PLEDGE AGREEMENT
Exhibit 4.16
THIS PLEDGE AGREEMENT, entered into as of June 29, 2007 (as it may be amended, supplemented or
otherwise modified from time to time, this “Agreement”), by each of the parties listed on
the signature pages hereof and those additional entities that hereafter become parties hereto by
executing the form of Supplement attached hereto as Annex 1, as pledgors (collectively, the
“Pledgors”, and each, a “Pledgor”) and THE BANK OF NEW YORK TRUST COMPANY, N.A., in
its capacity as Trustee under the Indenture (as defined below) (the “Trustee”).
W I T N E S S E T H :
WHEREAS, pursuant to (a) that certain Indenture dated as of September 9, 2004 (as amended,
restated, supplemented or otherwise modified from time to time, the “Indenture”), by and
among Securus Technologies, Inc., a Delaware corporation, as issuer (the “Company”), the
Subsidiaries of the Company party thereto as guarantors (the “Guarantors”) and the Trustee
and (b) one or more Purchase Agreements (each, a “Purchase Agreement”), among the Company,
the Guarantors, the initial purchaser(s) party thereto (collectively, the “Initial
Purchasers”), the Company has issued or will issue its Second-Priority Senior Secured Notes Due
2011 (the Notes validly issued under the Indenture being referred to herein as the “Notes”
and the holders thereof, “Noteholders”) which will be guaranteed on a senior secured basis
by the Guarantors;
WHEREAS, in order to induce the Trustee to enter into the Indenture and to induce the Initial
Purchasers to purchase the Notes and in order to secure the prompt and complete payment, observance
and performance of, among other things, (a) the obligations of the Pledgors that are Guarantors
under the Indenture and (b) all obligations of the Company under the Indenture and (items (a) and
(b) being hereinafter referred to as the “Secured Obligations”), each Pledgor has agreed to
pledge to the Trustee, for the benefit of the Noteholders, all of its right, title and interest in
and to all of the Equity Interests owned by such Pledgor, regardless of class or designation
(collectively, including, without limitation, the Additional Pledged Interests (defined below), the
“Pledged Interests”), whether now owned or hereafter acquired (i) in each of the business
organizations listed on Schedule 1 attached hereto (collectively, together with any
additional Subsidiaries of any Pledgor hereafter acquired or formed which shares, interests or
units are pledged pursuant to this Agreement, the “Pledged Companies”) and (ii) each
additional Subsidiary of such Pledgor hereafter acquired or formed which shares, interests or units
thereof are required pursuant to the Indenture to be pledged to the Trustee (the “Additional
Pledged Interests”);
WHEREAS the Company, the Guarantors, the Trustee and ING Capital LLC, as Intercreditor Agent,
among others, have entered into an Intercreditor Agreement, dated as of September 9, 2004 (as
amended, restated, supplemented or otherwise modified form time to time, the “Intercreditor
Agreement”), pursuant to which the lien upon and security interest in the Pledged Collateral
(as defined below) granted by this Agreement are and shall be subordinated in all respects to the
lien upon and security
interest in the Pledged Collateral (as defined below) granted pursuant to, and subject to the
terms and conditions of, the Senior Lender Documents (as defined in the Intercreditor Agreement);
WHEREAS, each Pledgor (other than the Company) is a direct or indirect Subsidiary of the
Company, and each Pledgor has determined that its execution, delivery and performance of this
Agreement directly or indirectly benefits, and is within the business purposes and in the best
interests of, such Pledgor; and
WHEREAS each Pledgor has duly authorized the execution, delivery and performance of this
Agreement.
NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Warranty. Each Pledgor hereby represents and warrants to the Trustee and the
Initial Purchasers that:
(a) except for the security interest created hereby, such Pledgor is and will at all times be
the sole holder of record and the legal and beneficial owner, free and clear of all Liens other
than Permitted Liens (as defined in the Indenture), of the Pledged Interests indicated on
Schedule 1 as being owned by such Pledgor and, when acquired by such Pledgor, the
Additional Pledged Interests;
(b) all of the Pledged Interests are duly authorized, validly issued, fully paid and
nonassessable and the Pledged Interests constitute or will constitute the percentage of the issued
and outstanding Equity Interests of the Pledged Companies of such Pledgor identified on
Schedule 1 hereto as supplemented or modified by any Pledge Agreement Addendum (as defined
below) or any Supplement (as defined below);
(c) such Pledgor has the right and requisite authority to pledge, assign, transfer, deliver,
deposit and set over the Pledged Collateral (as defined below) pledged by such Pledgor to the
Trustee as provided herein;
(d) all actions necessary or desirable to perfect, establish the perfection of, or otherwise
protect, the Trustee’s Liens in the Pledged Collateral, and the proceeds thereof, have been duly
taken (i) upon the execution and delivery of this Agreement, (ii) upon the taking of possession by
the Trustee or any bailee thereof, including under the provisions of the Intercreditor Agreement or
otherwise, of any certificates constituting the Pledged Interests (including any Additional Pledged
Interests), to the extent such Pledged Interests are represented by certificates, together with
undated powers endorsed in blank by the applicable Pledgor, and (iii) upon the filing of Uniform
Commercial Code (“UCC”) or Personal Property Security Act (British Columbia) (the “PPSA”) financing
statements, as applicable, in the jurisdiction of formation (in case of the UCC) and the chief
executive office (in case of the PPSA) of each Pledgor with respect to the Pledged
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Interests (including any Additional Pledged Interests) of such Pledgor, and the Trustee’s
Liens in the Pledged Collateral will not be subject to any prior Lien other than Permitted Liens;
and
(e) no consent, approval, authorization or other order or other action by, and no notice to or
filing with, any Governmental Authority or any other Person is required (i) for the pledge and
grant of a lien by such Pledgor of the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by such Pledgor, or (ii) for the exercise by
the Trustee of the voting or other rights provided for in this Agreement or the remedies in respect
of the Pledged Collateral pursuant to this Agreement, except as may be required in connection with
such disposition by laws affecting the offering and sale of securities generally or as may be
required by the Intercreditor Agreement.
The representations and warranties set forth in this Section 1 shall survive the execution
and delivery of this Agreement.
2. Security Interest. As security for the full and prompt payment and performance of
the Secured Obligations, each Pledgor hereby unconditionally pledges, transfers, conveys, grants
and assigns to the Trustee, for the benefit of the Noteholders, a continuing security interest in
all of the following property now owned or at any time hereafter acquired by such Pledgor or in
which such Pledgor now has, or may acquire in the future, any right, title or interest thereto
(collectively, the “Pledged Collateral”):
(a) the Pledged Interests (including the Additional Pledged Interests) and all substitutions
therefor and replacements thereof, all proceeds thereof and all rights relating thereto, including,
without limitation, any certificates representing the Pledged Interests (including the Additional
Pledged Interests) and all warrants, options, share appreciation rights and other rights,
contractual or otherwise, in respect thereof and of all dividends, distributions of income,
profits, surplus or other compensation by way of income or liquidating distributions, in cash or in
kind, cash, instruments and other property from time to time received, receivable or otherwise
distributed in respect of or in addition to, in substitution of, on account of or in exchange for
any or all of the Pledged Interests (including the Additional Pledged Interests), whether now owned
or hereafter acquired by such Pledgor;
(b) [Intentionally Deleted]
(c) to the extent not otherwise included, all proceeds of any and all of the foregoing. For
purposes of this Agreement, the term “proceeds” includes whatever is receivable or received when
Pledged Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether
such disposition is voluntary or involuntary, and includes, without limitation, proceeds of any
indemnity or guaranty payable to the Pledgors or the Trustee from time to time with respect to any
of the Pledged Collateral.
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Each Pledgor has delivered to and deposited with ING Capital LLC (i) as administrative agent (the
“Administrative Agent”) under the Credit Agreement (as further amended, restated,
refinanced, replaced, supplemented or otherwise modified from time to time, the “Credit
Agreement”) dated as of the date hereof, by and among the Company, the Administrative Agent,
the Guarantors and the various financial institutions party thereto, and (ii) as bailee of the
Trustee on behalf of the Noteholders under the Intercreditor Agreement (or will deliver and deposit
(in any event within five (5) Business Days of such Pledgor’s receipt thereof) with the
Administrative Agent or the Trustee, as the case may be, in accordance with Section 4
hereof) all certificates representing the Pledged Interests owned by such Pledgor to the extent
such Pledged Interests are represented by certificates, and undated powers endorsed in blank with
respect to such certificates. In addition, each Pledgor hereby authorizes the filing of
appropriate UCC and PPSA financing statements and financing change statements describing the
Pledged Collateral (including any Additional Pledged Interests) in order to perfect the Trustee’s
security interest therein. Record and beneficial ownership of the Pledged Collateral, including,
without limitation, all voting, consensual and dividend rights, shall remain in the applicable
Pledgor until the occurrence of an Event of Default and until the Administrative Agent or the
Trustee, as the case may be in accordance with the Intercreditor Agreement, shall notify the
applicable Pledgor of the Administrative Agent’s or Trustee’s, as the case may be, exercise of
voting and consensual rights to the Pledged Collateral pursuant to Section 11 hereof.
3. Rights of Trustee. The Trustee shall have (i) the right to request, after the
occurrence and during the continuation of an Event of Default, that the Pledged Interests
(including the Additional Pledged Interests) be registered in the name of the Trustee or any of its
nominees, (ii) the right to receive any certificates representing any of the Pledged Interests
(including any certificates representing any of the Additional Pledged Interests) and (iii) the
right to require that the same be delivered to the Trustee together with the undated powers or
assignments of investment securities with respect thereto, duly endorsed in blank by the applicable
Pledgor.
4. Additional Pledged Interests. In the event that, during the term of this
Agreement,
(a) any Pledgor shall receive or become entitled to receive any Additional Pledged Interests
(including, without limitation, any Additional Pledged Interests representing a dividend or a
distribution in connection with any reclassification, increase or reduction of capital, merger,
consolidation, sale of assets, combination or other reorganization), or any promissory note or
other instrument by virtue of such Pledgor having been an owner of any of the Pledged Collateral,
or any other assets (including, without limitation, any options, warrants, subscriptions or other
rights, whether as an addition to, in substitution for, or in exchange for any of the Pledged
Interests or otherwise) constituting Pledged Collateral, each Pledgor agrees to promptly (and in
any event within five (5) Business Days of such Pledgor’s receipt thereof) undertake the following
actions: (i) to deliver to the Administrative Agent, as bailee for the Trustee under the
Intercreditor Agreement, or, if following a Discharge of Senior
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Lender Claims (as defined in the Intercreditor Agreement), to the Trustee, any such Additional
Pledged Interests or other Pledged Collateral represented by a certificate or other instrument, or
any such promissory note or other instrument received, such certificate, promissory note or other
instrument, together with undated powers endorsed in blank by such Pledgor, (ii) with respect to
any such Additional Pledged Interests or other Pledged Collateral which is not represented by a
certificate or other instrument, to file UCC and PPSA financing statements and financing change
statements to the extent required in order to perfect the Lien of the Trustee in such Additional
Pledged Interests and other Pledged Collateral granted hereunder and (iii) in the case of both
clause (i) and clause (ii) to deliver to the Trustee a duly executed Pledge Agreement Addendum in
substantially the form of Annex 1 hereto (a “Pledge Agreement Addendum”)
identifying the Additional Pledged Interests, promissory note or other instrument or other Pledged
Collateral which are pledged by such Pledgor pursuant to this Agreement. Upon the execution and
delivery of any Pledge Agreement Addendum, any Additional Pledged Interests, promissory note or
other instrument and other Pledged Collateral identified thereon shall thereafter constitute
Pledged Collateral to be held by the Administrative Agent or the Trustee, as the case may be,
pursuant to the terms of this Agreement, and
(b) any distribution of any Equity Interests or other securities of any Person, regardless of
class or designation, or any warrants, options, purchase rights, conversion or exchange rights,
voting rights, calls or claims of any character with respect to any of the foregoing, shall be made
on or in respect of the Pledged Collateral or any property shall be distributed upon or with
respect to the Pledged Collateral pursuant to the recapitalization or reclassification of the
Equity Interests or other securities of the issuer thereof or pursuant to the reorganization
thereof, the property so distributed shall be delivered promptly (and in any event within five (5)
Business Days of the applicable Pledgor’s receipt thereof) by each applicable Pledgor to (i) the
Administrative Agent, as bailee of the Trustee on behalf of the Noteholders under the provisions of
the Intercreditor Agreement, or (ii) if following a Discharge of Senior Lender Claims (as defined
in the Intercreditor Agreement), the Trustee, to be held by it as additional collateral security
for the Secured Obligations. All sums of money and property so paid or distributed in respect of
the Pledged Collateral which are received by any Pledgor shall, until paid or delivered to the
Administrative Agent or the Trustee, as the case may be, be held by the Pledgors in trust for the
benefit of the Trustee segregated from such Pledgor’s other property, and such Pledgor shall
deliver such money or property promptly to the Administrative Agent or the Trustee, as the case may
be, in the exact form received, together with the authorization to file any necessary UCC or PPSA
financing statements or financing change statements or any necessary endorsement or appropriate
stock or other powers or assignments duly endorsed in blank by such Pledgor.
5. Covenants. Each Pledgor hereby covenants and agrees that:
(a) such Pledgor will not sell or otherwise dispose of any interest in the Pledged Collateral
or any funds or property held therein or constituting a part thereof, except as permitted by the
Indenture;
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(b) such Pledgor will not create or permit to exist any Lien upon or with respect to the
Pledged Collateral or any funds or property constituting a part thereof, other than the Lien
created hereunder in favor of the Trustee and other Permitted Liens (as defined in the Indenture)
and such Pledgor has and will defend the title to the Pledged Collateral and the Liens of the
Trustee in the Pledged Collateral against the claim of any Person (other than the Administrative
Agent) and will maintain and preserve such Liens;
(c) such Pledgor shall at its own expense, promptly deliver to the Trustee a copy of each
notice or other communication received by it in respect of any of the Pledged Interests
constituting Pledged Collateral hereunder;
(d) such Pledgor shall not make or consent to any amendment or other modification or waiver
with respect to any such Pledged Interests, or enter into any agreement or permit to exist any
restriction with respect to any such Pledged Interests other than pursuant hereto, except as
permitted by the Indenture;
(e) such Pledgor shall not convey or encumber any of the Pledged Collateral in any manner
whatsoever except as provided in the Indenture nor take any action which would (or fail to take any
action, the result of which failure would) in any manner impair the value of the Pledged Collateral
or the priority or enforceability of the security interest of the Trustee therein;
(f) such Pledgor agrees that from time to time, at its own expense, such Pledgor will promptly
execute and deliver all further instruments and documents, and take all further action, that may be
necessary or that the Trustee may reasonably request, in order to ensure to the Trustee and the
Noteholders the benefits of the Liens in and to the Pledged Collateral intended to be created by
this Agreement, or to enable the Trustee to exercise and enforce its rights and remedies hereunder
with respect to any of the Pledged Collateral;
(g) such Pledgor authorizes the Trustee to file, transmit, or communicate, as applicable, UCC
and PPSA financing statements, in-lieu financing statements, financing change statements and
amendments in order to perfect the Trustee’s security interest in the Pledged Collateral without
such Pledgor’s signature to the extent permitted by Applicable Law. A photocopy or other
reproduction of this Agreement or any financing statement covering the Pledged Collateral or any
part thereof shall be sufficient as a financing statement where permitted by Applicable Law. Each
Pledgor also hereby ratifies its authorization for the Trustee to have filed in any jurisdiction
any UCC and PPSA financing statements, financing change statements, in-lieu of financing statements
or amendments thereto if filed prior to the date hereof;
(h) such Pledgor acknowledges that it is not authorized to file any UCC or PPSA financing
statement, financing change statement, or amendment or termination statement with respect to any
financing statement filed in connection with this Agreement without the prior written consent of
the Trustee, subject to such Pledgor’s rights under Section 9-509(d)(2) of the UCC;
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(i) such Pledgor hereby acknowledges receiving a copy of this Agreement and to the extent
permitted by Applicable Law, waives all rights to receive a copy of any UCC or PPSA financing
statement or UCC or PPSA financing change statement registered at any time in respect of this
Agreement; and
(j) such Pledgor will cooperate with the Trustee, at such Pledgor’s expense, in obtaining all
necessary approvals and making all necessary filings under federal (domestic or foreign), state,
provincial, local or foreign law in connection with such Liens or any sale or transfer of the
Pledged Collateral.
6. Event of Default. Upon the occurrence and during the continuation of an Event of
Default, the Trustee, subject to the provisions of the Intercreditor Agreement, may sell or
otherwise dispose of any of the Pledged Interests at one or more public or private sales or make
other commercially reasonable disposition of the Pledged Interests or any portion thereof after ten
(10) days’ notice to the applicable Pledgor, and the Trustee or any Noteholder may purchase the
Pledged Interests or any portion thereof at any public sale. Each Pledgor hereby acknowledges and
agrees that such notice, when given, shall constitute a reasonable “authenticated notification of
disposition” within the meaning of Section 9-611 of the UCC, as in effect from time to time in any
applicable jurisdiction. The proceeds of the public or private sale or other disposition shall,
subject to the provisions of the Intercreditor Agreement, first be applied to the costs of the
Trustee incurred in connection with the sale, expressly including, without limitation, any costs
under Section 10 hereof, and then as provided in the Indenture. In the event the proceeds
of such sale or other disposition of the Pledged Interests are insufficient to satisfy the Secured
Obligations in full, each Pledgor shall remain jointly and severally liable for any such
deficiency.
7. Power of Attorney. Upon the occurrence and during the continuation of an Event of Default,
each Pledgor hereby constitutes and appoints the Trustee the true and lawful attorney of such
Pledgor irrevocably with full power of substitution to do, make and execute all such assignments,
documents, acts, matters or things with the right to use the name of such Pledgor whenever and
wherever it may be deemed necessary or expedient for the purposes of exercising the Trustee’s
rights herein. Each Pledgor hereby declares that the irrevocable power of attorney granted hereby,
being coupled with an interest, is given for valuable consideration.
8. Additional Rights of the Trustee. In addition to its rights, powers, protections,
immunities, indemnities and privileges under this Agreement and the Indenture (which are expressly
incorporated by reference herein), the Trustee shall have all the rights, powers and privileges of
a secured party under the PPSA.
9. Return of Pledged Interests to the Pledgor. Upon payment in full in cash, or other
satisfaction to the satisfaction of the Trustee, of the Secured Obligations, this Agreement and the
Trustee’s Liens hereunder shall terminate, and, if applicable, the Trustee shall promptly return
the remaining certificated Pledged Interests and all rights received by the Trustee as a result of
its possessory interest in such Pledged Interests to
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the appropriate Pledgors and shall promptly deliver such termination statements and other
release documents as may be requested by the applicable Pledgor to evidence the termination of the
Trustee’s Liens in such Pledged Interests hereunder.
10. Disposition of Pledged Collateral by Trustee. None of the Pledged Interests
existing as of the date of this Agreement is, and none of the Additional Pledged Interests
hereafter acquired on the date of acquisition thereof will be, registered or qualified under the
various Federal or state securities laws of the United States and disposition thereof after an
Event of Default may be restricted to one or more private (instead of public) sales in view of the
lack of such registration or qualification. Each Pledgor understands that in connection with such
disposition, the Trustee may approach only a restricted number of potential purchasers and further
understands that a sale under such circumstances may yield a lower price for the Pledged Interests
than if the Pledged Interests were registered and qualified pursuant to Federal and state
securities laws and sold on the open market. Each Pledgor, therefore, agrees that: (a) if the
Trustee shall, pursuant to the terms of this Agreement and the Intercreditor Agreement, sell or
cause the Pledged Interests or any portion thereof to be sold at a private sale, the Trustee shall
have the right to rely upon the advice and opinion of any nationally recognized brokerage or
investment firm (but shall not be obligated to seek such advice and the failure to do so shall not
be considered in determining the commercial reasonableness of such action) as to the best manner in
which to offer the Pledged Interest for sale and as to the best price reasonably obtainable at the
private sale thereof; and (b) such reliance shall be conclusive evidence that the Trustee has
handled such disposition in a commercially reasonable manner.
11. Pledgors’ Obligations Absolute. The obligations of the Pledgors under this
Agreement shall be direct and immediate and not conditional or contingent upon the pursuit of any
remedies against any other Person, nor against other security or Liens available to the Trustee or
any Noteholder. Each Pledgor hereby waives any right to require that an action be brought against
any other Person or to require that resort be had to any security or to any balance of any deposit
account or credit on the books of the Trustee in favor of any other Person prior to the exercise of
remedies hereunder, or to require action hereunder prior to resort by the Trustee to any other
security or collateral for the Secured Obligations.
12. Voting Rights.
(a) Unless an Event of Default under the Indenture shall have occurred and be continuing, each
Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to
the Pledged Interests owned by it, subject to Section 11(b). Upon the occurrence and during the
continuation of an Event of Default under the Indenture, subject to the provisions of the
Intercreditor Agreement, (i) the Trustee may, at its option, and with ten (10) days’ prior notice
to any Pledgor, and in addition to all rights and remedies available to the Trustee under any other
agreement, at law, in equity, or otherwise, exercise all voting rights, and all other ownership or
consensual rights, in respect of the Pledged Collateral owned by such Pledgor, but under
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no circumstances is the Trustee obligated by the terms of this Agreement to exercise such rights, and (ii) each
Pledgor hereby appoints the Trustee, such Pledgor’s true and lawful attorney-in-fact and
IRREVOCABLE PROXY to vote the Pledged Collateral owned by such Pledgor in any manner the Trustee
deems advisable for or against all matters submitted or which may be submitted to a vote of
shareholders, partners or members, as the case may be. The power-of-attorney granted hereby is
coupled with an interest and shall be irrevocable.
(b) For so long as any Pledgor shall have the right to vote the Pledged Collateral owned by
it, such Pledgor covenants and agrees that it will not, without the prior written consent of the
Trustee, vote or take any consensual action with respect to such Pledged Collateral which would
materially adversely affect the rights of the Trustee and the Noteholders or violate the Indenture,
this Agreement or any other Noteholder Document (as defined in the Intercreditor Agreement).
13. Indemnity and Expenses.
(a) Each Pledgor, jointly and severally, agrees to indemnify the Trustee, the Initial
Purchasers and the Noteholders from and against all claims, lawsuits and liabilities (including
reasonable attorneys’ fees) growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement) except claims, losses or liabilities resulting from the
gross negligence or willful misconduct of the party seeking indemnification as determined by a
final non-appealable order of a court of competent jurisdiction. This provision shall survive the
termination of this Agreement and the Indenture and the repayment of the Secured Obligations.
(b) The Pledgors shall, upon demand, pay to the Trustee, jointly and severally, the amount of
any and all expenses, including, without limitation, the reasonable fees and expenses of its
counsel incurred and the fees and expenses of any experts and agents, which the Trustee may incur
in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or
operation of, or, upon an Event of Default, the sale of, collection from, or other realization
upon, any of the Pledged Collateral in accordance with this Agreement, (iii) the exercise or
enforcement of any of the rights of the Trustee hereunder or (iv) the failure by any of the
Pledgors to perform or observe any of the provisions hereof.
14. Merger, Amendments; Etc. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER
NOTEHOLDER DOCUMENTS (AS DEFINED IN THE INTERCREDITOR AGREEMENT), REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. No
waiver of any provision of this Agreement, and no consent to any departure by any of the Pledgors
herefrom, shall in any event be effective unless the same shall be in writing and signed by the
Trustee, and then such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No amendment of any provision of this Agreement shall be
effective unless the same shall be in writing and signed by the Trustee and each of the Pledgors to which such amendment applies.
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15. Addresses for Notices. All notices and other communications provided for
hereunder shall be given in the form and manner and delivered to the Trustee at its address
specified in the Indenture, and to any of the Pledgors at their respective addresses specified in
the Indenture, or, as to any party, at such other address as shall be designated by such party in a
written notice to each of the parties hereto.
16. Continuing Security Interest: Assignments under Indenture. This Agreement shall
create a continuing security interest in the Pledged Collateral and shall (a) remain in full force
and effect until the Secured Obligations have been paid in full in cash or otherwise satisfied to
the satisfaction of the Trustee, (b) be binding upon each of the Pledgors, and their respective
successors and assigns, and (c) inure to the benefit of, and be enforceable by, the Trustee, and
its successors, transferees and assigns. Upon payment in full in cash, or other satisfaction to
the satisfaction of the Trustee, of the Secured Obligations, the security interest granted hereby
shall terminate and all rights to the Pledged Collateral shall immediately revert to the Pledgors
or any other Person entitled thereto. At such time as the Secured Obligations have been paid in
full in cash or otherwise satisfied to the satisfaction of the Trustee, the Trustee will promptly
authorize the filing of appropriate termination statements to terminate the security interest and
promptly return the remaining certificated Pledged Interests, if any, and all rights received by
the Trustee as a result of its possessory interest in such Pledged Interests to the appropriate
Pledgors. No transfer or renewal, extension, assignment or termination of this Agreement or of the
Indenture, or any other instrument or document executed and delivered by the Company or any of the
Pledgors to the Trustee, nor the taking of further security, nor the retaking or re-delivery of the
Pledged Collateral to the Company and the Pledgors, or any of them, by the Trustee, nor any other
act of the Noteholders, or any of them, shall release any of the Pledgors from any obligation under
this Agreement, except a release or discharge executed in writing by the Trustee with respect to
such obligation or payment of such obligation or upon payment in full in cash, or other
satisfaction to the satisfaction of the Trustee of the Secured Obligations. The Trustee shall not
by any act, delay, omission or otherwise, be deemed to have waived any of its rights or remedies
hereunder, unless such waiver is in writing and signed by the Trustee and then only to the extent
therein set forth. A waiver by the Trustee of any right or remedy on any occasion shall not be
construed as a bar to the exercise of any such right or remedy which the Trustee would otherwise
have had on any other occasion. In the event of any sale of Pledged Collateral permitted by
Section 11.03 of the Indenture, or any other permitted sale of Pledged Collateral, the Trustee
will, promptly upon the written request of the appropriate Pledgor, if applicable, return the
relevant certificated Pledged Interests to the appropriate Pledgor (and all rights received by the
Trustee as a result of its possessory interest in such Pledged Interests) and execute and deliver
to the relevant Pledgor termination statements provided to the Trustee to terminate the security
interest in such Pledged Xxxxxxxxxx.
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00. Governing Law. This Agreement shall be construed in accordance with and governed
by the laws of the Province of British Columbia and the federal laws of Canada applicable therein
and shall be treated in all respects as a British Columbia contract.
18. New Subsidiaries. Pursuant to, and except as otherwise provided in, Section
4.20 of the Indenture, any new direct or indirect Subsidiary (whether by acquisition, creation
or designation) of the Company (if such new Subsidiary owns Equity Interests in another Subsidiary)
and any existing Subsidiary that owns any Equity Interests in such new Subsidiary if such existing
Subsidiary is not currently a party hereto is required to enter into this Agreement by executing
and delivering in favor of the Trustee, an instrument in the form of Annex 2 attached
hereto (a “Supplement”). Upon the execution and delivery of the Supplement by such
Subsidiary, such Subsidiary shall become a Pledgor hereunder with the same force and effect as if
originally named as a Pledgor herein. The execution and delivery of any instrument adding an
additional Pledgor as a party to this Agreement shall not require the consent of any other Pledgor
hereunder. The rights and obligations of each Pledgor hereunder shall remain in full force and
effect notwithstanding the addition of any new Pledgor hereunder.
19. Trustee. Each reference herein to any right granted to, benefit conferred upon or
power exercisable by the “Trustee” shall be a reference to Trustee for the benefit of Noteholders,
and each action taken or right exercised hereunder shall be deemed to have been so taken or
exercised by Trustee for the benefit of the Noteholders.
20. Miscellaneous.
(a) This Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such separate counterparts shall together constitute but one and
the same instrument. In proving this Agreement in any judicial proceedings, it shall not be
necessary to produce or account for more than one such counterpart signed by the party against whom
such enforcement is sought. Any signatures delivered by a party by facsimile transmission or by
e-mail transmission of an adobe file format document (also known as a PDF file) shall be deemed an
original signature hereto.
(b) Any provision of this Agreement which is prohibited or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such provision in any
other jurisdiction.
(c) Headings used in this Agreement are for convenience only and shall not be used in
connection with the interpretation of any provision hereof.
(d) The pronouns used herein shall include, when appropriate, either gender and both singular
and plural, and the grammatical construction of sentences shall conform thereto.
11
(e) Notwithstanding anything herein to the contrary, (i) the liens and security interests
granted to the Trustee pursuant to this Agreement are expressly subject and subordinate to the
liens and security interests granted to the Administrative Agent (and its permitted successors and
assigns), for the benefit of the credit parties, pursuant to the Credit Agreement and the related
security documents dated as of September 9, 2004 (as further amended, restated, refinanced,
replaced, supplemented or otherwise modified from time to time), by and among the Company, ING
Capital LLC, as agent, the lenders and the other credit parties party thereto and the other parties
party thereto and (ii) the exercise of any right or remedy by the Trustee hereunder is subject to
the limitations and provisions of the Intercreditor Agreement. In the event of any conflict
between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the
Intercreditor Agreement shall govern.
(f) In connection with its appointment and acting hereunder, the Trustee is entitled to all
rights, privileges, protections, benefits and immunities provided to it under the Indenture.
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12
IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and
through their duly authorized officers, as of the day and year first above written.
| PLEDGORS: | SYSCON HOLDINGS LTD., a British Columbia company |
|||
| By: | ||||
| Name: | ||||
| Title: | ||||
| APPALOOSA ACQUISITION COMPANY
LTD., a British Columbia company |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| SECURUS TECHNOLOGIES, INC., a Delaware corporation |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| TRUSTEE: | TRUSTEE: THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee |
|||
| By: | ||||
| Name: | ||||
| Title: | ||||
13
SCHEDULE 1
PLEDGED COMPANIES
| Name of Pledged | Number of Pledged | Class of Pledged | Percentage of Class | ||||||||||||||
| Name of Pledgor | Company | Shares/Units | Interests | Owned | Certificate Nos. | ||||||||||||
Securus
Technologies Inc.
|
Appaloosa Acquisition Company Ltd. | ||||||||||||||||
Appaloosa Acquisition
Company Ltd.
|
Syscon Holdings Ltd. | ||||||||||||||||
Syscon Holdings Ltd.
|
Syscon Justice Systems Canada Ltd. | ||||||||||||||||
Annex 1 to Pledge Agreement
PLEDGE AGREEMENT ADDENDUM
This Pledge Agreement Addendum, dated as of _______________, 20___, is delivered pursuant to
Section 4 of the Pledge Agreement referred to below. The undersigned hereby agrees that
this Pledge Agreement Addendum may be attached to that certain Pledge Agreement, dated as of June
, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “Pledge
Agreement”; the terms defined therein and not otherwise defined herein being used as therein
defined), made by the undersigned, together with the other Pledgors named therein, to The Bank of
New York Trust Company, N.A., as Trustee, and that the additional interests listed on this Pledge
Agreement Addendum as set forth below shall be and become part of the Pledged Interests pledged by
the undersigned to the Trustee in the Pledge Agreement and shall secure all Secured Obligations and
any pledged company set forth on this Pledge Agreement Addendum as set forth below shall be and
become a “Pledged Company” under the Pledge Agreement, each with the same force and effect as if
originally named therein.
The undersigned hereby certifies that the representations and warranties set forth in
Section 1 of the Pledge Agreement of the undersigned are true and correct as to the Pledged
Collateral listed herein on and as of the date hereof.
| By: | ||||
| Name: | ||||
| Title | ||||
| Name of Pledged | Number of Pledged | Class of Pledged | Percentage of Class | ||||||||||||||||||||||||
| Name of Pledgor | Company | Shares/Units | Interests | Owned | Certificate Nos. | ||||||||||||||||||||||
Annex 2 to Pledge Agreement
Form of Supplement
Supplement No. ___(this “Supplement”) dated as of _______________to the Pledge
Agreement dated as of June , 2007 (as amended, restated, supplemented or otherwise
modified from time to time, the “Pledge Agreement”) by each of the parties
listed on the signature pages thereto and those additional entities that thereafter
become parties thereto (each a “Pledgor” and collectively, (the
“Pledgors”) and THE BANK OF NEW YORK TRUST COMPANY, N.A., in its capacity as
trustee under the Indenture (as defined below) (the “Trustee”).
WITNESSETH:
WHEREAS, pursuant to (a) that certain Indenture dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the “Indenture”), by and
among Securus Technologies, Inc., a Delaware corporation, as issuer (the “Company”), the
Subsidiaries of the Company party thereto as guarantors (the “Guarantors”) and the Trustee
and (b) the Purchase Agreement dated as of August 18, 2004 (the “Purchase Agreement”),
among the Company, the Guarantors, Credit Suisse First Boston LLC and Xxxxxx Xxxxxxx & Co.
Incorporated (the “Initial Purchasers”), the Company is issuing $154,000,000 aggregate
principal amount of its Second-Priority Senior Secured Notes Due 2011 (the “Notes”) which
will be guaranteed on a senior secured basis by the Guarantors;
WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Pledge Agreement, and if not defined therein, in the
Indenture; and
WHEREAS, the Pledgors have entered into the Pledge Agreement in order to induce the Initial
Purchasers to purchase the Notes and to induce the Trustee to enter into the Indenture and continue
to perform its duties thereunder; and
WHEREAS, pursuant to, and except as otherwise provided in, Section 4.20 of the
Indenture, new direct or indirect Subsidiaries of the Company (if such new Subsidiary owns Equity
Interests in another Subsidiary) and any existing Subsidiary that owns any Equity Interests in such
new Subsidiary if such existing Subsidiary is not currently a party to the Pledge Agreement), must
execute and deliver certain Security Documents, including the Pledge Agreement to provide to the
Trustee a supplement to the Pledge Agreement, and such other security documents requested by the
Trustee in its discretion and the execution of the Pledge Agreement by the undersigned new Pledgor
or Pledgors (collectively, the “New Pledgor”) may be accomplished by the execution of this
Supplement in favor of the Trustee for the benefit of the Noteholders;
Annex 2 — Page 1
NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the New Pledgor hereby
agrees as follows:
SECTION 1. In accordance with Section 18 of the Pledge Agreement, the New Pledgor, by
its signature below, becomes a ‘Pledgor’ under the Pledge Agreement with the same force and effect
as if originally named therein as a ‘Pledgor’ and the New Pledgor hereby (a) agrees to all of the
terms and provisions of the Pledge Agreement applicable to it as a ‘Pledgor’ thereunder and (b)
represents and warrants that the representations and warranties made by it as a ‘Pledgor’
thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the
New Pledgor, as security for the full and prompt payment and performance of the Secured Obligations
now or hereafter existing and all obligations of such New Pledgor pursuant to this Agreement, the
Indenture and the other Noteholder Documents (as defined in the Intercreditor Agreement) to which
such New Pledgor is a party, does hereby grant and assign to the Trustee, for the benefit of the
Noteholders, a continuing security interest in and security title to all Equity Interests or other
securities of such Pledgor, regardless of class or designation, and all warrants, options, purchase
rights, conversion or exchange rights, voting rights, calls or claims of any character with respect
thereto (hereafter collectively referred to as “Pledged Interests”) of any Subsidiary of
the New Pledgor listed on Exhibit A attached hereto and any Pledged Collateral of any
Subsidiary of the New Pledgor obtained in the future. Concurrently with the delivery hereof, the
New Pledgor shall, subject to the provisions of the Intercreditor Agreement, deliver to and deposit
with the Trustee all certificates representing any of the Pledged Collateral, to the extent such
Pledged Interests are represented by certificates, together with undated powers endorsed in blank
by the New Pledgor, and, to the extent any of the Pledged Collateral shall not be represented by
certificates, the New Pledgor hereby authorizes the Trustee to file UCC and PPSA financing
statements and financing change statements in order to perfect the security interest granted to the
Trustee under the Pledge Agreement in such Pledged Collateral. Exhibit A, “Pledged
Interests,” attached hereto supplements Schedule 1 to the Pledge Agreement and shall be
deemed a part thereof for all purposes of the Pledge Agreement. Each reference to a ‘Pledgor’ in
the Pledge Agreement shall be deemed to include the New Pledgor. The Pledge Agreement is
incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the Trustee and the Noteholders that
this Supplement has been duly executed and delivered by the New Pledgor and constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its terms, except as
enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws affecting creditors’ rights generally and general
principles of equity (regardless of whether such enforceability is considered in a proceeding at
law or in equity).
SECTION 3. This Supplement may be executed in multiple counterparts, each of which shall be
deemed to be an original, but all such separate counterparts shall together constitute but one and
the same instrument. Delivery of a counterpart hereof by facsimile transmission or by e-mail
transmission shall be as effective as delivery of a manually executed counterpart hereof.
SECTION 4. Except as expressly supplemented hereby, the Pledge Agreement shall remain in full
force and effect.
Annex 2 — Page 2
SECTION 5. This Supplement is intended to take effect as a sealed instrument and shall be
construed in accordance with and governed by the laws of the Province of British Columbia, without
regard to the conflict of laws principles thereof, except to the extent that the validity or
perfection of the security interest hereunder, or remedies hereunder, in respect of any particular
Collateral are governed by the laws of a jurisdiction other than the Province of British Columbia.
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Annex 2 — Page 3
IN WITNESS WHEREOF, the New Pledgor has duly executed this Supplement to the Pledge
Agreement as of the day and year first above written.
| NEW PLEDGOR: | [Name of New Pledgor] |
|||
| By: | ||||
| Name: | ||||
| Title: | ||||
Annex 2 — Page 4
EXHIBIT A
ADDITIONAL PLEDGED INTERESTS
| Name of Pledged | Number of Pledged | Class of Pledged | Percentage of Class | ||||||||||||||||||||||||
| Name of Pledgor | Company | Shares/Units | Interests | Owned | Certificate Nos. | ||||||||||||||||||||||
