EXHIBIT 10.1
LAW OFFICES OF EDWARD C. CASEY, JR.
EDWARD C. CASEY, JR. (State Bar #123702)
300 Frank H. Ogawa Plaza, Suite 370
Oakland, CA 94612
Telephone: (510) 251-2300
Facsimile: (510) 251-2305
LAW OFFICES JOHN W. ALLURED
JOHN W. ALLURED (State Bar #84770)
One Maritime Plaza, Suite 1040
San Francisco, California 94111
Telephone: (415) 675-2960
Facsimile: (415) 675-2961
BRAMSON, PLUTZIK, MAHLER & BIRKHAEUSER, LLP
ALAN R. PLUTZIK (State Bar #77785)
KATHRYN A. SCHOFIELD (State Bar #202939)
2125 Oak Grove Blvd., Suite 120
Walnut Creek, California 94598
Telephone: (925) 945-0200
Facsimile: (925) 945-8792
Attorneys for Plaintiffs, Individually and
On Behalf of All Others Similarly Situated
[Additional Counsel Listed on Signature Page]
SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF ALAMEDA — UNLIMITED

             
ELENA CONDES, BRIAN H. GETZ,
    )     Case No. 2002054255
BICKA BARLOW and CHRISTOPHER
    )      
FANK, on behalf of themselves and all
    )     CLASS ACTION SETTLEMENT
others similarly situated,
    )     AGREEMENT
 
    )      
          Plaintiffs,
    )      
     vs.
    )      
 
    )      
EVERCOM SYSTEMS, INC., et al.,
    )     CLASS ACTION
 
    )      
          Defendants.
    )      
 
    )      
 
    )      
 
    )      

CLASS ACTION SETTLEMENT AGREEMENT

 

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     THIS CLASS ACTION SETTLEMENT AGREEMENT is made by Plaintiffs Elena Condes,
Brian H. Getz, Bicka Barlow and Christopher Fank, individually and in their
capacity as class representatives, and Settling Defendants, to settle the Action
(as defined in paragraph 2.1) on the terms and conditions set forth below.
I. BACKGROUND AND DESCRIPTION OF THE ACTION
     1.1 This action was commenced on June 12, 2002. Plaintiffs sued three
defendants in their own names, i.e., Evercom Systems, Inc. (“Evercom”), SBC
Communications, Inc. (“SBC”), and Pacific Bell Telephone Company (“Pacific
Bell”), and fifty defendants under fictitious names. On March 10, 2003,
Plaintiffs filed amendments which added four of the fictitious defendants, i.e.,
Global Tel*Link Corporation (“Global”), ILD Communications, Inc. (“ILD”),
T-Netix Telecommunications Services, Inc. (“T-Netix”) and Verizon California,
Inc. (“Verizon”).
     1.2 Plaintiffs allege that defendants, singly and/or in concert, have
engaged — and continue to engage — in the practice of charging customers for
telephone services which were not authorized or accepted. More specifically,
Plaintiffs allege that defendants charge the recipients of collect calls from
inmates at correctional facilities even where the recipients have not authorized
or accepted the charges for such calls, such as where a collect call is
“received” by a recorded greeting.
     1.3 Plaintiffs contend that defendants’ conduct violates California
Business and Professions Code §17200 (First Cause of Action) and constitutes
unjust enrichment (Second Cause of Action). While Plaintiffs also alleged that
defendants’ conduct entitles Plaintiffs to an accounting (Third Cause of
Action), the Court sustained a demurrer to the Third Cause of Action by T-Netix
and granted motions for judgment on the pleadings by Verizon, Global, Evercom
and ILD. Plaintiffs brought this action on behalf of themselves and as a class
action on behalf of (1) all California residents who were charged by defendants,
directly or through any billing service used by them, for collect calls from
correctional facilities which such persons did not authorize or accept and (2)
all persons who were charged by defendants, directly or through any billing
service used by
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them, for collect calls from correctional facilities located in California which
such persons did not authorize or accept. Plaintiffs seek damages, restitution,
an accounting, and an injunction.
     1.4 Class Counsel have made a thorough analysis of the facts and law
applicable to the claims asserted in this action. During the pendency of the
action, Class Counsel have taken discovery of defendants and third parties.
     1.5 As set forth in greater detail below, the Settling Parties have
determined that they wish to reach an amicable resolution to the pending action.
     NOW, THEREFORE, the Class Representatives and the Settling Defendants, each
through their respective counsel, hereby agree that the above-captioned action
shall be settled on the terms and conditions set forth in this Agreement.
II. DEFINITIONS
     The following terms shall have the meanings set forth below:
     2.1 “Action” means the putative class action now pending in California
Superior Court for the County of Alameda entitled Elena Condes, et al. v. Ever
com Systems, Inc., et al., Case No. 2002054255.
     2.2 “Agreement” means this Class Action Settlement Agreement, including all
exhibits.
     2.3 “Cash Fund” means a check or wire transfer from the Settling Defendants
in the amount of $525,000.00.
     2.4 “Credit Fund” means a pool of free Inmate Telephone Calls established
by Evercom having a retail value of $400,000.00.
     2.5 “Class Counsel” means the Law Offices of Edward C. Casey, Jr., Bramson,
Plutzik, Mahler & Birkhaueser, LLP and The Law Offices of John W. Allured.
     2.6 “Class Period” means the period June 12, 1998 to December 1, 2005.
     2.7 “Class Representatives” or “Plaintiffs” means Elena Condes, Brian H.
Getz, Bicka Barlow and Christopher Fank, individually, in their capacity as
class representatives for the
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putative class, and in their capacity as class representatives for the
Settlement Class as provided for in paragraph 9.1.
     2.8 “Complaint” means the original Complaint and the Amended Complaints
filed in this Action.
     2.9 “Counsel for Settling Defendants” means Kelley Drye & Warren LLP and
Goodin, MacBride, Squeri, Ritchie & Day, LLP.
     2.10 “Court” means the California Superior Court for the County of Alameda.
     2.11 “Effective Date” means the first date by which all of the events and
conditions specified in paragraphs 15.2 through 15.11 have occurred, have been
met or have been waived as provided for in paragraph 16.1.
     2.12 “Escrow Agent” means Gilardi & Co. LLC as Escrow Agent, or its
successor in interest; provided, however, that no successor in interest shall be
permitted to serve as Escrow Agent prior to the Effective Date unless agreed to
in writing by counsel for each of the Settling Parties and approved by the
Court.
     2.13 “Evercom” means Evercom Systems, Inc.
     2.14 “Evercom Released Persons” means Evercom and each of Evercom’s past or
present directors, officers, employees, predecessors, successors, subsidiaries,
divisions or assigns, and Securus Technologies, Inc.
     2.15 “Fee Hearing” means the hearing to determine whether Class Counsel’s
application for an award of attorneys’ fees, costs and expenses should be
approved.
     2.16 “Final Judgment” means the Final Judgment and Order of Dismissal
provided for in Section 11.
     2.17 “Inmate Telephone Call” means a collect call made by a prisoner,
inmate or other person incarcerated or detained at any penitentiary, prison,
jail, holding facility, or other correctional facility or detention center that
is served by Evercom.
     2.18 “Notice of Proposed Settlement” means the Notice of Pendency and
Proposed Settlement of Class Action and Settlement Hearing provided for in
paragraph 10.4.
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     2.19 “Person” means a natural person, individual, corporation, association,
partnership, trust, and any other type of legal entity.
     2.20 “Preliminary Order” means the order certifying the Settlement Class,
approving the Notice of Proposed Settlement, and setting the Settlement Hearing,
as provided for in Section 10.
     2.21 “Evercom Released Claims” means any and all claims, actions, demands,
rights, liabilities, suits, and causes or any of every nature and description
whatsoever, known or unknown, arising under the laws of the United States or of
any state or territory thereof, including without limitation Unknown Claims,
that were asserted or that could have been asserted in the Action by the
Class Representatives individually or on behalf of the class, or by any of the
other Settlement Class Members against the Evercom Released Persons, based upon,
arising from, or in any way related to the processing of, billing for or
collection of monies for Inmate Telephone Calls by Evercom and the transactions,
conduct, disclosures, statements, acts or omissions or failures to act by
Evercom which were or could have been alleged in the Action or in any similar
action brought in any court or tribunal based upon the same facts.
     2.22 “T-Netix Released Claims” means those claims embraced in the form of
Release attached hereto as Exhibit E.
     2.23 “Released Claims” means the Evercom Released Claims and the T-Netix
Released Claims.
     2.24 “Released Persons” means the Evercom Released Persons and the T-Netix
Released Persons.
     2.25 “Settlement” means the settlement of certain claims in the Action as
reflected in this Agreement.
     2.26 “Settlement Class” means all California residents who paid for an
Inmate Telephone Call processed by Evercom during the period from June 12,1998
through December 1, 2005. Excluded from the Settlement Class are the Settling
Defendants and their officers, directors, and employees.
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     2.27 “Settlement Class Member” means a person who fits within the
definition of Settlement Class (and that person’s trustees, legal
representatives, successors, heirs, executors, administrators and assigns, only
to the extent that they are acting on behalf of that person) who has not validly
and timely requested exclusion from the Settlement Class pursuant to paragraph
9.3 below.
     2.28 “Settlement Hearing” means the hearing or hearings to determine:
(1) whether the Settlement should be approved as fair, reasonable and adequate;
and (2) whether a Final Judgment as provided in Section 11 of this Agreement
should be entered.
     2.29 “Settling Defendants” means Evercom and T-Netix.
     2.30 “Settling Parties” means the Class Representatives and the Settling
Defendants.
     2.31 “T-Netix” means T-Netix Telecommunications Services, Inc.
     2.32 “T-Netix Released Persons” means T-Netix and each of T-Netix’s past or
present directors, officers, employees, predecessors, successors, subsidiaries,
divisions or assigns, and Securus Technologies, Inc.
     2.33 “Unknown Claims” means any claims which any Class Representative or
Settlement Class Member does not know or suspect to exist in his or her favor at
the time of the release of the Evercom Released Persons which, if known by him,
her or it, might have affected his, her or its settlement with and release of
the Evercom Released Persons, or might have affected his, her or its decision
not to object to this Agreement. With respect to any and all Evercom Released
Claims against the Evercom Released Persons, the Settling Parties stipulate and
agree that, upon the Effective Date, the Class Representatives shall expressly
waive and relinquish, and the other Settlement Class Members shall be deemed to
have, and by operation of the Judgment shall have, expressly waived and
relinquished, to the fullest extent permitted by law, (a) the provisions,
rights, and benefits conferred by §1542 of the California Civil Code, which
provides:
A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.
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and (b) any law of any state or territory of the United States, Federal law or
principle of common law, or of international or foreign law, which is similar,
comparable or equivalent to §1542 of the California Civil Code.
     The Class Representatives and the other Settlement Class Members may
hereafter discover facts in addition to or different from those which he, she or
it now knows or believes to be true with respect to the Evercom Released Claims,
but the Settling Parties hereby stipulate and agree that upon the entry of the
Final Judgment and Order of Dismissal, the Class Representatives fully, finally
and forever settle and release, and each other Settlement Class Member shall be
deemed to, and by operation of the Judgment shall have, fully, finally, and
forever settled and released any and all Evercom Released Claims against the
Evercom Released Persons, known or unknown, suspected or unsuspected, contingent
or non-contingent, whether or not concealed or hidden which now exist, or
heretofore have existed, upon any theory of law or equity now existing or coming
into existence in the future, including, but not limited to, conduct which is
negligent, intentional, with or without malice, or a breach of any duty, law or
rule, without regard to the subsequent discovery or existence of such different
or additional facts. The Settling Parties acknowledge that they bargained for
the foregoing waiver.
III. BENEFITS OF THE SETTLEMENT
     3.1 Class Counsel have made a thorough investigation of the facts and
circumstances surrounding the allegations made in the Complaint. Class Counsel
have engaged in extensive investigation and discovery of the claims underlying
this Action, including propounding and receiving responses to document requests,
interrogatories and requests for admission. Class Counsel have reviewed and
analyzed publicly available information and investigated the law applicable to
their claims and to the defenses raised by Settling Defendants.
     3.2 Class Counsel have concluded that it is in the best interest of the
Settlement Class Members that the Action be settled on the terms and conditions
set forth in this Agreement. Class Counsel reached that conclusion after
considering the factual and legal issues in the Action, the substantial benefits
that the Settlement Class Members will receive as a result of the Action, the
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risks and uncertainties of continued litigation, the expense that would be
necessary to prosecute the Action through trial and through any appeals that
might be taken, and the likelihood of success at trial.
IV. SETTLING DEFENDANTS’ DENIAL OF WRONGDOING AND LIABILITY
     4.1 Settling Defendants have indicated their intent to contest vigorously
each and every claim in the Action. Settling Defendants have consistently
maintained that they did not engage in any improper conduct and that they acted
in accordance with applicable law at all times.
     4.2 Settling Defendants nonetheless have concluded that it is in their best
interest that the Action be settled on the terms and conditions set forth in
this Agreement. Settling Defendants reached that conclusion after considering
the factual and legal issues in the Action, the risks and uncertainties of
continued litigation, the substantial benefits to the Settling Defendants of a
final resolution of the Action, the expense that would be necessary to defend
the Action through trial and through any appeals that might be taken, and the
benefits of disposing of protracted complex litigation.
     4.3 Settling Defendants enter into this Agreement without in any way
acknowledging any fault, liability, or wrongdoing of any kind. Settling
Defendants continue to deny vigorously all of the material allegations in this
Action, and assert that the claims stated in the Action are completely without
merit. Neither this Agreement, nor any of the terms or provisions, nor any of
the negotiations or proceedings connected with it, shall be construed as an
admission or concession by Settling Defendants of the truth of any of the
allegations in the Action, or of any liability, fault, or wrongdoing of any
kind.
     4.4 Neither this Agreement, nor any of its terms or provisions, nor the
Final Judgment and Order of Dismissal, shall constitute an admission by the
Settling Defendants of any liability or wrongdoing whatsoever, nor is this
Agreement a finding of the validity or invalidity of any Released Claims in the
Action or a finding of any wrongdoing by the Settling Defendants. Neither this
Agreement nor the Final Judgment shall be used or construed as an admission,
concession, or presumption or inference of any fault, liability or wrongdoing by
any Person. Neither the Final
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Judgment, this Agreement, the fact of settlement and the settlement proceedings,
nor the settlement negotiations, nor any related documents or facts, shall be
offered or received in evidence as an admission, concession, or presumption or
inference against any Party in any proceeding other than (i) in such proceedings
as may be necessary to consummate or enforce this Agreement, or (ii) in any
subsequent action against or by the Released Persons, or any of them, to support
a defense of res judicata, collateral estoppel, release, or other theory of
claim preclusion, issue preclusion, or similar defense.
V. ESTABLISHMENT AND ADMINISTRATION OF THE CREDIT FUND
     5.1 Beginning as soon as practicable after the Effective date, but in no
event later than sixty (60) calendar days after the Effective Date, Evercom
shall provide free Inmate Telephone Calls to Settlement Class Members and others
in the total amount of Four Hundred Thousand Dollars ($400,000.00) in retail
value (the “Credit Fund”). Evercom shall provide such free telephone calls by
programming its billing system, at its own expense, to omit any charge for
telephone calls for which Evercom otherwise would be entitled to charge, in the
manner set forth in Paragraph 5.2, so that each free call automatically will be
omitted from telephone bills sent to Settlement Class Members and others as
specifically set forth in Paragraph 5.2. No Settlement Class Member or other
person will be required to submit any claim or other documentation to obtain a
credit.
     5.2 The free telephone calls will be credited in the following manner:
          (A) Credits for free calls first will be given to telephone numbers in
California to which, during the Class Period, an Inmate Telephone Call was
charged and from which either (i) a claim of “Deny All Knowledge” regarding a
billed Inmate Telephone Call was made and not credited, or (ii) a charge for an
Inmate Telephone Call was disputed for reasons other than “Deny All Knowledge”
and not credited (“First Credit Period”). Each such number shall be entitled to
up to four free calls, irrespective of length. Evercom will compile, at its own
expense, a list of all such telephone numbers and will begin giving credits to
such telephone numbers, in the order that Inmate Telephone Calls are made to and
accepted by such telephone numbers, commencing as
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soon as practicable after the Effective Date, but in no event more than sixty
(60) calendar days after the Effective Date, and continuing until the total
amount of calls credited, valued at the rate which Evercom would have ordinarily
charged for such calls, has reached $400,000.
          (B) If, within a period of six months after the day on which such
credits commence (“the First Credit Period”), the total value of credits has not
reached $400,000, credits for free calls will also be given to telephone numbers
in California to which, during the Class Period, an Inmate Telephone Call of one
minute or less was charged (“Second Credit Period”). Each such number will be
entitled to up to two free calls, irrespective of length. Evercom will compile,
at its own expense, a list of all such telephone numbers and will add such
telephone numbers to the list compiled pursuant to paragraph 5.2(A). Evercom
will begin giving credits to all telephone numbers on the list in the order that
Inmate Telephone Calls are made to and accepted by such telephone numbers,
commencing as soon as practicable after the First Credit Period, but in no event
more than sixty (60) calendar days after the First Credit Period, and continuing
until the total amount of calls credited under both paragraph 5.2(A) and this
paragraph 5.2(B), valued at the rate which Evercom would have ordinarily charged
for such calls, has reached $400,000.
          (C) If, within a period of six months after the day on which such
credits to be provided under section 5.2(B) commences (“the Second Credit
Period”), the total value of credits has not reached $400,000, credits also will
be given to Inmate Telephone Calls made to telephone numbers in California which
were billed for an intrastate Inmate Telephone Call during the Class Period
(“Third Credit Period”). Each such number will be entitled to one free call,
irrespective of length. Evercom will compile, at its own expense, a list of all
such telephone numbers and will add such telephone numbers to the list compiled
pursuant to paragraphs 5.1(A) and 5.1(B). Evercom will begin giving credits for
free calls to all telephone numbers on the list in the order that Inmate
Telephone Calls are made to and accepted by such telephone numbers, commencing
as soon as practicable after the Second Credit Period, but in no event more than
sixty (60) calendar days after the Second Credit Period, and continuing until
the total amount of calls credited under
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paragraphs 5.2(A), 5.2(B) and this Paragraph 5.2(C), valued at the rate which
Evercom would have ordinarily charged for such calls, has reached $400,000.
          (D) If, within a period of six months after the day on which such
credits to be provided under paragraph 5.2(C) commences (“the Third Credit
Period”), the total value of credits has not reached $400,000, credits for free
calls next will be given for Inmate Telephone Calls that are made to and
accepted by telephone numbers in California not already included on the list
compiled under paragraphs 5.1 (A), 5.1(B) and 5.1(C) after the Third Credit
Period (“Final Credit Period”). Each such number will be entitled to one free
call, irrespective of length. Evercom will add, at its own expense, such
telephone numbers to the list compiled pursuant to paragraphs 5.1(A), 5.1(B),
and 5.1(C). Evercom will begin giving credits for free calls to all telephone
numbers on the list in the order that Inmate Telephone Calls are made to such
telephone numbers, commencing as soon as practicable after the Third Credit
Period, but in no event more than sixty (60) calendar days after the Fourth
Credit Period, and continuing until the total amount of calls credited under
paragraphs 5.2(A), 5.2(B), 5.2(C), and this paragraph 5.2 (D), valued at the
rate which Evercom would have ordinarily charged for such calls, has reached
$400,000.
     5.3 No amount of credits to be given by Evercom under this Section 5 will
be reclaimed or retained by Evercom under any circumstances.
     5.4 Upon written request by Class Counsel to Counsel for Settling
Defendants, which shall not be made more often than once per month, Evercom
shall provide a statement of the amount of credits given under this Section 5.
VI. IMPLEMENTATION OF INJUNCTIVE RELIEF
     6.1 Evercom and T-Netix will use best efforts in good faith to take
reasonable measures designed to prevent Inmate Telephone Calls from being
charged to California residents who did not authorize them, including without
limitation (a) Inmate Telephone Calls accepted by call answering devices,
(b) Inmate Telephone Calls made as a result of secondary dial tone, and
(c) Inmate Telephone Calls made as a result of GLARE, and for that purpose
Evercom will use its best efforts to implement on Evercom inmate call platforms
in California and in any new installations in
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California any measures and technology heretofore implemented or subsequently
implemented by T-Netix to that end.
6.2 In order to implement the agreement set forth in paragraph 6.1 as to
Evercom, the Final Judgment and Order of Dismissal of the Action to be entered
in the Action, as provided more fully in Section 11, shall contain a provision
that Evercom will use best efforts in good faith to take reasonable measures
designed to prevent Inmate Telephone Calls from being charged to California
residents who did not authorize them, including without limitation (a) Inmate
Telephone Calls accepted by call answering devices, (b) Inmate Telephone Calls
made as a result of secondary dial tone, and (c) Inmate Telephone Calls made as
a result of GLARE, and for that purpose Evercom will use its best efforts to
implement on Evercom inmate call platforms in California and in any new
installations in California any measures and technology heretofore implemented
or that may be subsequently implemented by T-Netix to that end.
VII. COOPERATION IN THE PURSUIT OF CLAIMS AGAINST OTHER DEFENDANTS
     7.1 Evercom, T-Netix and their officers, directors and employees will
provide Plaintiffs with reasonable assistance in the pursuit of claims against
other defendants in the Action.
VIII. ESTABLISHMENT AND ADMINISTRATION OF THE CASH FUND
     A. Establishment of the Cash Fund
     8.1 Within five business days after the Settling Parties have executed this
Agreement, the Settling Defendants shall cause to be delivered to the Escrow
Agent one or more checks or wire transfers in the total amount of Five Hundred
Twenty-Five Thousand Dollars ($525,000.00) (the “Cash Fund”).
          (a) The Cash Fund shall be used for the following purposes:
               (i) to pay costs and expenses of notice and administration as set
forth in Paragraph 8.2;
               (ii) to pay attorneys’ fees and expenses as set forth in
Paragraph 8.14; and
               (iii) to pay incentive awards to the named plaintiffs in the
aggregate amount of $25,000.
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          (b) Any amounts remaining in the Cash Fund after the payment of the
amounts set forth in Paragraph 8(a) shall be conveyed to a charity selected by
Class Counsel and approved by the Court pursuant to California Code of Civil
Procedure § 384.
     8.2 Fifty thousand dollars ($50,000.00) of the Cash Fund from Evercom’s
contribution to the Cash Fund shall be segregated by the Escrow Agent in a
separate account (“the Notice and Administration Fund”). The Notice and
Administration Fund may be used by Class Counsel and/or the Escrow Agent to pay
the following expenses: (1) the costs of publishing the Notice of Proposed
Settlement; (2) the Escrow Agent’s fees, costs and expenses of administering the
settlement; and (3) other reasonable and customary fees and expenses as may be
agreed upon by Class Counsel and Counsel for Settling Defendants. The Escrow
Agent shall pay these expenses either on its own initiative or at the request of
Class Counsel, without the prior approval of the Court. Neither the Settling
Parties nor their counsel shall have any responsibility for the expenses
described in this paragraph, except out of the Notice and Administration Fund
and/or the Cash Fund as otherwise permitted by this Agreement. The Notice and
Administration Fund may also be invested and earn interest as provided for in
paragraph 8.5 of this Agreement.
     8.3 All interest or other earnings on the Cash Fund or the Notice and
Administration Fund shall become part of the Cash Fund.
     B. Escrow Agent
     8.4 The payment described in paragraph 8.1 shall be made to a trust account
established by the Escrow Agent. The Escrow Agent shall serve according to the
terms and conditions of an Escrow Agency Agreement substantially in the form of
Exhibit A to this Agreement.
     8.5 The Escrow Agent shall invest the Cash Fund in Securities of the United
States Government or any mutual fund whose holdings consist solely of securities
of the United States government and shall reinvest the proceeds of these
instruments as they mature in similar instruments at the then-current market
rates. None of the Settling Defendants, or any of their counsel, shall have any
responsibility or liability for investment decisions or for the administration
of the Cash Fund.
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     8.6 The Escrow Agent shall not disburse the Cash Fund except as provided
for in the Agreement or by Order of the Court.
     8.7 The Escrow Agent is authorized to execute such transactions on behalf
of the Settlement Class Members as are consistent with the terms of this
Agreement.
     8.8 The Cash Fund shall be within the control and jurisdiction of the
Court, in custodia legis, and shall remain subject to the jurisdiction of the
Court, until such time as such funds shall be distributed pursuant to this
Agreement and/or further order(s) of the Court.
     8.9 On the Effective Date, any balance (including interest) then remaining
in the Notice and Administration Fund, shall be transferred by the Escrow Agent
to, and reported and credited as part of the Cash Fund to be applied as set
forth in Section 14. Thereafter, Class Counsel and the Escrow Agent shall have
the right to use such portions of the Cash Fund as are, in the exercise of
reasonable judgment, necessary to carry out the purposes set forth in paragraph
8.2.
     C. Taxes
     8.10 The Settling Parties and the Escrow Agent agree to treat the Cash Fund
as being at all times a “qualified settlement fund” within the meaning of Treas.
Reg. §1.468B-1 through 1.468B5, 26 C.F.R. §§ 1.468B-1 through 1.468B-5 (1992).
The Settling Parties shall treat the Cash Fund as a qualified settlement fund
for all reporting purposes under the federal tax laws. In addition, the Escrow
Agent and, as required, the Settling Defendants contributing any settlement
consideration shall jointly and timely make the “relation-back election” (as
defined in Treas. Reg. §1.468B-1) back to the earliest permitted date. Such
election shall be made in compliance with the procedures and requirements
contained in such regulations. It shall be the responsibility of the Escrow
Agent to timely and properly prepare and deliver the necessary documentation for
signature by all necessary Settling Parties, and thereunder to cause the
appropriate filing to occur.
     8.11 For the purposes of §468B of the Internal Revenue Code of 1986, and
Treas. Reg. §1.468B, the “administrator” shall be the Escrow Agent. The Escrow
Agent shall timely and properly file all informational and other tax returns
necessary or advisable with respect to the Cash Fund (including without
limitation the returns described in Treas. Reg. §1.468B-2(k)). Such
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returns (as well as the election described in paragraph 8.10) shall be
consistent with this paragraph 8.11 and in all events shall reflect that all
taxes (including any estimated taxes, interest or penalties) on the income
earned by the Cash Fund shall be paid out of the Cash Fund as provided in
paragraph 8.12 hereof.
     8.12 All (i) taxes (including any estimated taxes, interest or penalties)
arising with respect to the income earned by the Cash Fund (“Taxes”) and
(ii) expenses and costs incurred in connection with the operation and
implementation of paragraph 8.11 (including, without limitation, expenses of tax
attorneys and/or accountants and mailing and distribution costs and expenses
relating to filing (or failing to file) the returns described in paragraph 8.11)
(“Tax Expenses”), shall be paid out of the Cash Fund; in all events the Settling
Defendants shall have no liability or responsibility for the Taxes, the Tax
Expenses, or the filing of any tax returns or other documents with the Internal
Revenue Service or any other state or local taxing authority. Further, Taxes and
Tax Expenses shall be treated as, and considered to be, a cost of administration
of the Settlement and shall be timely paid by the Escrow Agent out of the Cash
Fund without prior order from the Court; the Settling Defendants are not
responsible and shall have no liability therefor, or for any reporting
requirements that may relate thereto. The Settling Parties hereto agree to
cooperate with the Escrow Agent, each other, and their tax attorneys and
accountants to the extent reasonably necessary to carry out the provisions of
Paragraph 8.11 and this paragraph 8.12.
     D. Termination
     8.13 In the event that the Agreement is not approved, or is terminated,
canceled, or fails to become effective for any reason, the Cash Fund (including
accrued interest) and the funds in the Notice and Administration Fund (described
in paragraphs 8.1 and 8.2 above), less expenses (including without limitation
Taxes or Tax Expenses) actually paid, incurred or due and owing in connection
with the Settlement provided for herein, shall be refunded to Settling
Defendants as provided in paragraph 16.4.
     8.14 The parties agree that the Settlement contemplated herein addresses an
important public issue and confers a significant benefit on the general public
of the State of California and the
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portion thereof affected by the practices at issue in the Action, such that the
payment of attorneys’ fees and expenses to Class Counsel and the payment of
incentive awards by Evercom, all in the specific amounts set forth herein is
reasonable and appropriate pursuant to California Code of Civil Procedure
Section 1021.5. Accordingly, the Settling Parties agree that following amounts
shall be paid from the Cash Fund:
          (a) The sum of $100,000 shall be paid to Class Counsel to reimburse
Class Counsel for a portion of the costs and expenses of the litigation incurred
by them in the Action;
          (b) Attorneys’ fees in the amount of $350,000 shall be paid to
Class Counsel; and
          (c) Incentive awards in the amount of $6,250 shall be paid to each of
the Class Representatives.
IX. CERTIFICATION OF SETTLEMENT CLASS
     9.1 For settlement purposes only, the Settling Parties stipulate that the
Plaintiffs are adequate representatives of the Settlement Class whose claims are
typical of the claims of other members of the Settlement Class, and that common
issues predominate over individual or unique issues, and the Settling Parties
shall request, as part of the Preliminary Order, that the Court enter an order
certifying the Settlement Class, and appointing Plaintiffs as representatives of
the Settlement Class.
     9.2 Settling Defendants do not consent to certification of the Settlement
Class for any purpose other than to effectuate the Settlement and dismissal of
the Action. If this Agreement is terminated pursuant to its terms, the Effective
Date does not occur, or for any reason the Settlement described in this
Agreement is not effectuated, any order certifying the Settlement Class shall be
vacated upon notice of termination of the Settlement to the Court, and the
Action shall proceed as though the Settlement Class had never been certified,
without prejudice to the Settling Parties to either request or oppose class
certification.
     9.3 Any person falling within the definition of the Settlement Class may
request exclusion from the Settlement Class. A request for exclusion must state:
(1) the name, address,
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and telephone number of the Person requesting exclusion and (2) that the Person
wishes to be excluded from the Settlement Class. The exclusion request must be
sent by mail to Class Counsel and postmarked on or before the date provided in
the Preliminary Order. All persons who submit valid and timely requests for
exclusion in the manner set forth in this paragraph shall have no rights under
this Agreement, shall not share in the distribution of the Cash Fund, and shall
not be bound by this Agreement or the Final Judgment. All persons falling within
the definition of Settlement Class who do not request exclusion in the manner
set forth in this paragraph shall be Settlement Class Members and shall be bound
by this Agreement and the Final Judgment.
X. ORDER PRELIMINARILY APPROVING SETTLEMENT, APPROVING NOTICE OF PROPOSED
SETTLEMENT, AND SETTING SETTLEMENT HEARING
     10.1 The Settling Parties agree to apply to the Court for entry of a
Preliminary Order, substantially in the form of Exhibit B to this Agreement, as
soon as practicable after the execution of this Agreement. The Preliminary Order
shall contain the provisions set forth in paragraphs 10.3 through 10.13. The
Settling Parties agree to argue to the Court that publication of class notice in
the manner set forth in paragraph 10.4 constitutes the best notice practicable
under the circumstances to all persons within the definition of the Settlement
Class, and fully complied with California law, the United States Constitution,
and any other applicable law.
     10.2 The Preliminary Order shall adopt the definitions set forth in
Section 2 of this Agreement.
     10.3 The Preliminary Order shall preliminarily approve this Agreement, and
each of the releases and other terms set forth herein, as falling within the
range of possible approval and meriting submission to the Settlement
Class Members for consideration.
     10.4 The Preliminary Order shall require Class Counsel to publish a Notice
of Proposed Settlement substantially in the form of Exhibit C to this Agreement
once, using a 1/8 page format, in the following newspapers: The Los Angeles
Times, The San Francisco Chronicle, The San Diego Union Tribune, The Orange
County Register and The Sacramento Bee (including two other Bee newspapers, The
Fresno Bee and The Modesto Bee). The date of publication shall be set forth in
the order. Class Counsel shall file with the Court and serve upon Counsel for
Settling
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Defendants no later than seven (7) days prior to the Settlement Hearing an
affidavit or declaration stating that the Notice has been published in
accordance with the terms of the Preliminary Order.
     10.5 The Preliminary Order shall find that publication of the Notice in the
manner required by paragraph 10.4 constitutes the best notice practicable under
the circumstances to potential members of the Settlement Class and comply fully
with California law, the United States Constitution, and any other applicable
law.
     10.6 The Preliminary Order shall authorize the Settling Parties and their
counsel to enter into an Escrow Agency Agreement substantially in the form of
Exhibit A to this Agreement, and to submit instructions to the Escrow Agent in
accordance with this Agreement.
     10.7 The Preliminary Order shall authorize the Escrow Agent to pay out of
the Cash Fund the expenses described in paragraphs 8.2, 8.9 and 8.12.
     10.8 The Preliminary Order shall provide for a Settlement Hearing to be
held on a date set forth in the Order, at which the Court will determine whether
the settlement of the Action should be approved as fair, reasonable and adequate
and whether a Final Judgment as provided in Section 11 of this Agreement should
be entered. The Court may adjourn or continue the Settlement Hearing without
further notice to the Settlement Class.
     10.9 The Preliminary Order shall provide that any Settlement Class Member
who objects to the settlement of the Class Action shall have a right to appear
and be heard at the Settlement Hearing. Any such person must file with the Court
and deliver to Class Counsel and Counsel for Settling Defendants a written
notice of objection on or before a date to be set forth in the Order. The manner
by which an objection must be prepared, filed, and delivered shall be stated in
the Notice of Proposed Settlement. Only Settlement Class Members who have filed
and delivered valid and timely written notices of objection will be entitled to
be heard at the Settlement Hearing unless the Court otherwise so orders.
     10.10 The Preliminary Order shall provide that any person falling within
the definition of the Settlement Class may, upon request, be excluded from the
Settlement. Any such person must submit to Class Counsel a request for
exclusion, as provided for in paragraph 9.3, postmarked on or
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before a date to be set forth in the order. Class Counsel shall provide copies
of any and all requests for exclusion to Counsel for Settling Defendants at
least ten (10) business days before the Settlement Hearing.
     10.11 The Preliminary Order shall provide that neither the Preliminary
Order, nor this Agreement, nor any of its terms or provisions, nor any of the
negotiations or proceedings connected with it, shall be construed as an
admission or concession by Settling Defendants of the truth of any of the
allegations in the Complaint, or of any liability, fault or wrongdoing of any
kind.
     10.12 The Preliminary Order shall provide that the Final Judgment will
provide that members of the Settlement Class shall, as of the Effective Date,
conclusively be deemed to have released and forever discharged the Evercom
Released Persons from all Evercom Released Claims.
XI. FINAL JUDGMENT AND ORDER OF DISMISSAL OF THE ACTION
     11.1 Class Counsel and Counsel for Settling Defendants agree to apply to
the Court for entry of a Final Judgment and Order of Dismissal of the Action,
substantially in the form of Exhibit D to this Agreement, at the conclusion of
the Court’s consideration of the issues to be determined at the Settlement
Hearing. The Final Judgment shall contain the provisions set forth in paragraphs
11.2 through 11.11.
     11.2 The Final Judgment shall adopt the definitions set forth in Section 2.
     11.3 The Final Judgment shall provide that the Court has jurisdiction over
the subject matter of the Action, the Plaintiffs, the Settlement Class Members,
and the Settling Defendants.
     11.4 The Final Judgment shall find that the publication of the Notice as
provided for in the Preliminary Order constituted the best notice practicable
under the circumstances to all persons within the definition of the Settlement
Class, and fully complied with California law, the United States Constitution,
and any other applicable law.
     11.5 The Final Judgment shall approve the settlement set forth in this
Agreement, including the contributions by the Settling Defendants, each of the
releases and other terms, set forth herein, as fair, reasonable, and adequate to
the members of the Settlement Class.
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     11.6 The Final Judgment shall dismiss the Action, and all claims contained
therein, as to Evercom only with prejudice to the Plaintiffs and all Settlement
Class Members.
     11.7 The Final Judgment shall provide that all members of the Settlement
Class shall, as of the Effective Date, conclusively be deemed to have released
and forever discharged the Evercom Released Persons from all Evercom Released
Claims.
     11.8 The Final Judgment shall permanently bar and enjoin all Settlement
Class Members from commencing or prosecuting any direct or representative
action, or any action in any other capacity, asserting any of the Evercom
Released Claims against the Evercom Released Persons.
     11.9 The Final Judgment shall contain a provision that Settling Defendants
will use best efforts in good faith to take reasonable measures designed to
prevent Inmate Telephone Calls from being charged to California residents who
did not authorize them, including without limitation (a) Inmate Telephone Calls
accepted by call answering devices, (b) Inmate Telephone Calls made as a result
of secondary dial tone, and (c) Inmate Telephone Calls made as a result of
GLARE, and for that purpose Evercom will use its best efforts to implement on
Evercom inmate call platforms in California and in any new installations in
California any measures and technology heretofore implemented or subsequently
implemented by T-Netix to that end.
     11.10 The Final Judgment shall provide that the Court reserves exclusive
and continuing jurisdiction over the Action, the Plaintiffs, the Settlement
Class Members, and the Settling Defendants for all purposes including the
following: (1) supervising the implementation, enforcement, construction, and
interpretation of this Agreement, the Preliminary Order, and the Final Judgment;
and (2) supervising the distribution of the Cash Fund.
     11.11 The Final Judgment shall provide that neither the Final Judgment, nor
this Agreement, nor any of its terms or provisions, nor any of the negotiations
or proceedings connected with it, shall be: (1) construed as an admission or
concession by Settling Defendants of the truth of any of the allegations in the
complaint, or of any liability, fault, or wrongdoing of any kind; or (2)
referred to, offered as evidence, or received in evidence in any pending or
future civil, criminal, or administrative action or proceeding, except in a
proceeding to enforce the Final
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Judgment, or to defend against the assertion of the Evercom Released Claims
against the Evercom Released Persons or the assertion of the individual T-Netix
Released Claims by plaintiffs against the T-Netix Released Persons, or as
otherwise required by law.
     11.12 All Class Representatives agree that they will not appeal a Final
Judgment that comports with Sections 11.2 through 11.11 hereof.
XII. RELEASES
     12.1 As of the Effective Date, the Class Representatives hereby fully,
finally and forever release, relinquish and discharge all Evercom Released
Claims against each and all of the Evercom Released Persons.
     12.2 As of the Effective Date, each and all of the Settlement Class Members
shall be deemed to have fully, finally and forever released, relinquished and
discharged all Evercom Released Claims against each and all of the Evercom
Released Persons. All Settlement Class Members shall be bound by the releases
set forth in paragraphs 12.1 and this Paragarph 12.2.
XIII. RELEASES AND DISMISSAL OF CLAIMS AGAINST T-NETIX
     13.1 Within five (5) business days after the Settling Parties have executed
both this Agreement and the Escrow Agency Agreement, plaintiffs Elena Condes,
Brian H. Getz, Bicka Barlow and Christopher Fank shall cause to be delivered to
the Escrow Agent both (a) a signed dismissal of each plaintiff’s individual
claims against the T-Netix Released Persons and (b) a signed release of each
plaintiff’s individual claims against the T-Netix Released Persons. The release
will be substantially in the form attached hereto as Exhibit E and will release
the T-Netix Released Persons from any and all claims, actions, demands, rights,
liabilities, suits, and causes or any of every nature and description
whatsoever, known or unknown, arising under the laws of the United States or of
any state or territory thereof, including without limitation Unknown Claims,
that were asserted or that could have been asserted in the Action by plaintiffs
individually against the T-Netix Released Persons, based upon, arising from, or
in any way related to the processing, billing for or collection of monies for
collect calls made by a prisoner, inmate or other person incarcerated or
detained at any penitentiary, prison, jail, holding facility, or other
correctional
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facility or detention center served by T-Netix and the transactions, conduct,
disclosures, statements, acts or omissions or failures to act by T-Netix which
were or could have been alleged in the Action or in any similar action brought
in any court or tribunal based upon the same facts.
     13.2 The releases and dismissals described in paragraph 13.1 shall not be
effective until the Effective Date, and neither the releases nor the dismissals
may be released by the Escrow Agent until after the Effective Date. Within five
business days after the Effective Date, the Escrow Agent shall deliver the
releases and dismissals to Counsel for Settling Defendants. Counsel for Settling
Defendants are authorized to file the dismissals with the Court after receiving
them from the Escrow Agent.
     13.3 In the event that the Agreement is not approved, or is terminated,
canceled, or fails to become effective for any reason, the releases and
dismissals described in paragraph 13.1 shall be returned to Counsel for
Plaintiffs as provided in paragraph 16.4 below.
XIV. DISTRIBUTION OF CASH FUND
     14.1 Except as permitted by paragraphs 8.2, 8.9 and 8.12, the Escrow Agents
shall not disburse any portion of the Cash Fund prior to the Effective Date.
After the Effective Date, the Escrow Agents shall pay, upon the written
authorization of Class Counsel or as authorized by Court order, additional
expenses, taxes and tax expenses, if any, permitted by paragraphs 8.2, 8.9 and
8.12, and the reasonable fees and expenses of the Escrow Agent. In addition, the
Escrow Agent, after the Effective Date and after receiving Court approval, shall
distribute such amounts from the Cash Fund as may be ordered by the Court.
     14.2 All rights of the Settling Defendants in the Cash Fund shall be
absolutely and forever extinguished on the Effective Date.
     14.3 Neither Settling Defendants nor Counsel for Settling Defendants shall
have any responsibility for, or liability whatsoever with respect to, the
investment, administration, or distribution of the Cash Fund.
CLASS ACTION SETTLEMENT AGREEMENT

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XV. EFFECTIVE DATE OF THE SETTLEMENT AGREEMENT
     15.1 The settlement of the Class Action shall become effective on the first
date by which all of the events and conditions set forth in paragraphs 15.2
through 15.11 have occurred:
     15.2 Class Counsel and Counsel for Settling Defendants have executed this
Agreement.
     15.3 The Settling Defendants have transferred the Cash Fund to the Escrow
Agent as provided in paragraph 8.1.
     15.4 The Court has entered the Preliminary Order as provided for in
Section 10.
     15.5 The Court has held the Settlement Hearing.
     15.6 The Court has entered the Final Judgment as provided for in
Section 11.
     15.7 The time to appeal from the Final Judgment has expired without any
appeal having been perfected.
     15.8 If any appeal is taken from the Final Judgment, the appeal has either
been dismissed or has resulted in affirmance of the judgment or order.
     15.9 If a ruling or decision is entered by an appellate court with respect
to the Final Judgment, the time to petition for review by the California Supreme
Court with respect to the ruling or decision has expired; or if filed, such a
petition has been denied or dismissed; or, if filed and granted, has resulted in
affirmance of the judgment.
     15.10 If a ruling or decision is entered by an appellate court with respect
to the Final Judgment, the time to petition for a writ of certiorari with
respect to the ruling or decision has expired.
     15.11 If a petition for a writ of certiorari with respect to the Final
Judgment is filed, the petition has been denied or dismissed, or, if granted,
has resulted in affirmance of the judgment or order.
XVI. TERMINATION OF SETTLEMENT AGREEMENT
     16.1 Settling Defendants may, in their sole and absolute discretion, elect
to waive, in whole or in part, the failure of any of the conditions set forth in
paragraphs 15.2 through 15.11.
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     16.2 If Settling Defendants decide to waive the failure of any condition as
provided for in paragraph 16.1, they shall serve a written notice of waiver on
the Court and Class Counsel, by hand delivery or by first class mail, such that
notice is delivered or postmarked within thirty (30) days after the failure of
such condition. If Settling Defendants waive the failure of any condition as
provided for in this paragraph, then the Effective Date will occur without
satisfaction of that condition.
     16.3 If the total expense of notifying potential members of the Settlement
Class as ordered by the Court exceeds the initial amount to be segregated into
the Notice and Administration Fund ($50,000), Plaintiffs shall have the right to
terminate this Agreement by providing written notice to Counsel for Settling
Defendants, provided, however, that any such termination will be null and void
if, within five days after receiving such written notice, Evercom transfers into
the Notice and Administration Fund the amount by which the expense of class
notice as ordered by the Court exceeds $50,000.
     16.4 Except as provided for in paragraph 16.2, if any of the conditions set
forth in paragraphs 15.2 through 15.11 does not occur, or if Settling Plaintiffs
terminate this Agreement as provided for in paragraph 16.3, then this Agreement
shall have no further force or effect. In that event, the Settling Parties shall
revert to their respective positions as of the time immediately before this
Agreement was executed, as though this Agreement had never been executed. The
Escrow Agent shall, within five (5) days after receiving written notice of the
termination from either Class Counsel or Counsel for Settling Defendants, and
with written approval of counsel, (a) refund the entire Cash Fund to the
Settling Defendants, including all accrued interest, except for those expenses,
taxes or tax expenses actually paid, incurred or due and owing as provided for
in paragraph 8.2, 8.9 and 8.12, prior to the date on which notice of termination
is received by the Escrow Agent and (b) return the releases and dismissals
provided in paragraph 13.1 to Counsel for Plaintiffs.
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XVII. OTHER TERMS
     17.1 The Settling Parties agree to exercise their best mutual efforts to
accomplish the terms and conditions of the Agreement.
     17.2 This Agreement constitutes the entire settlement among the Settling
Parties and supersedes any prior agreements or understandings between them
relating to the settlement of the Action.
     17.3 The Agreement may be amended or modified only by a written instrument
signed by Class Counsel and Counsel for Settling Defendants. Amendments and
modifications may be made without notice to the Settlement Class unless notice
is required by the Court.
     17.4 The Agreement shall be subject to, governed by, and constituted and
enforced pursuant to the laws of the State of California, without reference to
its conflicts of law provisions.
     17.5 The exhibits to the Agreement are an integral part of the settlement
and are hereby incorporated and made a part of the Agreement.
     17.6 Class Counsel represent that they have the full authority of the
Class Representatives to execute the Agreement, and Counsel for Settling
Defendants represent that they have the full authority of the Settling
Defendants to execute the Agreement.
     17.7 The Agreement may be executed in one or more counterparts, which
together shall be deemed one original agreement.
     17.8 The Settling Parties agree that any rule of construction to the effect
that any ambiguities are to construed against the drafting Settling Parties
shall not be employed in the interpretation of this Agreement.
     IN WITNESS WHEREOF, the Settling Parties, through their respective counsel,
have executed this Settlement Agreement as of December      , 2005.

     
Dated: December ___, 2005
  BRANSON, PLUTZIK, MAHLER & BIRKHAEUSER, LLP
 
  Alan R. Plutzik (State Bar #077785)
 
  Kathryn A. Schofield (State Bar #202939)
 
  2125 Oak Grove Road, Suite 120
 
  Walnut Creek, CA 94598
 
  Telephone: (925) 945-0200
 
  Facsimile: (925) 945-8792

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Dated: December 20, 2005
  /s/ Alan R. Plutzik    
 
       
 
  Alan R. Plutzik    
 
       
 
  LAW OFFICES OF JOHN W. ALLURED    
 
  John W. Allured (State Bar #84770    
 
  One Maritime Plaza, Suite 1040    
 
  San Francisco, CA 94111    
 
  Telephone: (415) 675-2960    
 
       
Dated: December 20, 2005
  /s/ John W. Allured    
 
       
 
  John W. Allured    

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  LAW OFFICES OF EDWARD C. CASEY, JR.    
 
  Edward C. Casey, Jr. (State Bar #123702)    
 
  300 Frank H. Ogawa Plaza, Suite 370    
 
  Oakland, CA 94612    
 
  Telephone: (510) 251-2300    
 
  Facsimile: (510) 251-2305    
 
       
Dated: December 20, 2005
  /s/ Edward C. Casey, Jr.    
 
       
 
  Edward C. Casey, Jr.    
 
       
 
  KELLY DRYE& WARREN    
 
  Stephanie A. Joyce (# 198978)    
 
  1200 19th Street, N.W., Suite 500    
 
  Washington, D.C. 20036    
 
  Telephone: (202) 955-9600    
 
       
Dated: December 20, 2005
  /s/ Stephanie A. Joyce    
 
       
 
  Stephanie A. Joyce    
 
       
 
  GOODIN, MACBRIDE, SQUERI, RITCHIE & DAY, LLP    
 
  Francine T. Radford (SB #168269)    
 
  505 Sansome Street, Suite 900    
 
  San Francisco, CA 94111-7900    
 
  Telephone: (415) 542-2551    
 
       
Dated: December 20, 2005
  /s/ Francine T. Radford    
 
       
 
  Francine T. Radford    
 
       
 
  Attorneys for Defendants Evercom Systems, Inc. and T-Netix    
 
  Telecommunications Services, Inc.    

CLASS ACTION SETTLEMENT AGREEMENT

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