EXHIBIT 10.3
AMENDED AND RESTATED CONSULTING SERVICES AGREEMENT
This AMENDED AND RESTATED CONSULTING SERVICES AGREEMENT ("Agreement") is
made and entered into as of the 9th day of September, 2004, by and between
T-NETIX, Inc., a Delaware corporation ("T-NETIX"), Evercom Systems, Inc., a
Delaware corporation ("ESI", and together with T-NETIX, each a "Company" and
together the "Companies"), and H.I.G. Capital, LLC, a Delaware limited liability
company (the "Consultant"). This Agreement amends and restates in its entirety
that certain Consulting Services Agreement, dated as of March 3, 2004, by and
between T-NETIX and the Consultant.
1. Appointment of the Consultant. The Companies appoint the Consultant and
the Consultant accepts appointment on the terms and conditions provided in this
Agreement as a consultant to the business of each Company, their parent
companies and their subsidiaries, including any other entities hereafter formed
or acquired by either Company or any such parent or subsidiary to engage in any
business (collectively, the "Company Group").
2. Board of Directors Supervision. The activities of the Consultant to be
performed under this Agreement shall be subject to the supervision of the Board
of Directors of the each respective Company (each, a "Board") to the extent
required by applicable law or regulation and subject to reasonable policies not
inconsistent with the terms of this Agreement adopted by the respective Board
and in effect from time to time. Where not required by applicable law or
regulation, the Consultant shall not require the prior approval of either Board
to perform its duties under this Agreement.
3. Authority of the Consultant. Subject to any limitations imposed by
applicable law or regulation, the Consultant shall render management, consulting
and financial advisory services to the Company Group, which services shall
include advice and assistance concerning any and all aspects of the operations,
planning and financing of the Company Group as needed from time to time,
including conducting relations on behalf of the Company Group with accountants,
attorneys, bankers, financial advisors and other professionals. The Consultant
will also make periodic reports to the Companies with respect to the management
services provided hereunder and the value of the assets of the Company Group.
The Consultant will use its best efforts to cause its employees and agents to
provide the Company Group with the benefit of their special knowledge, skill and
business expertise to the extent relevant to the business and affairs of the
Company Group.
4. Reimbursement of Expenses; Independent Contractor. All obligations or
expenses incurred by the Consultant in the performance of its duties under this
Agreement shall be for the account of, on behalf of, and at the expense of the
Companies, on a joint and several basis. The Consultant shall not be obligated
to make any advance to or for the account of either Company or any other member
of the Company Group or to pay any sums, except out of funds held in accounts
maintained by either Company nor shall the Consultant be obligated to incur any
liability or obligation for the account of either Company or any other member of
the Company Group without assurance that the necessary funds for the discharge
of such liability or obligation will be provided. The Consultant shall be an
independent contractor, and nothing contained in this Agreement shall be deemed
or construed (i) to create a partnership or joint
venture between either Company or any other member of the Company Group and the
Consultant, or (ii) to cause the Consultant to be responsible in any way for the
debts, liabilities or obligations of the Company Group or any other party, or
(iii) to constitute the Consultant or any of its employees as employees,
officers or agents of any member of the Company Group.
5. Other Activities of the Consultant; Investment Opportunities. Each
Company acknowledges and agrees that neither the Consultant nor any of the
Consultant's employees, officers, directors, affiliates or associates shall be
required to devote full time and business efforts to the duties of the
Consultant specified in this Agreement, but instead shall devote only so much of
such time and efforts as the Consultant reasonably deems necessary. Each Company
further acknowledges and agrees that the Consultant and its affiliates are
engaged in the business of investing in, acquiring and/or managing businesses
for the Consultant's own account, for the account of the Consultant's affiliates
and associates and for the account of other unaffiliated parties, and
understands that the Consultant plans to continue to be engaged in such
businesses (and other business or investment activities) during the term of this
Agreement. No aspect or element of such activities shall be deemed to be engaged
in for the benefit of the Company Group or any member thereof nor to constitute
a conflict of interest. Furthermore, notwithstanding anything herein to the
contrary, the Consultant shall be required to bring only such investments and/or
business opportunities to the attention of the Companies as the Consultant, in
its sole discretion, deems appropriate.
6. Compensation of the Consultant. In consideration of Consultant's
agreement to provide the management services described herein, the Companies
will pay, on a joint and several basis, to the Consultant the following fees:
(a) The Companies will pay, on a joint and several basis, to the
Consultant a yearly base cash consulting and management fee equal to $750,000
(the "Consulting Fee"), to be paid quarterly in arrears on each May 15, August
15, November 15 and February 15 of each year (commencing with the first such
payment on November 15, 2004). The payment by the Companies of the Consulting
Fee hereunder is subject to the applicable restrictions contained in the Credit
Agreement, dated as of September 9, 2004 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), by and among
Securus Technologies, Inc., a Delaware corporation (together with its successors
and assigns, the "Parent"), as borrower, each subsidiary of the Parent listed as
a Guarantor on the signature pages thereto, the financial institutions from time
to time party thereto (collectively, the "Lenders"), ING Capital LLC, as the
Issuing Lender, and ING Capital LLC, as the administrative agent (the
"Administrative Agent"). If any such restrictions prohibit the payment of any
installment of the Consulting Fee, such installment shall accrue and the
Companies shall make such installment payment as soon as it is permitted to do
so under such restrictions.
(b) Upon termination of this Agreement pursuant to Section 7(b) below, the
Companies will pay a fee of two percent (2%) of the Enterprise Value of the
Parent. As used herein, "Enterprise Value" means:
(i) with respect to the Parent's initial public offering, an amount
equal to the initial public offering price per share in such initial
public offering multiplied by the
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number of shares of the Parent outstanding on a fully diluted basis after
giving effect to such initial public offering; and
(ii) with respect to a termination described in Section 7(b)(ii)
below, the Total Value (as defined below).
(c) As used herein "Total Value" means the total cash and non-cash
consideration paid to any member of the Company Group or any shareholder thereof
in any transaction or a series of transactions described in Section 7(b)(ii)
below (each, a "Transaction"), including, without limitation, the amount of all
indebtedness for borrowed money of any member of the Company Group party to or
the subject of such Transaction, which is assumed, acquired, retired,
extinguished or defeased by the purchaser or acquiror, or with respect to any
entity acquired by the purchaser or acquiror, which otherwise remains
outstanding. The value of any non-cash consideration included in Total Value
shall be determined as follows:
(i) The value of stock and other securities that are Freely
Tradeable shall be the average closing market price of such stock or
securities for the five consecutive business days preceding the public
announcement of the definitive agreement to enter into a Transaction. For
purposes of the foregoing, a security shall be "Freely Tradeable" if such
security is listed on the New York Stock Exchange, American Stock
Exchange, Nasdaq National Market, the Nasdaq Small Cap Market or on
another U.S. stock exchange, quotation service or foreign stock exchange
of comparable depth and liquidity.
(ii) The value of stock and other securities that are not Freely
Tradeable and the value of all other non-cash consideration, other than
consideration of the nature described in paragraph (iii) below, shall be
the fair market value thereof at the time of closing of the Transaction as
determined by the Consultant in good faith.
(iii) The value of deferred installments and contingent payments
shall be estimated for the purposes of fee calculation at an expected
present value mutually agreeable to the Companies and Consultant at the
time of closing of the Transaction.
(d) In addition to the fees payable to the Consultant, we understand that
other professional service firms may also receive an advisory fee or fees
pursuant to a letter agreement between those firms and either Company. In no
event will the fee or fees payable to the Consultant hereunder be reduced or
offset against any amounts paid or payable to (i) the Consultant under any
consulting or other agreements between the Consultant and either Company or (ii)
other professional services firms or any other party.
7. Term and Termination.
(a) This Agreement shall commence as of the date hereof and shall remain
in effect through September 9, 2009, unless (i) terminated pursuant to Section
7(b) below or (ii) the Consultant or any of its affiliates shall cease to own at
least 20% of the issued and outstanding capital stock of the Parent prior to the
consummation of any Transaction.
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(b) Upon (i) the Parent's initial public offering, or (ii) whether in one
or a series of transactions, the sale, transfer or other disposition, directly
or indirectly, of all or substantially all of the assets of the Company Group,
whether by way of a sale, transfer or other disposition of securities of any
member of the Company Group, merger or consolidation, reorganization,
recapitalization or restructuring, tender or exchange offer, negotiated
purchase, leveraged buyout or otherwise, this Agreement shall immediately
terminate and, except for Section 4, Section 6 (with respect to fees owed to the
Consultant thereunder), Section 11, Sections 13 through 19 and Section 21 which
shall survive such termination, shall be of no further force and effect.
8. Use of Information. Each Company agrees to furnish or cause to be
furnished to the Consultant all necessary or appropriate information for use in
carrying out its obligations hereunder. Each Company agrees that any information
or advice rendered by Consultant or any of its representatives pursuant to this
Agreement is for the confidential use of the Company Group and the Company Group
will not, and will not permit any third party to, use it for any other purpose
or disclose or otherwise refer to such advice or information, or to the
Consultant, in any manner without the prior written consent of the Consultant.
9. Certain Acknowledgments. Each Company acknowledges that the Consultant
has been retained hereunder solely as an adviser to the Company Group, and not
as an adviser to or agent of any other person, and that the Companies'
engagement of the Consultant pursuant to this Agreement is as an independent
contractor and not in any other capacity including as a fiduciary. Neither this
engagement, nor the delivery of any advice in connection with this engagement,
is intended to confer rights upon any persons not a party hereto (including
security holders, employees or creditors of any member of the Company Group) as
against the Consultant its affiliates or their respective directors, officers,
agents and employees.
10. Standard of Care. The Consultant (including any person or entity
acting for or on behalf of the Consultant) shall not be liable for any mistakes
of fact, errors of judgment, losses sustained by the Companies or any member of
the Company Group or any acts or omissions of any kind (including acts or
omissions of the Consultant), unless caused by the gross negligence or willful
misconduct of the Consultant.
11. Indemnification of the Consultant. The Companies will jointly and
severally indemnify and hold harmless the Consultant and its present and future
officers, directors, affiliates, employees and agents ("Indemnified Parties") to
the fullest extent permitted by law (as if the Indemnified Persons were officers
or directors of the Companies), including for acts of Indemnified Parties
constituting negligence, against any and all losses, claims, damages or
liabilities (including reasonable attorneys' fees) (together, "Losses") in
connection with Consultant's engagement or any other matter referred to in this
Agreement, except to the extent that any Losses result from the gross negligence
or willful misconduct of the Consultant in performing its obligations hereunder.
Each Company further agrees, jointly and severally, to reimburse the Indemnified
Parties on a monthly basis for any cost of defending any action or investigation
(including attorneys' fees and expenses), subject to an undertaking from such
Indemnified Party to repay the Companies if it is determined that such party is
not entitled to such indemnity. The indemnity obligations under this Section 11
shall be in addition to any liability that either Company may otherwise have and
shall be binding upon and inure to the
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benefit of any successors, assigns, heirs and personal representatives of the
Companies, the Consultant or any of the other Indemnified Parties.
12. Assignment. Without the consent of the Consultant, the Companies shall
not assign, transfer or convey any of their rights, duties or interest under
this Agreement, nor shall they delegate any of the obligations or duties
required to be kept or performed by them hereunder. The Consultant shall not
assign, transfer or convey any of its rights, duties or interests under this
Agreement, nor shall it delegate any of the obligations or duties required to be
kept or performed by it under this Agreement, except that the Consultant may
transfer its rights and obligations hereunder to one of its affiliates.
13. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
sent by registered or certified mail, return receipt requested, with first-class
postage fees prepaid, or if hand delivered against receipt or if sent via
facsimile transmission upon electronic confirmation of receipt thereof during
normal business hours, to the applicable party at the address indicated below:
If to T-NETIX: 0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Attention: Board of Directors
Facsimile: (000) 000-0000
If to ESI: Evercom Systems, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Board of Directors
Facsimile: (000) 000-0000
If to the Consultant: H.I.G. Capital, LLC
0000 Xxxxxxxx Xxx Xxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Mr. Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
or, to each party, to such other address as shall be designated by such party in
a written notice to the other party pursuant to the provisions of this Section
13. All such notices, requests, demands and other communications shall be
effective when sent.
14. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term or provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
15. No Waiver. The failure by any party to exercise any right, remedy or
elections herein contained or permitted by law shall not constitute or be
construed as a waiver or relinquishment for the future exercise of such right,
remedy or election, but the same shall
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continue and remain in full force and effect. All rights and remedies that any
party may have at law, in equity or otherwise upon breach of any term or
condition of this Agreement, shall be distinct, separate and cumulative rights
and remedies and no one of them, whether exercised or not, shall be deemed to be
in exclusion of any other right or remedy.
16. Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the matters herein contained and any
agreement hereafter made shall be ineffective to effect any change or
modification, in whole or in part, unless such agreement is in writing and
signed by the party against whom enforcement of the change or modification is
sought.
17. Governing Laws. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to the laws
of any other state.
18. Waiver of Jury Trial. THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT.
19. Jurisdiction; Service of Process. Any proceeding arising out of or
relating to this Agreement may be brought in the courts of the State of New
York, County of Manhattan, or, if it has or can acquire jurisdiction, in the
United States District Court for the Southern District of New York, and each of
the parties irrevocably submits to the exclusive jurisdiction of each such court
in any such proceeding, waives any objection it may now or hereafter have to
venue or to convenience of forum, agrees that all claims in respect of the
proceeding shall be heard and determined only in any such court and agrees not
to bring any proceeding arising out of or relating to this Agreement in any
other court. The parties agree that any or all of them may file a copy of this
paragraph with any court as written evidence of the knowing, voluntary and
bargained agreement between the parties irrevocably to waive any objections to
venue or to convenience of forum. Process in any proceeding referred to in the
first sentence of this section may be served on any party anywhere in the world.
20. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
agreement.
21. Restrictions Relating to Fees Due Hereunder. Notwithstanding any
provision herein to the contrary, neither the Consulting Fee nor any other
payment under this Agreement shall be made or permitted or required to be made
if the making of such payment is prohibited under the terms of the Credit
Agreement, and the Consultant shall promptly turn over any such payment received
in violation of the Credit Agreement to the Company (or, if an "Event of
Default" (as defined in the Credit Agreement) has occurred and is continuing,
directly to the Administrative Agent prior to repayment in full of the
"Obligations" (as defined in the Credit Agreement) and termination of all
commitments to lend under the Credit Agreement. Furthermore, without the express
written consent of the Administrative Agent, the Consultant shall not be
entitled to any payments under Section 6(b) of this Agreement if the transaction
giving rise to such payment occurs in connection with an exercise of remedies
pursuant to the
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Credit Agreement. Until repayment in full of all Obligations and termination of
all commitments to lend under the Credit Agreement, this Section 21 shall not be
modified without the express written consent of the Administrative Agent.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Consulting Services
Agreement to be duly exercised by their authorized representatives as of the
date first above written.
T-NETIX, INC.
By: /s/ Xxxxx Xxxxxxxxxxxx
Title: Vice President
EVERCOM SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxxxxxxxx
Title: Vice President
H.I.G. CAPITAL,LLC
By: /s/ Xxxx Xxxxxxxx
Title: Managing Director
