Exhibit 4.8
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement"), is entered into as of September
9, 2004, 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").
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" 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 financing statements in the jurisdiction of formation of
each Pledgor with respect to the Pledged 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
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(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 and security title to 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),
subject to the Intercreditor Agreement, (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 same be delivered to the Trustee together with undated
powers or assignments of investment securities with respect thereto, duly
endorsed in blank by the applicable Pledgor, 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; provided, however, that the Pledged Interests shall not include more
than 65% of the issued and outstanding voting Equity Interests of any Subsidiary
that is not a U.S. Subsidiary or any U.S. Subsidiary that is a limited liability
company or limited partnership which has no other assets other than Equity
Interests of any Subsidiary that is not a U.S. Subsidiary; provided, further,
that (x) shares of capital stock and other Equity Interests will constitute
Pledged Interests only to the extent that such capital stock and other Equity
Interests can secure the Notes without Rule 3-10 or Rule 3-16 of Regulation S-X
under the Securities Act ("Rule 3-10"
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and "Rule 3-16," respectively) (or any other law, rule or regulation) requiring
separate financial statements of such Subsidiary to be filed with the SEC (or
any other governmental regulatory agency); (y) in the event that either Rule
3-10 or Rule 3-16 requires or is amended, modified or interpreted by the SEC to
require (or is replaced with another rule or regulation, or any other law, rule
or regulation is adopted, which would require) the filing with the SEC (or any
other governmental regulatory agency) of separate financial statements of any
Subsidiary due to the fact that such Subsidiary's capital stock or other Equity
Interests constitute Pledged Interests, then such capital stock or other Equity
Interests shall automatically be deemed not to be Pledged Interests, but only to
the extent necessary to not be subject to such requirement; and (z) in the event
that either Rule 3-10 or Rule 3-16 is amended, modified or interpreted by the
SEC to permit (or is replaced with another rule or regulation, or any other law,
rule or regulation is adopted, which would permit) such capital stock or other
Equity Interests to constitute Pledged Interests without the filing with the SEC
(or any other governmental regulatory agency) of separate financial statements
of such Subsidiary, then such capital stock and other Equity Interests shall
automatically be deemed to be Pledged Interests but only to the extent necessary
to not be subject to any such financial statement requirement;
(b) all of such Pledgor's rights, powers and remedies under the
limited liability company operating agreements of the Pledged Companies that are
limited liability companies (collectively, the "Operating Agreements") and under
the partnership agreements of the Pledged Companies that are general or limited
partnerships (collectively, the "Partnership Agreements"); and
(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.
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 Uniform Commercial Code financing statements describing the Pledged
Collateral (including any Additional Pledged Interests) in order to perfect the
Trustee's security interest therein. It is the intention of the parties hereto
that record and beneficial ownership of the Pledged
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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. Operating Agreements and Partnership Agreements.
(a) Anything herein to the contrary notwithstanding, each Pledgor
shall, for so long as it shall remain a member under any Operating Agreement or
a partner under any Partnership Agreement, remain liable under such Operating
Agreement or Partnership Agreement, as the case may be, to observe and perform
all of the conditions and obligations to be observed and performed by it
thereunder, all in accordance with and pursuant to the terms and provisions
thereof.
(b) For Pledged Collateral where the applicable Operating Agreement or
Partnership Agreement provides that all limited liability company or partnership
interests, as applicable, issued thereunder shall be certificated, then the
applicable Pledgor or Pledgors shall not amend, supplement or otherwise modify
(or consent to any such amendment, supplement or modification of) the terms of
such Operating Agreement or such Partnership Agreement, as the case may be, so
as to provide for the issuance of uncertificated limited liability company or
partnership interests, as applicable.
(c) For Pledged Collateral where the applicable Operating Agreement or
Partnership Agreement, as the case may be, does not provide that all limited
liability company or partnership interests, as applicable, issued thereunder
shall be certificated, each Pledgor, as applicable, hereby represents and
warrants to the Trustee that such Pledged Collateral owned by it (i) is not
dealt in or traded on securities exchanges or in securities markets, (ii) does
not constitute investment company securities, and (iii) is not held by such
Pledgor in a securities account. In addition, none of the articles of
organization, the Operating Agreements, the Partnership Agreements and the other
agreements governing any of the uncertificated Pledged Collateral provide that
such Pledged Collateral may be certificated or that such Pledged Collateral are
securities governed by Article 8 of the UCC as in effect in any relevant
jurisdiction.
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,
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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 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 Uniform Commercial Code financing
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 Uniform Commercial Code financing statements or any necessary
endorsement or appropriate stock or other powers or assignments duly endorsed in
blank by such Pledgor.
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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;
(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, Uniform Commercial Code financing statements,
in-lieu financing 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 financing statements, in-lieu of
financing statements or amendments thereto if filed prior to the date hereof;
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(h) such Pledgor acknowledges that it is not authorized to file any
financing 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; and
(i) 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 Uniform Commercial Code, 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 9 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. 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
UCC.
8. 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 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.
9. 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
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(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.
10. 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.
11. 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 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.
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(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).
12. 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.
13. 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.
14. 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
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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.
15. 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 Collateral.
16. Governing Law. This Agreement is intended to take effect as a sealed
instrument and shall be construed in accordance with and governed by the laws of
the State of New York, 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 Pledged
Collateral are governed by the laws of a jurisdiction other than the State of
New York.
11
17. 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.
18. 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.
19. 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.
(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
12
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.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
13
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: SECURUS TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxxxxx
Title: Vice President
T-NETIX, INC., a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxxxxx
Title: Vice President
EVERCOM HOLDINGS, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxxxxx
Title: Vice President
EVERCOM, INC., a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxxxxx
Title: Vice President
TRUSTEE: THE BANK OF NEW YORK TRUST
COMPANY, N.A., as Trustee
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Assistant Vice President
PLEDGE AGREEMENT
SCHEDULE 1
PLEDGED COMPANIES
Number of Class of Percentage
Name of Pledged Pledged Pledged of Class Certificate
Name of Pledgor Company Shares/Units Interests Owned Nos.
--------------- --------------- ------------ --------- ---------- -----------
PLEDGE AGREEMENT ADDENDUM
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 September 9, 2004 (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
----------------------------------
Number of Class of Percentage
Name of Pledged Pledged Pledged of Class Certificate
Name of Pledgor Company Shares/Units Interests Owned Nos.
--------------- --------------- ------------ --------- ---------- -----------
Annex 2 to Pledge Agreement
Form of Supplement
Supplement No. __ (this "Supplement") dated as of _______ to the Pledge
Agreement dated as of September 9, 2004 (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 17 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 Uniform Commercial Code financing
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.
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 State of New York, 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 State of
New York.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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
Number of Class of Percentage
Name of Pledged Pledged Pledged of Class Certificate
Name of Pledgor Company Shares/Units Interests Owned Nos.
--------------- --------------- ------------ --------- ---------- -----------
