EXHIBIT 10.1
AMENDMENT NO. 3 TO SECOND AMENDED
AND RESTATED CREDIT AGREEMENT
AMENDMENT NO. 3, dated as of September 13, 1999 (this "Amendment"), to the
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Existing Credit Agreement (as defined below), among EVERCOM, INC., a Delaware
corporation (the "Borrower"), the various financial institutions as are, or may
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from time to time become, parties thereto (the "Lenders") and CANADIAN IMPERIAL
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BANK OF COMMERCE, acting through one or more of its affiliates, branches or
agencies ("CIBC"), as Administrative Agent and Documentation Agent.
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W I T N E S S E T H:
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WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties
to the Second Amended and Restated Credit Agreement, dated as of December 19,
1997 (as heretofore modified, the "Existing Credit Agreement", and together with
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this Amendment, the "Credit Agreement");
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WHEREAS, the Borrower desires to amend the Existing Credit Agreement as set
forth herein; and
WHEREAS, the Lenders have agreed, subject to the terms and conditions
hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as provided below;
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION I.1. Certain Definitions. The following terms (whether or not
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underscored) when used in this Amendment shall have the following meanings (such
meanings to be equally applicable to the singular and plural form thereof):
"Amendment" is defined in the preamble.
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"Borrower" is defined in the preamble.
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"Credit Agreement" is defined in the first recital.
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"Existing Credit Agreement" is defined in the first recital.
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"Third Amendment Effective Date" is defined in Section 3.1.
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SECTION I.2. Other Definitions. Terms for which meanings are provided in
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the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendment with such meanings.
ARTICLE II
AMENDMENTS TO CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Third Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Article II; except as so amended, the Existing Credit Agreement shall
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continue in full force and effect.
SECTION II.1. Amendments to Article I. Article I of the Existing Credit
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Agreement is hereby amended as follows:
SECTION II.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definitions in such Section in the
appropriate alphabetical sequence:
"Amendment No. 3" means Amendment No. 3 to Second Amended and Restated
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Credit Agreement, dated as of September 13, 1999, among the Borrower, the
Lenders parties thereto and the Administrative Agent.
"Carry-Forward Amount" is defined in Section 7.2.16.
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"Third Amendment Effective Date" is defined in Section 3.1 of
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Amendment No. 3.
"Unused Amount" is defined in Section 7.2.16.
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SECTION II.1.2. Section 1.1 of the Existing Credit Agreement is hereby
amended by deleting in their entirety the definitions of "Acquisition
Adjustment" and "Maintenance Capital Expenditures".
SECTION II.1.3. Section 1.1 of the Existing Credit Agreement is hereby
amended by amending and restating the following definitions in such Section so
that they read in their entirety as follows:
"Debt Service" means, for any period, (a) all maturities of short-term
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Funded Debt and all current maturities of long term Funded Debt (including
actual scheduled payments in respect of Capitalized Lease Liabilities)
actually paid during such period, plus (b) Cash Interest Expense actually
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paid during such period.
"EBITDA" means, with respect to any applicable fiscal period, the Net
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Income (excluding profits generated from the amortization of negative good
will) of the Borrower and its Subsidiaries on a consolidated basis before
taxes for such period (excluding pre-tax gains or losses of the Borrower
and its Subsidiaries on a consolidated basis on the sale of assets (other
than the sale of inventory in the ordinary course of business) and
excluding other pre-tax extraordinary gains or losses of the Borrower and
its Subsidiaries on a consolidated basis), plus Interest Expense,
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depreciation and amortization deducted in determining Net Income for such
period; provided, however, that with respect to EBITDA calculated for a
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Rolling Period (unless otherwise specified), (i) for the period ended June
30, 1999, EBITDA shall include the sum of EBITDA for
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the two Fiscal Quarters ended June 30, 1999, multiplied by two; (ii) for
the period ended September 30, 1999, EBITDA shall include the sum of EBITDA
for the three Fiscal Quarters ended September 30, 1999, multiplied by
1.333; and (iii) for the period ended December 31, 1999 and for each
Rolling Period thereafter, EBITDA shall include the sum of EBITDA for such
period.
SECTION II.1.4. Section 1.1 of the Existing Credit Agreement is hereby
amended by amending the definition of "EBITDA to Fixed Charges Ratio" by
deleting the word "Maintenance" before the words "Capital Expenditures" in
clause (ii) thereof;
SECTION II.2. Amendments to Article VI. Article VI of the Existing Credit
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Agreement is hereby amended as follows:
SECTION II.2.1. Clause (d) of Section 7.1.1 of the Existing Credit
Agreement is hereby amended by inserting "(other than each fourth Fiscal
Quarter) and 90 days after the end of each fourth Fiscal Quarter" immediately
following the words "each Fiscal Quarter" appearing therein.
SECTION II.3. Amendments to Article VII. Article VII of the Existing
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Credit Agreement is hereby amended as follows:
SECTION II.3.1. Clauses (a) through (e) of Section 7.2.4 of the Existing
Credit Agreement are hereby amended and restated in their entirety to read as
follows:
(a) the Total Debt to EBITDA Ratio at any time during any period set
forth below to be greater than the ratio set forth opposite such period:
Total Debt
Period to EBITDA Ratio
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04/01/99 to (and 6.20:1
including) 09/29/99
09/30/99 to (and 6.00:1
including) 12/30/99
12/31/99 to (and 5.40:1
including) 03/30/00
03/31/00 to (and 5.25:1
including) 09/29/00
09/30/00 to (and 5.00:1
including) 12/30/00
12/31/00 to (and 4.50:1
including) 12/30/01
12/31/01 to (and 4.25:1
including) 12/30/02
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Total Debt
Period to EBITDA Ratio
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12/31/02 and thereafter 4.00:1;
(b) the Senior Secured Debt to EBITDA Ratio at any time during any
period set forth below to be greater than the ratio set forth opposite such
period:
Secured Secured Debt
Period to EBITDA Ratio
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04/01/99 to (and 3.00:1
including) 12/30/99
12/31/99 to (and 2.75:1
including) 12/30/00
12/31/00 to (and 2.50:1
including) 12/30/01
12/31/01 and thereafter 2.25:1;
(c) the EBITDA to Cash Interest Expense Ratio as at the last day of
any Fiscal Quarter ending on a date set forth below to be less than the
ratio set forth opposite such date:
EBITDA to Cash
Period Interest Expense Ratio
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04/01/99 to (and 1.60:1
including) 12/30/00
12/31/00 to (and 2.00:1
including) 12/30/01
12/31/01 to (and 2.25:1
including) 12/30/02
12/31/02 and thereafter 2.50:1;
(d) the EBITDA to Fixed Charges Ratio as at the last day of any
Fiscal Quarter ending on a date set forth below to be less than the ratio
set forth opposite such date:
EBITDA to
Period Fixed Charges Ratio
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04/01/99 to (and 0.80:1
including) 03/30/00
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EBITDA to
Period Fixed Charges Ratio
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03/31/00 to (and 0.90:1
including) 03/30/01
03/31/01 and thereafter 1.00:1
(e) EBITDA for any period set forth below to be less than the amount
set forth opposite such period:
Period EBITDA
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Six months ended 06/30/99 15,300,000
Nine months ended 09/30/99 24,700,000
Rolling Period ended 12/31/99 34,200,000
Rolling Period ended 03/31/00 37,000,000
Rolling Period ended 06/30/00 38,100,000
Rolling Period ended 09/30/00 38,300,000
Rolling Period ended 12/31/00 38,400,000
Rolling Period ended 03/31/01 40,100,000
Rolling Period ended 06/30/01 41,800,000
Rolling Period ended 09/30/01 43,500,000
Rolling Period ended 12/31/01 45,200,000
Rolling Period ended 03/31/02 45,600,000
Rolling Period ended 06/30/02 48,000,000
Rolling Period ended 09/30/02 49,400,000
Rolling Period ended 12/31/02 50,800,000
SECTION II.3.2. Section 7.2.16 of the Existing Credit Agreement is hereby
amended and restated in its entirety to read as follows:
SECTION 7.2.16 Capital Expenditures, etc. The Borrower will not, and
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will not permit any of its Subsidiaries to, make or commit to make Capital
Expenditures (a) in the 1999 Fiscal Year, which aggregate in excess of
$14,000,000 and (b) for each Fiscal Year thereafter, which aggregate in
excess of $12,000,000; provided, however, that for each such Fiscal Year
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after the 1999 Fiscal Year, the amount of Capital Expenditures in any
Fiscal Quarter or group of Fiscal Quarters set forth below shall not exceed
the amount set forth below opposite such period:
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Period Capital Expenditure Amount
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first Fiscal Quarter $ 3,500,000
first and second Fiscal $ 7,000,000
Quarters, collectively
first, second and third Fiscal $10,500,000
Quarters, collectively
first, second, third and fourth $12,000,000
Fiscal Quarters, collectively
provided, further, that
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(i) to the extent Capital Expenditures are made in any Fiscal
Year in an amount less than the maximum amount permitted for such
Fiscal Year as provided in this Section, the Capital Expenditures that
the Borrower or any of its Subsidiaries may make in the next following
Fiscal Year shall be increased by an amount (the "Carry-Forward
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Amount") equal to the amount of the permitted Capital Expenditures not
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so made in the immediately preceding Fiscal year (the "Unused
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Amount"); provided that the Carry-Forward Amount created in any Fiscal
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Year shall not exceed $4,000,000; and
(ii) no portion of any Carry-Forward Amount shall be used in any
Fiscal Year until the entire amount of the Capital Expenditures
permitted to be made in such Fiscal Year as provided in clause (a) or
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clause (b) above shall have been used.
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ARTICLE III
CONDITIONS TO EFFECTIVENESS
SECTION III.1. Amendment Effective Date. This Amendment (and the
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amendments and modifications contained herein) shall become effective as of the
date first above written, (the "Third Amendment Effective Date") when all of the
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conditions set forth in this Section 3.1 have been satisfied.
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SECTION III.1.1. Execution of Counterparts. The Administrative Agent
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shall have received counterparts of this Amendment, duly executed and delivered
on behalf of the Borrower, the Administrative Agent and the Lenders.
SECTION III.1.2. Legal Details, etc. All documents executed or submitted
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pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and their
counsel shall have received all information and such counterpart originals or
such certified or other copies or such materials, as the Administrative Agent or
its counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendment shall be satisfactory to the
Administrative Agent and its counsel.
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ARTICLE IV
MISCELLANEOUS
SECTION IV.1. Cross-References. References in this Amendment to any
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Article or Section are, unless otherwise specified or otherwise required by the
context, to such Article or Section of this Amendment.
SECTION IV.2. Loan Document Pursuant to Credit Agreement. This Amendment
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is a Loan Document executed pursuant to the Credit Agreement and shall be
construed, administered and applied in accordance with all of the terms and
provisions of the Credit Agreement.
SECTION IV.3. Representations and Warranties. The Borrower hereby
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represents and warrants that after giving effect to this Amendment, the
statements contained in Section 5.2.1 of the Existing Credit Agreement are true
and correct in all material respects.
SECTION IV.4. Successors and Assigns. This Amendment shall be binding
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upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION IV.5. Counterparts. This Amendment may be executed by the parties
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hereto in several counterparts, each of which when executed and delivered shall
be deemed to be an original and all of which shall constitute together but one
and the same agreement.
SECTION IV.6. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND
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CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the signatories hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
EVERCOM, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: Chief Financial Officer and
Vice President
CANADIAN IMPERIAL BANK
OF COMMERCE,
as Administrative Agent
By: /s/ Xxxxx Xxx
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Title: Executive Director
LENDERS:
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CIBC INC.
By: /s/ Xxxxx Xxx
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Title: Executive Director
FIRST SOURCE FINANCIAL LLP
By: First Source Financial, Inc.
its Agent/Manager
By: /s/ Xxxxx X. Xxxxxx
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Title: Vice President
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IBJ WHITEHALL BANK & TRUST
COMPANY
By: /s/ Xxxxx Xxxxxxx
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Title: Director
BANQUE PARIBAS
By:
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Title:
AMERICAN NATIONAL BANK
By: /s/ Xxxxxxx Xxxxxxxx
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Title: Vice President
ARES LEVERAGED INVESTMENT
FUND L.P.
By: /s/ Xxxx Xxxxx
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Title: Principal
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