STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT ("AGREEMENT") is made as of the 31st day of
December, 1997, by the parties set forth on signature page hereto under the
heading Pledgor (hereinafter called "PLEDGOR", whether one or more), in favor
of Infinity Investors Limited, as agent for and representative of (in such
capacity, "PLEDGEE") the Purchasers (as hereinafter defined) under the
Securities Purchase Agreement (as hereinafter defined). Pledgor hereby agrees
with Pledgees as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings indicated below:
(a) The term "BORROWER" shall mean Touch Tone America, Inc. and Orix
Global Communications, Inc., or either of them.
(b) The term "CODE" shall mean the Uniform Commercial Code as in
effect in the State of Nevada on the date of this Agreement or as it may
hereafter be amended from time to time.
(c) The term "COLLATERAL" shall mean all of the following property
all shares of capital stock or other equity interests now owned or
hereafter acquired by Pledgor in Orix Global Communications, Inc. ("Orix"),
together with certificates representing all of such shares or other
interests (the "Pledged Shares"), and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to the
Pledged Shares, and all dividends, cash, options, warrants, rights,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any
and all of the Pledged Shares. The term Collateral, as used herein, shall
also include (A) all certificates, instruments and/or other documents
evidencing the foregoing, (B) all renewals, replacements and substitutions
of all of the foregoing, (C) all Additional Property (as hereinafter
defined), and (D) all PRODUCTS and PROCEEDS of all of the foregoing. The
designation of proceeds does not authorize Pledgor to sell, transfer or
otherwise convey any of the foregoing property. The delivery at any time
by Pledgor to Secured Party of any property as a pledge to secure payment
or performance of any indebtedness or obligation whatsoever shall also
constitute a pledge of such property as Collateral hereunder.
(d) The term "INDEBTEDNESS" shall mean (i) all indebtedness,
obligations and liabilities of Borrower to Secured Party to timely pay the
Rescission Price, as such term is defined in the Securities Purchase
Agreement dated as of the date hereof (the "SECURITIES PURCHASE AGREEMENT")
among Borrower, Orix, and Infinity Investors Limited and Infinity Emerging
Opportunities Limited (the "PURCHASERS"); (ii) all accrued but unpaid
interest on any of the indebtedness described in (i) above; (iii) all
obligations owing to Secured Party under any documents evidencing,
securing, governing and/or pertaining to all or any part of the
indebtedness described in (i) and (ii) above; (iv) all costs and expenses
incurred by Secured Party in connection with the collection and
administration of all or any part of the indebtedness and obligations
described in (i), (ii) and (iii) above or the protection or preservation
of, or realization upon, the collateral securing all or any part of such
indebtedness and obligations, including without limitation all reasonable
attorneys' fees; and (v) all renewals, extensions, modifications and
rearrangements of the indebtedness and obligations described in (i), (ii),
(iii) and (iv) above.
(e) The term "LOAN DOCUMENTS" shall mean all instruments and
documents evidencing, securing, governing, guaranteeing and/or pertaining
to the Indebtedness, including without limitation the Securities Purchase
Agreement.
(f) The term "OBLIGATED PARTY" shall mean any party other than
Borrower who secures, guarantees and/or is otherwise obligated to pay all
or any portion of the Indebtedness.
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STOCK PLEDGE AGREEMENT - Page 1
(g) The term "SECURED PARTY" shall mean the Purchasers, and the
Pledgee as agent for the Purchasers, their successors and assigns,
including without limitation, any party to whom any Purchaser or the
Pledgee, or any of their successors or assigns, may assign all or any part
of the Indebtedness or any of its their rights and interests under this
Agreement.
All words and phrases used herein which are expressly defined in Section
1-201, Chapter 8 or Chapter 9 of the Code shall have the meaning
provided for therein. Other words and phrases defined elsewhere in the
Code shall have the meaning specified therein except to the extent such
meaning is inconsistent with a definition in Section 1-201, Chapter 8 or
Chapter 9 of the Code.
2. SECURITY INTEREST. As security for the Indebtedness, Pledgor, for
value received, hereby grants to Secured Party a continuing security interest in
the Collateral.
3. ADDITIONAL PROPERTY. Collateral shall also include the following
property (collectively, the "ADDITIONAL PROPERTY") which Pledgor becomes
entitled to receive or shall receive in connection with any other Collateral:
(a) any stock certificate, including without limitation, any certificate
representing a stock dividend or any certificate in connection with any
recapitalization, reclassification, merger, consolidation, conversion, sale of
assets, combination of shares, stock split or spin-off; (b) any option, warrant,
subscription or right, whether as an addition to or in substitution of any other
Collateral; (c) any dividends or distributions of any kind whatsoever, whether
distributable in cash, stock or other property; (d) any interest, premium or
principal payments; and (e) any conversion or redemption proceeds; provided,
however, that until the occurrence of an Event of Default (as hereinafter
defined), Pledgor shall be entitled to all cash dividends and all interest paid
on the Collateral (except interest paid on any certificate of deposit pledged
hereunder) free of the security interest created under this Agreement. All
Additional Property received by Pledgor shall be received in trust for the
benefit of Secured Party. All Additional Property and all certificates or other
written instruments or documents evidencing and/or representing the Additional
Property that is received by Pledgor, together with such instruments of transfer
as Secured Party may request, shall immediately be delivered to or deposited
with Secured Party and held by Secured Party as Collateral under the terms of
this Agreement. If the Additional Property received by Pledgor shall be shares
of stock or other securities, such shares of stock or other securities shall be
duly endorsed in blank or accompanied by proper instruments of transfer and
assignment duly executed in blank with, if requested by Secured Party,
signatures guaranteed by a member or member organization in good standing of an
authorized Securities Transfer Agents Medallion Program, all in form and
substance satisfactory to Secured Party. Secured Party shall be deemed to have
possession of any Collateral in transit to Secured Party or its agent.
4. VOTING RIGHTS. As long as no Event of Default shall have occurred
hereunder, any voting rights incident to any stock or other securities pledged
as Collateral may be exercised by Pledgor; provided, however, that Pledgor will
not exercise, or cause to be exercised, any such voting rights, without the
prior written consent of Secured Party, if the direct or indirect effect of such
vote will result in an Event of Default hereunder.
5. MAINTENANCE OF COLLATERAL. Other than the exercise of reasonable care
to assure the safe custody of any Collateral in Secured Party's possession from
time to time, Secured Party does not have any obligation, duty or
responsibility with respect to the Collateral. Without limiting the generality
of the foregoing, Secured Party shall not have any obligation, duty or
responsibility to do any of the following: (a) ascertain any maturities,
calls, conversions, exchanges, offers, tenders or similar matters relating to
the Collateral or informing Pledgor with respect to any such matters; (b) fix,
preserve or exercise any right, privilege or option (whether conversion,
redemption or otherwise) with respect to the Collateral unless (i) Pledgor makes
written demand to Secured Party to do so, (ii) such written demand is received
by Secured Party in sufficient time to permit Secured Party to take the action
demanded in the ordinary course of its business, and (iii) Pledgor provides
additional collateral,
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acceptable to Secured Party in its sole discretion; (c) collect any amounts
payable in respect of the Collateral (Secured Party being liable to account
to Pledgor only for what Secured Party may actually receive or collect
thereon); (d) sell all or any portion of the Collateral to avoid market loss;
(e) sell all or any portion of the Collateral unless and until (i) Pledgor
makes written demand upon Secured Party to sell the Collateral, and (ii)
Pledgor provides additional collateral, acceptable to Secured Party in its
sole discretion; or (f) hold the Collateral for or on behalf of any party
other than Pledgor.
6. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and
warrants the following to Secured Party:
(a) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and all of the other Loan Documents by Pledgor have been duly
authorized by all necessary corporate action of Pledgor, to the extent Pledgor
is a corporation, or by all necessary partnership action, to the extent Pledgor
is a partnership.
(b) ENFORCEABILITY. This Agreement and the other Loan Documents
constitute legal, valid and binding obligations of Pledgor, enforceable in
accordance with their respective terms, except as limited by bankruptcy,
insolvency or similar laws of general application relating to the enforcement of
creditors' rights and except to the extent specific remedies may generally be
limited by equitable principles.
(c) OWNERSHIP AND LIENS. Pledgor has good and marketable title to
the Collateral free and clear of all liens, security interests, encumbrances or
adverse claims, except for the security interest created by this Agreement. No
dispute, right of setoff, counterclaim or defense exists with respect to all or
any part of the Collateral. Pledgor has not executed any other security
agreement currently affecting the Collateral and no financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording office except as may have been executed or filed in favor
of Secured Party. The Pledged Shares constitute 100% of the issued and
outstanding capital stock of Orix.
(d) NO CONFLICTS OR CONSENTS. Neither the ownership, the intended
use of the Collateral by Pledgor, the grant of the security interest by Pledgor
to Secured Party herein nor the exercise by Secured Party of its rights or
remedies hereunder, will (i) conflict with any provision of (A) any domestic or
foreign law, statute, rule or regulation, (B) the articles or certificate of
incorporation, charter, bylaws or partnership agreement, as the case may be, of
Pledgor, or (C) any agreement, judgment, license, order or permit applicable to
or binding upon Pledgor or otherwise affecting the Collateral, or (ii) result in
or require the creation of any lien, charge or encumbrance upon any assets or
properties of Pledgor or of any person except as may be expressly contemplated
in the Loan Documents. Except as expressly contemplated in the Loan Documents,
no consent, approval, authorization or order of, and no notice to or filing
with, any court, governmental authority or third party is required in connection
with the grant by Pledgor of the security interest herein or the exercise by
Secured Party of its rights and remedies hereunder.
(e) SECURITY INTEREST. Pledgor has and will have at all times full
right, power and authority to grant a security interest in the Collateral to
Secured Party in the manner provided herein, free and clear of any lien,
security interest or other charge or encumbrance. This Agreement creates a
legal, valid and binding security interest in favor of Secured Party in the
Collateral.
(f) SECURITIES. Any certificates evidencing securities pledged as
Collateral are valid and genuine and have not been altered. All securities
pledged as Collateral have been duly authorized and validly issued, are fully
paid and non-assessable, and were not issued in violation of the preemptive
rights of any party or of any agreement by which Pledgor or the issuer thereof
is bound. No restrictions or conditions exist with respect to the transfer or
voting of any securities pledged as Collateral, except as has been disclosed to
Secured Party in writing. To the best of Pledgor's knowledge, no issuer of such
securities (other than securities of a class which are publicly traded) has any
outstanding stock rights, rights to subscribe, options, warrants or convertible
securities outstanding or any other rights outstanding entitling any party to
have issued to such party capital stock of such issuer, except as has been
disclosed to Secured Party in writing.
(g) NAME CHANGE. Orix was formerly known as Orix Leasing, Inc., and
all stock certificates representing the issued and outstanding capital stock of
Orix are represented by stock certificates Nos. 1-18 of Orix Leasing, Inc.
Page 3
7. AFFIRMATIVE COVENANTS. Pledgor will comply with the covenants
contained in this Section at all times during the period of time this
Agreement is effective unless Secured Party shall otherwise consent in
writing.
(a) OWNERSHIP AND LIENS. Pledgor will maintain good and marketable
title to all Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest created by
this Agreement and the security interests and other encumbrances expressly
permitted by the other Loan Documents. Pledgor will not permit any
dispute, right of setoff, counterclaim or defense to exist with respect to
all or any part of the Collateral. Pledgor will cause any financing
statement or other security instrument with respect to the Collateral to be
terminated, except as may exist or as may have been filed in favor of
Secured Party. Pledgor will defend at its expense Secured Party's right,
title and security interest in and to the Collateral against the claims of
any third party.
(b) ADVERSE CLAIM. Pledgor covenants and agrees to promptly notify
Secured Party of any claim, action or proceeding affecting title to the
Collateral, or any part thereof, or the security interest created hereunder
and, at Pledgor's expense, defend Secured Party's security interest in the
Collateral against the claims of any third party. Pledgor also covenants
and agrees to promptly deliver to Secured Party a copy of all written
notices received by Pledgor with respect to the Collateral, including
without limitation, notices received from the issuer of any securities
pledged hereunder as Collateral.
(c) DELIVERY OF INSTRUMENTS AND/OR CERTIFICATES. Contemporaneously
herewith, Pledgor covenants and agrees to deliver to Secured Party any
certificates, documents or instruments representing or evidencing the
Collateral, with Pledgor's endorsement thereon and/or accompanied by proper
instruments of transfer and assignment duly executed in blank with, if
requested by Secured Party, signatures guaranteed by a member or member
organization in good standing of an authorized Securities Transfer Agents
Medallion Program, all in form and substance satisfactory to Secured Party.
(d) FURTHER ASSURANCES. Pledgor will contemporaneously with the
execution hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all
further action necessary or appropriate or that Secured Party may request
in order (i) to perfect and protect the security interest created or
purported to be created hereby and the first priority of such security
interest, (ii) to enable Secured Party to exercise and enforce its rights
and remedies hereunder in respect of the Collateral, and (iii) to otherwise
effect the purposes of this Agreement, including without limitation: (A)
executing and filing any financing or continuation statements, or any
amendments thereto; (B) obtaining written confirmation from the issuer of
any securities pledged as Collateral of the pledge of such securities, in
form and substance satisfactory to Secured Party; (C) cooperating with
Secured Party in registering the pledge of any securities pledged as
Collateral with the issuer of such securities; (D) delivering notice of
Secured Party's security interest in any securities pledged as Collateral
to any securities or financial intermediary, clearing corporation or other
party required by Secured Party, in form and substance satisfactory to
Secured Party; and (E) obtaining written confirmation of the pledge of any
securities constituting Collateral from any securities or financial
intermediary, clearing corporation or other party required by Secured
Party, in form and substance satisfactory to Secured Party. If all or any
part of the Collateral is securities issued by an agency or department of
the United States, Pledgor covenants and agrees, at Secured Party's
request, to cooperate in registering such securities in Secured Party's
name or with Secured Party's account maintained with a Federal Reserve
Bank. When applicable law provides more than one method of perfection of
Secured Party's security interest in the Collateral, Secured Party may
choose the method(s) to be used.
8. NEGATIVE COVENANTS. Pledgor will comply with the covenants contained
in this Section at all times during the period of time this Agreement is
effective, unless Secured Party shall otherwise consent in writing.
(a) TRANSFER OR ENCUMBRANCE. Pledgor will not (i) sell, assign (by
operation of law or otherwise) or transfer Pledgor's rights in any of the
Collateral, (ii) ▇▇▇▇▇ ▇ ▇▇▇▇ or security interest in or execute, file or
record any financing statement or other security instrument with respect to
the Collateral to
Page 4
any party other than Secured Party, or (iii) deliver actual or
constructive possession of any certificate, instrument or document
evidencing and/or representing any of the Collateral to any party other
than Secured Party.
(b) IMPAIRMENT OF SECURITY INTEREST. Pledgor will not take or fail
to take any action which would in any manner impair the value or
enforceability of Secured Party's security interest in any Collateral.
(c) DILUTION OF OWNERSHIP. As to any securities pledged as
Collateral (other than securities of a class which are publicly traded),
Pledgor will not consent to or approve of the issuance of (i) any
additional shares of any class of securities of Orix (unless immediately
upon issuance additional securities are pledged and delivered to Secured
Party pursuant to the terms hereof to the extent necessary to give Secured
Party a security interest after such issuance in at least the same
percentage of such issuer's outstanding securities as Secured Party had
before such issuance), (ii) any instrument convertible voluntarily by the
holder thereof or automatically upon the occurrence or non-occurrence of
any event or condition into, or exchangeable for, any such securities, or
(iii) any warrants, options, contracts or other commitments entitling any
third party to purchase or otherwise acquire any such securities.
(d) RESTRICTIONS ON SECURITIES. Pledgor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or
condition upon the transfer, voting or control of any securities pledged as
Collateral, except as consented to in writing by Secured Party.
9. RIGHTS OF SECURED PARTY. Secured Party shall have the rights
contained in this Section at all times during the period of time this
Agreement is effective.
(a) POWER OF ATTORNEY. Pledgor hereby irrevocably appoints Secured
Party as Pledgor's attorney-in-fact, such power of attorney being coupled
with an interest, with full authority in the place and stead of Pledgor and
in the name of Pledgor or otherwise, to take any action and to execute any
instrument which Secured Party may from time to time in Secured Party's
discretion deem necessary or appropriate to accomplish the purposes of this
Agreement, including without limitation, the following action: (i)
transfer any securities, instruments, documents or certificates pledged as
Collateral in the name of Secured Party or its nominee; (ii) use any
interest, premium or principal payments, conversion or redemption proceeds
or other cash proceeds received in connection with any Collateral to reduce
any of the Indebtedness; (iii) exchange any of the securities pledged as
Collateral for any other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof, and, in connection therewith, to deposit and deliver any and all
of such securities with any committee, depository, transfer agent,
registrar or other designated agent upon such terms and conditions as
Secured Party may deem necessary or appropriate; (iv) exercise or comply
with any conversion, exchange, redemption, subscription or any other right,
privilege or option pertaining to any securities pledged as Collateral;
provided, however, except as provided herein, Secured Party shall not have
a duty to exercise or comply with any such right, privilege or option
(whether conversion, redemption or otherwise) and shall not be responsible
for any delay or failure to do so; and (v) file any claims or take any
action or institute any proceedings which Secured Party may deem necessary
or appropriate for the collection and/or preservation of the Collateral or
otherwise to enforce the rights of Secured Party with respect to the
Collateral.
(b) PERFORMANCE BY SECURED PARTY. If Pledgor fails to perform any
agreement or obligation provided herein, Secured Party may itself perform,
or cause performance of, such agreement or obligation, and the expenses of
Secured Party incurred in connection therewith shall be a part of the
Indebtedness, secured by the Collateral and payable by Pledgor on demand.
Notwithstanding any other provision herein to the contrary, Secured Party
does not have any duty to exercise or continue to exercise any of the
foregoing rights and shall not be responsible for any failure to do so or
for any delay in doing so.
Page 5
10. EVENTS OF DEFAULT. Each of the following constitutes an "Event of
Default" under this Agreement:
DEFAULT UNDER SECURITIES PURCHASE AGREEMENT. The occurrence of any
Event of Default under the Securities Purchase Agreement; or
NON-PERFORMANCE OF COVENANTS. The failure of Borrower or any
Obligated Party to timely and properly observe, keep or perform any
covenant, agreement, warranty or condition required herein or in any of the
other Loan Documents; or
FALSE REPRESENTATION. Any representation contained herein or in any
of the other Loan Documents made by Borrower or any Obligated Party is
false or misleading in any material respect; or
DEFAULT TO THIRD PARTY. The occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing by Borrower or any
Obligated Party to any third party under any agreement or undertaking; or
EXECUTION ON COLLATERAL. The Collateral or any portion thereof is
taken on execution or other process of law in any action against Pledgor;
or
ABANDONMENT. Pledgor abandons the Collateral or any portion thereof;
or
ACTION BY OTHER LIENHOLDER. The holder of any lien or security
interest on any of the assets of Pledgor, including without limitation, the
Collateral (without hereby implying the consent of Secured Party to the
existence or creation of any such lien or security interest on the
Collateral), declares a default thereunder or institutes foreclosure or
other proceedings for the enforcement of its remedies thereunder; or
DILUTION OF OWNERSHIP. The issuer of any securities (other than
securities of a class which are publicly traded) constituting Collateral
hereafter issues any shares of any class of capital stock (unless
immediately upon issuance, additional securities are pledged and delivered
to Secured Party pursuant to the terms hereof to the extent necessary to
give Secured Party a security interest after such issuance in at least the
same percentage of such issuer's outstanding securities as Secured Party
had before such issuance) or any options, warrants or other rights to
purchase any such capital stock; or
BANKRUPTCY OF ISSUER. (i) The issuer of any securities constituting
Collateral files a petition for relief under any Applicable Bankruptcy Law,
(ii) an involuntary petition for relief is filed against any such issuer
under any Applicable Bankruptcy Law and such involuntary petition is not
dismissed within thirty (30) days after the filing thereof, or (iii) an
order for relief naming any such issuer is entered under any Applicable
Bankruptcy Law.
11. REMEDIES AND RELATED RIGHTS. If an Event of Default shall have
occurred, and without limiting any other rights and remedies provided herein,
under any of the other Loan Documents or otherwise available to Secured Party,
Secured Party may exercise one or more of the rights and remedies provided in
this Section.
(a) REMEDIES. Secured Party may from time to time at its discretion,
without limitation and without notice except as expressly provided in any
of the Loan Documents:
(i) exercise in respect of the Collateral all the rights and
remedies of a secured party under the Code (whether or not the Code applies
to the affected Collateral);
(ii) reduce its claim to judgment or foreclose or otherwise
enforce, in whole or in part, the security interest granted hereunder by
any available judicial procedure;
Page 6
(iii) sell or otherwise dispose of, at its office, on the premises
of Pledgor or elsewhere, the Collateral, as a unit or in parcels, by public
or private proceedings, and by way of one or more contracts (it being
agreed that the sale or other disposition of any part of the Collateral
shall not exhaust Secured Party's power of sale, but sales or other
dispositions may be made from time to time until all of the Collateral has
been sold or disposed of or until the Indebtedness has been paid and
performed in full), and at any such sale or other disposition it shall not
be necessary to exhibit any of the Collateral;
(iv) buy the Collateral, or any portion thereof, at any public
sale;
(v) buy the Collateral, or any portion thereof, at any private
sale if the Collateral is of a type customarily sold in a recognized market
or is of a type which is the subject of widely distributed standard price
quotations;
(vi) apply for the appointment of a receiver for the Collateral,
and Pledgor hereby consents to any such appointment; and
(vii) at its option, retain the Collateral in satisfaction of the
Indebtedness whenever the circumstances are such that Secured Party is
entitled to do so under the Code or otherwise.
Pledgor agrees that in the event Pledgor is entitled to receive any notice
under the Uniform Commercial Code, as it exists in the state governing any such
notice, of the sale or other disposition of any Collateral, reasonable notice
shall be deemed given when such notice is deposited in a depository receptacle
under the care and custody of the United States Postal Service, postage prepaid,
at Pledgor's address set forth on the signature page hereof, five (5) days prior
to the date of any public sale, or after which a private sale, of any of such
Collateral is to be held. Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Pledgor further
acknowledges and agrees that the redemption by Secured Party of any certificate
of deposit pledged as Collateral shall be deemed to be a commercially reasonable
disposition under Section 9-504 of the Code.
(b) PRIVATE SALE OF SECURITIES. Pledgor recognizes that Secured
Party may be unable to effect a public sale of all or any part of the
securities pledged as Collateral because of restrictions in applicable
federal and state securities laws and that Secured Party may, therefore,
determine to make one or more private sales of any such securities to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment
and not with a view to the distribution or resale thereof. Pledgor
acknowledges that each any such private sale may be at prices and other
terms less favorable then what might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that each such private sale
shall be deemed to have been made in a commercially reasonable manner and
that Secured Party shall have no obligation to delay the sale of any such
securities for the period of time necessary to permit the issuer to
register such securities for public sale under any federal or state
securities laws. Pledgor further acknowledges and agrees that any offer to
sell such securities which has been made privately in the manner described
above to not less than five (5) bona fide offerees shall be deemed to
involve a "public sale" for the purposes of Section 9-504(3) of the Code,
notwithstanding that such sale may not constitute a "public offering" under
any federal or state securities laws and that Secured Party may, in such
event, bid for the purchase of such securities.
(c) APPLICATION OF PROCEEDS. If any Event of Default shall have
occurred, Secured Party may at its discretion apply or use any cash held by
Secured Party as Collateral, and any cash proceeds received by Secured
Party in respect of any sale or other disposition of, collection from, or
other realization upon, all or any part of the Collateral as follows in
such order and manner as Secured Party may elect:
Page 7
(i) to the repayment or reimbursement of the reasonable costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses) incurred by Secured Party in connection with (A) the
administration of the Loan Documents, (B) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon,
the Collateral, and (C) the exercise or enforcement of any of the rights
and remedies of Secured Party hereunder;
(ii) to the payment or other satisfaction of any liens and other
encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as Collateral;
(v) to the payment of any other amounts required by applicable
law (including without limitation, Section 9-504 of the Code or any other
applicable statutory provision); and
(vi) by delivery to Pledgor or any other party lawfully entitled
to receive such cash or proceeds whether by direction of a court of
competent jurisdiction or otherwise.
(d) DEFICIENCY. In the event that the proceeds of any sale of,
collection from, or other realization upon, all or any part of the
Collateral by Secured Party are insufficient to pay all amounts to which
Secured Party is legally entitled, Borrower and any party who guaranteed or
is otherwise obligated to pay all or any portion of the Indebtedness shall
be liable for the deficiency, together with interest thereon as provided in
the Loan Documents.
(e) NON-JUDICIAL REMEDIES. In granting to Secured Party the power to
enforce its rights hereunder without prior judicial process or judicial
hearing, Pledgor expressly waives, renounces and knowingly relinquishes any
legal right which might otherwise require Secured Party to enforce its
rights by judicial process. Pledgor recognizes and concedes that
non-judicial remedies are consistent with the usage of trade, are
responsive to commercial necessity and are the result of a bargain at arm's
length. Nothing herein is intended to prevent Secured Party or Pledgor
from resorting to judicial process at either party's option.
(f) OTHER RECOURSE. Pledgor waives any right to require Secured
Party to proceed against any third party, exhaust any Collateral or other
security for the Indebtedness, or to have any third party joined with
Pledgor in any suit arising out of the Indebtedness or any of the Loan
Documents, or pursue any other remedy available to Secured Party. Pledgor
further waives any and all notice of acceptance of this Agreement and of
the creation, modification, rearrangement, renewal or extension of the
Indebtedness. Pledgor further waives any defense arising by reason of any
disability or other defense of any third party or by reason of the
cessation from any cause whatsoever of the liability of any third party.
Until all of the Indebtedness shall have been paid in full, Pledgor shall
have no right of subrogation and Pledgor waives the right to enforce any
remedy which Secured Party has or may hereafter have against any third
party, and waives any benefit of and any right to participate in any other
security whatsoever now or hereafter held by Secured Party. Pledgor
authorizes Secured Party, and without notice or demand and without any
reservation of rights against Pledgor and without affecting Pledgor's
liability hereunder or on the Indebtedness, to (i) take or hold any other
property of any type from any third party as security for the Indebtedness,
and exchange, enforce, waive and release any or all of such other property,
(ii) apply such other property and direct the order or manner of sale
thereof as Secured Party may in its discretion determine, (iii) renew,
extend, accelerate, modify, compromise, settle or release any of the
Indebtedness or other security for the Indebtedness, (iv) waive, enforce or
modify any of the provisions of any of the Loan Documents executed by any
third party, and (v) release or substitute any third party.
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(g) VOTING RIGHTS. Upon the occurrence of an Event of Default,
Pledgor will not exercise any voting rights with respect to securities
pledged as Collateral. Pledgor hereby irrevocably appoints Secured Party
as Pledgor's attorney-in-fact (such power of attorney being coupled with an
interest) and proxy to exercise any voting rights with respect to Pledgor's
securities pledged as Collateral upon the occurrence of an Event of
Default.
(h) DIVIDEND RIGHTS AND INTEREST PAYMENTS. Upon the occurrence of an
Event of Default:
(i) all rights of Pledgor to receive and retain the dividends
and interest payments which it would otherwise be authorized to receive and
retain pursuant to Section 3 shall automatically cease, and all such rights
shall thereupon become vested with Secured Party which shall thereafter
have the sole right to receive, hold and apply as Collateral such dividends
and interest payments; and
(ii) all dividend and interest payments which are received by
Pledgor contrary to the provisions of clause (i) of this Subsection shall
be received in trust for the benefit of Secured Party, shall be segregated
from other funds of Pledgor, and shall be forthwith paid over to Secured
Party in the exact form received (properly endorsed or assigned if
requested by Secured Party), to be held by Secured Party as Collateral.
12. INDEMNITY. Pledgor hereby indemnifies and agrees to hold harmless
Secured Party, and its officers, directors, employees, agents and
representatives (each an "Indemnified Person") from and against any and all
liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
(collectively, the "Claims") which may be imposed on, incurred by, or asserted
against, any Indemnified Person arising in connection with the Loan Documents
the Indebtedness or the Collateral (including without limitation, the
enforcement of the Loan Documents and the defense of any Indemnified Person's
actions and/or inactions in connection with the Loan Documents). WITHOUT
LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON
WITH RESPECT TO ANY CLAIMS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT
OF THE NEGLIGENCE OF SUCH AND/OR ANY OTHER INDEMNIFIED PERSON, except to the
limited extent the Claims against an Indemnified Person are proximately caused
by such Indemnified Person's gross negligence or willful misconduct. If Pledgor
or any third party ever alleges such gross negligence or willful misconduct by
any Indemnified Person, the indemnification provided for in this Section shall
nonetheless be paid upon demand, subject to later adjustment or reimbursement,
until such time as a court of competent jurisdiction enters a final judgment as
to the extent and effect of the alleged gross negligence or willful misconduct.
The indemnification provided for in this Section shall survive the termination
of this Agreement and shall extend and continue to benefit each individual or
entity who is or has at any time been an Indemnified Person hereunder.
13. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement contains the entire agreement
of Secured Party and Pledgor with respect to the Collateral. If the
parties hereto are parties to any prior agreement, either written or oral,
relating to the Collateral, the terms of this Agreement shall amend and
supersede the terms of such prior agreements as to transactions on or
after the effective date of this Agreement, but all security agreements,
financing statements, guaranties, other contracts and notices for the
benefit of Secured Party shall continue in full force and effect to secure
the Indebtedness unless Secured Party specifically releases its rights
thereunder by separate release.
(b) AMENDMENT. No modification, consent or amendment of any
provision of this Agreement or any of the other Loan Documents shall be
valid or effective unless the same is in writing and signed by the party
against whom it is sought to be enforced.
(c) ACTIONS BY SECURED PARTY. The lien, security interest and other
security rights of Secured Party hereunder shall not be impaired by (i) any
renewal, extension, increase or modification with respect
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to the Indebtedness, (ii) any surrender, compromise, release, renewal,
extension, exchange or substitution which Secured Party may grant with
respect to the Collateral, or (iii) any release or indulgence granted to
any endorser, guarantor or surety of the Indebtedness. The taking of
additional security by Secured Party shall not release or impair the
lien, security interest or other security rights of Secured Party
hereunder or affect the obligations of Pledgor hereunder.
(d) WAIVER BY SECURED PARTY. Secured Party may waive any Event of
Default without waiving any other prior or subsequent Event of Default.
Secured Party may remedy any default without waiving the Event of Default
remedied. Neither the failure by Secured Party to exercise, nor the delay
by Secured Party in exercising, any right or remedy upon any Event of
Default shall be construed as a waiver of such Event of Default or as a
waiver of the right to exercise any such right or remedy at a later date.
No single or partial exercise by Secured Party of any right or remedy
hereunder shall exhaust the same or shall preclude any other or further
exercise thereof, and every such right or remedy hereunder may be exercised
at any time. No waiver of any provision hereof or consent to any departure
by Pledgor therefrom shall be effective unless the same shall be in writing
and signed by Secured Party and then such waiver or consent shall be
effective only in the specific instances, for the purpose for which given
and to the extent therein specified. No notice to or demand on Pledgor in
any case shall of itself entitle Pledgor to any other or further notice or
demand in similar or other circumstances.
(e) COSTS AND EXPENSES. Pledgor will upon demand pay to Secured
Party the amount of any and all costs and expenses (including without
limitation, attorneys' fees and expenses), which Secured Party may incur in
connection with (i) the transactions which give rise to the Loan Documents,
(ii) the preparation of this Agreement and the perfection and preservation
of the security interests granted under the Loan Documents, (iii) the
administration of the Loan Documents, (iv) the custody, preservation, use
or operation of, or the sale of, collection from, or other realization
upon, the Collateral, (v) the exercise or enforcement of any of the rights
of Secured Party under the Loan Documents, or (vi) the failure by Pledgor
to perform or observe any of the provisions hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA AND APPLICABLE FEDERAL
LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION OR
NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN RESPECT OF
ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEVADA.
(g) APPOINTMENT OF PLEDGEE AS AGENT. Pledgee has been appointed to
act as Pledgee hereunder by and for the benefit of the Purchasers.
(h) SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be illegal, invalid or unenforceable
under present or future laws, such provision shall be fully severable,
shall not impair or invalidate the remainder of this Agreement and the
effect thereof shall be confined to the provision held to be illegal,
invalid or unenforceable.
(i) NO OBLIGATION. Nothing contained herein shall be construed as an
obligation on the part of Secured Party to extend or continue to extend
credit to Borrower.
(j) NOTICES. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be in
writing and given by (i) personal delivery, (ii) expedited delivery service
with proof of delivery, or (iii) United States mail, postage prepaid,
registered or certified mail, return receipt requested, sent to the
intended addressee at the address set forth on the signature page hereof or
to such different address as the addressee shall have designated by written
notice sent pursuant to the terms hereof and shall be deemed to have been
received either, in the case of personal delivery, at the time of personal
delivery, in the case of expedited delivery service, as of the date of
first attempted delivery
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at the address and in the manner provided herein, or in the case of
mail, upon deposit in a depository receptacle under the care and custody
of the United States Postal Service. Either party shall have the right
to change its address for notice hereunder to any other location within
the continental United States by notice to the other party of such new
address at least thirty (30) days prior to the effective date of such
new address.
(k) BINDING EFFECT AND ASSIGNMENT. This Agreement (i) creates a
continuing security interest in the Collateral, (ii) shall be binding on
Pledgor and the heirs, executors, administrators, personal representatives,
successors and assigns of Pledgor, and (iii) shall inure to the benefit of
Secured Party and its successors and assigns. Without limiting the
generality of the foregoing, Secured Party may pledge, assign or otherwise
transfer the Indebtedness and its rights under this Agreement and any of
the other Loan Documents to any other party. Pledgor's rights and
obligations hereunder may not be assigned or otherwise transferred without
the prior written consent of Secured Party.
(l) TERMINATION. It is contemplated by the parties hereto that from
time to time there may be no outstanding Indebtedness, but notwithstanding
such occurrences, this Agreement shall remain valid and shall be in full
force and effect as to subsequent outstanding Indebtedness. Upon (i) the
satisfaction in full of the Indebtedness, (ii) the termination or
expiration of any commitment of Secured Party to extend credit to Borrower,
(iii) written request for the termination hereof delivered by Pledgor to
Secured Party, and (iv) written release delivered by Secured Party to
Pledgor, this Agreement and the security interests created hereby shall
terminate. Upon termination of this Agreement and Pledgor's written
request, Secured Party will, at Pledgor's sole cost and expense, promptly
return to Pledgor such of the Collateral as shall not have been sold or
otherwise disposed of or applied pursuant to the terms hereof and execute
and deliver to Pledgor such documents as Pledgor shall reasonably request
to evidence such termination.
(m) CUMULATIVE RIGHTS. All rights and remedies of Secured Party
hereunder are cumulative of each other and of every other right or remedy
which Secured Party may otherwise have at law or in equity or under any of
the other Loan Documents, and the exercise of one or more of such rights or
remedies shall not prejudice or impair the concurrent or subsequent
exercise of any other rights or remedies.
(n) GENDER AND NUMBER. Within this Agreement, words of any gender
shall be held and construed to include the other gender, and words in the
singular number shall be held and construed to include the plural and words
in the plural number shall be held and construed to include the singular,
unless in each instance the context requires otherwise.
(o) DESCRIPTIVE HEADINGS. The headings in this Agreement are for
convenience only and shall in no way enlarge, limit or define the scope or
meaning of the various and several provisions hereof.
[SIGNATURE PAGE FOLLOWS]
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EXECUTED as of the date first written above.
PLEDGOR:
TOUCH TONE AMERICA, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
Secured Party's Address: Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
c/o Infinity Investors Limited ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
c/o HW Partners, L.P. Telephone: 602/▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ Fax: 602/▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: 214/▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ATTACHED ARE SIGNATURE PAGES FROM
EACH SHAREHOLDER OF ORIX GLOBAL
COMMUNICATIONS, INC., EACH OF WHICH
IS A PART OF THIS STOCK PLEDGE
AGREEMENT.
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