FIRST AMENDED
PLEDGE AND SECURITY AGREEMENT
June 20, ▇▇▇▇
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This FIRST AMENDED PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated
as of June 20, 1997, is entered into by and between Telenational Communications,
Inc., a Delaware Corporation ("the Pledgor") and Value Partners, Ltd., a Texas
limited partnership (the "Secured Party"), in order to secure the payment of the
indebtedness hereinafter referred to of Pledgor
to the Secured Party.
R E C I T A L S
1. On or about November 8, 1995, Telenational Communications Limited
Partnership, a Nebraska limited partnership ("Telenational") executed as maker
that certain Unsecured Senior Promissory Note (the "Original Note") in the
principal sum of Eight Hundred Fifty Thousand and no/l00 Dollars ($850,000.00)
to Aden Enterprises, Inc., d/b/a ECDI, Inc., as Payee ("Aden"). The Original
Note was pledged and assigned by Aden to the Secured Party and acquired at
public sale by the Secured Party pursuant to that certain Amended and Restated
Pledge Agreement executed by Aden in favor of the Secured Party and dated as of
December 8, 1995.
2. Telenational defaulted on the Original Note. As a condition to and in
consideration of the Secured Party reinstating, renewing, and extending the
Original Note to Telenational in the amount of $850,000.00, Telenational agreed
(i) to enter into and execute that certain Amended and Restated Promissory Note
dated March 20, 1997 (the "Telenational Note"), and (ii) to pledge to the
Secured Party (a) all of the personal property of Telenational, including that
set forth in Exhibit "A" attached hereto and made a part hereof, (the "Personal
Property") and (b) 850,000 shares of Series A noncumulative Preferred Stock of
Enhanced Telecommunications Services, Inc., owned by Telenational, (the "Pledged
Securities") pursuant to that certain Pledge and Security Agreement dated March
20, 1997 (the "Telenational Pledge Agreement"). The Telenational Note, that
certain Loan Modification Agreement dated March 20, 1997 by and between Secured
Party and Telenational, the Telenational Pledge Agreement and all financing
statements and related documents shall be referred to herein as the
"Telenational Documents".
3. Pledgor desires to acquire the Personal Property from Telenational, subject
to the security interest granted the Secured Party in the Telenational Pledge
Agreement. WorldPort Communications, Inc. ("WorldPort") and Telenational entered
into that certain Asset Purchase Agreement dated April 23, 1997 (the "Asset
Purchase Agreement"), pursuant to which TCI, as assignee of WorldPort, is to
acquire the Personal Property, subject to the security interest of Secured
Party, as modified in the Loan Documents (as that term is defined herein).
Pledgor and its parent, WorldPort, have executed that certain Second Amended and
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 1
Restated Senior Secured Promissory Note (the "Note") and that certain First
Amended Loan Modification Agreement (the "Loan Agreement") and the Pledgor has
executed this Agreement. The Note, this Agreement, the Loan Agreement, that
certain Certificate of No Oral Agreements, financing statements as amended by
the Pledgor (the "Financing Statements") and all related documents shall be
referred to herein as the "Loan Documents". This Agreement is entitled to all of
the liens, benefits, priorities, rights and privileges, as amended, reinstated,
restated, replaced, modified and granted herein and in the other Loan Documents,
which are hereby ratified and carried forward in full force and effect, of the
Original Note and the Telenational Documents.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used herein shall have the
meaning specified herein.
Section 2. Pledge.
(a) Pledgor Pledgor hereby pledges, assigns, transfers, and delivers to
the Secured Party, and hereby grants a security interest, and renews,
assumes and affirms the existing security interest of Secured Party in
the following (the "Collateral"): (a) the Personal Property, and (b)
all of the property compromising the Personal Property , and all
proceeds thereof and all substitutions, replacements and accessions
thereto. Cash proceeds from the Collateral shall promptly be delivered
to the Secured Party and shall, at the option of the Secured Party, be
held as Collateral for the Note and/or be applied to the obligations
of the Pledgor and WorldPort arising under the Loan Documents.
(b) The pledge of the Collateral shall be referred to herein as the
"Security Interest".
(c) Pledgor assumes all obligations of Telenational under the Telenational
Pledge Agreement, as modified herein. This Agreement amends, renews,
restates, reinstates replaces and affirms the security interest
granted Pledgor in the Telenational Pledge Agreement, as modified
herein, and the Pledgor expressly affirms that such priority created
therein is affirmed herein.
Section 3. Secured Obligations. The Security Interest shall secure, under
the circumstances set forth herein, the Secured Obligations. For purposes of
this Agreement, the term "Secured Obligations" shall mean the following (i) the
due and punctual payment and performance of the Note, and (ii) the reimbursement
of all costs incurred by the Secured Party to maintain, preserve and enforce the
Note, the Loan Agreement and this Agreement, collect the Secured Obligations and
maintain and preserve the Collateral, including without limitation the Secured
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 2
Party's reasonable attorneys' fees, disbursements and legal expenses, and all
expenditures by Secured Party for taxes, insurance and repairs to and
maintenance of the Collateral.
Section 4. Pledgor's Obligations to Pay. Pledgor shall pay and perform all
of the Secured Obligations and any and all obligations set forth in the Loan
Documents as the same may become due according to their terms. Pledgor shall be
liable for, and shall reimburse to Secured Party, all expenses, including
reasonable attorneys= fees, incurred or paid in connection with establishing,
perfecting, maintaining, protecting or enforcing any of Secured Party=s rights
and remedies hereunder, including in, retaking, holding, preparing for sale or
lease, or selling and leasing, and the like, the Collateral.
Section 5. Protection of the Collateral. Pledgor shall defend the title to
the Collateral against all claims and demands whatsoever. Other than those
encumbrances set forth in Exhibit "B", attached hereto and by this reference
incorporated herein, Pledgor shall keep the respective Collateral free and clear
of all liens, charges, encumbrances, taxes and assessments, and shall pay all
taxes, assessments and fees relating to the Collateral. Upon request by Secured
Party, Pledgor, at the Pledgor's expense, shall furnish further assurances of
title, execute any further instruments and documents, and do any other acts,
that Secured Party may request, necessary to effectuate the purposes and
provisions of this Agreement, including, in order to perfect and protect the
Security Interest granted or purported to be granted hereby or to enable the
Secured Party to exercise and enforce the rights and remedies hereunder with
respect to any Collateral.
Pledgor shall not further sell, exchange, assign, transfer or otherwise
dispose of the Collateral, and shall not further encumber, hypothecate,
mortgage, create a lien on or security interest in the Collateral, without the
prior written consent of Secured Party in each instance. The risk of loss of the
Collateral at all times shall be borne by the Pledgor. Pledgor shall keep the
Collateral in good repair and condition and shall not misuse, abuse or waste the
Collateral or allow the Collateral to deteriorate except for normal wear and
tear.
Pledgor at all times shall maintain: (a) insurance covering the Collateral
and all other property of Pledgor against loss or damage by fire and other
hazards; (b) insurance against liability on account of damage to persons and
property; (c) all insurance required under applicable workmen=s compensation
laws; and (d) insurance covering such other risks as Secured Party reasonably
may request. Such insurance shall be in amounts satisfactory to Secured Party,
shall be maintained with responsible insurance carriers, shall name Pledgor and
Secured Party as their interests may appear as insured, and shall provide for at
least thirty (30) days notice to Secured Party prior to cancellation. Pledgor
from time to time, shall upon Secured Party=s written request, promptly furnish
or cause to be furnished to Secured Party evidence of the maintenance of all
insurance required to be maintained hereunder, including such originals or
copies of policies, certificates of insurance, riders and endorsements relating
thereto and proof of payment of premiums as Secured Party may request. If
Pledgor shall fail to maintain any such insurance, Secured Party may, but shall
not be obligated to, do so at the expense of Pledgor, in addition to the other
rights and remedies of Secured Party. Pledgor hereby appoints Secured Party the
attorney in fact of Pledgor for purposes of obtaining, adjusting and canceling
any such insurance and endorsing settlement drafts, and hereby assigns to
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 3
Secured Party all sums which may become payable under such insurance, including
returned premiums and dividends, as additional security for the Secured
Obligations.
The Collateral shall be kept at Pledgor's place of business at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, except for temporary removal in
connection with its ordinary use or unless Pledgor shall have obtained the prior
written consent of Secured Party for its removal to another location. Secured
Party shall have the right to enter upon Pledgor's premises at any reasonable
time, and from time to time, to inspect the Collateral.
Section 6. Filing and Recording. Pledgor shall execute and deliver to
Secured Party any financing statements, and shall procure for Secured Party any
other documents, necessary or appropriate to protect the security interest
granted, renewed, amended, reinstated, assumed and extended to Secured Party
hereunder and in the Telenational Pledge Agreement against the rights and
interests of third parties, and shall cooperate with the Secured Party to cause
the same to be duly filed in all places necessary to perfect the security
interest of Secured Party in the Collateral. In the event that any recording or
refiling thereof (or filing of any statements of continuation or assignment of
any financing statement) is required to protect and preserve such security
interest, Pledgor, at its own cost and expense, shall cause the same to be
re-recorded and/or refiled at the time and in the manner requested by Secured
Party. Pledgor hereby authorizes Secured Party to file or refile any financing
statements, continuation statements, and/or amended statements with respect to
the security interest granted pursuant to this Agreement which at anytime may be
required or appropriate, although the same may have been executed only by
Secured Party, and to execute such financing statement on behalf of Pledgor.
Pledgor hereby irrevocably designates Secured Party, its agents, representatives
and designees, as agent and attorney-in-fact for Pledgor for the aforesaid
purposes.
Section 7. Representations and Warranties.
Pledgor represents and warrants to the Secured Party as follows:
(i) Pledgor is not in default under any indenture, mortgage, deed of
trust, agreement or other instrument to which it is a party or by which it
may be bound. Neither the execution nor the delivery of this Agreement,
nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof, will violate any law or regulation,
or any order or decree of any court or governmental authority, or will
conflict with, or result in the breach of, or constitute a default under,
any indenture, mortgage, deed or trust, agreement or other instrument to
which Pledgor is a party or by which Pledgor may be bound, or result in
the creation or imposition of any lien, claim or encumbrance upon any
property of Pledgor.
(ii) Pledgor has the power to execute, deliver and perform the
provisions of this agreement and all instruments and documents delivered
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 4
or to be delivered pursuant hereto, and has taken or caused to be taken
all necessary or appropriate actions to authorize the execution, delivery
and performance of this Agreement and all such instruments and documents.
(iii) The property described on Exhibit "A" hereto is all personal
property of any kind or nature owned, either directly or indirectly, by
Pledgor as of closing of the Asset Purchase Agreement.
(iv) Pledgor is the legal and equitable owner of the Collateral,
subject to the interest therein granted Secured Party. The ownership by
Pledgor of the Collateral is free and clear of all security interests,
liens, claims and encumbrances of every kind and nature, except as set
forth in Exhibit "B" hereto. Except as may be set forth in Exhibit "B"
annexed hereto, no financing statement covering the Collateral or its
proceeds is on file in any public office. Nothing herein shall be
construed either as a consent by Secured Party to the validity of such
encumbrances or as a waiver of Secured Party's right to contest such
encumbrances.
(v) No default exists, and no event which with notice or the
passage of time or both, would constitute a default under the Collateral
by any part thereto, and there are no offsets, claims or defenses against
the obligations evidenced by the Collateral, except as may be expressly
set forth in Exhibit "B" annexed hereto.
(vi) The Security Interest constitutes a valid and, upon
delivery of documents necessary to perfect the Secured Party=s security
interest in the Collateral, a perfected security interest in the
Collateral for payment and performance of the Secured Obligations, subject
only to those liens and encumbrances of record as set forth in Exhibit "B"
attached hereto and by this reference incorporated herein.
All representations and warranties of Pledgor contained herein shall
survive the execution, delivery and performance of this Agreement until
termination of this Agreement under Section 20.
Section 8. Release of Collateral. The Pledgor shall not sell or otherwise
dispose of the Collateral, or any part thereof or any interest therein. If the
Collateral, or any part thereof, is sold or otherwise disposed of in violation
of these provisions, the Security Interest of the Secured Party shall continue
in such Collateral or any part thereof notwithstanding such sale or other
disposition, and Pledgor will deliver any proceeds thereof to the Secured Party
to be, at the option of the Secured Party, held as Collateral hereunder, and/or
be applied to the obligations of the Pledgor.
Section 9. Secured Party Appointed Attorney-in-Fact. Pledgor hereby
irrevocably appoints the Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of any Pledgor and in its name or otherwise,
from time to time in the Secured Party's discretion, to take any action and to
execute any instrument that the Secured Party may deem reasonably necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made payable to
Pledgor representing any dividend, interest payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same, when and to the extent permitted by this Agreement.
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 5
Section 10. Secured Party May Perform. Upon the occurrence and during the
continuance of an Event of Default (including an Event of Default resulting from
a failure to perform any agreement contained herein), if the Pledgor fails to
perform any agreement contained herein, the Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of the Secured Party
incurred in connection therewith shall be payable by Pledgor under Section 15.
Section 11. Reasonable Care. The Secured Party shall have an obligation to
exercise reasonable care with respect to Collateral in its possession; provided,
however, that the Secured Party shall be deemed to have exercised reasonable
care if the Collateral is accorded treatment substantially comparable to that
which the Secured Party accords its own property or treatment substantially in
accordance with actions requested by Pledgor in writing (although the Secured
Party shall not be obligated to comply with any such requests and no failure to
do so shall be deemed to be a failure to exercise reasonable care).
Section 12. Events of Default
The occurrence of any one or more of the following events (hereinafter
referred to as AEvents of Default@) shall constitute a default hereunder,
whether such occurrence is voluntary or involuntary or comes about or is
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental authority:
(a) If a default in the payment of any principal or interest due
under the Note shall occur; or
(b) If a failure to pay, perform or observe any covenant, agreement,
term or provision of the Loan Documents, or any other agreement or
arrangement now or hereafter entered into between the parties to the
Loan Documents shall occur; or
(c) If any Event of Default shall occur under the terms of the Note
or the Loan Agreement.
(d) If there shall occur any reduction in the value of the
Collateral or any act of any of the Pledgor which imperils the
prospect of the full performance or satisfaction of the Secured
Obligations; or
(e) If all of or any part of the Collateral shall be sold,
transferred or assigned, or shall be further encumbered,
hypothecated, mortgaged, or made subject to any other lien or
security interest, without the prior written consent of Secured
Party.
Section 14. Remedies
If upon or after the occurrence of any Event of Default, the Secured Party
elects to exercise remedies under this Agreement (the occurrence of any such
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 6
event shall be referred to as an "Acceleration"), then upon minimum notice
required by applicable law the Secured Obligations shall immediately become due
and payable in full without notice or demand and the following provisions shall
apply:
(a) The Secured Party may, with or without notice to Pledgor,
foreclose the security interest created herein by any available
judicial procedure, or take possession of the Collateral, or any
portion thereof, with or without judicial process, and enter any
premises where the Collateral may be located for the purpose of
taking possession of or removing the same, or rendering the same
unusable, or disposing of the Collateral on such premises, and
Pledgor agrees not to resist or interfere therewith;
(b) The Secured Party may require Pledgor to prepare, assemble or
collect the Collateral, at Pledgor's own expense, and make the same
available to Secured Party at such place as Secured Party may
designate, whether at Pledgor's premises or elsewhere;
(c) The Secured Party may exercise (in compliance with all
applicable securities laws) in respect of the Collateral, in
addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured
party after default under the Uniform Commercial Code in effect in
the State of Texas at that time, and the Secured Party may also,
without notice except as specified below, sell with or without
representations or warranties, the Collateral or any part thereof in
one or more parcels at public or private sale, at any exchange, over
the counter or at the Secured Party's offices or elsewhere, for
cash, on credit or for future delivery, and at such price or prices
and upon such other terms as the Secured Party may in its sole
discretion deem commercially reasonable or otherwise in such manner
as necessary to comply with applicable federal and state securities
laws. Upon consummation of any such sale, the Secured Party shall
have the right to assign, transfer and deliver to the purchaser or
purchasers at any such sale and such purchasers shall hold the
property sold absolutely, free from any claim or right on the part
of any Pledgor, and Pledgor hereby waives (to the extent permitted
by Law) all rights of redemption, stay or appraisal that it now has
or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted;
(d) The Secured Party may execute and deliver documents of title,
certificates of origin, or other evidence of payment, shipment or
storage of any Collateral or proceeds on behalf of and in the name
of Pledgor;
(e) Should Pledgor fail to cure any default within three (3)
business days of receiving written notice of such default from the
Secured Party the Secured Party may remedy any default by Pledgor
hereunder, without waiving such default, and any monies expended in
so doing shall be chargeable with interest to Pledgor and added to
the Secured Obligations secured hereby;
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 7
(f) The Secured Party may apply for a temporary restraining order,
and/or an injunction to restrain a breach or threatened breach of
this Agreement by Pledgor;
(g) Pledgor agrees that the Secured Party shall not be required to
register or qualify any of the Collateral under applicable state or
federal securities laws in connection with any such sale if the sale
is effected in a manner that complies with all applicable federal
and state securities laws or exemptions therefrom. The Secured Party
shall be authorized at any such sale (if it deems it advisable to do
so) to restrict the prospective bidders or purchasers to persons who
will represent and agree that they are purchasing the Collateral for
their own account for investment and not with a view to the
distribution or sale thereof. In the event that any such Collateral
is sold at private sale, Pledgor agrees that if such Collateral is
sold for a price that the Secured Party in good faith believes to be
reasonable under the circumstances then existing, then (a) the sale
shall be deemed to be commercially reasonable in all respects, (b)
Pledgor shall not be entitled to a credit against the Secured
Obligations in an amount in excess of the purchase price, and (c)
the Secured Party shall not incur any liability or responsibility to
Pledgor in connection therewith, notwithstanding the possibility
that a substantially higher price might have been realized at a
public sale. Pledgor hereby waives any claims against the Secured
Party arising by reason of the fact that the price at which the
Collateral may have been sold at such private sale was less than the
price which might have been obtained at a public sale or was less
than the Secured Obligations, even if the Secured Party accepts the
first offer received and does not offer the Collateral to more than
one offeree (other than the Secured Party or an affiliate of the
Secured Party), unless such sale was not commercially reasonable
under the circumstances;
(h) To the extent notice of sale shall be required by law, the
Secured Party shall give the Pledgor at least ten (10) days' (or
such longer period as shall be specified by applicable laws) notice
of the time and place of any public sale or the time after which any
private sale is to be made, which Pledgor agrees shall constitute
commercially reasonable notification. At any such sale, the Secured
Party, to the extent permitted by law, may bid (which bid may be, in
whole or in part, in the form of cancellation of Secured
Obligations) for and purchase for the account of the Secured Party
the whole or any part of the Collateral. The Secured Party shall not
be obligated to make any sale of Collateral regardless of notice of
sale having been given. The 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. If sale of all
or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Secured
Party until the sale price is paid by the purchaser or purchasers
thereof, but the Secured Party shall not incur any liability in case
any such purchaser or purchasers shall fail to take up and pay for
the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. Pledgor agrees that
any sale of the Collateral conducted by the Secured Party in
accordance with the foregoing provisions of this Section 14(h) shall
be deemed to be a commercially reasonable sale under the Uniform
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 8
Commercial Code as in effect in the State of Texas from time to
time;
(i) As an alternative to exercising the power of sale herein
conferred upon it, the Secured Party may proceed by a suit or suits
at law or in equity to foreclose the security interest granted under
this Agreement and to sell the Collateral, or any portion thereof,
pursuant to a judgment or decree of a court or courts of competent
jurisdiction;
(j) Any cash held by the Secured Party as Collateral and all cash
proceeds received by the Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral (i) prior to the occurrence of an Acceleration shall, at
the option of the Secured Party, be applied as is set forth in
subparts (x) and (y) of this paragraph, or be held by the Secured
Party as collateral for the Note, and (ii) following the occurrence
of an Acceleration may be held by the Secured Party as Collateral
and/or then or at any time thereafter applied as follows: (x) first,
to the payment to the Secured Party of the costs and expenses of
retaking, holding and preparing for sale of the Collateral and any
other fees, expenses, claims, demands, losses, judgments, damages
and liabilities arising out of or related to any Loan Document which
are payable to the Secured Party, including arising in the Note and
this Agreement, and (y) second, to the Secured Party for application
against or on account of all or any part of the Note; and
(k) Any surplus of such cash or cash proceeds held by the Secured
Party and remaining after payment in full of all the Note shall be
reassigned and redelivered as provided in Section 20 hereof.
Section 15. Expenses. The Secured Party shall be entitled to receive from
any proceeds of the Collateral, the amount of any and all reasonable expenses,
including, in the event of default, the fees and expenses of its counsel and of
any experts and agents which the Secured Party may incur in connection with (i)
the administration of this Agreement, (ii) the custody or preservation of, or
the sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Secured Party
hereunder, or (iv) the failure by any Pledgor to perform or observe any of the
provisions hereof.
Section 16. Security Interest Absolute. All rights of the Secured Party
hereunder, the interest, and all obligations of Pledgor hereunder, shall be
absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Loan Documents or
the Secured Obligations or any other agreement or instrument
relating to the Loan Documents or the Secured Obligations;
(ii) any change in the time, manner or place of payment of, or in
any other term of, the Loan Documents or the Secured Obligations, or
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 9
any renewal or extension of the Loan Documents or the Secured
Obligations or any other amendment or waiver of or any consent to
any departure from this Agreement or any other agreement or
instrument;
(iii) any sale, exchange, release or nonperfection of any of the
Collateral, or any release of any guarantor or any person liable in
any manner for the collection of the Note or the Secured
Obligations, or any amendment or waiver of or consent to or
departure from any guaranty, the Loan Documents or the Secured
Obligations; or
(iv) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, Pledgor in respect of any
of the Loan Documents or the Secured Obligations.
Section 17. Amendments and Waivers. The Loan Documents represent the final
agreement agreed to by the parties. No amendment or waiver of any provision of
the Loan Documents, and no consent by Secured Party to any breach thereof by
Pledgor shall in any event be effective unless the same shall be in writing and
signed by the Secured Party, Pledgor and, if appropriate, any guarantor of any
Secured Obligation, and then such waiver or consent shall be effective only for
the specific purpose for which given. No course of dealing between Pledgor, any
guarantor of any Secured Obligation and Secured Party in exercising any rights
or remedies in the Loan Documents shall operate as a waiver or preclude the
exercise of any other rights or remedies in the Loan Documents. All such rights
and remedies shall continue unimpaired, notwithstanding any delay, extension of
time, renewal, compromise or other indulgence granted with respect to any of the
Secured Obligations. Pledgor hereby waives all notice of any such delay,
extension of time, renewal, compromise or indulgence, and consents to be bound
thereby as fully and effectually as if Pledgor expressly had agreed thereto in
advance. The aforesaid Note may be negotiated by Secured Party, without
releasing Pledgor or the Collateral.
Section 18. Time is of the Essence; No Waiver: Cumulative Remedies. Time
and exactitude of each of the terms, obligations, covenants and conditions of
this Agreement are hereby declared to be of the essence. No failure on the part
of the Secured Party to exercise, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy by the Secured Party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
Section 19. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns. The Secured Party may assign this
Agreement, and if assigned, the assignee shall be entitled, upon notifying
Pledgor, to the payment and performance of all of the Secured Obligations and
agreements of Pledgor hereunder and to all of the rights and remedies of Secured
Party hereunder, and Pledgor will assert no claims or defenses Pledgor may have
against Secured Party against the assignee. The gender and number used in this
Agreement are used for reference term only and shall apply with the same effect
whether the parties are masculine, feminine, neuter, singular or plural.
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Section 20. Termination. This Agreement shall terminate upon the payment
in full of the Note and Secured Obligations. Upon such termination, the Secured
Party shall reassign and redeliver (or cause to be reassigned and redelivered)
to appropriate Pledgor, or to such person or persons as Pledgor shall designate
or to whomever may be lawfully entitled to receive such surplus, against
receipt, such of the Collateral pledged by that Pledgor (if any) as shall not
have been sold or otherwise applied by the Secured Party pursuant to the terms
hereof and shall still be held by it hereunder, together with appropriate
instruments of reassignment and release. Any such reassignment shall be without
recourse upon or warranty by the Secured Party and at the expense of Pledgor.
Section 21. Addresses for Notices. Any notice or communication to be given
or made hereunder shall be in writing (including facsimile communication) and
may be given or made personally or by first class letter, telefax, courier telex
or tested telex, telegram or cable (confirmed, in the case of a telecopy, telex,
telegram or cable, by a letter delivered personally within, or dispatched by
first class mail within, twenty-four (24) hours of the dispatch of such telefax,
telex, telegram or cable) and shall be effective when actually received. For the
purposes hereof, the address of the Pledgor shall be the address maintained in
the records of the Secured Party (until notice of a change thereof is given as
provided in this Section 21), and the address of the Secured Party (until notice
of a change thereof is given as provided in this Section 21) shall be as
follows:
Value Partners, Ltd.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
Section 22. Continuing Security Interest; Assignments. This Agreement
shall create a continuing security interest in the Collateral and shall (i)
remain in full force and effect until termination as provided in herein, (ii) be
binding upon Pledgor, the Secured Party and their respective successors and
assigns, and (iii) inure, together with the rights, powers and remedies of
Pledgor and the Secured Party hereunder, to the benefit of Pledgor, the Secured
Party and their respective successors, transferees and assigns, as the case may
be.
Section 23. Governing Law. This Agreement and the rights and obligations
of the parties hereto shall be governed by and construed and enforced in
accordance with the laws of the State of Texas (other than conflict of laws
rules).
Section 24. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective. If any
provisions of this Agreement or any lien, security interest or other right of
the Secured Party hereunder shall be held to be invalid, illegal or
unenforceable under applicable law, such invalidity, illegality or
unenforceability shall not affect any other provision herein or any lien,
security interest or other right granted hereby.
Section 25. Usury. All agreements between Pledgor and the Secured Party,
whether now existing or hereafter arising and whether written or oral, are
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 11
hereby limited so that in no contingency, whether by reason of demand or
acceleration of the Final Maturity Date, as that term is defined in the Note, or
otherwise, shall the interest contracted for, charged, received, paid or agreed
to be paid to the Secured Party exceed the maximum amount permissible under the
laws of the State of Texas (hereinafter the "Applicable Law"). If, from any
circumstance whatsoever, interest would otherwise be payable to the Secured
Party in excess of the maximum amount permissible under the Applicable Law, the
interest payable to the Secured Party shall be reduced to the maximum amount
permissible under the Applicable Law, and if from any circumstance the Secured
Party shall ever receive anything of value deemed interest by the Applicable Law
in excess of the maximum amount permissible under the Applicable Law, an amount
equal to the excessive interest shall be applied to the reduction of the
principal hereof and not to the payment of interest, or if such excessive amount
of interest exceeds the unpaid balance of principal hereof, such excess shall be
refunded to the party making such payment. All interest paid or agreed to be
paid to the Secured Party shall, to the extent permitted by the Applicable Law,
be amortized, prorated, allocated and spread throughout the full period
(including any renewal or extension) until payment in full of the principal so
that the interest hereon for such full period shall not exceed the maximum
amount permissible under the Applicable Law. The Secured Party expressly
disavows any intent to contract for, charge or receive interest in an amount
which exceeds the maximum amount permissible under the Applicable Law. This
paragraph shall control all agreements between Pledgor and the Secured Party.
Section 26. Multiple Counterparts. This Agreement may be executed in
separate or multiple counterparts by the parties, and all of such counterparts
shall be considered as one and the same instrument notwithstanding the fact that
various counterparts are signed by only one or more of the parties, and all of
such Agreements shall be deemed but one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of
the date first above written.
SECURED PARTY:
VALUE PARTNERS, LTD.
By: ▇▇▇▇▇▇ ▇▇▇▇▇ Partners,
a Texas general partnership
General Partner
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: General Partner
PLEDGOR:
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 12
TELENATIONAL COMMUNICATIONS, INC.
By: /s/▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Its: President & C.E.O.
----------------------------------------
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 13
EXHIBIT "A"
SCHEDULE OF PLEDGED ASSETS
A. All "accounts", as such term is defined in Article 9 of the UCC,
acquired by Pledgor pursuant to the Asset Purchase Agreement, shall include,
without limitation, each of the following, whether now owned or hereafter
acquired by the Pledgor: (a) all rights of the Pledgor to payment for goods sold
or leased or services rendered, whether or not earned by performance, (b) all
accounts receivable of the Pledgor, (c) all rights of the Pledgor to receive any
payment of money or other form of consideration, (d) all security pledged,
assigned or granted to or held by the Pledgor to secure any of the foregoing,
(e) all guaranties of, or indemnifications with respect to, any of the
foregoing, and (f) all rights of the Pledgor as an unpaid seller of goods or
services, including, but not limited to, all rights of stoppage in transit,
replevin, reclamation and resale. The total value of such accounts subject to
this Pledge shall not exceed the present value of such accounts held by or for
the benefit of Pledgor as of the date hereof.
B. All "chattel paper", as such term is defined in Article 9 of the UCC,
acquired by Pledgor pursuant to the Asset Purchase Agreement. The total value of
such chattel paper shall not exceed the present value of chattel paper held by
or for the benefit of Pledgor.
C. All "instruments", as such term is defined in Article 9 of the UCC,
acquired by Pledgor pursuant to the Asset Purchase Agreement, shall include all
promissory notes, drafts, bills of exchange, and trade acceptances of the
Pledgor, whether now owned or hereafter acquired. The total value of such
instruments shall not exceed the present value of instruments held by or for the
benefit of Pledgor.
D. All "general intangibles", as such term is defined in Article 9 of the
UCC, acquired by Pledgor pursuant to the Asset Purchase Agreement and shall
include, without limitation, each of the following: (1) all of the Pledgor=
service marks, trade names, trade secrets, registrations, goodwill, franchises,
licenses, permits, proprietary information, customer lists, designs, and
inventions; (2) all of the Pledgor= books, records, data, plans, manuals,
computer software, computer tapes, computer disks, computer programs, source
codes, object codes, and all rights of the Pledgor to retrieve data and other
information from third parties; (3) all of the Pledgor= contract rights,
partnership interests, joint venture interests, securities, deposit accounts,
investment accounts and certificates of deposit; (4) all rights of the Pledgor
to payment under letters of credit and similar agreements; (5) all tax refunds
and tax refund claims of the Pledgor, (6) all choses in action and causes of
action of the Pledgor (whether arising in contract, tort or otherwise and
whether or not currently in litigation) and all judgments in favor of the
Pledgor, (7) all rights and claims of the Pledgor under warranties and
indemnities, and (8) all rights of the Pledgor under any insurance, surety, or
similar contract or arrangement.
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 14
E. All "documents", as such term is defined in Article 9 of the UCC,
acquired by Pledgor from Telenational pursuant to the Asset Purchase Agreement
including, without limitation, all documents of title and all receipts covering,
evidencing or representing goods now owned or hereafter acquired by the Pledgor.
F. All "equipment", as such term is defined in Article 9 of the UCC,
acquired by Pledgor from Telenational pursuant to the Asset Purchase Agreement
or hereafter acquired as a substitution, replacement or accession thereto by the
Pledgor, and, in any event shall include, without limitation, all switches,
machinery, equipment, furniture, fixtures, trade fixtures, trailers, rolling
stock, vessels, aircraft, and vehicles now owned by the Pledgor and any and all
additions, substitutions, and replacement of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment, and
accessories installed thereon or affixed thereto.
G. All "inventory", as such term is defined in Article 9 of the UCC,
acquired by Pledgor from Telenational pursuant to the Asset Purchase Agreement,
and, in any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by the Pledgor: (l) all goods and other
personal property of the Pledgor that are held for sale or lease or to be
furnished under any contract of service; (2) all raw materials, work-in-process,
finished goods, inventory, supplies and materials of the Pledgor; (3) all
wrapping, packaging, advertising, and shipping materials of the Pledgor; (4) all
goods that have been returned to, repossessed by or stopped in transit by the
Pledgor; and (5) all documents evidencing any of the foregoing. This shall
include the rights in and to the unredeemed value of prepaid telephone cards
commonly referred to as "breakage". The total value of such inventory shall not
exceed the present value of inventory held by or for the benefit of Pledgor.
H. All rights of Pledgor under any agreement (together with any collateral
or other security therefor existing at any time, the "Assigned Agreements"),
acquired by Pledgor from Telenational pursuant to the Asset Purchase Agreement
including, without limitation, (1) all rights of the Pledgor to receive moneys
due and to become due under or pursuant to the Assigned Agreements, (2) all
rights of the Pledgor to receive proceeds of any insurance, indemnity, warranty,
or guaranty with respect to the assigned Agreements, (3) all claims of the
Pledgor for damages arising out of or for breach of or default under the
assigned Agreements, and (4) all rights of the Pledgor to enforce and terminate
the Assigned Agreements, to performance by all obligors thereunder and to compel
performance and otherwise exercise all rights and remedies thereunder.
I. All of the following acquired by Pledgor from Telenational pursuant to
the Asset Purchase Agreement: (1) all copyrights, works protectable by
copyright, copyright registrations, and copyright applications of the Pledgor,
if any; (2) all renewals, extensions, and modifications thereof; (3) all income,
royalties, damages, profits, and payments relating to or payable under any of
the foregoing; (4) the right to ▇▇▇ for past, present, or future infringements
of any of the foregoing; (5) all other rights and benefits relating to any of
the foregoing throughout the world; and (6) all goodwill associated with
symbolized by any of the foregoing; in each case, whether now owned or hereafter
acquired by the Pledgor (collectively, the "Copyrights").
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 15
J. All written agreements acquired by Pledgor from Telenational
pursuant to the Asset Purchase Agreement granting to the Pledgor any right to
use any Copyright.
K. All of the following acquired by Pledgor from Telenational pursuant to
the Asset Purchase Agreement: (1) all patents, patent applications, and
patentable inventions of the Pledgor, if any, and all of the inventions and
improvements described and claimed therein; (2) all continuations, divisions,
renewals, extensions, modifications, substitutions, continuations-in-part, or
reissues of any of the foregoing; (3) all income, royalties, profits, damages,
awards, and payments relating to or payable under any of the foregoing; (4) the
right to ▇▇▇ for past, present, and future infringements of any of the
foregoing; (5) all other rights and benefits relating to any of the foregoing
throughout the world; (6) all goodwill associated with any of the foregoing; in
each case, acquired by Pledgor from Telenational pursuant to the Asset Purchase
Agreement (collectively, the APatents@).
L. All written agreements acquired by Pledgor from Telenational pursuant
to the Asset Purchase Agreement granting to the Pledgor any right to use any
invention on which a Patent is in existence.
M. All of the following acquired by Pledgor from Telenational pursuant to
the Asset Purchase Agreement: (1) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos, other business identifiers (including the rights and interest in
and to the use of the the logos and identifiers of any third parties which Maker
may have the right to use), prints and labels on which any of the foregoing have
appeared or appear, all registrations and recordings thereof, and all
applications in connection therewith including registrations, recordings, and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state thereof or any other country or
any political subdivision thereof; (2) all reissues, extensions and renewals
thereof; (3) all income, royalties, damages, and payments now or hereafter
relating to or payable under any of the foregoing including damages or payments
for past or future infringements of any of the foregoing; (4) the right to ▇▇▇
for past, present, and future infringements of any of the foregoing; (5) all
rights corresponding to any of the foregoing throughout the world; and (6) all
goodwill associated with and symbolized by any of the foregoing; in each case,
whether now owned or hereafter acquired by the Pledgor (collectively, the
"Trademarks").
N. All written agreements acquired by Pledgor from Telenational
pursuant to the Asset Purchase Agreement granting to the Pledgor any right
to use any Trademark.
O. All other goods and personal property of the Pledgor of any kind or
character; whether tangible or intangible acquired by Pledgor from Telenational
pursuant to the Asset Purchase Agreement.
P. Those items set forth on Exhibit A-1 attached hereto and
incorporated herein by reference.
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 16
Q. The proceeds, in cash or otherwise, of any of the property
described herein and all liens, security, rights, remedies and claims of the
Pledgor with respect thereto.
R. All "proceeds" of the property described herein, as such term is
defined in Section 9.306 of the UCC and, in any event, shall include, but not be
limited to; (1) any and all proceeds of any insurance, indemnity, warranty, or
guaranty payable to the Pledgor from time to time with respect to any of the
property described herein, (2) any and all payments (in any form whatsoever)
made or due and payable to the Pledgor from time to time in connection with any
requisition, confiscation, condemnation, seizure, or forfeiture of all or any
part of the property described herein, by any governmental authority (or any
person or entity acting, or purporting to act, for or on behalf of any
governmental authority); and (3) any and all other amounts from time to time
paid or payable under or in connection with any of the property described herein
and all products of the property described herein.
As used herein, "UCC" means the Uniform Commercial Code as in effect in
the State of Texas; provided, that if by mandatory provisions of law, the
perfection or effect of perfection or non-perfection of the security interest in
any Collateral to which this document relates is governed by the Uniform
Commercial Code as in effect on or after the date hereof in any other
jurisdiction, UCC means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or the effect of perfection or non-perfection.
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 17
EXHIBIT B
SCHEDULE OF ENCUMBRANCES
Secured Party: BA Credit Corporation
Security: Equipment, Product, Proceeds
Filed: 6-1-93
Secured Party: ▇▇▇▇▇▇ Corporation
Security: Equipment
Filed: 12-2-94
Secured Party: Bank of Nebraska
Security: Equipment, Product
Filed: 4-10-95
Secured Party: Business Leasing, Inc.
Security: Equipment
Filed: 6-17-96
Secured Party: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Security: Accounts receivable on Telenational's customer base.
Filed: 8-12-96
Secured Party: Midcom Communications, Inc.
Security: Accounts receivable, inventory, equipment, general intangibles
and all other personal property.
Filed: 12-13-96
Secured Party: Value Partners, Ltd.
Security: Collateral, as defined in this Agreement.
Filed: March 24, 1997
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FIRST AMENDED PLEDGE AND SECURITY AGREEMENT, PAGE 18