EXHIBIT 10.40
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement") is made and entered
into on November 26, 1997, between XXXXXXXXXXX X. XXXXXXXX ("Shareholder"),
and STAR TELECOMMUNICATIONS, INC., a Delaware corporation ("Company") with
reference to the following facts:
RECITALS
A. Company is lending shareholder $8,000,000 pursuant to that certain
Promissory Note Secured by Share of Stock of even date (the "Note") with
this Pledge Agreement.
B. The parties have agreed that 1,000,000 of Shareholder's shares in
the Company (the "Shares") shall be pledged as security on the Note.
AGREEMENT
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. GRANT OF SECURITY INTEREST
Shareholder grants a security interest to Company in the following
(collectively, the "Collateral"):
1.1 SHARES. The Shares;
1.2 REPLACEMENT SHARES. Any and all new or substituted shares, other
securities or other property distributed with respect to the Shares as a
result of any merger, consolidation or reorganization of the Company or any
recapitalization, stock dividend, stock split-up, reclassification or other
change declared or made in the capital structure of the Company; and
1.3 DISTRIBUTIONS. Subject to the provisions of Section 4, below, all
income and profits from, distributions on, and proceeds of, the Shares, and
any sums paid upon or in respect of any of the Shares upon the liquidation or
dissolution of the Company.
2. PERFECTION OF SECURITY INTEREST
2.1 DELIVERY OF SHARE CERTIFICATE. In order to perfect the security
interest granted to Company, concurrently with its execution of this Pledge
Agreement, Shareholder shall deliver to Company an undated Stock Power in the
form attached as EXHIBIT A with respect to the Shares, duly executed in blank.
2.2 DELIVERY OF ADDITIONAL PROPERTY. If at any time during the term of
this Pledge Agreement Shareholder receives or becomes entitled to receive any
stock certificate evidencing all or any portion of the Shares, or any other
certificates, documents, instruments, money or property constituting
Collateral, Shareholder agrees to accept the same as agent for Company, to
hold the same in trust on behalf of Company and to deliver the same promptly
to Company in the exact form received with any appropriate endorsements,
along with undated stock powers duly executed in blank where appropriate.
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3. SECURED OBLIGATIONS
The security interest granted by Shareholder to Company hereunder is
given as Collateral for the performance by Shareholder of all of his
obligations and liabilities under this Pledge Agreement and the Note.
4. EVENTS OF DEFAULT
An Event of Default shall exist under this Pledge Agreement if
Shareholder breaches any of his obligations under this Pledge Agreement and
such breach continues for a period of five days after written notice of
breach, specifying the basis therefor, has been given to Shareholder by
Company, or the Shareholder breaches any of his obligations under the Note.
5. REMEDIES OF COMPANY
Upon the occurrence of an Event of Default under Section 4. Company may
take any action(s) pertaining to the Collateral as may be permitted under the
California Uniform Commercial Code.
6. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
6.1 POWER AND AUTHORITY TO CREATE LIEN. Shareholder represents and
warrants to Company that (a) Shareholder is the legal record and beneficial
owner of, and has good title to, the Shares, (b) Shareholder has full power
to pledge all of the Shares pursuant to this Pledge Agreement, and (c) the
pledge of the Shares pursuant to this Pledge Agreement creates a valid,
first security interest in the Company, and the proceeds thereof, subject to
no other liens or agreements purporting to create a security interest in
favor of any third party.
6.2 DEFENSE OF TITLE. Shareholder covenants and agrees to defend the
right, tide and security interest of Company in the Collateral and the
proceeds thereof against the claims and demands of all persons.
7. TERMINATION
7.1 EXPIRATION OF SECURITY INTEREST. Unless Company has exercised its
remedies in accordance with the provisions of Section 5, above, this Pledge
Agreement shall terminate upon payment in full of the obligations secured
hereby in accordance with their terms.
7.2 SURRENDER OF COLLATERAL. Upon satisfaction in full of the
Shareholder's obligation to the Company as set forth in the Note, Company
shall return to Shareholder any of the Collateral then in possession of
Company.
8. GENERAL PROVISIONS
8.1 WAIVER. Neither the acceptance of any partial or delinquent
payment by Company nor Company's failure to exercise any of its rights or
remedies upon an Event of Default by Shareholder shall constitute a waiver of
such default, a modification of this Pledge Agreement or a waiver of
Shareholder's Obligations under this Pledge Agreement.
8.2 BINDING EFFECT. All of the terms, conditions and provisions of
this Pledge Agreement shall be binding upon and shall inure to the benefit
of and be enforceable by the successors, assigns and personal representatives
of each of the parties.
8.3 ATTORNEY'S FEES. Should any action or proceeding be brought to
construe or enforce the terms and conditions of this Pledge Agreement or the
rights of the parties hereunder, the party
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prevailing in such action or proceeding shall be entitled to recover all
court costs and reasonable attorney's fees.
8.4 FURTHER ASSURANCES. Each of the parties hereto agrees to perform
all such acts (including, but not limited to, executing and delivering any
necessary or appropriate instruments and documents) as may reasonably be
necessary or appropriate to effectuate fully the purposes and intent of this
Pledge Agreement.
8.5 GOVERNING LAW. This Pledge Agreement, the construction of its
terms and the interpretation of the rights and duties of the parties
hereunder shall be governed by the laws of the State of California.
8.6 COMPLETE AGREEMENTS. The provisions of this Pledge Agreement
constitute the entire understanding and agreement between the parties
regarding its subject matter. It may not be altered, amended or extended
except by instrument in writing signed by the parties hereto after the
execution of this Pledge Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Pledge Agreement
on the date set forth opposite their respective names.
SHAREHOLDER
/s/ Xxxxxxxxxxx X. Xxxxxxxx
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Date Xxxxxxxxxxx X. Xxxxxxxx
COMPANY
STAR Telecommunications, Inc.,
a Delaware corporation
/s/ Xxxx Xxxxx
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Date Xxxx Xxxxx, President
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