PLEDGE AND SECURITY AGREEMENT
EXHIBIT 10.8
EXECUTION COPY
This PLEDGE AND SECURITY AGREEMENT (the “Agreement”), dated as of June 1, 2007, by and among
StarVox Communications, Inc., a California corporation (the “Company”), U.S. Wireless Data, Inc. a
Delaware corporation (the “Parent”), Capital Telecommunications, Inc., a Pennsylvania corporation (
“Guarantor” and together with the Company and Parent, the “Debtors” and each, a “Debtor”), and such
Holders of those certain Senior Secured Debentures (each, a “Secured Party” and together, the
“Secured Parties”), in the aggregate principal amount of $9,000,000, as the same may be amended
from time to time (the “Debentures”), issued by the Company to the Secured Parties in connection
with that certain Securities Purchase Agreement entered into by and among the Company and the
Secured Parties, and guaranteed by each Guarantor, on the date hereof (the “Securities Purchase
Agreement”);
W I T N E S S E T H:
WHEREAS, pursuant to the Debentures, the Secured Parties have extended and have agreed to
extend certain credit extensions described above to the Company as evidenced by the Debentures;
NOW, THEREFORE, in consideration of the agreements herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms shall have the
meanings set forth in this Section 1.
(a) “Collateral” means the collateral in which the Secured Parties are
granted a security interest by this Agreement, or otherwise so obligated to grant a security
interest under the Securities Purchase Agreement, Debentures, or Guaranty and which shall
include the following, whether presently owned or existing or hereafter acquired or coming
into existence, and all additions and accessions thereto and all substitutions and
replacements thereof, and all proceeds, products and accounts thereof, including, without
limitation, all proceeds from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith:
(i) all Accounts, Deposit Accounts, Instruments, Documents, Chattel Paper (whether
Tangible Chattel Paper or Electronic Chattel Paper), Goods (including Inventory, Equipment,
Fixtures and Motor Vehicles), Payment Intangibles, Software and other General Intangibles
and all Letter-of-Credit Rights;
(ii) the shares of common stock and preferred stock of, or partnership, membership
and other ownership interests in any subsidiary organized under the laws of the United
States or any political subdivision thereof, now or hereafter owned by any Debtor and all
certificates evidencing the same (collectively, the “Pledged Equity”) which are attached
hereto on Schedule A, together with, in each case:
(1) all shares, securities, monies or property representing a dividend on any of the
Pledged Equity, or representing a distribution or return of capital upon or in respect of
the Pledged Equity, or resulting from a split-up, revision, reclassification or other like
change of the Pledged Equity or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or otherwise in respect
of, the Pledged Equity, and
(2) without affecting the obligations of the Debtors under any provision prohibiting
such action hereunder or under any other Transaction Document, in the event of any
consolidation or merger or similar transaction in which a subsidiary of such Debtor is not
the surviving corporation, all ownership interests of any class or character of the
successor corporation (unless such successor corporation is that Debtor itself), formed by
or resulting from such consolidation or merger (the Pledged Equity, together with all other
certificates, shares, securities, properties or moneys as may from time to time be pledged
hereunder pursuant to this clause (2) and clause (1) above being herein collectively called
the “Equity Collateral”);
(iii) all Investment Property, Financial Assets and Securities Accounts not covered by
the foregoing clauses, (i), (i) and (iii);
(iv) all Intellectual Property;
(v) all commercial tort claims described on Schedule B hereto;
(vi) All other tangible and intangible property of each Debtor, including all books,
correspondence, credit files, records, invoices, tapes, cards, computer runs and other
papers and documents in the possession or under the control of the Debtor or any computer
bureau or service company from time to time acting for such Debtor; and
(vii) all Proceeds and products in whatever form of all or any part of the other
Collateral, including all rents, profits, income and benefits and all proceeds of insurance
and all condemnation awards and all other compensation for any event of loss with respect to
all or any part of the other Collateral (together with all rights to recover and proceed
with respect to the same), and all accessions to, substitutions for and replacements of all
or any part of the other Collateral.
Notwithstanding the foregoing, the term Collateral shall not include equipment acquired
by lease or purchase money financing, in each case only to the extent such lease or
financing prohibit the granting of such lien therein.
(c) “Obligations” means all obligations of the Debtors owed to the Secured
Parties under the Transaction Documents (as defined in the Securities Purchase Agreement)
whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that
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are paid, to the extent all or any part of such payment is avoided or recovered directly or
indirectly from the Secured Parties as a preference, fraudulent transfer or otherwise as
such obligations may be amended, supplemented, converted, extended or modified from time to
time.
(d) “Required Holders” has the meaning set forth in the Debentures and shall
include the Agent acting on behalf of the Required Holders pursuant to their written
instructions.
(e) “UCC” means the Uniform Commercial Code and or any other applicable law
of any jurisdiction (including, without limitation, the states of New York, Pennsylvania,
Texas, California and Delaware) as to any Collateral located therein.
2. Grant of Security Interest.
As an inducement for the Secured Parties to extend the credit as evidenced by the
Debentures and to secure the complete and timely payment, performance and discharge in full,
as the case may be, of all of the Obligations, each Debtor hereby unconditionally and
irrevocably pledges, grants and hypothecates to the Secured Parties a continuing security
interest in and to, a lien upon and a right of set-off against all of their respective
right, title and interest of whatsoever kind and nature in and to, the Collateral (the
“Security Interest”).
3. Representations, Warranties, Covenants and Agreements of the Debtors. Each Debtor
represents and warrants to, and covenants and agrees with, the Secured Parties as follows:
(a) Each Debtor has the requisite corporate power and authority to enter into this
Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and
performance by each Debtor of this Agreement and the filings contemplated therein have been
duly authorized by all necessary action on the part of each Debtor and no further action is
required by each Debtor.
(b) Each Debtor has no place of business or offices where its books of account and
records are kept (other than temporarily at the offices of its attorneys or accountants)
except as set forth on Schedule C attached hereto. Schedule C contains a list of places
where Equipment representing at least 85% of the value of all of the Equipment of Debtor is
stored or located.
(c) Each Debtor is the sole owner of its Collateral, free and clear of any
conflicting ownership interest or liens, security interests, encumbrances, rights or claims
(except for Permitted Liens), and is fully authorized to grant the Security Interest in and
to pledge the Collateral. Except for Permitted Liens, there is not on file in any
governmental or regulatory authority, agency or recording office an effective financing
statement, security agreement, license or transfer or any notice of any of the foregoing
(other than those filed in favor of the Secured Parties) covering or affecting any of the
Collateral. So long as this Agreement shall be in effect, no Debtor shall execute and shall
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knowingly permit to be on file in any such office or agency any such financing
statement or other document or instrument (except (i) for Permitted Liens and (ii) to the
extent filed or recorded in favor of the Secured Parties pursuant to the terms of this
Agreement).
(d) To each Debtor’s knowledge, no part of its ownership rights to its Collateral has
been judged invalid or unenforceable. No written claim has been received that any
Collateral or any Debtor’s use of any Collateral violates the rights of any third party.
There has been no adverse decision to any Debtor’s claim of ownership rights in or exclusive
rights to use of its Collateral in any jurisdiction or to any Debtor’s right to keep and
maintain such Collateral in full force and effect, and there is no proceeding involving said
rights pending or, to the best knowledge of such Debtor, threatened before any court,
judicial body, administrative or regulatory agency, arbitrator or other governmental
authority.
(e) Each Debtor shall at all times maintain its books of account and records relating
to the Collateral at its principal place of business and its Collateral at the locations set
forth on Schedule C and may not relocate such books of account and records or
tangible Collateral unless it delivers to the Secured Parties at least thirty (30) days
prior to such relocation (i) written notice of such relocation and the new location thereof
(which must be within the United States) and (ii) evidence that appropriate financing
statements under the UCC and other necessary documents have been filed and recorded and
other steps have been taken to perfect the Security Interest to create in favor of each of
the Secured Parties a valid, perfected and continuing perfected first priority lien in the
Collateral or a certificate of a responsible officer of the Company that such is not
required.
(f) This Agreement creates in favor of the Secured Parties a valid security interest
in the Collateral securing the payment and performance of the Obligations and, upon (i)
making the filings described in the paragraph (g) set forth immediately below and (ii)
entering into account control agreements with Silicon Valley Bank, will create a perfected
first priority security interest in such Collateral subject only to Permitted Liens (as
defined in the Debentures).
(g) Each Debtor hereby authorizes each of the Secured Parties to file one or more
financing statements under the UCC, with respect to the Security Interest with the proper
filing and recording agencies in any jurisdiction deemed proper by them.
(h) The execution, delivery and performance of this Agreement by each Debtor does not
conflict with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing such Debtor’s debt or
otherwise) or other understanding to which such Debtor is a party or by which any property
or asset of such Debtor is bound or affected. No consent, which has not been received and
provided to the Secured Parties (including, without limitation, from
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stockholders or creditors of such Debtor) is required for such Debtor to enter into and
perform its obligations hereunder.
(i) After making the filings contemplated by Section 3(g), each Debtor shall at all
times maintain the liens and Security Interest provided for hereunder as valid and perfected
first priority liens and security interests in the Collateral (subject only to Permitted
Liens) as described in Sections 3(e) and (f) of this Agreement in favor of the Secured
Parties until this Agreement and the Security Interest hereunder shall be terminated
pursuant to Section 11 hereof. Notwithstanding the foregoing and the requirements of
Section (3)(f) above, the Debtors will not be required to provide control agreements for the
pledged deposit accounts at M&T Bank so long as they maintain a balance of less than
$200,000.00 in the aggregate in such accounts and so long as cash balances in such accounts
are transferred to accounts of the Company or a Guarantor at Silicon Valley Bank (or another
bank upon receiving the written consent of Agent). Each Debtor hereby agrees to defend the
same against any and all persons. Each Debtor shall safeguard and protect all Collateral
for the account of the Secured Parties. Each Debtor irrevocably authorizes the Secured
Parties at any time and from time to time to file in any filing office in any jurisdiction
any initial financing statement or amendment thereto that indicates the collateral as “all
assets” or “all personal property” of such Debtor or words of similar effect and will pay
the cost of filing the same in all public offices wherever filing is, or is deemed by the
Secured Parties to be, necessary or desirable to effect the rights and obligations provided
for herein. Without limiting the generality of the foregoing, the Debtors shall pay all
fees, taxes and other amounts necessary to maintain the Collateral and the Security Interest
hereunder, and the Debtors shall obtain and furnish to the Secured Parties from time to
time, upon demand, such releases and/or subordinations of claims and liens which may be
required to maintain the priority of the Security Interest hereunder.
(j) Except as permitted by the Debentures, no Debtor will directly or indirectly,
consummate an Asset Sale (as such is defined in the Debentures).
(k) Each Debtor shall keep and preserve its Equipment, Inventory and other tangible
Collateral in good condition, repair and order and shall not operate or locate any such
Collateral (or cause to be operated or located) in any area excluded from insurance
coverage.
(l) Each Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
Secured Parties promptly, in sufficient detail, of any substantial change in the Collateral,
and of the occurrence of any event which would have a material adverse effect on the value
of the Collateral or on the Secured Parties’ security interest therein.
(m) Each Debtor shall promptly execute and deliver to the Secured Parties such
further deeds, mortgages, fixture filings, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take such
further action as any Secured Party may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce its security interest in the
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Collateral or any additional collateral, including, without limitation, the execution
and delivery of separate mortgages and fixture filings, which shall be satisfactory to the
Secured Parties in their sole discretion for real or personal property interest.
(n) Each Debtor shall permit the Secured Parties and their representatives and agents
to inspect the Collateral at any time, with reasonable advance notice, and to make copies of
records pertaining to the Collateral as may be requested by the Secured Parties from time to
time.
(o) Each Debtor shall take all steps reasonably necessary to diligently pursue and
seek to preserve, enforce and collect any rights, claims, causes of action and accounts
receivable in respect of its Collateral other than as normal and customary in the ordinary
course of such Debtor’s business.
(p) Each Debtor shall promptly notify the Secured Parties in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process levied
against its Collateral and of any other information received by such Debtor which would have
a material adverse effect on the value of the Collateral, the Security Interest or the
rights and remedies of the Secured Parties hereunder.
(q) All information heretofore, herein or hereafter supplied to the Secured Parties by
or on behalf of any Debtor with respect to the Collateral is accurate and complete in all
material respects as of the date furnished.
(r) Each Debtor shall, and cause it subsidiaries, if any, to, at all times preserve
and keep in full force and effect their respective valid existence and good standing and any
rights and franchises material to their businesses.
(s) Each Debtor will not change its name, corporate structure, or identity, or add any
new fictitious name unless it provides at least thirty (30) days’ prior written notice to
the Secured Parties of such change and, at the time of such written notification, such
Debtor provides any financing statements or fixture filings necessary to perfect and
continue perfected the perfected first priority Security Interest granted and evidenced by
this Agreement.
(t) No Debtor may consign any of its Inventory or sell any of its Inventory on xxxx and
hold, sale or return, sale on approval, or other conditional terms of sale without the
consent of the Secured Parties which shall not be unreasonably withheld.
(u) No Debtor may relocate its chief executive office to a new location without
providing thirty (30) days’ prior written notification thereof to the Secured Parties and so
long as, at the time of such written notification, such Debtor provides any financing
statements or fixture filings necessary to perfect and continue perfected the perfected
first priority Security Interest granted and evidenced by this Agreement.
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4. Defaults. The following events shall be “Events of Default”:
(a) The occurrence of an Event of Default (as defined in the Debentures) under the
Debentures;
(b) Any representation or warranty of any Debtor in this Agreement shall prove to
have been incorrect in any material respect when made;
(c) The failure by any Debtor to observe or perform any of its obligations hereunder
for (i) ten (10) days after delivery to all Debtors of notice of such failure by or on
behalf of a Secured Party if such failure is not able to be cured, or (ii) thirty (30) days
after delivery to all Debtors of notice of such failure by or on behalf of a Secured Party
if such failure is able to be cured and the Debtor is diligently prosecuting such cure;
(d) If any provision of this Agreement shall at any time for any reason be declared
to be null and void, or the validity or enforceability hereof shall be contested by any
Debtor, or a proceeding shall be commenced by any Debtor, or by any governmental authority
having jurisdiction over any Debtor, seeking to establish the invalidity or unenforceability
thereof, or any Debtor shall deny that any Debtor has any liability or obligation purported
to be created under this Agreement; or
(e) The Debtors fail to obtain authorization for the transactions contemplated in the
Transaction Documents from the Pennsylvania Public Utilities Commission within twenty (20)
days after the Issuance Date (as defined in the Debentures).
5. Duty To Hold In Trust. Upon the occurrence and during the continuance of an
Event of Default, each Debtor shall, upon receipt of any revenue, income or other sums subject to
the Security Interest, whether payable pursuant to the Debentures or otherwise, or of any check,
draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum,
hold the same in trust for the Secured Parties and shall forthwith endorse and transfer any such
sums or instruments, or both, to the Secured Parties (pro rata in accordance with the principal
amount of Debentures held by each) for application to the satisfaction of the Obligations.
6. Rights and Remedies Upon Default. Upon the occurrence and during the
continuance of an Event of Default, the Required Holders, acting through the Agent (as defined
below) on behalf of all Secured Parties, shall have the right to exercise all of the remedies
conferred hereunder and under the Debentures, and all the rights and remedies of a secured party
under the UCC, including, without limitation, the following rights and powers:
(a) The Required Holders, acting through the Agent, shall have the right to take
possession of the Collateral and, for that purpose, enter, with the aid and assistance of
any person, any premises where the Collateral, or any part thereof, is or may be placed and
remove the same, and each Debtor shall assemble the Collateral and make it available to the
Required Holders at places which the Required Holders shall reasonably select, whether at
such Debtor’s premises or elsewhere, and make available to the Required Holders, without
rent, all of such Debtor’s respective premises and facilities for the
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purpose of the Required Holders taking possession of, removing or putting the
Collateral in saleable or disposable form.
(b) The Required Holders, acting through the Agent, shall have the right to operate
the business of the Debtors using the Collateral and shall have the right to assign, sell,
lease or otherwise dispose of and deliver all or any part of the Collateral, at public or
private sale or otherwise, either with or without special conditions or stipulations, for
cash or on credit or for future delivery, in such parcel or parcels and at such time or
times and at such place or places, and upon such terms and conditions as the Required
Holders may deem commercially reasonable, all without (except as shall be required by
applicable statute and cannot be waived) advertisement or demand upon or notice to the
Debtors or right of redemption of any Debtor, which are hereby expressly waived. Upon each
such sale, lease, assignment or other transfer of Collateral, the Required Holders may,
unless prohibited by applicable law which cannot be waived, purchase all or any part of the
Collateral being sold, free from and discharged of all trusts, claims, right of redemption
and equities of any Debtor, which are hereby waived and released.
7. Applications of Proceeds. The proceeds of any such sale, lease or other
disposition of the Collateral hereunder shall be applied first, to the expenses of retaking,
holding, storing, processing and preparing for sale, selling, and the like (including, without
limitation, any taxes, fees and other costs incurred in connection therewith) of the Collateral, to
the reasonable attorneys’ fees and expenses incurred by the Secured Parties in enforcing their
rights hereunder and in connection with collecting, storing and disposing of the Collateral, and
then to satisfaction of the Obligations to each Secured Party, and to the payment of any other
amounts required by applicable law, after which the Secured Parties shall pay to the Debtors any
surplus proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds
thereof are insufficient to pay all amounts to which the Secured Parties are legally entitled, the
Debtors will be liable for the deficiency, together with interest thereon, at the rate of 18% per
annum or the lesser amount permitted by applicable law (the “Default Rate”), and the reasonable
fees of any attorneys employed by the Required Holders to collect such deficiency. To the extent
permitted by applicable law, each Debtor waives all claims, damages and demands against the Secured
Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due
to the gross negligence or willful misconduct of the Secured Parties.
8. Costs and Expenses. The Debtors agree to pay all reasonable out-of-pocket fees,
costs and expenses incurred in connection with any filing required hereunder, including without
limitation, any financing statements pursuant to the UCC, continuation statements, partial releases
and/or termination statements related thereto or any expenses of any searches reasonably required
by any Secured Party. The Debtors shall also pay all other claims and charges which in the
reasonable opinion of the Required Holders might prejudice, imperil or otherwise affect the
Collateral or the Security Interest therein. The Debtors will also, upon demand, pay to the
Required Holders the amount of any and all reasonable expenses, including the reasonable fees and
expenses of their counsel and of any experts and agents, which the Required Holders may incur in
connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise
or enforcement of any of the rights of the Secured Parties under the Debentures. Until
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so paid, any fees payable hereunder shall be added to the principal amount of the Debentures and
shall bear interest at the Default Rate.
9. Responsibility for Collateral. Each Debtor assumes all liabilities and
responsibility in connection with all Collateral (except for such Collateral that is perfected by
possession or control and only to the extent such is in the possession of a Secured Party or its
agent), and the Obligations shall in no way be affected or diminished by reason of the loss,
destruction, damage or theft of any of the Collateral or its unavailability for any reason.
10. Security Interest Absolute. All rights of each Secured Party and all Obligations
of the Debtors hereunder shall be absolute and unconditional, irrespective of: (a) any lack of
validity or enforceability of this Agreement, the Debentures or any agreement entered into in
connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner
or place of payment or performance of, or in any other term of, all or any of the Obligations, or
any other amendment or waiver of or any consent to any departure from the Debentures or any other
agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection
of any of the Collateral, or any release or amendment or waiver of or consent to departure from any
other collateral for, or any guaranty, or any other security, for all or any of the Obligations;
(d) any action by the Required Holders to obtain, adjust, settle and cancel in its sole discretion
any insurance claims or matters made or arising in connection with the Collateral; or (e) any other
circumstance which might otherwise constitute any legal or equitable defense available to any
Debtor, or a discharge of all or any part of the Security Interest granted hereby. Until the
Obligations shall have been paid and performed in full, the rights of each Secured Party shall
continue even if the Obligations are barred for any reason, including, without limitation, the
running of the statute of limitations or bankruptcy. The Debtor expressly waives presentment,
protest, notice of protest, demand, notice of nonpayment and demand for performance. In the event
that at any time any transfer of any Collateral or any payment received by any Secured Party
hereunder shall be deemed by final order of a court of competent jurisdiction to have been a
voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United
States, or shall be deemed to be otherwise due to any party other than any Secured Party, then, in
any such event, the Debtors’ obligations hereunder shall survive cancellation of this Agreement,
and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this
Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms
and provisions hereof. Each Debtor waives all right to require a Secured Party to proceed against
any other person or Debtor or to apply any Collateral which such Secured Party may hold at any
time, or to marshal assets, or to pursue any other remedy. Each Debtor waives any defense arising
by reason of the application of the statute of limitations to any obligation secured hereby.
11. Term of Agreement. This Agreement and the Security Interest shall terminate on
the date on which all payments under the Debentures have been made in full or have been satisfied
and all other Obligations have been paid or discharged (excluding inchoate indemnity obligations
and obligations under the Warrants and Registration Rights Agreement). Upon such termination, each
Secured Party, at the request and at the expense of the Debtors, will file or authorize the filing
of any termination statement or similar statement with respect to any financing statement or other
security instrument executed and filed pursuant to this Agreement.
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12. Power of Attorney; Further Assurances.
(a) Each Debtor authorizes the Required Holders, and the Agent acting pursuant to the
written instructions of the Required Holders, and does hereby make, constitute and appoint
the Agent, acting on behalf of and pursuant to the written instructions of the Required
Holders, and each of the Agent’s officers, agents, successors or assigns with full power of
substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in the name of
the Required Holders, the Agent or such Debtor, after the occurrence and during the
continuance of an Event of Default, (i) to endorse any note, checks, drafts, money orders or
other instruments of payment (including payments payable under or in respect of any policy
of insurance) in respect of the Collateral that may come into possession of the Secured
Party; (ii) to sign and endorse any financing statement pursuant to the UCC or any invoice,
freight or express xxxx, xxxx of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with accounts, and other
documents relating to the Collateral; (iii) to pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on or threatened against the
Collateral; (iv) to demand, collect, receipt for, compromise, settle and xxx for monies due
in respect of the Collateral; and (v) generally, to do, at the option of the Required
Holders, and at the expense of the Debtors, at any time, or from time to time, all acts and
things which the Required Holders or the Agent acting on their behalf, deem necessary to
protect, preserve and realize upon the Collateral and the Security Interest granted therein
in order to effect the intent of this Agreement and the Debentures all as fully and
effectually as the Debtors might or could do; and each Debtor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and shall be irrevocable for the term of this Agreement and
thereafter as long as any of the Obligations shall be outstanding.
(b) On a continuing basis, each Debtor will make, execute, acknowledge, deliver, file
and record, as the case may be, with the proper filing and recording agencies in any
jurisdiction all such instruments, and take all such action as may reasonably be deemed
necessary or advisable, or as reasonably requested by the Agent, to perfect the Security
Interest granted hereunder and otherwise to carry out the intent and purposes of this
Agreement, or for assuring and confirming to the Required Holders the grant or perfection of
a perfected first priority security interest in all the Collateral under the UCC.
(c) Each Debtor hereby irrevocably appoints the Required Holders and the Agent acting
on their behalf, as the Debtor’s attorney-in-fact, with full authority in the place and
instead of the Debtor and in the name of the Debtor, from time to time in the Required
Holders’ or the Agent’s discretion, to take any action and to execute any instrument which
the Required Holders or the Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including the filing, in its sole discretion, of one or more financing or
continuation statements and amendments thereto, relative to any of the Collateral without
the signature of such Debtor where permitted by law.
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13. Notices. All notices, requests, demands and other communications hereunder shall
be subject to the notice provision of the Secured Guaranty or Securities Purchase Agreement as
applicable .
14. Other Security. To the extent that the Obligations are now or hereafter secured
by property other than the Collateral or by the guarantee, endorsement or property of any other
person, firm, corporation or other entity, then the Required Holders shall have the right, in their
sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any Secured Party’s rights and remedies
hereunder.
15. Best Efforts for Licensed Collateral. Notwithstanding any other provision
contained herein or any of the other Transaction Documents, upon the occurrence of an Event of
Default, each Debtor hereby agrees that with respect to any part of the Collateral which may
require the consent of any third party or third parties in order for such Debtor to transfer and/or
convey its interest in and to such Collateral to the Required Holders, as may be required in
accordance herewith, such Debtor agrees to and shall use its best efforts to obtain such consents
or approvals in as expedient manner as possible.
16. Agency.
(a) Appointment. The Required Holders by their acceptance of the benefits of
this Agreement, hereby designate DKR SOUNDSHORE OASIS HOLDING FUND LTD. as their
representative (the “Agent”) to act as specified herein. The Required Holders shall by
written consent from time to time as they shall deem appropriate, authorize the Agent to
take such action on their behalf under the provisions of this Agreement and any other
Transaction Document (as such term is defined in the Debentures) and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically delegated to or
required of the Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Agent may perform any of its duties hereunder by or
through its agents or employees.
(b) Nature of Duties. The Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement. Neither the Agent nor any of its
partners, members, shareholders, officers, directors, employees or agents shall be liable
for any action taken or omitted by it as such under this Agreement or hereunder or in
connection herewith or therewith, be responsible for the consequence of any oversight or
error of judgment or answerable for any loss, unless caused solely by its or their gross
negligence or willful misconduct as determined by a final judgment (not subject to further
appeal) of a court of competent jurisdiction. The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have by reason of this Agreement or any
other Transaction Document a fiduciary relationship in respect of any Debtor or any Secured
Party; and nothing in this Agreement or any other Transaction Document, expressed or
implied, is intended to or shall be so construed as to impose upon the Agent any obligations
in respect of this Agreement or any other Transaction Document except as expressly set forth
herein and therein.
11
(c) Lack of Reliance on the Agent. Independently and without reliance upon the
Agent, each Secured Party, to the extent it deems appropriate, has made and shall continue
to make (i) its own independent investigation of the financial condition and affairs of the
Company and its subsidiaries in connection with such Secured Party’s investment in the
Debtors, the creation and continuance of the Obligations, the transactions contemplated by
the Transaction Documents, and the taking or not taking of any action in connection
therewith, and (ii) its own appraisal of the creditworthiness of the Company and its
subsidiaries, and of the value of the Collateral from time to time, and the Agent shall have
no duty or responsibility, either initially or on a continuing basis, to provide any Secured
Party with any credit, market or other information with respect thereto, whether coming into
its possession before any Obligations are incurred or at any time or times thereafter. The
Agent shall not be responsible to the Debtors or any Secured Party for any recitals,
statements, information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith, or for the execution,
effectiveness, genuineness, validity, enforceability, perfection, collectibility, priority
or sufficiency of this Agreement or any other Transaction Document, or for the financial
condition of the Debtors or the value of any of the Collateral, or be required to make any
inquiry concerning either the performance or observance of any of the terms, provisions or
conditions of this Agreement or any other Transaction Document, or the financial condition
of the Debtors, or the value of any of the Collateral, or the existence or possible
existence of any default or Event of Default under this Agreement, the Debentures or any of
the other Transaction Documents.
(d) Certain Rights of the Agent. Subject to this Agreement, the Agent shall
have the right to take any action with respect to the Collateral, on behalf of all of the
Secured Parties. To the extent practical, the Required Holders shall provide the Agent with
instructions with respect to any material act or action (including failure to act) in
connection with this Agreement or any other Transaction Document, and the Agent shall be
entitled to act or refrain from acting in accordance with the instructions of the Required
Holders; if such instructions are not provided despite the Agent’s request therefor, the
Agent shall be entitled to refrain from such act or taking such action, and if such action
is taken, shall be entitled to appropriate indemnification from the Secured Parties in
respect of actions to be taken by the Agent; and the Agent shall not incur liability to any
person or entity by reason of so refraining. Without limiting the foregoing, (a) no Secured
Party shall have any right of action whatsoever against the Agent as a result of the Agent
acting or refraining from acting hereunder in accordance with the terms of this Agreement or
any other Transaction Document, and the Debtors shall have no right to question or challenge
the authority of, or the instructions given to, the Agent pursuant to the foregoing and (b)
the Agent shall not be required to take any action which the Agent believes (i) could
reasonably be expected to expose it to personal liability or (ii) is contrary to this
Agreement, the Transaction Documents or applicable law.
(e) Reliance The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, statement, certificate, telex,
teletype or
12
telecopier message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by the proper person or entity, and, with respect to all legal matters
pertaining to this Agreement and the other Transaction Documents and its duties thereunder,
upon advice of counsel selected by it and upon all other matters pertaining to this
Agreement and the other Transaction Documents and its duties thereunder, upon advice of
other experts selected by it. Anything to the contrary notwithstanding, the Agent shall
have no obligation whatsoever to any Secured Party to assure that the Collateral exists or
is owned by the Debtors or is cared for, protected or insured or that the liens granted
pursuant to this Agreement have been properly or sufficiently or lawfully created,
perfected, or enforced or are entitled to any particular priority.
(f) Indemnification. To the extent that the Agent is not reimbursed and
indemnified by the Debtors, the Secured Parties will jointly and severally reimburse and
indemnify the Agent, in proportion to their respective principal amounts of Debentures, from
and against any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the Agent in performing its duties
hereunder or under this Agreement or any other Transaction Document, or in any way relating
to or arising out of this Agreement or any other Transaction Document except for those
determined by a final judgment (not subject to further appeal) of a court of competent
jurisdiction to have resulted solely from the Agent’s own gross negligence or willful
misconduct. Prior to taking any action hereunder as Agent, the Agent may require each
Secured Party to deposit with it sufficient sums as it determines in good faith is necessary
to protect the Agent for costs and expenses associated with taking such action.
(g) Resignation by the Agent.
(i) (a) The Agent (A) may resign at any time or (B) upon it no longer being a Holder,
it must resign, by giving thirty (30) days’ prior written notice to the Debtors and the
Secured Parties or (b) if requested in writing by the Required Holders, must immediately
resign upon the appointment of a successor Agent pursuant to clause (ii) below, from the
performance of all its functions and duties under this Agreement as Agent. Such resignation
shall take effect upon the appointment of a successor Agent pursuant to clauses (ii) and
(iii) below.
(ii) Upon any such notice of resignation or as otherwise provided, the Required
Holders, shall appoint a successor Agent hereunder.
(iii) If a successor Agent shall not have been so appointed within such thirty (30) day
period, the Agent shall then appoint a successor Agent who shall serve as Agent until such
time, if any, as the Required Holders appoint a successor Agent as provided above. If a
successor Agent has not been appointed within such thirty (30) day period, the Agent may
petition any court of competent jurisdiction or may interplead the Debtors and the Secured
Parties in a proceeding for the appointment of a successor Agent, and all fees, including,
but not limited to, extraordinary fees associated with the filing of interpleader
13
and expenses associated therewith, shall be payable by the Debtors on demand.
(h) Rights with respect to Collateral. Each Secured Party agrees with all
other Secured Parties and the Agent (i) that it shall not, and shall not attempt to,
exercise any rights with respect to its security interest in the Collateral, whether
pursuant to any other agreement or otherwise (other than pursuant to this Agreement), or
take or institute any action against the Agent or any of the other Secured Parties in
respect of the Collateral or its rights hereunder (other than any such action arising from
the breach of this Agreement) and (ii) that such Secured Party has no other rights with
respect to the Collateral other than as set forth in this Agreement and the other
Transaction Documents. Upon the acceptance of any appointment as the Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall
be discharged from its duties and obligations under this Agreement. After any retiring
Agent’s resignation or removal hereunder as Agent, the provisions of this Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
17. Miscellaneous.
(a) No course of dealing between any Debtor and any Secured Party, nor any failure to
exercise, nor any delay in exercising, on the part of any Secured Party, any right, power or
privilege hereunder or under the Debentures shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or thereunder preclude
any other or further exercise thereof or the exercise of any other right, power or
privilege.
(b) All of the rights and remedies of each Secured Party with respect to the
Collateral, whether established hereby or by the Debentures or by any other agreements,
instruments or documents or by law shall be cumulative and may be exercised singly or
concurrently.
(c) This Agreement constitutes the entire agreement of the parties with respect to
the subject matter hereof and is intended to supersede all prior negotiations,
understandings and agreements with respect thereto. Except as specifically set forth in
this Agreement, no provision of this Agreement may be modified or amended except by a
written agreement specifically referring to this Agreement and signed by the parties hereto.
(d) In the event any provision of this Agreement is held to be invalid, prohibited or
unenforceable in any jurisdiction for any reason, unless such provision is narrowed by
judicial construction, this Agreement shall, as to such jurisdiction, be construed as if
such invalid, prohibited or unenforceable provision had been more narrowly drawn so as not
to be invalid, prohibited or unenforceable. If, notwithstanding the foregoing, any
provision of this Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to the extent of
such invalidity,
14
prohibition or unenforceability without invalidating the remaining portion of such
provision or the other provisions of this Agreement and without affecting the validity or
enforceability of such provision or the other provisions of this Agreement in any other
jurisdiction.
(e) No waiver of any breach or default or any right under this Agreement shall be
considered valid unless in writing and signed by the party giving such waiver, and no such
waiver shall be deemed a waiver of any subsequent breach or default or right, whether of the
same or similar nature or otherwise.
(f) This Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.
(g) Each party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the provisions and
purposes of this Agreement.
(h) All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York.
EACH PARTY AGREES THAT ALL PROCEEDINGS CONCERNING THE INTERPRETATIONS, ENFORCEMENT AND
DEFENSE OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE DEBENTURE (WHETHER
BROUGHT AGAINST A PARTY HERETO OR ITS RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS,
SHAREHOLDERS, EMPLOYEES OR AGENTS) SHALL BE COMMENCED EXCLUSIVELY IN THE STATE AND FEDERAL
COURTS SITTING IN NEW YORK, NEW YORK.
EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS SITTING IN NEW YORK, NEW YORK, FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY PROCEEDING, ANY CLAIM
THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT OR THAT SUCH
PROCEEDING IS IMPROPER. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH PROCEEDING BY MAILING A COPY
THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY)
TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES
THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN
15
SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED
BY LAW.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. IF EITHER PARTY SHALL
COMMENCE A PROCEEDING TO ENFORCE ANY PROVISIONS OF THIS AGREEMENT, THEN THE PREVAILING PARTY
IN SUCH PROCEEDING SHALL BE REIMBURSED BY THE OTHER PARTY FOR ITS REASONABLE ATTORNEYS’ FEES
AND OTHER COSTS AND EXPENSES INCURRED WITH THE INVESTIGATION, PREPARATION AND PROSECUTION OF
SUCH PROCEEDING.
(i) This Agreement may be executed in any number of counterparts, each of which when
so executed shall be deemed to be an original and, all of which taken together shall
constitute one and the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation of the party
executing (or on whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.
[signature page follows]
16
IN WITNESS WHEREOF, the parties hereto have caused this Pledge and Security Agreement to be
duly executed on the day and year first above written.
COMPANY:
| STARVOX COMMUNICATIONS, INC. | ||||||||||
| By: | /s/ Xxxxxx Xxxxxx | |||||||||
| Name: Xxxxxx Xxxxxx | ||||||||||
| Title: Chief Executive Officer | ||||||||||
| Address for Notice and Delivery: | With a copy to: | |||||||||
| StarVox Communications, Inc. | Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, | |||||||||
| 0000 Xxxxxxx Xxxxxxx | Professional Corporation | |||||||||
| Xxx Xxxx, Xxxxxxxxxx 00000-0000 | 000 Xxxx Xxxx Xxxx | |||||||||
| Telephone: (000) 000-0000 | Xxxx Xxxx, Xxxxxxxxxx 00000-0000 | |||||||||
| Facsimile: (000) 000-0000 | Telephone: (000) 000-0000 | |||||||||
| Attention: Xxxxxx Xxxxxx | Facsimile: (000) 000-0000 | |||||||||
| Attention: Xxxxxx Xxxxxx, Esq. | ||||||||||
| PARENT: | ||||||||||
| U.S. Wireless Data, Inc. | ||||||||||
| By: | /s/ Xxxxxx Xxxxxx | |||||||||
| Name: Xxxxxx Xxxxxx | ||||||||||
| Title: Chief Executive Officer | ||||||||||
| Address for Notice and Delivery: | With a copy to: | |||||||||
| StarVox Communications, Inc. | Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, | |||||||||
| 0000 Xxxxxxx Xxxxxxx | Professional Corporation | |||||||||
| Xxx Xxxx, Xxxxxxxxxx 00000-0000 | 000 Xxxx Xxxx Xxxx | |||||||||
| Telephone: (000) 000-0000 | Xxxx Xxxx, Xxxxxxxxxx 00000-0000 | |||||||||
| Facsimile: (000) 000-0000 | Telephone: (000) 000-0000 | |||||||||
| Attention: Xxxxxx Xxxxxx | Facsimile: (000) 000-0000 | |||||||||
| Attention: Xxxxxx Xxxxxx, Esq. | ||||||||||
[Pledge and Security Agreement Signature Page]
GUARANTORS:
| Capital Telecommunications, Inc. | ||||||||||
| By: | /s/ Xxxxxx Xxxxxx | |||||||||
| Name: Xxxxxx Xxxxxx | ||||||||||
| Title: Chief Executive Officer | ||||||||||
| Address for Notice and Delivery: | With a copy to: | |||||||||
| StarVox Communications, Inc. | Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, | |||||||||
| 0000 Xxxxxxx Xxxxxxx | Professional Corporation | |||||||||
| Xxx Xxxx, Xxxxxxxxxx 00000-0000 | 000 Xxxx Xxxx Xxxx | |||||||||
| Telephone: (000) 000-0000 | Xxxx Xxxx, Xxxxxxxxxx 00000-0000 | |||||||||
| Facsimile: (000) 000-0000 | Telephone: (000) 000-0000 | |||||||||
| Attention: Xxxxxx Xxxxxx | Facsimile: (000) 000-0000 | |||||||||
| Attention: Xxxxxx Xxxxxx, Esq. | ||||||||||
[Pledge and Security Agreement Signature Page]
IN WITNESS WHEREOF, the undersigned has duly executed the agreement as of the day and year
first above written.
SECURED PARTY:
| DKR SOUNDSHORE OASIS HOLDING FUND LTD. | ||||||||
| By: | /s/ Xxxxxxx Xxxxxx | |||||||
| Name: Xxxxxxx Xxxxx | ||||||||
| Title: Authorized Signatory | ||||||||
| Address for Notice and Delivery: | With a copy to: | |||||||
| 0000 Xxxx Xxxx Xxxxxx | XxXxxxxxx Will & Xxxxx LLP | |||||||
| Xxxxxxxx, XX 00000 | 000 Xxxxxxx Xxxxxx | |||||||
| Telephone: (000) 000-0000 | Xxx Xxxx, Xxx Xxxx 00000 | |||||||
| Facsimile: (000) 000-0000 | Telephone: (000) 000-0000 | |||||||
| Attention: Xxxxx X. Xxxxxx, Assoc. General | Facsimile: (000) 000-0000 | |||||||
| Counsel | Attention: Xxxxxxx X. Older, Esq. | |||||||
| Xxxx X. Xxxxxxxx, Esq. | ||||||||
[Pledge and Security Agreement Signature Page]
IN WITNESS WHEREOF, the undersigned has duly executed the agreement as of the day and year
first above written.
SECURED PARTY:
| SMH CAPITAL INC. | ||||||||
| By: | /s/ Xxx X. Xxxxxx | |||||||
| Name: Xxx X. Xxxxxx | ||||||||
| Title: Chief Executive Officer | ||||||||
| Address for Notice and Delivery: | With a copy to: | |||||||
| SMH Capital, Inc. | SMH Capital, Inc. | |||||||
| 000 Xxxxxx, Xxxxx 0000 | 600 Travis, Suite 3100 | |||||||
| Houston, TX 77002 | Xxxxxxx, XX 00000 | |||||||
| Telephone: (000) 000-0000 | Telephone: (000) 000-0000 | |||||||
| Facsimile: (713) | Facsimile: (713) | |||||||
| Attention: Chief Executive Officer | Attention: Xxxx Xxxxx, Esq., General Counsel | |||||||
[Pledge and Security Agreement Signature Page]
IN WITNESS WHEREOF, the undersigned has duly executed the agreement as of the day and year
first above written.
SECURED PARTY:
| XXXXXX CAPITAL MASTER FUND, LTD. | ||||||
| By: | /s/ Xxx Xxxx | |||||
| Name: Xxx Xxxx | ||||||
| Title: Director | ||||||
| Address for Notice and Delivery: | With a copy to: | |||||
| 2121 Avenue of the Stars, Suite 1650 | Mintz, Levin, Cohn, Ferris, Glovsky | |||||
| Xxx Xxxxxxx, XX 00000 | and Popeo, P.C. | |||||
| Telephone: | Chrystler Center | |||||
| Facsimile: (310) 277-2741 | 000 Xxxxx Xxxxxx, 00xx Xxxxx | |||||
| Attention: Xxx Xxxx | Xxx Xxxx, XX 00000 | |||||
| Telephone: | ||||||
| Facsimile: (000) 000-0000 | ||||||
| Attention: Xxxxxxx X. Xxxx, Esq. | ||||||
