Exhibit 4.10
SUBORDINATION AND INTERCREDITOR AGREEMENT
THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this "AGREEMENT") is
entered into as of September 9, 2004, by and among LAMINAR DIRECT CAPITAL, L.P.,
a Delaware limited partnership ("LAMINAR", and, together with any other Person
that becomes a party hereto as a "Subordinated Creditor" pursuant to a
Subordinated Creditor Supplement (as hereinafter defined), each, a "SUBORDINATED
CREDITOR", and collectively, "SUBORDINATED CREDITORS"), SECURUS TECHNOLOGIES,
INC., a Delaware corporation ("COMPANY"), the Subsidiaries of Company party
hereto (collectively, "SUBSIDIARY GUARANTORS" and, together with Company,
collectively, "DEBTORS") and THE BANK OF NEW YORK TRUST COMPANY, N.A., as
Trustee ("TRUSTEE") under the Indenture (as defined below) governing the
Company's 11% Second-priority Senior Secured Notes Due 2011 (the "NOTES").
R E C I T A L S
A. Debtors, Trustee and certain initial purchasers have entered into a
Purchase Agreement with respect to the initial sale of the Notes and Debtors and
Trustee have entered into an Indenture dated as of even date herewith (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the "INDENTURE"; capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in the Indenture) pursuant to
which, among other things, the Notes have been issued. All of Debtors'
obligations to Trustee and the holders of the Notes under the Indenture and the
other Senior Debt Documents (as hereinafter defined) are guaranteed by
Subsidiary Guarantors and secured by liens on and security interests in
substantially all of the now existing and hereafter acquired personal property
of Debtors (other than accounts receivable, inventory and any and all proceeds
thereof) and substantially all hereafter acquired real property of Debtors.
B. Subordinated Creditors are extending credit to Company as evidenced
by its 17% Senior Subordinated Notes due September 9, 2014, in the aggregate
principal amount of $40,000,000 (the "INITIAL SUBORDINATED NOTES"). The
obligations of Company under the Subordinated Note Documents (as defined herein)
are guaranteed by Subsidiary Guarantors.
C. As an inducement to and as one of the conditions precedent to the
agreement of Trustee and the holders of the Notes to consummate the transactions
contemplated by the Purchase Agreement and the Indenture, Trustee and the
holders of the Notes have required the execution and delivery of this Agreement
by Subordinated Creditors and Debtors in order to set forth the relative rights
and priorities of Trustee, the other Senior Creditors and Subordinated Creditors
under the Senior Debt Documents and the Subordinated Debt Documents (as
hereinafter defined).
NOW, THEREFORE, in order to induce (i) Trustee to enter into
the Indenture and (ii) the initial purchasers of the Notes to purchase such
Notes and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. The following terms shall have the following meanings in
this Agreement:
"AGENT" shall mean ING Capital LLC, as Agent for the credit
parties under the ING Loan Documents, or any other Person appointed by
such credit parties as administrative agent for purposes of the Senior
Credit Agreement and this Agreement.
"BANKRUPTCY CODE" shall mean Chapter 11 of Title 11 of the
United States Code, as amended from time to time and any successor
statute and all rules and regulations promulgated thereunder.
"DISTRIBUTION" shall mean, with respect to any indebtedness,
obligation or security, (a) any payment or distribution by any Person
of cash, securities or other property, by set-off or otherwise, on
account of such indebtedness, obligation or security, (b) any
redemption, purchase or other acquisition of such indebtedness,
obligation or security by any Person or (c) the granting of any lien or
security interest to or for the benefit of the holders of such
indebtedness, obligation or security in or upon any property of any
Person.
"ENFORCEMENT ACTION" shall mean (a) to take from or for the
account of any Debtor or any guarantor of the Subordinated Debt, by
set-off or in any other manner, the whole or any part of any moneys
which may now or hereafter be owing by any such Debtor or any such
guarantor with respect to the Subordinated Debt, (b) to xxx for payment
of, or to initiate or participate with others in any suit, action or
proceeding against any such Debtor or any such guarantor to (i) enforce
payment of or to collect the whole or any part of the Subordinated Debt
or (ii) commence judicial enforcement of any of the rights and remedies
under the Subordinated Debt Documents or applicable law with respect to
the Subordinated Debt, (c) to accelerate the Subordinated Debt, (d) to
exercise any put option or to cause any such Debtor or any such
guarantor to honor any redemption or mandatory prepayment obligation
under any Subordinated Debt Document or (e) to take any action under
the provisions of any state or federal law, including, without
limitation, the Uniform Commercial Code, or under any contract or
agreement, to enforce, foreclose upon, take possession of or sell any
property or assets of any such Debtor or any such guarantor, PROVIDED
that the receipt by any Subordinated Creditor of PIK Subordinated Debt
Payments shall not be deemed to be an Enforcement Action.
"FUNDED DEBT" shall mean with respect to Debtors, on a
consolidated basis and without duplication, as of any calculation date,
(a) any obligation of such Person for borrowed money, including,
without limitation, all of the "Obligations" (as defined in the Senior
Credit Agreement); (b) any obligation of such Person evidenced by
bonds, debentures, notes or other similar instruments; (c) any
obligation of such Person to pay the deferred purchase price of
property or for services (other than in the ordinary course of
business); (d) any Capitalized Lease Obligation (as defined in the
Senior Credit
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Agreement); (e) any obligation or liability of others secured by a Lien
on property owned by such Person, whether or not such obligation or
liability is assumed; (f) any reimbursement obligations (contingent or
otherwise) of such Person with respect to letters or credit, bankers
acceptances and similar instruments issued for the account of such
Person; (g) any Guaranty (as defined in the Senior Credit Agreement)
(except items of shareholders' equity or Equity Interests or surplus or
general contingency or deferred tax reserves); (h) any financial
obligation of such Person under purchase money mortgages; (i) any
financial obligation of such Person under asset securitization
vehicles; (j) any obligations of such Person under conditional sales
contracts and similar title retention instruments with respect to
property acquired; and (k) any financial obligation of such Person as
issuer of Equity Interests redeemable in whole or in part at the option
of a Person other than such issuer, at a fixed and determinable date or
upon the occurrence of an event not solely within the control of such
issuer.
"ING LOAN DOCUMENTS" shall mean the Senior Credit Agreement,
the Loan Documents (as defined in the Senior Credit Agreement) and all
other agreements, documents and instruments executed from time to time
in connection therewith, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"INTERCREDITOR AGREEMENT" shall mean the Intercreditor
Agreement among Debtors, Agent and Trustee, dated as of even date
herewith, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"JUNIOR OBLIGATIONS" means securities and other obligations
issued by any Debtor in the course of a Proceeding involving such
Debtor, PROVIDED that such securities or other obligations are
subordinated to the Senior Debt on terms at least as favorable, in all
material respects, as the terms and provisions of this Agreement.
"NOTE PURCHASE AGREEMENT" shall mean that certain Note
Purchase Agreement dated the date hereof among Debtors and Laminar.
"PIK SUBORDINATED DEBT PAYMENTS" shall mean payments, in the
form of increases of the outstanding principal amount of the
Subordinated Notes, of interest on the Subordinated Debt due and
payable on a non-accelerated basis in accordance with the terms of the
Subordinated Debt Documents.
"PERMITTED ENFORCEMENT ACTION" shall mean (a) the acceptance
by any Subordinated Creditor of cash payments of interest to the extent
that the same is permitted by subsection 2.3(a)(ii) hereof, (b) the
filing of a lawsuit for payment of, or initiating or participating with
others in any suit, action or proceeding against any Debtor to (i)
enforce payment of or to collect the whole or any part of the
Subordinated Debt or (ii) commence judicial enforcement of any of the
rights and remedies under the Subordinated Debt Documents or applicable
law with respect to the Subordinated Debt or (c) the acceleration of
the Subordinated Debt.
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"PERMITTED REFINANCING" shall mean Funded Debt that is
incurred to refund, refinance, replace, exchange, renew, repay or
extend the Subordinated Debt (and including any Funded Debt that
refinances Funded Debt incurred pursuant to a Permitted Refinancing);
PROVIDED, HOWEVER, that the Funded Debt incurred pursuant to such
Permitted Refinancing:
(a) shall have a final maturity date that is no
earlier than the final maturity date of the Subordinated Debt;
(b) shall be in an aggregate principal amount (or if
issued with original issue discount, an aggregate issue price)
that is equal to or less than the principal amount of the
Subordinated Debt then outstanding;
(c) shall be subject to a subordination agreement
containing provisions that are, in substance, identical to the
provisions of this Agreement; and
(d) shall not (i) have the effect of (A) increasing
principal, interest, fee or other payment obligations
thereunder, (B) adding collateral or other guarantors (other
than as contemplated as of the Agreement Date with respect to
the Subordinated Debt), (C) shortening the maturity or
increasing the amortization of the obligations thereunder, or
(D) making the covenants, defaults or other provisions thereof
more burdensome in any material respect or (ii) otherwise have
a material adverse effect on the interests of Senior
Creditors.
"PERSON" shall mean an individual, corporation, partnership,
trust, joint stock company, limited liability company, unincorporated
organization, other legal entity or joint venture or a government or
any agency or political subdivision thereof.
"PROCEEDING" shall mean any voluntary or involuntary
insolvency, bankruptcy, receivership, custodianship, liquidation,
dissolution, reorganization, assignment for the benefit of creditors,
appointment of a custodian, receiver, trustee or other officer with
similar powers or any other proceeding for the liquidation, dissolution
or other winding up of a Person.
"REFINANCING SENIOR DEBT DOCUMENTS" shall mean any financing
documentation which replaces the Indenture and pursuant to which the
Senior Debt under the Indenture is refinanced, as such financing
documentation may be amended, restated, supplemented or otherwise
modified from time to time.
"SENIOR CREDIT AGREEMENT" shall mean the Credit Agreement
among Debtors, Agent and the other credit parties named therein, dated
as of even date herewith, as the same may be amended, supplemented or
otherwise modified from time to time.
"SENIOR CREDITORS" shall mean the holders of the Senior Debt.
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"SENIOR DEBT" shall mean the Obligations with respect to the
Notes and all other obligations, liabilities and indebtedness of every
nature of Debtors from time to time owed to the Trustee or any Senior
Creditor under the Senior Debt Documents, including, without
limitation, the principal amount of all debts, claims and indebtedness,
accrued and unpaid interest and all fees, costs and expenses, whether
primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and from time to time hereafter owing, due or payable, whether
before or after the filing of a Proceeding under the Bankruptcy Code
together with (a) any amendments, restatements, modifications, renewals
or extensions thereof from time to time and (b) any interest accruing
thereon after the commencement of a Proceeding, without regard to
whether or not such interest is an allowed claim. Senior Debt shall be
considered to be outstanding whenever any Note is outstanding.
"SENIOR DEBT DOCUMENTS" shall mean the Indenture, the Notes
and, after any refinancing of the Senior Debt under the Indenture, the
Refinancing Senior Debt Documents.
"SENIOR DEFAULT" shall mean any "Default" under the Senior
Debt Documents.
"SUBORDINATED CREDITOR SUPPLEMENT" means a Subordinated
Creditor Supplement substantially in the form of ANNEX A hereto that is
delivered to Trustee in accordance with subsection 2.6(b) hereof.
"SUBORDINATED DEBT" shall mean all of the obligations of
Debtors to Subordinated Creditors evidenced by or incurred pursuant to
the Subordinated Debt Documents.
"SUBORDINATED DEBT DEFAULT" shall mean a default in the
payment of the Subordinated Debt or in the performance of any term,
covenant or condition contained in the Subordinated Debt Documents or
any other occurrence permitting Subordinated Creditors to accelerate
the payment of all or any portion of the Subordinated Debt.
"SUBORDINATED DEBT DEFAULT NOTICE" shall mean a written notice
from Subordinated Creditors or Company to Trustee pursuant to which
Trustee is notified of the occurrence of a Subordinated Debt Default,
which notice incorporates a reasonably detailed description of such
Subordinated Debt Default and which notice expressly states that it is
a "Subordinated Debt Default Notice" hereunder.
"SUBORDINATED DEBT DOCUMENTS" shall mean the Subordinated
Notes, the Note Purchase Agreement, any guaranty with respect to the
Subordinated Debt and all other documents, agreements and instruments
now existing or hereinafter entered into in connection with any of the
foregoing or evidencing or pertaining to all or any portion of the
Subordinated Debt, as each is in effect on the date hereof or as
modified in accordance with the terms of this Agreement.
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"SUBORDINATED NOTES" shall mean the Initial Subordinated Notes
and any other notes issued under the Note Purchase Agreement.
2. SUBORDINATION.
2.1 SUBORDINATION OF SUBORDINATED DEBT TO SENIOR DEBT. Debtors covenant
and agree, and Subordinated Creditors, by their respective acceptance of the
Subordinated Debt Documents (whether upon original issue or upon transfer or
assignment) likewise covenant and agree, notwithstanding anything to the
contrary contained in any of the Subordinated Debt Documents, that the payment
of any and all of the Subordinated Debt shall be subordinate and subject in
right and time of payment, to the extent and in the manner hereinafter set
forth, to the prior indefeasible payment in full in cash to the satisfaction of
Senior Creditors of all Senior Debt. Each holder of Senior Debt, whether such
Senior Debt is now outstanding or hereafter created, incurred, assumed or
guaranteed, shall be deemed to have acquired Senior Debt in reliance upon the
provisions contained in this Agreement.
2.2 LIQUIDATION, DISSOLUTION, BANKRUPTCY. In the event of any
Proceeding involving any Debtor:
(a) All Senior Debt shall first be indefeasibly paid in full
in cash to the satisfaction of Senior Creditors before any
Distribution, whether in cash, securities or other property, shall be
made to any Subordinated Creditor on account of any Subordinated Debt.
(b) Any Distribution, whether in cash, securities or other
property which would otherwise, but for the terms hereof, be payable or
deliverable in respect of the Subordinated Debt (other than Junior
Obligations) shall be, subject to the provisions of the Intercreditor
Agreement, paid or delivered directly to Agent or Trustee, as the case
may be (to be held and/or applied by Agent or Trustee in accordance
with the terms of the Senior Debt Documents and the Intercreditor
Agreement), until all Senior Debt is indefeasibly paid in full in cash
to the satisfaction of Senior Creditors. Each Subordinated Creditor
irrevocably authorizes, empowers and directs any debtor, debtor in
possession, receiver, trustee, liquidator, custodian, conservator or
other Person having authority, to pay or otherwise deliver all such
Distributions to Agent or Trustee, as the case may be, other than
Junior Obligations. Each Subordinated Creditor also irrevocably
authorizes and empowers Agent or Trustee, as the case may be, in the
name of such Subordinated Creditor, to demand, xxx for, collect and
receive any and all such Distributions, other than Junior Obligations.
(c) Each Subordinated Creditor agrees not to initiate,
prosecute or participate in any claim, action or other proceeding
challenging the enforceability, validity, perfection or priority of the
Senior Debt or any liens and security interests securing the Senior
Debt.
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(d) Each Subordinated Creditor agrees to execute, verify,
deliver and file any proofs of claim in respect of the Subordinated
Debt requested by Agent or Trustee, as the case may be, in connection
with any such Proceeding and hereby irrevocably authorizes, empowers
and appoints Agent or Trustee its agent and attorney-in-fact to (i)
execute, verify, deliver and file such proofs of claim upon the failure
of such Subordinated Creditor promptly to do so prior to 30 days before
the expiration of the time to file any such proof of claim and (ii)
vote such claim in any such Proceeding upon the failure of such
Subordinated Creditor to do so prior to 15 days before the expiration
of the time to vote any such claim; PROVIDED Agent or Trustee, as the
case may be, shall have no obligation to execute, verify, deliver, file
and/or vote any such proof of claim. In the event that Agent or Trustee
votes any claim in accordance with the authority granted hereby, no
Subordinated Creditor shall be entitled to change or withdraw such
vote.
(e) The Senior Debt shall continue to be treated as Senior
Debt and the provisions of this Agreement shall continue to govern the
relative rights and priorities of Senior Creditors and Subordinated
Creditors even if all or part of the Senior Debt or the security
interests securing the Senior Debt are subordinated, set aside,
avoided, invalidated or disallowed in connection with any such
Proceeding, and this Agreement shall be reinstated if at any time any
payment of any of the Senior Debt is rescinded or must otherwise be
returned by any holder of Senior Debt or any representative of such
holder.
2.3 SUBORDINATED DEBT PAYMENT RESTRICTIONS.
(a) Notwithstanding the terms of the Subordinated Debt
Documents, each Debtor hereby agrees that it may not make, and each
Subordinated Creditor hereby agrees that it will not accept, any
Distribution with respect to the Subordinated Debt until all Senior
Debt is indefeasibly paid in full in cash to the satisfaction of Senior
Creditors; PROVIDED, HOWEVER, that Company may make, and each
Subordinated Creditor may accept, (i) PIK Subordinated Debt Payments
and (ii) so long as no Senior Default exists or would be caused thereby
and sufficient payment capacity exists under the Restricted Payment
covenant in the Indenture, cash payments of principal and interest on
the Subordinated Debt in accordance with the terms of the Subordinated
Debt Documents.
(b) No Senior Default shall be deemed to have been waived for
purposes of this subsection 2.3 unless and until Company shall have
received a written waiver from Trustee.
(c) Notwithstanding any provision of this subsection 2.3 to
the contrary, the failure of Debtors to make any Distribution with
respect to the Subordinated Debt by reason of the operation of this
subsection 2.3 shall not be construed as preventing the occurrence of a
Subordinated Debt Default under the applicable Subordinated Debt
Documents.
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2.4 SUBORDINATED DEBT STANDSTILL PROVISIONS. Until all Senior Debt is
indefeasibly paid in full in cash to the satisfaction of Senior Creditors, no
Subordinated Creditor shall, without the prior written consent of Agent or
Trustee (in accordance with the provisions of the Intercreditor Agreement), take
any Enforcement Action with respect to the Subordinated Debt; PROVIDED, HOWEVER,
that Subordinated Creditors may (a) file proofs of claim against any Debtor in
any Proceeding involving such Debtor and (b) in the event that (i) any one or
more Subordinated Debt Defaults shall have continued for at least 180 days
during any 365 day period and, either concurrently therewith or otherwise, at
least 180 days shall have passed since the date Subordinated Creditors shall
have provided a Subordinated Debt Default Notice (and stating that such notice
is provided for purposes of this subsection 2.4) in respect of such Subordinated
Debt Defaults or (ii) all of the Senior Debt shall have been declared to be then
due and payable, Subordinated Creditors may take Permitted Enforcement Actions.
Any Distributions or other proceeds of any Enforcement Action obtained by
Subordinated Creditors in violation of the foregoing prohibition shall in any
event be held in trust by it for the benefit of Trustee and the Senior Creditors
and promptly paid or delivered to Agent or Trustee, in accordance with the
provisions of the Intercreditor Agreement, for the benefit of Lender Group (as
defined in the Senior Credit Agreement) and the Senior Creditors, as the case
may be, in the form received until all Senior Debt is indefeasibly paid in full
in cash to the satisfaction of Senior Creditors.
2.5 INCORRECT PAYMENTS. Notwithstanding any other provision herein to
the contrary, if any Distribution on account of the Subordinated Debt not
permitted to be made by any Debtor or accepted by any Subordinated Creditor
under this Agreement is made and received by any Subordinated Creditor, such
Distribution shall be held in trust by such Subordinated Creditor for the
benefit of the Lender Group (as defined in the Senior Credit Agreement) and the
Senior Creditors and shall be promptly paid over to Agent, unless a payment on
the Senior Debt shall be then due and payable and no payment shall be due and
payable under the Senior Credit Agreement, or shall be due and payable under the
Indenture before the next payment shall be due and payable under the Senior
Credit Agreement, in which case, such Distribution shall be promptly paid over
to Trustee for application (in accordance with the Senior Debt Documents and the
Intercreditor Agreement) to the payment of the Senior Debt then remaining
unpaid, until all Senior Debt is indefeasibly paid in full in cash to the
satisfaction of Senior Creditors. Any Subordinated Creditor that is required to
deliver a Distribution in accordance with the provisions of this paragraph may
consult with the Agent and the Trustee to determine whether such delivery shall
be made to the Agent or Trustee in accordance herewith.
2.6 SALE, TRANSFER OR OTHER DISPOSITION OF SUBORDINATED DEBT.
(a) No Subordinated Creditor shall sell, assign, pledge,
dispose of or otherwise transfer all or any portion of the Subordinated
Debt or any Subordinated Debt Document except for any such sale,
assignment, pledge, disposition or transfer (i) that is permitted
pursuant to the provisions of the Subordinated Debt Documents; and (ii)
with respect to which the purchaser, assignee, pledgee or transferee
thereof executes a Subordinated Creditor Supplement.
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(b) Notwithstanding the foregoing, the subordination effected
hereby shall survive any sale, assignment, pledge, disposition or other
transfer of all or any portion of the Subordinated Debt in violation of
the foregoing prohibition, and the terms of this Agreement shall be
binding upon the successors and assigns of each Subordinated Creditor,
whether or not such assignee or transferee shall have executed a
Subordinated Creditor Supplement, as provided in Section 9 hereof.
2.7 LEGENDS. Until the termination of this Agreement in accordance with
Section 15 hereof, each Subordinated Creditor will cause to be clearly,
conspicuously and prominently inserted on the face of the Subordinated Notes and
any other Subordinated Debt Document, as well as any renewals or replacements
thereof, the following legend:
"This instrument and the rights and obligations evidenced
hereby are subordinate in the manner and to the extent set forth in (i)
that certain Subordination and Intercreditor Agreement dated as of
September 9, 2004, among Laminar Direct Capital L.P., Securus
Technologies, Inc. ("Company"), the subsidiaries of Company party
thereto, the other subordinated creditors party thereto and The Bank of
New York Trust Company, N.A. ("Trustee"), to the indebtedness
(including interest) and other obligations owed by Company and such
subsidiaries pursuant to that certain Indenture dated as of September
9, 2004, among Company, the subsidiaries of Company party thereto and
Trustee, as such Indenture has been and hereafter may be amended,
restated, supplemented or otherwise modified from time to time and to
indebtedness refinancing the indebtedness under that agreement as
contemplated by such subordination agreement; and each holder of this
instrument, by its acceptance hereof, irrevocably agrees to be bound by
the provisions of such subordination agreement and (ii) that certain
Subordination and Intercreditor Agreement dated as of September 9,
2004, among Laminar Direct Capital, L.P., Securus Technologies, Inc.
("Company"), the subsidiaries of Company party thereto, the other
subordinated creditors party thereto and ING Capital LLC ("Agent"), to
the indebtedness (including interest) and other obligations owed by
Company and such subsidiaries pursuant to that certain Credit Agreement
dated as of September 9, 2004, among Company, the subsidiaries of
Company party thereto, Agent and the lenders from time to time party
thereto, as such Credit Agreement has been and hereafter may be
amended, restated, supplemented or otherwise modified from time to time
and to indebtedness refinancing the indebtedness under that agreement
as contemplated by such subordination agreement; and each holder of
this instrument, by its acceptance hereof, irrevocably agrees to be
bound by the provisions of such subordination agreement."
3. MODIFICATIONS.
3.1 MODIFICATIONS TO SENIOR DEBT DOCUMENTS. Senior Creditors may at any
time and from time to time without the consent of or notice to Subordinated
Creditors, without incurring liability to Subordinated Creditors and without
impairing or releasing the obligations of
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Subordinated Creditors under this Agreement, change the manner or place of
payment or extend the time of payment of or renew or alter any of the terms of
the Senior Debt, or amend in any manner any agreement, note, guaranty or other
instrument evidencing or securing or otherwise relating to the Senior Debt,
regardless of whether such change, extension, renewal, alteration or amendment
is permitted pursuant to the provisions of the Subordinated Debt Documents.
3.2 MODIFICATIONS TO SUBORDINATED DEBT DOCUMENTS. Until all Senior Debt
is indefeasibly paid in full in cash to the satisfaction of Senior Creditors,
and notwithstanding anything to the contrary contained in the Subordinated Debt
Documents, Subordinated Creditors shall not, without the prior written consent
of Trustee, agree to any amendment, modification, alteration, increase, or
change of any of the terms or conditions of any of the Subordinated Debt
Documents in any manner that would (a) have the effect of (i) increasing
principal, interest, fees or other payment obligations thereunder, (ii) adding
collateral or other guarantors (other than as contemplated as of the Agreement
Date), (iii) shortening the maturity or increasing the amortization of the
obligations thereunder, or (iv) making the covenants, defaults or other
provisions thereof more burdensome in any material respect or (b) otherwise have
a material adverse effect on the interests of Senior Creditors; PROVIDED that,
notwithstanding the foregoing, the Subordinated Debt may be refinanced pursuant
to a Permitted Refinancing.
4. INTENTIONALLY OMITTED.
5. SUBROGATION. Subject to the indefeasible payment in full in cash to the
satisfaction of Senior Creditors of all Senior Debt, Subordinated Creditors
shall be subrogated to the rights of Trustee and the Senior Creditors to receive
Distributions with respect to the Senior Debt until the Subordinated Debt is
paid in full. Each Subordinated Creditor agrees that in the event that all or
any part of a payment made with respect to the Senior Debt is recovered from the
holders of the Senior Debt in a Proceeding or otherwise, any Distribution
received by such Subordinated Creditor with respect to the Subordinated Debt at
any time after the date of the payment that is so recovered, whether pursuant to
the right of subrogation provided for in this Agreement or otherwise, shall be
deemed to have been received by such Subordinated Creditor in trust as property
of the holders of the Senior Debt and such Subordinated Creditor shall promptly
deliver the same to Trustee for the benefit of Senior Creditors for application
to the Senior Debt until all Senior Debt is indefeasibly paid in full in cash to
the satisfaction of Senior Creditors. A Distribution made pursuant to this
Agreement to Trustee or Senior Creditors which otherwise would have been made to
Subordinated Creditors is not, as among Debtors and Subordinated Creditors, a
payment by Debtors to or on account of the Senior Debt.
6. MODIFICATION. Any modification or waiver of any provision of this Agreement,
or any consent to any departure by any party from the terms hereof, shall not be
effective in any event unless the same is in writing and signed by Trustee and
Subordinated Creditors, and then such modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose given. Any
notice to or demand on any party hereto in any event not specifically required
hereunder shall not entitle the party receiving such notice or demand to any
other or further notice or demand in the same, similar or other circumstances
unless specifically required hereunder.
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7. FURTHER ASSURANCES. Each party to this Agreement promptly will execute and
deliver such further instruments and agreements and do such further acts and
things as may be reasonably requested in writing by any other party hereto that
may be necessary or desirable in order to effect fully the purposes of this
Agreement.
8. NOTICES. Unless otherwise specifically provided herein, any notice delivered
under this Agreement shall be in writing addressed to the respective party as
set forth below and may be personally served, telecopied or sent by overnight
courier service or certified or registered United States mail and shall be
deemed to have been given (a) if delivered in person, when delivered; (b) if
delivered by telecopy, on the date of transmission if transmitted on a business
day before 4:00 p.m. (Chicago time) or, if not, on the next succeeding business
day; (c) if delivered by overnight courier, one business day after delivery to
such courier properly addressed; or (d) if by United States mail, four business
days after deposit in the United States mail, postage prepaid and properly
addressed.
Notices shall be addressed as follows:
If to Subordinated Creditors:
c/o Laminar Direct Capital, LP
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to:
X.X. Xxxx & Co. L.P.
39th Floor, Tower 45
000 Xxxx Xxxxx-Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Telecopy:
-----------------
If to Debtors:
Securus Technologies, Inc.
c/o Evercom Systems, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxx
Telecopy No.: (000) 000-0000
Email: XXxxxxx@xxxxxxx.xxx
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with a copy to:
H.I.G. Capital, LLC
0000 Xxxxxxxx Xxx Xxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxxxxx
Telecopy No.: (000) 000-0000
Email:xxxxxxxxxx@xxxxxxxxxx.xxx
and:
White & Case LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx
00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Email: xxxxxxxxx@xxxxxxxxx.xxx
If to Trustee:
The Bank of New York Trust Company, N.A.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: [ ]
Telecopy No.: [ ]
Email: [ ]
or in any case, to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this Section 8.
9. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of, and
shall be binding upon, the respective successors and assigns of Trustee, the
Senior Creditors, Subordinated Creditors and Debtors. To the extent permitted
under the Senior Debt Documents, Senior Creditors may, from time to time,
without notice to Subordinated Creditors, assign or transfer any or all of the
Senior Debt or any interest therein to any Person and, notwithstanding any such
assignment or transfer, or any subsequent assignment or transfer, the Senior
Debt shall, subject to the terms hereof, be and remain Senior Debt for purposes
of this Agreement, and every permitted assignee or transferee of any of the
Senior Debt or of any interest therein shall, to the extent of the interest of
such permitted assignee or transferee in the Senior Debt, be entitled to rely
upon and be the third party beneficiary of the subordination provided under this
Agreement and shall be entitled to enforce the terms and provisions hereof to
the same extent as if such assignee or transferee were initially a party hereto.
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10. RELATIVE RIGHTS. This Agreement shall define the relative rights of Trustee,
the Senior Creditors and Subordinated Creditors. Nothing in this Agreement shall
(a) impair, as among Debtors, Trustee and the Senior Creditors and as among
Debtors and Subordinated Creditors, the obligation of Debtors with respect to
the payment of the Senior Debt and the Subordinated Debt in accordance with
their respective terms or (b) affect the relative rights of Trustee, the Senior
Creditors or Subordinated Creditors with respect to any other creditors of any
Debtor.
11. CONFLICT. As to the relative rights of Trustee and the Senior Creditors, on
the one hand, and Subordinated Creditors, on the other, in the event of any
conflict between any term, covenant or condition of this Agreement and any term,
covenant or condition of any of the Subordinated Debt Documents, the provisions
of this Agreement shall control and govern. For the avoidance of doubt, as
between Debtors and Subordinated Creditors, the provisions of this Section 11
shall not impair any of the obligations of Debtors under the Subordinated Debt
Documents.
12. HEADINGS. The paragraph headings used in this Agreement are for convenience
only and shall not affect the interpretation of any of the provisions hereof.
13. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. 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.
14. SEVERABILITY. In the event that any provision of this Agreement is deemed to
be invalid, illegal or unenforceable by reason of the operation of any law or by
reason of the interpretation placed thereon by any court or governmental
authority, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not in any way be affected or impaired thereby, and the
affected provision shall be modified to the minimum extent permitted by law so
as most fully to achieve the intention of this Agreement.
15. CONTINUATION OF SUBORDINATION; TERMINATION OF AGREEMENT. This Agreement
shall remain in full force and effect until the indefeasible payment in full in
cash of the Senior Debt after which this Agreement shall terminate without
further action on the part of the parties hereto.
16. APPLICABLE LAW. This Agreement shall be governed by and shall be construed
and enforced in accordance with the internal laws of the State of New York.
17. CONSENT TO JURISDICTION. EACH OF THE PARTIES HERETO HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE LITIGATED IN SUCH COURTS.
EACH OF THE PARTIES HERETO EXPRESSLY SUBMITS AND CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. EACH OF
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THE PARTIES HERETO HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO EACH OF THE PARTIES
HERETO AT THEIR RESPECTIVE ADDRESSES SET FORTH IN THIS AGREEMENT OR THE
APPLICABLE SUBORDINATED CREDITOR SUPPLEMENT AND SERVICE SO MADE SHALL BE
COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
18. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT, ANY OF THE SUBORDINATED DEBT DOCUMENTS OR ANY OF THE SENIOR
DEBT DOCUMENTS. EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED
ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE SENIOR DEBT DOCUMENTS AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
EACH OF THE PARTIES HERETO WARRANTS AND REPRESENTS THAT EACH HAS HAD THE
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
19. INCORPORATION BY REFERENCE. In connection with its appointment and acting
hereunder, the Trustee is entitled to all rights, privileges, immunities and
indemnities provided to it under the Indenture and the Intercreditor Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SUBORDINATED CREDITORS:
LAMINAR DIRECT CAPITAL, L.P.,
a Delaware limited partnership
By: /s/ Xxxxxx X. Xxxx
Its: Authorized Signatory
DEBTORS:
SECURUS TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
Its: Vice President
T-NETIX, INC., a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
Its: Vice President
TELEQUIP LABS, INC., a Nevada corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
Its: Vice President
T-NETIX TELECOMMUNICATIONS SERVICES,
INC., a Texas corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
Its: Vice President
SPEAKEZ, INC., a Colorado corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
Its: Vice President
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T-NETIX MONITORING CORPORATION,
a Colorado corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
Its: Vice President
EVERCOM HOLDINGS, INC., a Delaware
corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
Its: Vice President
EVERCOM, INC., a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
Its: Vice President
EVERCOM SYSTEMS, INC., a Delaware
corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
Its: Vice President
FORTUNELINX, INC., a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
Its: Vice President
EVERCONNECT, INC., a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxxxx
Its: Vice President
TRUSTEE:
THE BANK OF NEW YORK TRUST COMPANY, N.A.,
a national banking association,
as Trustee
By: /s/ Xxxxxx Xxxxxxxx
Its: Assistant Vice President
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ANNEX A TO
SUBORDINATION AND INTERCREDITOR AGREEMENT
SUPPLEMENT NO. ___ dated as of _____________ (this "SUPPLEMENT"), to
that certain Subordination and Intercreditor Agreement dated as of September 9,
2004 (as amended, restated, supplemented or otherwise modified from time to
time, the "SUBORDINATION AGREEMENT"), among the Subordinated Creditors (as such
term is defined in the hereinafter defined Subordination Agreement; capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
such terms in the Subordination Agreement, and if not defined therein, having
the meanings given to them in the hereinafter defined Indenture), Securus
Technologies, Inc., a Delaware corporation ("COMPANY"), the Subsidiaries of
Company party hereto (collectively, "SUBSIDIARY GUARANTORS" and, together with
Company, collectively, "DEBTORS") and The Bank of New York Trust Company, N.A.,
as Trustee for all holders of the Notes ("TRUSTEE").
A. Reference is made to that certain Indenture dated as of September 9,
2004 (as amended, restated, supplemented, renewed, extended or otherwise
modified from time to time, the "INDENTURE"), among Debtors and Trustee; and
B. Subordinated Creditors and Debtors have entered into the
Subordination Agreement in order to induce (i) the holders of the Notes to
consummate the transactions contemplated by the Senior Credit Agreement and (ii)
the Trustee to enter into the Indenture. Pursuant to Section 2.6(a) of the
Subordination Agreement, each purchaser, assignee, pledgee or transferee of all
or any portion of the Subordinated Debt or any Subordinated Debt Document is
required to become a party to the Subordination Agreement as a Subordinated
Creditor by execution and delivery of an instrument in the form of this
Supplement. The undersigned ("NEW SUBORDINATED CREDITOR") is executing this
Supplement in accordance with the requirements of the Subordination Agreement to
become a Subordinated Creditor.
Accordingly, New Subordinated Creditor agrees as follows:
1. In accordance with Section 2.6(a) of the Subordination Agreement, New
Subordinated Creditor by its signature below becomes a Subordinated Creditor
under the Subordination Agreement with the same force and effect as if
originally named therein as a Subordinated Creditor and New Subordinated
Creditor hereby agrees to all the terms and provisions of the Subordination
Agreement applicable to it as a Subordinated Creditor thereunder. Each reference
to a "Subordinated Creditor" in the Subordination Agreement shall be deemed to
include New Subordinated Creditor. The Subordination Agreement is incorporated
herein by reference.
2. This Supplement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. 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. This
Supplement shall become effective when Trustee shall have received a counterpart
of this Supplement that bears the signature of New Subordinated Creditor.
3. Except as expressly supplemented hereby, the Subordination Agreement shall
remain in full force and effect.
4. This Supplement shall be governed by and shall be construed and enforced in
accordance with the internal laws of the State of New York.
5. In the event that any provision of this Supplement is deemed to be invalid,
illegal or unenforceable by reason of the operation of any law or by reason of
the interpretation placed thereon by any court or governmental authority, the
validity, legality and enforceability of the remaining provisions of this
Supplement shall not in any way be affected or impaired thereby, and the
affected provision shall be modified to the minimum extent permitted by law so
as most fully to achieve the intention of this Supplement.
6. All communications and notices hereunder shall be in writing and given as
provided in the Subordination Agreement. All communications and notices
hereunder to New Subordinated Creditor shall be given to it at the address set
forth under its signature.
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IN WITNESS WHEREOF, New Subordinated Creditor has duly executed this
Supplement to the Subordination Agreement as of the day and year first above
written.
[NAME OF NEW SUBORDINATED CREDITOR],
a _________________
By:
-------------------------------------
Its:
------------------------------------
Address:
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