. As of the end of each calendar month, commencing
with the calendar month ending December 31, 2006, at no time shall ASG (on
a consolidated basis) permit its EBITDA for the Test Period ending on the
date of such determination to be less than $3,000,000.