SECURITY AND PLEDGE AGREEMENT
(Subsidiary)
1. Identification.
This Security and Pledge Agreement (the "Agreement"), dated as of July 5,
2005, is entered into by and between Voipsolutions, a Florida corporation,
eGlobalphone, a Florida corporation, Caerus, Inc., a Delaware corporation, Vox
Consulting Group, Inc. d/b/a Voipamericas, a Florida corporation, VCG
Technologies d/b/a DTNet Technologies, Inc., a Florida corporation, Volo
Communications, Inc., a Delaware corporation, Caerus Billing, Inc., a Delaware
corporation, Caerus Networks, Inc., a Delaware corporation, VoiceOne
Communications, LLC, a Delaware Limited Liability corporation (each referred to
as "Debtor" and collectively "Debtors"), and Xxxxxxx Xxxxxxx, as collateral
agent acting in the manner and to the extent described in the Collateral Agent
Agreement defined below (the "Collateral Agent"), for the benefit of the parties
identified on Schedule A hereto (collectively, the "Lenders").
2. Recitals.
(a) Debtors are direct or indirect wholly-owned subsidiaries of VoIP,
Inc., a Texas corporation ("VoIP"). The Lenders have made or are
making loans to VoIP (the "Loans"). It is beneficial to Debtor that
the Loans were made, are being made and will be made. Debtor will
obtain substantial benefit from the proceeds of the Loans.
(b) The Loans are evidenced by certain convertible promissory notes
(each a "Convertible Note") issued by VoIP on or about the date of
this Agreement pursuant to subscription agreements (each a
"Subscription Agreement") to which Debtor and Lenders are parties
and which Convertible Notes are guaranteed by Debtor pursuant to a
Guaranty Agreement delivered by Debtor to the Collateral Agent and
Lenders (the "Guaranty Agreement"). The Notes are further identified
on Schedule A hereto and were and will be executed by Debtor as
"Borrower" or "Debtor" for the benefit of each Lender as the
"Holder" or "Lender" thereof.
(c) In consideration of the Loans made by Lenders to VoIP and for other
good and valuable consideration, and as security for the performance
by VoIP of its obligations under the Notes and as security for the
repayment of the Loans and all other sums due from Debtor to Lenders
arising under the Notes presently outstanding or to be outstanding,
Subscription Agreements, the Guaranty Agreement and any other
agreement between or among them (collectively, the "Obligations"),
Debtor, for good and valuable consideration, receipt of which is
acknowledged, has agreed to grant to the Collateral Agent, for the
benefit of the Lenders, a security interest in the Collateral (as
such term is hereinafter defined), on the terms and conditions
hereinafter set forth. Obligations includes all future advances by
Lenders to Debtor advanced on a pro rata basis by all Lenders on
substantially the same terms.
(d) The Lenders have appointed Xxxxxxx Xxxxxxx as Collateral Agent
pursuant to that certain Collateral Agent Agreement dated at or
about July 5, 2005 ("Collateral Agent Agreement"), among the Lenders
and Collateral Agent.
(Security and Pledge Agreement (subsidiary))
(e) The following defined terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper,
Documents, Equipment, General Intangibles, Instruments, Inventory
and Proceeds.
3. Grant of General Security Interest in Collateral.
(a) As security for the Obligations of Debtor, Debtor hereby grants the
Collateral Agent, for the benefit of the Lenders, a security
interest in the Collateral.
(b) "Collateral" shall mean all of the following property of Debtor:
(i) All now owned and hereafter acquired right, title and interest
of Debtor in, to and in respect of all Accounts, Goods, real
or personal property, all present and future books and records
relating to the foregoing and all products and Proceeds of the
foregoing, and as set forth below:
A. Accounts: All now owned and hereafter acquired right,
title and interest of Debtor in, to and in respect of
all: Accounts, interests in goods represented by
Accounts, returned, reclaimed or repossessed goods with
respect thereto and rights as an unpaid vendor; contract
rights; Chattel Paper; investment property; General
Intangibles (including but not limited to, tax and duty
claims and refunds, registered and unregistered patents,
trademarks, service marks, certificates, copyrights
trade names, applications for the foregoing, trade
secrets, goodwill, processes, drawings, blueprints,
customer lists, licenses, whether as licensor or
licensee, chooses in action and other claims, and
existing and future leasehold interests in equipment,
real estate and fixtures); Documents; Instruments;
letters of credit, bankers' acceptances or guaranties;
cash moneys, deposits; securities, bank accounts,
deposit accounts, credits and other property now or
hereafter owned or held in any capacity by Debtor, as
well as its affiliates, agreements or property securing
or relating to any of the items referred to above;
B. Goods: All now owned and hereafter acquired right, title
and interest of Debtor in, to and in respect of goods,
including, but not limited to:
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(Security and Pledge Agreement (subsidiary))
(1) All Inventory, wherever located, whether now owned
or hereafter acquired, of whatever kind, nature or
description, including all raw materials,
work-in-process, finished goods, and materials to
be used or consumed in Debtor' business, finished
goods, timber cut or to be cut, oil, gas,
hydrocarbons and minerals, extracted or to be
extracted; and all names or marks affixed to or to
be affixed thereto for purposes of selling same by
the seller, manufacturer, lessor or licensor
thereof and all Inventory which may be returned to
Debtor by its customers or repossessed by Debtor
and all of Debtor' right, title and interest in
and to the foregoing (including all of Debtor'
rights as a seller of goods);
(2) All Equipment and fixtures, wherever located,
whether now owned or hereafter acquired,
including, without limitation, all machinery,
motor vehicles, furniture and fixtures, and any
and all additions, substitutions, replacements
(including spare parts), and accessions thereof
and thereto (including, but not limited to Debtor'
rights to acquire any of the foregoing, whether by
exercise of a purchase option or otherwise);
C. Property: All now owned and hereafter
acquired right, title and interests of
Debtor in, to and in respect of any real or
other personal property in or upon which
Debtor has or may hereafter have a security
interest, lien or right of setoff;
D. Books and Records: All present and future
books and records relating to any of the
above including, without limitation, all
computer programs, printed output and
computer readable data in the possession or
control of the Debtor, any computer service
bureau or other third party; and
E. Products and Proceeds: All products and
Proceeds of the foregoing in whatever form
and wherever located, including, without
limitation, all insurance proceeds and all
claims against third parties for loss or
destruction of or damage to any of the
foregoing.
(ii) All now owned and hereafter acquired right, title and interest
of Debtor in, to and in respect of the following:
A. the shares of stock, partnership interests, member
interests or other equity interests at any time and from
time to time acquired by Debtor of any and all entities
now or hereafter existing, all or a portion of such
stock or other equity interests which are acquired by
such entities at any time (such entities, together with
the existing issuers, being hereinafter referred to
collectively as the "Pledged Issuers" and individually
as a "Pledged Issuer"), the certificates representing
such shares, partnership interests, member interests or
other interests all options and other rights,
contractual or otherwise, in respect thereof and all
dividends, distributions, cash, instruments, investment
property and other property from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of such shares, partnership
interests, member interests or other interests;
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(Security and Pledge Agreement (subsidiary))
B. all additional shares of stock, partnership interests,
member interests or other equity interests from time to
time acquired by Debtor, of any Pledged Issuer, the
certificates representing such additional shares, all
options and other rights, contractual or otherwise, in
respect thereof and all dividends, distributions, cash,
instruments, investment property and other property from
time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all
of such additional shares, interests or equity; and
C. all security entitlements of Debtor in, and all Proceeds
of any and all of the foregoing in each case, whether
now owned or hereafter acquired by Debtor and howsoever
its interest therein may arise or appear (whether by
ownership, security interest, lien, claim or otherwise).
(c) The Collateral Agent is hereby specifically authorized, after the
Maturity Date (defined in the Notes) accelerated or otherwise, or
after an Event of Default (as defined herein) and the expiration of
any applicable cure period, to transfer any Collateral into the name
of the Collateral Agent and to take any and all action deemed
advisable to the Collateral Agent to remove any transfer
restrictions affecting the Collateral.
4. Perfection of Security Interest.
(a) Debtor shall prepare, execute and deliver to the Collateral Agent
UCC-1 Financing Statements. The Collateral Agent is instructed to
prepare and file at Debtor's cost and expense, financing statements
in such jurisdictions deemed advisable to the Collateral Agent,
including but not limited to Texas, Florida and Delaware. The
Financing Statements are deemed to have been filed for the benefit
of the Collateral Agent and Lenders identified on Schedule A hereto.
(b) All other certificates and instruments constituting Collateral from
time to time required to be pledged to Collateral Agent pursuant to
the terms hereof (the "Additional Collateral") shall be delivered to
Collateral Agent promptly upon receipt thereof by or on behalf of
any of Debtor. All such certificates and instruments shall be held
by or on behalf of Collateral Agent pursuant hereto and shall be
delivered in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment
or undated stock powers executed in blank, all in form and substance
satisfactory to Collateral Agent. If any Collateral consists of
uncertificated securities, unless the immediately following sentence
is applicable thereto, Debtor shall cause Collateral Agent (or its
custodian, nominee or other designee) to become the registered
holder thereof, or cause each issuer of such securities to agree
that it will comply with instructions originated by Collateral Agent
with respect to such securities without further consent by Debtor.
If any Collateral consists of security entitlements, Debtor shall
transfer such security entitlements to Collateral Agent (or its
custodian, nominee or other designee) or cause the applicable
securities intermediary to agree that it will comply with
entitlement orders by Collateral Agent without further consent by
Debtor.
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(Security and Pledge Agreement (subsidiary))
(c) Within five (5) days after the receipt by Debtor of any Additional
Collateral, a Pledge Amendment, duly executed by Debtor, in
substantially the form of Annex I hereto (a "Pledge Amendment"),
shall be delivered to Collateral Agent in respect of the Additional
Collateral to be pledged pursuant to this Agreement. Debtor hereby
authorizes Collateral Agent to attach each Pledge Amendment to this
Agreement and agrees that all certificates or instruments listed on
any Pledge Amendment delivered to Collateral Agent shall for all
purposes hereunder constitute Collateral.
(d) If Debtor shall receive, by virtue of Debtor's being or having been
an owner of any Collateral, any (i) stock certificate (including,
without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of
capital, reclassification, merger, consolidation, sale of assets,
combination of shares, stock split, spin-off or split-off),
promissory note or other instrument, (ii) option or right, whether
as an addition to, substitution for, or in exchange for, any
Collateral, or otherwise, (iii) dividends payable in cash (except
such dividends permitted to be retained by Debtor pursuant to
Section 5.2 hereof) or in securities or other property or (iv)
dividends or other distributions in connection with a partial or
total liquidation or dissolution or in connection with a reduction
of capital, capital surplus or paid-in surplus, Debtor shall receive
such stock certificate, promissory note, instrument, option, right,
payment or distribution in trust for the benefit of Collateral
Agent, shall segregate it from Debtor's other property and shall
deliver it forthwith to Collateral Agent, in the exact form
received, with any necessary endorsement and/or appropriate stock
powers duly executed in blank, to be held by Collateral Agent as
Collateral and as further collateral security for the Obligations.
5. Distribution on Liquidation.
(a) If any sum is paid as a liquidating distribution on or with respect
to the Collateral, Debtor shall deliver same to the Collateral Agent
to be applied to the Obligations, then due, in accordance with the
terms of the Convertible Notes.
(b) So long as no Event of Default exists, Debtor shall be entitled (i)
to exercise all voting power pertaining to any of the Collateral,
provided such exercise is not contrary to the interests of the
Lenders and does not impair the Collateral and (ii) may receive and
retain any and all dividends, interest payments or other
distributions paid in respect of the Collateral.
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(Security and Pledge Agreement (subsidiary))
(c) Upon the occurrence and during the continuation of an Event of
Default, all rights of Debtor, upon notice given by Collateral
Agent, to exercise the voting power and receive payments, which it
would otherwise be entitled to pursuant to Section 5.2, shall cease
and all such rights shall thereupon become vested in Collateral
Agent, which shall thereupon have the sole right to exercise such
voting power and receive such payments.
(d) All dividends, distributions, interest and other payments
which are received by Debtor contrary to the provisions of
Section 5.3 shall be received in trust for the benefit of
Collateral Agent, shall be segregated from other funds of
Debtor, and shall be forthwith paid over to Collateral Agent
as Collateral in the exact form received with any necessary
endorsement and/or appropriate stock powers duly executed in
blank, to be held by Collateral Agent as Collateral and as
further collateral security for the Obligations.
6. Further Action By Debtor; Covenants and Warranties.
(a) Collateral Agent at all times shall have a perfected security
interest in the Collateral. Debtor has and will continue to have
full title to the Collateral free from any liens, leases,
encumbrances, judgments or other claims. Collateral Agent's security
interest in the Collateral constitutes and will continue to
constitute a first, prior and indefeasible security interest in
favor of Collateral Agent except for a security interest granted
pursuant to that certain Subordinated Loan and Security Agreement,
dated as of June 1, 2004, by and among Caerus, Inc. ("Caerus"), each
of the subsidiaries of Caerus, and Cedar Boulevard Lease Finance LLC
("Senior Lender"), that certain Senior Secured Promissory Note in
the original stated principal amount of $7,000,000 and which is
presently in the reduced principal amount of $5,131,818 in favor of
Senior Lender, that certain Guaranty and that certain Security
Agreement, each dated as of May 31, 2005, by Debtor and each of its
subsidiaries, other than Caerus and its subsidiaries, and each of
the other agreements entered into in connection with each of the
foregoing Agreements. Debtor will do all acts and things, and will
execute and file all instruments (including, but not limited to,
security agreements, financing statements, continuation statements,
etc.) reasonably requested by Collateral Agent to establish,
maintain and continue the perfected security interest of Collateral
Agent in the Collateral, and will promptly on demand, pay all costs
and expenses of filing and recording, including the costs of any
searches reasonably deemed necessary by Collateral Agent from time
to time to establish and determine the validity and the continuing
priority of the security interest of Collateral Agent, and also pay
all other claims and charges that, in the opinion of Collateral
Agent, exercised in good faith, are reasonably likely to materially
prejudice, imperil or otherwise affect the Collateral or Collateral
Agent's or Lenders' security interests therein.
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(Security and Pledge Agreement (subsidiary))
(b) Other than in the ordinary course of business, and except for
Collateral which is substituted by assets of identical or greater
value or which has become obsolete or is of inconsequential in
value, Debtor will not sell, transfer, assign or pledge those items
of Collateral (or allow any such items to be sold, transferred,
assigned or pledged), without the prior written consent of
Collateral Agent other than a transfer of the Collateral to a
wholly-owned subsidiary on prior notice to Collateral Agent, and
provided the Collateral remains subject to the security interest
herein described. Although Proceeds of Collateral are covered by
this Agreement, this shall not be construed to mean that Collateral
Agent consents to any sale of the Collateral, except as provided
herein. Sales of Collateral in the ordinary course of business shall
be free of the security interest of Lenders and Collateral Agent and
Lenders and Collateral Agent shall promptly execute such documents
(including without limitation releases and termination statements)
as may be required by Debtor to evidence or effectuate the same.
(c) Debtor will, at all reasonable times and upon reasonable notice,
allow Collateral Agent or its representatives free and complete
access to the Collateral and all of Debtor's records which in any
way relate to the Collateral, for such inspection and examination as
Collateral Agent reasonably deems necessary.
(d) Debtor, at its sole cost and expense, will protect and defend this
Security Agreement, all of the rights of Collateral Agent and
Lenders hereunder, and the Collateral against the claims and demands
of all other persons.
(e) Debtor will promptly notify Collateral Agent of any levy, distraint
or other seizure by legal process or otherwise of any part of the
Collateral, and of any threatened or filed claims or proceedings
that are reasonably likely to affect or impair any of the rights of
Collateral Agent under this Security Agreement in any material
respect.
(f) Debtor, at its own expense, will obtain and maintain in force
insurance policies covering losses or damage to those items of
Collateral which constitute physical personal property. The
insurance policies to be obtained by Debtor shall be in form and
amounts reasonably acceptable to Collateral Agent. Debtor shall make
the Collateral Agent a first loss payee thereon to the extent of its
interest in the Collateral. Collateral Agent is hereby irrevocably
(until the Obligations are paid in full) appointed Debtor'
attorney-in-fact to endorse any check or draft that may be payable
to Debtor so that Collateral Agent may collect the proceeds payable
for any loss under such insurance. The proceeds of such insurance
(subject to the rights of senior secured parties), less any costs
and expenses incurred or paid by Collateral Agent in the collection
thereof, shall be applied either toward the cost of the repair or
replacement of the items damaged or destroyed, or on account of any
sums secured hereby, whether or not then due or payable.
(g) Collateral Agent may, at its option, and without any obligation to
do so, pay, perform and discharge any and all amounts, costs,
expenses and liabilities herein agreed to be paid or performed by
Debtor. Upon Debtor' failure to do so, all amounts expended by
Collateral Agent in so doing shall become part of the Obligations
secured hereby, and shall be immediately due and payable by Debtor
to Collateral Agent upon demand and shall bear interest at the
lesser of 15% per annum or the highest legal amount from the dates
of such expenditures until paid.
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(Security and Pledge Agreement (subsidiary))
(h) Upon the request of Collateral Agent, Debtor will furnish to
Collateral Agent within five (5) business days thereafter, or to any
proposed assignee of this Security Agreement, a written statement in
form reasonably satisfactory to Collateral Agent, duly acknowledged,
certifying the amount of the principal and interest and any other
sum then owing under the Obligations, whether to its knowledge any
claims, offsets or defenses exist against the Obligations or against
this Security Agreement, or any of the terms and provisions of any
other agreement of Debtor securing the Obligations. In connection
with any assignment by Collateral Agent of this Security Agreement,
Debtor hereby agrees to cause the insurance policies required hereby
to be carried by Debtor, if any, to be endorsed in form satisfactory
to Collateral Agent or to such assignee, with loss payable clauses
in favor of such assignee, and to cause such endorsements to be
delivered to Collateral Agent within ten (10) calendar days after
request therefor by Collateral Agent.
(i) Debtor will, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time
to time such vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other
reasonable assurances or instruments and take further steps relating
to the Collateral and other property or rights covered by the
security interest hereby granted, as the Collateral Agent may
reasonably require to perfect its security interest hereunder.
(j) Debtor represents and warrants that it is the true and lawful
exclusive owner of the Collateral, free and clear of any liens and
encumbrances.
(k) Debtor hereby agrees not to divest itself of any right under the
Collateral except as permitted herein absent prior written approval
of the Collateral Agent, except to a subsidiary organized and
located in the United States, on prior notice to Collateral Agent
provided the Collateral remains subject to the security interest
herein described.
(l) Debtor shall cause each Subsidiary of Debtor not in existence on the
date hereof to execute and deliver to Collateral Agent promptly and
in any event within 10 days after the formation, acquisition or
change in status thereof (A) a guaranty guaranteeing the Obligations
and (B) a security and pledge agreement, together with (x)
certificates evidencing all of the capital stock of any entity owned
by such Subsidiary, (y) undated stock powers executed in blank with
signature guaranteed, and (z) such opinion of counsel and such
approving certificate of such Subsidiary as Collateral Agent may
reasonably request in respect of complying with any legend on any
such certificate or any other matter relating to such shares and (E)
such other agreements, instruments, approvals, legal opinions or
other documents reasonably requested by Collateral Agent in order to
create, perfect, establish the first priority of or otherwise
protect any lien purported to be covered by any such pledge and
security Agreement or otherwise to effect the intent that all
property and assets of such Subsidiary shall become Collateral for
the Obligations. For purposes of this Agreement, "Subsidiary" means,
with respect to any entity at any date, any ---------- corporation,
limited or general partnership, limited liability company, trust,
estate, association, joint venture or other business entity) of
which more than 50% of (A) the outstanding capital stock having (in
the absence of contingencies) ordinary voting power to elect a
majority of the board of directors or other managing body of such
entity, (B) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership
or limited liability company or (C) in the case of a trust, estate,
association, joint venture or other entity, the beneficial interest
in such trust, estate, association or other entity business is, at
the time of determination, owned or controlled directly or
indirectly through one or more intermediaries, by such entity.
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(Security and Pledge Agreement (subsidiary))
7. Power of Attorney.
After the occurrence and during the uncured continuation of an Event of
Default as defined in Section 9 below, Debtor hereby irrevocably constitutes and
appoints the Collateral Agent as the true and lawful attorney of Debtor, with
full power of substitution, in the place and stead of Debtor and in the name of
Debtor or otherwise, at any time or times, in the discretion of the Collateral
Agent, to take any action and to execute any instrument or document which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement. This power of attorney is coupled with an interest and is
irrevocable until the Obligations are satisfied.
8. Performance By The Collateral Agent.
If Debtor fails to perform any material covenant, agreement, duty or
obligation of Debtor under this Agreement, the Collateral Agent may, after any
applicable cure period, at any time or times in its discretion, take action to
effect performance of such obligation. All reasonable expenses of the Collateral
Agent incurred in connection with the foregoing authorization shall be payable
by Debtor as provided in Paragraph 12.1 hereof. No discretionary right, remedy
or power granted to the Collateral Agent under any part of this Agreement shall
be deemed to impose any obligation whatsoever on the Collateral Agent with
respect thereto, such rights, remedies and powers being solely for the
protection of the Collateral Agent.
9. Event of Default.
An event of default ("Event of Default") shall be deemed to have occurred
hereunder upon the occurrence of any event of default as defined and described
in this Agreement, in the Notes, Subscription Agreement, and any other agreement
to which Debtor and a Collateral Agent or Lender are parties. Upon and after any
Event of Default, after the applicable cure period, if any, any or all of the
Obligations shall become immediately due and payable at the option of the
Collateral Agent, for the benefit of the Lenders, and the Collateral Agent may
dispose of Collateral as provided below. A default by Debtor of any of its
material obligations pursuant to this Agreement shall be an Event of Default
hereunder and an event of default as defined in the Notes, and Subscription
Agreement.
10. Disposition of Collateral.
Upon and after any Event of Default which is then continuing,
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(Security and Pledge Agreement (subsidiary))
(a) The Collateral Agent may exercise its rights with respect to each
and every component of the Collateral, without regard to the
existence of any other security or source of payment for the
Obligations. In addition to other rights and remedies provided for
herein or otherwise available to it, the Collateral Agent shall have
all of the rights and remedies of a lender on default under the
Uniform Commercial Code then in effect in the State of New York.
(b) If any notice to Debtor of the sale or other disposition of
Collateral is required by then applicable law, five business (5)
days prior written notice (which Debtor agrees is reasonable notice
within the meaning of Section 9.612(a) of the Uniform Commercial
Code) shall be given to Debtor of the time and place of any sale of
Collateral, which Debtor hereby agrees may be by private sale. The
rights granted in this Section are in addition to any and all rights
available to Collateral Agent under the Uniform Commercial Code.
(c) The Collateral Agent is authorized, at any such sale, if the
Collateral Agent deems it advisable to do so, in order to comply
with any applicable securities laws, to restrict the prospective
bidders or purchasers to persons who will represent and agree, among
other things, that they are purchasing the Collateral for their own
account for investment, and not with a view to the distribution or
resale thereof, or otherwise to restrict such sale in such other
manner as the Collateral Agent deems advisable to ensure such
compliance. Sales made subject to such restrictions shall be deemed
to have been made in a commercially reasonable manner.
(d) All proceeds received by the Collateral Agent for the benefit of the
Lenders in respect of any sale, collection or other enforcement or
disposition of Collateral, shall be applied (after deduction of any
amounts payable to the Collateral Agent pursuant to Paragraph 12.1
hereof) against the Obligations pro rata among the Lenders in
proportion to their interests in the Obligations. Upon payment in
full of all Obligations, Debtor shall be entitled to the return of
all Collateral, including cash, which has not been used or applied
toward the payment of Obligations or used or applied to any and all
costs or expenses of the Collateral Agent incurred in connection
with the liquidation of the Collateral (unless another person is
legally entitled thereto). Any assignment of Collateral by the
Collateral Agent to Debtor shall be without representation or
warranty of any nature whatsoever and wholly without recourse. To
the extent allowed by law, each Lender may purchase the Collateral
and pay for such purchase by offsetting up to such Lender's pro rata
portion of the proceeds with sums owed to such Lender by Debtor
arising under the Obligations or any other source.
(e) The foregoing notwithstanding upon any payment or distribution of
assets of the Debtor of any kind or character whether in cash or
property, to creditors upon any dissolution or winding up or total
or partial liquidation or reorganization of the Debtor, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership
or other proceedings, then and in any such event all principal,
premium and interest and all other amounts due or to become due upon
all Senior Lender's obligations shall first be paid in full before
the Lenders shall be entitled to retain any assets so paid or
distributed in respect of the Obligations (whether for principal,
premium, interest or otherwise except for payments of principal,
interest, Liquidated Damages, fees and expenses or any other
payments in accordance with the terms of the Transaction Documents),
and upon any such dissolution or winding up or liquidation or
reorganization, any payment or distribution of assets of the Debtor
of any kind or character, whether in cash, property or securities,
to which the Lenders would be entitled, except as otherwise provided
herein, shall be paid to the Senior Lender by the Debtor or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, or by the Lenders if
received by them.
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(Security and Pledge Agreement (subsidiary))
11. Waiver of Automatic Stay.
Debtor acknowledges and agrees that should a proceeding under any
bankruptcy or insolvency law be commenced by or against Debtor, or if any of the
Collateral should become the subject of any bankruptcy or insolvency proceeding,
then the Collateral Agent should be entitled to, among other relief to which the
Collateral Agent or Lenders may be entitled under the Note, Subscription
Agreement, Guaranty Agreement, and any other agreement to which the Debtor,
Lenders or Collateral Agent are parties, (collectively "Loan Documents") and/or
applicable law, an order from the court granting immediate relief from the
automatic stay pursuant to 11 U.S.C. Section 362 to permit the Collateral Agent
to exercise all of its rights and remedies pursuant to the Loan Documents and/or
applicable law.
12. Miscellaneous.
(a) Expenses. Debtor shall pay to the Collateral Agent, on demand, the
amount of any and all reasonable expenses, including, without
limitation, attorneys' fees, legal expenses and brokers' fees, which
the Collateral Agent may incur in connection with (a) sale,
collection or other enforcement or disposition of Collateral; (b)
exercise or enforcement of any the rights, remedies or powers of the
Collateral Agent hereunder or with respect to any or all of the
Obligations upon breach or threatened breach; or (c) failure by
Debtor to perform and observe any agreements of Debtor contained
herein which are performed by the Collateral Agent.
(b) Waivers, Amendment and Remedies. No course of dealing by the
Collateral Agent and no failure by the Collateral Agent to exercise,
or delay by the Collateral Agent in exercising, any right, remedy or
power hereunder shall operate as a waiver thereof, and no single or
partial exercise thereof shall preclude any other or further
exercise thereof or the exercise of any other right, remedy or power
of the Collateral Agent. No amendment, modification or waiver of any
provision of this Agreement and no consent to any departure by
Debtor therefrom, shall, in any event, be effective unless contained
in a writing signed by the Collateral Agent, and then such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given. The rights, remedies and powers of
the Collateral Agent, not only hereunder, but also under any
instruments and agreements evidencing or securing the Obligations
and under applicable law are cumulative, and may be exercised by the
Collateral Agent from time to time in such order as the Collateral
Agent may elect.
11
(Security and Pledge Agreement (subsidiary))
(c) Notices. All notices or other communications given or made hereunder
shall be in writing and shall be personally delivered or deemed
delivered the first business day after being faxed (provided that a
copy is delivered by first class mail) to the party to receive the
same at its address set forth below or to such other address as
either party shall hereafter give to the other by notice duly made
under this Section:
To Debtor: c/o VoIP, Inc.
00000 XX00 Xxxxxx, Xxxxx 000
Xxxxxx Xxxx Xxxxxxx 00000
Attn: Xxxxxx Xxxxxxx, President and CEO
Fax: (000) 000-0000
With a copy by telecopier
only to: Xxxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
To Lenders: To the addresses and telecopier numbers
set forth on Schedule A
To the Collateral Agent: Xxxxxxx X. Xxxxxxx
Grushko & Xxxxxxx, P.C.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Any party may change its address by written notice in accordance with this
paragraph.
(d) Term; Binding Effect. This Agreement shall (a) remain in full force
and effect until payment and satisfaction in full of all of the
Obligations; (b) be binding upon Debtor, and its successors and
permitted assigns; and (c) inure to the benefit of the Collateral
Agent, for the benefit of the Lenders and their respective
successors and assigns. All the rights and benefits granted by
Debtor to the Collateral Agent and Lenders in the Loan Documents and
other agreements and documents delivered in connection therewith are
deemed granted to both the Collateral Agent and Lenders.
(e) Captions. The captions of Paragraphs, Articles and Sections in this
Agreement have been included for convenience of reference only, and
shall not define or limit the provisions hereof and have no legal or
other significance whatsoever.
12
(Security and Pledge Agreement (subsidiary))
(f) Governing Law; Venue; Severability. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York without regard to principles of conflicts or choice of law,
except to the extent that the perfection of the security interest
granted hereby in respect of any item of Collateral may be governed
by the law of another jurisdiction. Any legal action or proceeding
against Debtor with respect to this Agreement may be brought in the
courts in the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery of
this Agreement, Debtor hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Debtor hereby irrevocably
waives any objection which they may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement brought in the
aforesaid courts and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an
inconvenient forum. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid,
such invalidity shall not affect any other provisions which can be
given effect without the invalid provision or application, and to
this end the provisions hereof shall be severable and the remaining,
valid provisions shall remain of full force and effect.
(g) Entire Agreement. This Agreement contains the entire agreement of
the parties and supercedes all other agreements and understandings,
oral or written, with respect to the matters contained herein.
(h) Counterparts/Execution. This Agreement may be executed in any number
of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and the
same instrument. This Agreement may be executed by facsimile
signature and delivered by facsimile transmission.
This Security Agreement (Subsidiary) may be signed by facsimile signature
and delivered by confirmed facsimile transmission.
[THIS SPACE INTENTIONALLY LEFT BLANK]
13
(Security and Pledge Agreement (subsidiary))
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Security Agreement (Subsidiary), as of the date first written above.
"DEBTOR" "DEBTOR"
VOIPSOLUTIONS EGLOBALPHONE
a Florida corporation a Florida corporation
By:/s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
-------------------------- -------------------
Its: CEO Its: CEO
------------------------ ----
"DEBTOR" "DEBTOR"
CAERUS, INC. VOX CONSULTING GROUP, INC.
a Delaware corporation a Florida corporation
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
-------------------------- -------------------
Its: CEO Its: CEO
------------------------- ----
"DEBTOR" "DEBTOR"
VCG TECHNOLOGIES VOLO COMMUNICATIONS, INC.
a Florida corporation a Delaware corporation
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
-------------------------- -------------------
Its: CEO Its: CEO
------------------------- ----
"DEBTOR" "DEBTOR"
CAERUS BILLING, INC. CAERUS NETWORKS, INC.
a Delaware corporation a Delaware corporation
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
-------------------------- -------------------
Its: CEO Its: CEO
------------------------- ----
"DEBTOR" "THE COLLATERAL AGENT"
VOICEONE COMMUNICATIONS, INC. XXXXXXX X. XXXXXXX
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------- -----------------------
Its: CEO
APPROVED AND, AS TO SECTIONS 6.1 AND 10.5, AGREED TO BY "LENDERS"
/s/ Xxxxxxxxxxx Limited Partnership /s/ Whalehaven Capital Fund Ltd.
----------------------------------- --------------------------------
XXXXXXXXXXX LIMITED PARTNERSHIP WHALEHAVEN CAPITAL FUND LTD.
/s/ Xxxxx Enterprises Ltd. /s/ Bristol Investment Fund, Ltd.
----------------------------------- ---------------------------------
XXXXX ENTERPRISES LTD. BRISTOL INVESTMENT FUND, LTD.
/s/ Alpha Capital Aktiengesellschaft
------------------------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT
(Security and Pledge Agreement (subsidiary))
SCHEDULE A TO SECURITY AND PLEDGE AGREEMENT
----------------------------------- -------------------- -----------------------
INITIAL CLOSING SECOND CLOSING
LENDER NOTE PRINCIPAL NOTE PRINCIPAL
----------------------------------- -------------------- -----------------------
XXXXXXXXXXX LIMITED PARTNERSHIP $287,500.00 $287,500.00
00 Xxxxxx Xxxxxx Xxx.
Xxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx
Fax: (000) 000-0000
----------------------------------- -------------------- -----------------------
WHALEHAVEN CAPITAL FUND LTD. $230,000.00 $230,000.00
0XX Xxxxx, 00 Xxx-Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx XX00
Fax: (000) 000-0000
----------------------------------- -------------------- -----------------------
XXXXX INTERNATIONAL LTD. $143,750.00 $143,750.00
00xx Xxxxxx Xxxxxxxxxxxx Xxxxxxx
Xxxxx Xxxxx, 00xx Xxxxx, Xxxxxx
Xxxxxxxx of Panama
Fax: (000) 000-0000
----------------------------------- -------------------- -----------------------
BRISTOL INVESTMENT FUND, LTD. $383,332.95 $383,332.95
Caledonia House, Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxx Xxxxxx
Xxxxxx Xxxxxxx
Fax: (000) 000-0000
----------------------------------- -------------------- -----------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT $383,332.95 $383,332.95
Xxxxxxxxx 0
0000 Xxxxxxxxxxx
Xxxxx, Xxxxxxxxxxxx
Fax: 000-00-00000000
----------------------------------- -------------------- -----------------------
TOTAL $1,427,915.90 $1,427,915.90
----------------------------------- -------------------- -----------------------
(Security and Pledge Agreement (subsidiary))
ANNEX I
TO
SECURITY AND PLEDGE AGREEMENT
PLEDGE AMENDMENT
This Pledge Amendment, dated _________ __, 200_, is delivered pursuant to
Section 4.3 of the Security and Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Security and Pledge Agreement, dated June ____, 2005, as it may heretofore have
been or hereafter may be amended, restated, supplemented or otherwise modified
from time to time and that the shares listed on this Pledge Amendment shall be
hereby pledged and assigned to Collateral Agent and become part of the
Collateral referred to in such Security and Pledge Agreement and shall secure
all of the Obligations referred to in such Security and Pledge Agreement.
----------------------- ----------------- ----------------- --------------------
Number Certificate
Name of Issuer of Shares Class Number(s)
-------------- --------- ----- ---------
----------------------- ----------------- ----------------- --------------------
----------------------- ----------------- ----------------- --------------------
----------------------- ----------------- ----------------- --------------------
----------------------- ----------------- ----------------- --------------------
----------------------- ----------------- ----------------- --------------------
----------------------- ----------------- -----------------
----------------------- ----------------- -----------------
By:
-------------------------------------
Name:
Title:
(Security and Pledge Agreement (subsidiary))
