EXHIBIT 10.12
EXCUTION COPY
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE
COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
StarVox Communications, Inc.
Senior Secured Debenture

Issuance Date: July 10, 2007   Principal: U.S. $3,000,000

     FOR VALUE RECEIVED, StarVox Communications, Inc., a California corporation
(the “Company”) and a wholly owned subsidiary of U.S. Wireless Data, Inc., a
Delaware corporation (“Parent”), hereby promises to pay to the order of DKR
Soundshore Oasis Holding Fund Ltd. or its registered assigns (“Holder”) the
amount set out above as the Principal (as reduced pursuant to the terms hereof
pursuant to redemption or otherwise, the “Principal”) when due, upon the
Maturity Date (as defined below), acceleration, redemption or otherwise (in each
case in accordance with the terms hereof) and to pay interest (“Interest”) on
any outstanding Principal at a rate equal to 10.00% per annum (the “Interest
Rate”), from the date set out above as the Issuance Date (the “Issuance Date”)
until the same becomes due and payable, whether upon an Interest Date (as
defined below) or the Maturity Date, acceleration, redemption or otherwise (in
each case in accordance with the terms hereof). This Senior Debenture (including
all Senior Debentures issued in exchange, transfer or replacement hereof, this
“Debenture”) is one of an issue of Senior Debentures issued pursuant to the
Securities Purchase Agreement (as defined below) on the Issuance Date
(collectively, the “Debentures” and such other Senior Debentures, the “Other
Debentures”). Certain capitalized terms used herein are defined in Section 21.
     (1) PAYMENTS OF PRINCIPAL. On the Maturity Date, the Company shall pay to
the Holder an amount equal to the Principal, as well as all accrued but unpaid
Interest. The “Maturity Date” shall be August 1, 2007, or (a) such earlier date
as may be accelerated by the Required Holders upon an Event of Default in
accordance with the terms hereof, (b) such later date as may be extended at the
option of the Required Holders, or (c) such earlier date which is the third day
following a financing or refinancing (or related series thereof) of either debt
or equity by the Company and/or the Parent of at least Thirty Million Dollars
($30,000,000) in the aggregate.
     (2) INTEREST; INTEREST RATE. Interest on this Debenture shall commence
accruing on the Issuance Date and shall be computed on the basis of a 365-day
year and actual days elapsed and shall be payable in arrears for each Payment
Quarter on the first day

 

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of the succeeding Payment Quarter during the period beginning on the Issuance
Date and ending on, and including, the Maturity Date (each, an “Interest Date”).
Interest shall be payable on each Interest Date, to the record holder of this
Debenture on the applicable Interest Date, in cash. Interest accrues at the
Interest Rate on all outstanding unpaid Principal owed under this Debenture and
all accrued Interest is payable on each Interest Date. Upon the occurrence and
during the continuance of an Event of Default, the Interest Rate shall be
increased to fifteen percent (15.00%) (the “Default Rate”). In the event that
such Event of Default is subsequently cured, the adjustment referred to in the
preceding sentence shall cease to be effective as of the date of such cure;
provided, that the Interest as calculated and unpaid at such increased rate
during the continuance of such Event of Default shall continue to apply to the
extent relating to the days after the occurrence of such Event of Default
through and including the date of cure of such Event of Default.
     (3) RIGHTS UPON EVENT OF DEFAULT.
          (a) Event of Default. Each of the following events shall constitute an
“Event of Default”:
               (i) the failure of the applicable Registration Statement required
to be filed pursuant to the Registration Rights Agreement to be declared
effective by the SEC, or, while the applicable Registration Statement is
required to be maintained effective pursuant to the terms of the Registration
Rights Agreement, the effectiveness of the applicable Registration Statement
lapses for any reason or is unavailable to any holder of the Debenture for sale
of all of such holder’s Registrable Securities (as defined in the Registration
Rights Agreement), in each case as required by and in accordance with the terms
of the Registration Rights Agreement;
               (ii) the Company’s failure to pay to the Holder any amount of
Principal, Interest, Late Charges or other amounts when and as due under this
Debenture (including, without limitation, the Company’s failure to pay any
redemption payments or amounts hereunder) or any other amounts due under any
Transaction Document to which the Company is a party (as defined in the
Securities Purchase Agreement) or any other agreement, document, certificate or
other instrument delivered in connection with the transactions contemplated
hereby and thereby to which the Holder is a party, except, in the case of a
failure to pay Interest and Late Charges or other amounts (other than Principal)
when and as due, in which case only if such failure continues for a period of at
least five (5) Business Days;
               (iii) any default in excess of $50,000 in the aggregate occurs
and is continuing under, or any redemption of or acceleration prior to maturity
occurs in respect of any Indebtedness of the Company, Parent or any of their
Subsidiaries (as defined in Section 3(a) of the Securities Purchase Agreement)
in excess of $50,000 in the aggregate, other than in respect of Capital Lease
Obligations not in excess of $75,000 in the aggregate and other than with
respect to any redemption of the Other Debentures in accordance with their
terms; provided, that in the event that any such acceleration of Indebtedness is
rescinded by the holders thereof prior to acceleration of this Debenture or the
Other Debentures, no Event of Default shall exist as a result of such rescinded
acceleration;

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               (iv) the Company, Parent or any of their Subsidiaries, pursuant
to or within the meaning of Title 11, U.S. Code, or any similar federal, foreign
or state law for the relief of debtors (collectively, “Bankruptcy Law”),
(A) commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
receiver, trustee, assignee, liquidator or similar official (a “Custodian”),
(D) makes a general assignment for the benefit of its creditors or (E) admits in
writing that it is generally unable to pay its debts as they become due except
as disclosed in the SEC Documents at least three (3) Business Days prior to the
Issuance Date;
               (v) creditors of the Company, Parent or any of their Subsidiaries
file an action for relief under any Bankruptcy Law against such entity in an
involuntary case and such action is not dismissed within thirty (30) days of
such filing or a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (A) is for relief against the Company, Parent or any of
their Subsidiaries in an involuntary case, (B) appoints a Custodian of the
Company, Parent or any of their Subsidiaries or (C) orders the liquidation of
the Company, Parent or any of their Subsidiaries;
               (vi) a final judgment or judgments for the payment of money
aggregating in excess of $250,000 are rendered against the Company, Parent or
any of their Subsidiaries, which judgments are not, within sixty (60) days after
the entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within sixty (60) days after the expiration of such stay; provided,
however, that any judgment which is covered by insurance or an indemnity from a
credit worthy party shall not be included in calculating the $250,000 amount set
forth above so long as the Company provides the Holder a written statement from
such insurer or indemnity provider (which written statement shall be reasonably
satisfactory to the Holder) to the effect that such judgment is covered by
insurance or an indemnity and the Company will receive the proceeds of such
insurance or indemnity within sixty (60) days of the issuance of such judgment;
               (vii) the Company or Parent, as applicable, (A) makes any
representation or warranty in any Transaction Document which is incorrect or
misleading when made, or (B) breaches any covenant (other than a covenant
contained in Section 8 of this Debenture or in the Post-Closing Letter
Agreement) of any Transaction Document, except, in the case of a breach of a
covenant of any Transaction Document which is curable, only if such breach
continues for a period of at least ten (10) consecutive Business Days;
               (viii) any breach or failure in any respect to comply with
Section 8 of this Debenture or with the Post-Closing Letter Agreement;
               (ix) the Parent fails to obtain authorization for the
transactions contemplated in the Transaction Documents from the Pennsylvania
Public Utilities Commission within twenty (20) days after the Issuance Date;
               (x) the Company fails to cause its, and its Subsidiaries’,
outside Pennsylvania counsel, to deliver to Holder an opinion dated within ten
(10) days after the Issuance Date in form and substance satisfactory to Holder
in its sole discretion;

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               (xi) any Event of Default (as defined in the Other Debentures)
occurs and is continuing with respect to any Other Debentures;
               (xii) any Event of Default (as defined in the Security Agreement)
occurs and is continuing under the Security Documents, the repudiation by the
Company, Parent or any of their Subsidiaries of any of its obligations under the
Security Agreement or the unenforceability of the Security Agreement against the
Company, Parent or any of their Subsidiaries for any reason; and
               (xiii) any of the Governmental Approvals shall have been
(a) revoked, rescinded, suspended, modified in an adverse manner or not renewed
in the ordinary course for a full term and such revocation, rescission,
suspension, adverse modification or failure to renew has a material adverse
effect on the business or financial condition of the Company, Parent or a
Subsidiary or (b) subject to any decision by a Governmental Authority that
designates a hearing with respect to any applications for renewal of any of the
Governmental Approvals or that could result in the Governmental Authority taking
any of the actions described in clause (a) above, and such decision or such
revocation, rescission, suspension, modification or non-renewal (1) has, or
could reasonably be expected to have, a material adverse change, or
(2) adversely affects the legal qualifications of Parent or any of its
Subsidiaries to hold any of the Governmental Approvals in any applicable
jurisdiction and such revocation, rescission, suspension, modification or
non-renewal could reasonably be expected to affect the status of or legal
qualifications of Parent or any of its Subsidiaries to hold any of the
Governmental Approvals in any other jurisdiction.
          (b) Redemption Right. Promptly after the occurrence of an Event of
Default with respect to this Debenture or any other Debenture, the Company shall
deliver written notice thereof via facsimile and overnight courier (an “Event of
Default Notice”) to the Holder. At any time after the earlier of the Holder’s
receipt of an Event of Default Notice and the Holder becoming aware of an Event
of Default, the Required Holder may require the Company to redeem all or any
portion of the Debenture (as “Event of Default Redemption”) by delivering
written notice thereof (the “Event of Default Redemption Notice”) to the
Company, which Event of Default Redemption Notice shall indicate the portion of
the Debenture the Required Holders are electing to redeem; provided that upon
the occurrence of any default described in Section 3(a)(v) and 3(a)(vi), the
Debenture shall automatically, and without any action on behalf of the Holders,
be redeemed by the Company. Each portion of the Debenture subject to redemption
by the Company pursuant to this Section 3(b) shall be redeemed by the Company at
a price equal to 110% of the outstanding Principal amount and accrued and unpaid
Interest and accrued and unpaid Late Charges and Interest with respect to such
portion of the Debenture subject to redemption (the “Event of Default Redemption
Price”). Redemptions required by this Section 3(b) shall be made in accordance
with the provisions of Section 7.
     (4) RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.
          (a) Assumption. Neither Parent nor the Company shall enter into or be
party to a Fundamental Transaction unless (i) the Successor Entity assumes in
writing all of the obligations of the Company under this Debenture and the other
Transaction Documents in

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accordance with the provisions of this Section 4(a) pursuant to written
agreements in form and substance reasonably satisfactory to the Required Holders
and approved by the Required Holders prior to such Fundamental Transaction,
including agreements to deliver to the Holder of this Debenture in exchange for
such Debenture a security of the Successor Entity evidenced by a written
instrument substantially similar in form and substance to the Debenture,
including, without limitation, having a principal amount and interest rate equal
to the principal amounts and the interest rates of the Debenture held by such
holder and having similar ranking to the Debenture, and satisfactory to the
Required Holders and (ii) unless the Fundamental Transaction would result in a
Change of Control and the Company complies with the provisions of Section 4(b),
the Successor Entity (including its Parent Entity) is a publicly traded
corporation whose common stock is quoted on or listed for trading on an Eligible
Market (a “Public Successor Entity”). Upon the occurrence of any Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of such Fundamental Transaction, the provisions of
this Debenture referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume
all of the obligations of the Company under this Debenture with the same effect
as if such Successor Entity had been named as the Company herein. The provisions
of this Section shall apply similarly and equally to successive Fundamental
Transactions and shall be applied without regard to any limitations on the
redemption of this Debenture.
          (b) Redemption Right. No sooner than fifteen (15) days nor later than
ten (10) days prior to the consummation of a Change of Control, but not prior to
the public announcement of such Change of Control, the Company shall deliver
written notice thereof via facsimile and overnight courier to the Holder (a
“Change of Control Notice”). At any time during the period beginning after the
Holder’s receipt of a Change of Control Notice and ending on the date of the
consummation of such Change of Control (or, in the event a Change of Control
Notice is not delivered at least ten (10) days prior to a Change of Control, at
any time on or after the date which is ten (10) days prior to a Change of
Control and ending ten (10) days after the consummation of such Change of
Control), the Required Holders may require the Company to redeem all or any
portion of the Debenture by delivering written notice thereof (“Change of
Control Redemption Notice”) to the Company, which Change of Control Redemption
Notice shall indicate the portion of the Debenture each Holder is electing to
redeem. The portion of this Debenture subject to redemption pursuant to this
Section 4 shall be redeemed by the Company at a price equal to the sum of the
amount being redeemed together with accrued and unpaid Interest with respect to
such amount and accrued and unpaid Late Charges with respect to such amount and
Interest (the “Change of Control Redemption Price”). Redemptions required by
this Section 4 shall be made in accordance with the provisions of Section 7 and
shall have priority to payments to stockholders in connection with a Change of
Control.
     (5) COMPANY REDEMPTION. Prior to the Maturity Date, the Company may elect
to pay to the Holder of this Debenture the Company Redemption Amount, subject to
and in accordance with the terms of this Section 5, by redeeming the Principal,
in whole or in part, in accordance with this Section 5 (a “Company Redemption”).
On or prior to the date which is the sixth (6th) Trading Day prior to the
Company Redemption (each, a “Company Redemption Notice Due Date”), the Company
shall deliver written notice (each, a “Company Redemption Notice”), to the
Holder which Company Redemption Notice shall state the amount of Principal which
the Company elects to redeem pursuant to a Company Redemption (the

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“Company Redemption Amount”), together with accrued and unpaid Interest with
respect to such Company Redemption Amount and accrued and unpaid Late Charges
with respect to such Company Redemption Amount and Interest. Each Company
Redemption Notice shall be irrevocable. The Company shall redeem the applicable
Company Redemption Amount of this Debenture pursuant to this Section 5 together
with the corresponding Company Redemption Amounts of the Other Debentures
pursuant to the corresponding provisions of the Other Debentures. If the Company
elects a Company Redemption, then the Company Redemption Amount which is to be
paid to the Holder on the applicable Company Redemption Date shall be redeemed
by the Company on such Company Redemption Date, and the Company shall pay to the
Holder on such Company Redemption Date, by wire transfer of immediately
available funds, an amount in cash equal to the Company Redemption Amount.
     (6) NONCIRCUMVENTION. The Company and Parent hereby covenant and agree that
neither the Company nor Parent will, by amendment of its Articles or Certificate
(as applicable) of Incorporation, Bylaws or through any reorganization, transfer
of assets, consolidation, merger, scheme of arrangement, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Debenture, and will at all
times in good faith carry out all of the provisions of this Debenture and take
all action as may be required to protect the rights of the Holder of this
Debenture.
     (7) HOLDER’S REDEMPTIONS.
          (a) Mechanics. The Company shall deliver the applicable Event of
Default Redemption Price to the Holder within five Business Days after the
Company’s receipt of the Required Holders’ Event of Default Redemption Notice.
If the Required Holders have submitted a Change of Control Redemption Notice in
accordance with Section 4(b), the Company shall deliver the applicable Change of
Control Redemption Price to the Holder concurrently with the consummation of
such Change of Control if such notice is received prior to the consummation of
such Change of Control (provided, that if the Change of Control is described in
Section 1(c)), then the payment shall be made in accordance with Section 1(c)
and within five (5) Business Days after the Company’s receipt of such notice
otherwise. In the event of a redemption of less than all of the Principal of
this Debenture, the Company shall promptly cause to be issued and delivered to
the Holder a new Debenture (in accordance with Section 12(d)) representing the
outstanding Principal which has not been redeemed.
          (b) Redemption by Other Holders. Any Event of Default Redemption
Notice or Change of Control Redemption Notice for redemption or repayment as a
result of an event or occurrence substantially similar to the events or
occurrences described in Section 3(b), Section 4(b) or Section 8 is to be
delivered to the Company by the Required Holders. If the Company receives any
Event of Default Redemption Notice or Change of Control Redemption Notice and
the Company is unable to redeem all principal, interest and other amounts
designated in such Redemption Notice, then the Company shall redeem a pro rata
amount from each holder of the Debentures (including the Holder) based on the
principal amount of the Debentures submitted for redemption pursuant to such
Event of Default Redemption Notice or Change of Control Redemption Notice
received by the Company from the Required Holders.

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     (8) COVENANTS.
          (a) Rank. All payments due under this Debenture (a) shall rank pari
passu with all Other Debentures and (b) shall be senior in right of payment to
all other Indebtedness of the Company and its Subsidiaries.
          (b) Incurrence of Indebtedness. So long as this Debenture is
outstanding, Parent and the Company shall not, and neither Parent nor the
Company shall permit any of its Subsidiaries to, directly or indirectly, incur
or guarantee, assume or suffer to exist any Indebtedness, other than (i) the
Indebtedness evidenced by this Debenture and the Other Debentures and
(ii) Permitted Indebtedness.
          (c) Existence of Liens. So long as this Debenture is outstanding,
Parent and the Company shall not, and neither Parent nor the Company shall
permit any of its Subsidiaries to, directly or indirectly, allow or suffer to
exist any mortgage, lien, pledge, charge, security interest or other encumbrance
upon or in any property or assets (including accounts and contract rights) owned
by Parent, the Company or any of either of its Subsidiaries (collectively,
“Liens”) other than Permitted Liens.
          (d) Restricted Payments. Parent shall not, the Company shall not, and
neither Parent nor the Company shall permit any of its Subsidiaries to, directly
or indirectly,
               (i) declare or pay any dividend or make any other payment or
distribution on account of the Parent’s Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation involving
the Parent) or to the direct or indirect holders of the Parent’s Equity
Interests in their capacity as such;
               (ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Parent) any Equity Interests of the Parent or any direct or
indirect parent of the Parent other than in connection with a Permitted
Distribution; or
               (iii) make any payment on or with respect to, accelerate the
maturity of, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness of the Company or the Parent, except a payment of
interest, principal or other amounts due at the stated maturity thereof and
except for payments of principal, interest and other amounts under the Other
Debentures.
          (e) Asset Sales. Parent shall not, the Company shall not, and neither
Parent nor the Company shall permit any of its Subsidiaries to, directly or
indirectly, consummate any Asset Sale unless:
               (A) Parent or the Company (or the applicable Subsidiary, as the
case may be) receives consideration at the time of the Asset Sale at least equal
to the fair market value of the assets or Equity Interests issued or sold or
otherwise disposed of, and at least 85% of the consideration received in the
Asset Sale by the Company or such Subsidiary is in the form of cash; or

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               (B) the asset transferred consists of worn-out or obsolete or
unneeded Equipment; or
               (C) the owner of the assets or rights after the transfer or
series of related transfer is Parent, the Company or a Subsidiary party to the
Security Agreement; or
               (D) the assets or rights transferred after the Issuance Date have
a book value not exceeding $200,000 in the aggregate.
          (f) Use of Proceeds. The Company and Parent will use the proceeds from
the sale of the Securities as set forth in Section 4(d) of the Securities
Purchase Agreement.
          (g) Additional Collateral. With respect to any Property acquired after
the Issuance Date by the Company or any of its Subsidiaries (other than Property
acquired with a lease or purchase money financing constituting Permitted
Indebtedness, to the extent the terms of such lease or financing prohibit the
granting of a security interest in such Property) as to which the Holder does
not have a perfected Lien, the Company shall promptly (i) execute and deliver to
the Holder or its agent such amendments to the Security Agreement or such other
documents as such Holder deems necessary or advisable to grant to the Holder a
security interest in such Property and (ii) take all actions necessary or
advisable to grant to the Holder, for the benefit of the Secured Parties, a
perfected first priority security interest in such Property, including, without
limitation, the filing of Mortgages and UCC financing statements in such
jurisdictions as may be required by the Security Agreement or by law or as may
be reasonably requested by such Holder.
     (9) CHANGE THE TERMS OF THIS DEBENTURE; WAIVER. The affirmative vote at a
meeting duly called for such purpose or the written consent without a meeting of
the Required Holders shall be required for any change or amendment to this
Debenture or waiver of compliance by the Company or Parent with any term of this
Debenture or the Other Debentures.
     (10) TRANSFER. This Debenture may be offered, sold, assigned or transferred
by the Holder without the consent of the Company, subject only to the provisions
of Sections 2(f) and 2(g) of the Securities Purchase Agreement.
     (11) REISSUANCE OF THIS DEBENTURE.
          (a) Transfer. If this Debenture is to be transferred, the Holder shall
surrender this Debenture to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Debenture (in accordance
with Section 12(d)), registered as the Holder may request, representing the
outstanding Principal being transferred by the Holder and, if less then the
entire outstanding Principal is being transferred, a new Debenture (in
accordance with Section 12(d)) to the Holder representing the outstanding
Principal not being transferred.
          (b) Lost, Stolen or Mutilated Debenture. Upon receipt by the Company
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Debenture, and, in the case of mutilation,
upon surrender and cancellation of

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this Debenture, the Company shall execute and deliver to the Holder a new
Debenture (in accordance with Section 12(d)) representing the outstanding
Principal.
          (c) Debenture Exchangeable for Different Denominations. This Debenture
is exchangeable, upon the surrender hereof by the Holder at the principal office
of the Company, for a new Debenture or Debentures (in accordance with Section
12(d) and in principal amounts of at least $100,000) representing in the
aggregate the outstanding Principal of this Debenture, and each such new
Debenture will represent such portion of such outstanding Principal as is
designated by the Holder at the time of such surrender.
          (d) Issuance of New Debentures. Whenever the Company is required to
issue a new Debenture pursuant to the terms of this Debenture, such new
Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent,
as indicated on the face of such new Debenture, the Principal remaining
outstanding (or in the case of a new Debenture being issued pursuant to Section
12(a) or Section 12(c), the Principal designated by the Holder which, when added
to the principal represented by the other new Debentures issued in connection
with such issuance, does not exceed the Principal remaining outstanding under
this Debenture immediately prior to such issuance of new Debentures),
(iii) shall have an issuance date, as indicated on the face of such new
Debenture, which is the same as the Issuance Date of this Debenture, (iv) shall
have the same rights and conditions as this Debenture, and (v) shall represent
accrued Interest and Late Charges on the Principal and Interest of this
Debenture, from the Issuance Date.
     (12) REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Debenture shall be cumulative
and in addition to all other remedies available under this Debenture and any of
the other Transaction Documents at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall
limit the Holder’s right to pursue actual and consequential damages for any
failure by the Company to comply with the terms of this Debenture. Amounts set
forth or provided for herein with respect to payments and the like (and the
computation thereof) shall be the amounts to be received by the Holder and shall
not, except as expressly provided herein, be subject to any other obligation of
the Company (or the performance thereof).
     (13) PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this
Debenture is placed in the hands of an attorney for collection or enforcement or
is collected or enforced through any legal proceeding or the Holder otherwise
takes action to collect amounts due under this Debenture or to enforce the
provisions of this Debenture or (b) there occurs any bankruptcy, reorganization,
receivership of the Company or other proceedings affecting Company creditors’
rights and involving a claim under this Debenture, then the Company shall pay
the costs incurred by the Holder for such collection, enforcement or action or
in connection with such bankruptcy, reorganization, receivership or other
proceeding, including, but not limited to, attorneys’ fees and disbursements.
     (14) CONSTRUCTION; HEADINGS. This Debenture shall be deemed to be jointly
drafted by the Company and all the Purchasers and shall not be construed against
any Person as the drafter hereof. The headings of this Debenture are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Debenture.

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     (15) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of
the Holder in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
     (16) DISPUTE RESOLUTION. In the case of a dispute as to the determination
of the Redemption Price, the Company shall submit the disputed determinations or
arithmetic calculations via facsimile within one (1) Business Day of receipt, or
deemed receipt, of the Redemption Notice or other event giving rise to such
dispute, as the case may be, to the Holder. If the Holder and the Company are
unable to agree upon such determination or calculation within one (1) Business
Day of such disputed determination or arithmetic calculation being submitted to
the Holder, then the Company shall, within one (1) Business Day, submit via
facsimile the disputed arithmetic calculation of the Redemption Price to the
Company’s independent, outside accountant. The Company, at the Company’s
expense, shall cause the accountant to perform the determinations or
calculations and notify the Company and the Holder of the results no later than
five (5) Business Days from the time it receives the disputed determinations or
calculations. Such accountant’s determination or calculation, as the case may
be, shall be binding upon all parties absent demonstrable error.
     (17) NOTICES; PAYMENTS.
          (a) Notices. Whenever notice is required to be given under this
Debenture, unless otherwise provided herein, such notice shall be given in
accordance with Section 10(f) of the Securities Purchase Agreement. The Company
shall provide the Holder with prompt written notice of all actions taken
pursuant to this Debenture, including in reasonable detail a description of such
action and the reason therefor.
          (b) Payments. Whenever any payment of cash is to be made by the
Company to any Person pursuant to this Debenture, such payment shall be made in
lawful money of the United States of America by a check drawn on the account of
the Company and sent via overnight courier service to such Person at such
address as previously provided to the Company in writing (which address, in the
case of each of the Purchasers, shall initially be as set forth on the Schedule
of Buyers attached to the Securities Purchase Agreement); provided, that the
Holder may elect to receive a payment of cash via wire transfer of immediately
available funds by providing the Company with prior written notice setting out
such request and the Holder’s wire transfer instructions. Whenever any amount
expressed to be due by the terms of this Debenture is due on any day which is
not a Business Day, the same shall instead be due on the next succeeding day
which is a Business Day and, in the case of any Interest Date which is not the
date on which this Debenture is paid in full, the extension of the due date
thereof shall not be taken into account for purposes of determining the amount
of Interest due on such date. Any amount of Principal or other amounts due under
the Transaction Documents, other than Interest, which is not paid when due shall
result in a late charge being incurred and payable by the Company in an amount
equal to interest on such amount at the rate of fifteen percent (15.00%) per
annum from the date such amount was due until the same is paid in full (“Late
Charge”). Late Charges shall be added to Principal to the extent not paid when
they are incurred.

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     (18) CANCELLATION. After all Principal, accrued Interest and other amounts
at any time owed on this Debenture have been paid in full in cash, this
Debenture shall automatically be deemed canceled, shall be surrendered to the
Company for cancellation and shall not be reissued.
     (19) WAIVER OF NOTICE. To the extent permitted by law, the Company hereby
waives demand, notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or enforcement of this
Debenture and the Securities Purchase Agreement.
     (20) GOVERNING LAW. This Debenture shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Debenture and all disputes arising
hereunder shall be governed by, the laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New York.
     (21) CERTAIN DEFINITIONS. For purposes of this Debenture, the following
terms shall have the following meanings:
          (a) “Asset Sale” means (i) the sale, lease, conveyance or other
disposition of any assets or rights with a book value in excess of $50,000 other
than in the ordinary course of business consistent with past practice, and
(ii) the sale of Equity Interests in any of the Company’s Subsidiaries.
          (b) “Business Day” means any day other than Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized or required
by law to remain closed.
          (c) “Capital Lease Obligation” means, at the time any determination is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet prepared in
accordance with GAAP.
          (d) “Capital Stock” means: (1) in the case of a corporation, corporate
stock; (2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (3) in the case of a partnership or limited liability company,
partnership interests (whether general or limited) or membership interests; and
(4) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person, but excluding from all of the foregoing any debt securities
convertible into Capital Stock, whether or not such debt securities include any
right of participation with Capital Stock.
          (e) “Change of Control” means any Fundamental Transaction other than
(i) any reorganization, recapitalization or reclassification of the shares of
Capital Stock in which holders of the Parent’s voting power immediately prior to
such reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, the voting power of

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the surviving entity or entities necessary to elect a majority of the members of
the board of directors (or their equivalent if other than a corporation) of such
entity or entities, or (ii) pursuant to a migratory merger effected solely for
the purpose of changing the jurisdiction of incorporation of the Company or the
Parent.
          (f)“Common Stock” shall mean the common stock of the Parent, par value
$0.01 per share.
          (g)“Eligible Market” means the Principal Market, The New York Stock
Exchange, Inc., the American Stock Exchange, The Nasdaq Global Market or The
Nasdaq Capital Market.
          (h)“Equity Interests” means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
          (i)“Fundamental Transaction” means that the Parent shall, directly or
indirectly, in one or more related transactions, (i) consolidate or merge with
or into (whether or not the Parent is the surviving corporation) another Person,
or (ii) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company to another Person,
or (iii) allow another Person to make a purchase, tender or exchange offer that
is accepted by the holders of more than the 50% of the outstanding shares of
Capital Stock (not including any shares of Capital Stock held by the Person or
Persons making or party to, or associated or affiliated with the Persons making
or party to, such purchase, tender or exchange offer), or (iv) consummate a
stock purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person whereby such other Person acquires more than
the 50% of the outstanding shares of Capital Stock (not including any shares of
Capital Stock held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to, such stock
purchase agreement or other business combination), or (v) reorganize,
recapitalize or reclassify its Capital Stock or (vi) own 100% of the Capital
Stock of the Company.
          (j)“GAAP” means United States generally accepted accounting
principles, consistently applied.
          (k)“Governmental Approval” is any consent, authorization, approval,
order, license, franchise, permit, certificate, accreditation, registration,
filing or notice, of, issued by, from or to, or other act by or in respect of,
any Governmental Authority with respect to the Company, Parent or a Subsidiary.
          (l) “Governmental Authority” means any nation or government, any state
or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization having jurisdiction over the Company, Parent or a Subsidiary
(including, without limitation, the Federal Communications Commission and any

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State public utility commission or other State agency or department with primary
regulatory jurisdiction over common carrier telecommunications and pay telephone
services).
          (m) “Hedging Obligations” means, with respect to any specified Person,
the obligations of such Person under:
               (i) interest rate swap agreements (whether from fixed to floating
or from floating to fixed), interest rate cap agreements and interest rate
collar agreements;
               (ii) other agreements or arrangements designed to manage interest
rates or interest rate risk; and
               (iii) other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange rates or commodity prices.
          (n) “Indebtedness” means any indebtedness (excluding accrued expenses
and trade payables), whether or not contingent:
               (i) in respect of borrowed money;
               (ii) evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof);
               (iii) in respect of banker’s acceptances;
               (iv) representing Capital Lease Obligations;
               (v) representing the balance deferred and unpaid of the purchase
price of any property or services due more than six months after such property
is acquired or such services are completed; or
               (vi) representing any Hedging Obligations,
          (o) if and to the extent any of the preceding items (other than
letters of credit and Hedging Obligations) would appear as a liability upon a
balance sheet of the Company prepared in accordance with GAAP. In addition, the
term “Indebtedness” includes all Indebtedness of others secured by a Lien on any
asset of the Company or its Subsidiaries (whether or not such Indebtedness is
assumed by the Company or such Subsidiary) and, to the extent not otherwise
included, the guarantee by the Company or any of its Subsidiaries of any
Indebtedness of any other Person.
          (p) “Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more
than one such Person or Parent Entity, the Person or Parent Entity with the
largest public market capitalization as of the date of consummation of the
Fundamental Transaction.

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          (q) “Payment Quarter” means the period beginning on and including
July 10, 2007, and ending on and including the Maturity Date.
          (r) “Permitted Distribution” means the conversion or exchange of any
convertible securities (including preferred stock) issued prior to the Issuance
Date into or for other securities pursuant to the terms of such convertible
securities or preferred stock and cash payments in lieu of fractional shares in
connection with such conversion or exchange.
          (s) “Permitted Indebtedness” means (a) purchase money debt, Capital
Lease Obligations or other Indebtedness incurred in connection with the
acquisition of an interest in property, equipment, entities or other assets,
provided that such purchase money debt, Capital Lease Obligations or other
Indebtedness is recourse only to the interests in property, equipment, entities
or other assets so acquired, (b) Indebtedness of up to $2,000,000 for working
capital purposes, provided the interest rate on such Indebtedness is equal to or
less than 10.0% per annum, (c) Indebtedness described in Schedule 3(s) of the
Securities Purchase Agreement, (d) indebtedness incurred by the Company or
Parent, which is subordinated to all indebtedness to Holder under this Debenture
pursuant to a subordination, intercreditor, or other similar agreement in form
and substance satisfactory to Holder entered into between Holder and the other
creditor, (e) unsecured Indebtedness to trade creditors and with respect to
surety bonds and similar obligations incurred in the ordinary course of
business, (f) Indebtedness incurred as a result of endorsing negotiable
instruments received in the ordinary course of business, (g) guarantees with
respect to Permitted Indebtedness, (h) extensions, refinancings, modifications,
amendments and restatements of indebtedness described in (c) of this definition,
provided that the principal amount thereof is not increased and the terms
thereof are not modified to impose more burdensome terms upon the Company or
Parent, as the case may be, and (i) Indebtedness of the Company to any
Guarantor, or of any Guarantor to any other Guarantor, which is memorialized in
writing in the form of a note approved by the Required Holders, and in each case
pledged to the Holder and holders of the other Senior Debentures issued pursuant
to the Securities Purchase Agreement.
          (t) “Permitted Liens” means (i) any Lien for taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP; (ii) any
statutory Lien arising in the ordinary course of business by operation of law
with respect to a liability that is not yet due or delinquent; (iii) any Lien
created by operation of law, such as materialmen’s liens, mechanics’ liens and
other similar liens, arising in the ordinary course of business with respect to
a liability that is not yet due or delinquent or that are being contested in
good faith by appropriate proceedings; (iv) Liens securing the Company’s
obligations under the Debenture; (v) Liens securing purchase money debt, Capital
Lease Obligations or other Indebtedness incurred pursuant to clause (a) of the
definition of Permitted Indebtedness, provided, that such Liens do not extend
and otherwise are not recourse to any assets of the Company or its Subsidiaries
other than the interests in property, equipment, entities or other assets
acquired with such purchase money debt, Capital Lease Obligations or other
Indebtedness; (vi) leases or subleases of property granted in the ordinary
course of business, and leases, subleases, non-exclusive licenses or sublicenses
of property granted in the ordinary course of business of the Company, Parent or
any Subsidiary; (vii) non-exclusive license of intellectual property granted to
third parties in the ordinary course of business of the Company, Parent or any
Subsidiary; (viii) Liens securing

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judgments for the payment of money not constituting an Event of Default
hereunder; and (ix) Liens in favor of other financial institutions arising in
connection with Borrowers’ deposit and/or securities accounts held at such
institutions, provided that Holder has a priority perfected security interest in
the amounts held in such deposit and/or securities accounts.
          (u) “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.
          (v) “Post-Closing Letter Agreement” shall have the meaning set forth
in the Securities Purchase Agreement.
          (w) “Principal Market” means the NASD OTC Bulletin Board.
          (x) “Property” means any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, capital stock.
          (y) “Registrable Securities” shall have the meaning set forth in the
Registration Rights Agreement.
          (z) “Registration Rights Agreement” means that certain registration
rights agreement dated as of February 2, 2007, by and among the Parent, the
Existing Investors (as defined therein), initial holders of the Debentures, and
any subsequent registration rights agreement between the Parent, the holder of
this Debenture and the holders of the Other Debentures, relating to, among other
things, the registration of the resale of the shares of Common Stock underlying
the warrants issued pursuant to the Securities Purchase Agreement.
          (aa) “Registration Statement” shall have the meaning set forth in the
Registration Rights Agreement.
          (bb) “Required Holders” means the holders of Debentures representing
at least a majority of the aggregate principal amount of the Debentures then
outstanding.
          (cc) “SEC” means the United States Securities and Exchange Commission.
          (dd) “SEC Documents” shall have the meaning set forth in the
Securities Purchase Agreement.
          (ee) “Securities Purchase Agreement” means that certain securities
purchase agreement dated as of the Issuance Date by and among the Parent, the
Company and the initial holders of the Debentures pursuant to which the Company
issued the Debenture.
          (ff) “Security Agreement” means the Pledge and Security Agreement
dated as of the Issuance Date among the Parent, its Subsidiaries, the holder of
this Debenture and the holders of the Other Debentures, as may be amended or
modified from time to time.

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          (gg) “Security Documents” means the Security Agreement, if any, and
all other instruments, documents and agreements delivered by the Company or any
of its Subsidiaries in order to grant to any holder of a Debenture or Other
Debenture, a Lien on any real, personal or mixed property of the Company or one
of its Subsidiaries as security for the obligations under the Debentures and
Other Debentures.
          (hh) “Successor Entity” means the Person, which may be the Company,
formed by, resulting from or surviving any Fundamental Transaction or the Person
with which such Fundamental Transaction shall have been made, provided, that if
such Person is not a publicly traded entity whose common stock or equivalent
equity security is quoted or listed for trading on an Eligible Market, Successor
Entity shall mean such Person’s Parent Entity.
          (ii) “Trading Day” means any day on which the Common Stock is quoted
on the Principal Market, or, if the Common Stock is not quoted on the Principal
Market, then on the principal securities exchange or securities market on which
the Common Stock is then traded; provided, that “Trading Day” shall not include
any day on which the Common Stock is scheduled to trade on such exchange or
market for less than 4.5 hours or any day that the Common Stock is suspended
from trading during the final hour of trading on such exchange or market (or if
such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00 p.m.,
New York time).
     (22) DISCLOSURE. Upon receipt or delivery by the Company of any notice in
accordance with the terms of this Debenture, unless the Company has in good
faith determined that the matters relating to such notice do not constitute
material, nonpublic information relating to the Company or its Subsidiaries, the
Company shall within one (1) Business Day after any such receipt or delivery
publicly disclose such material, nonpublic information on a Current Report on
Form 8-K or otherwise. In the event that the Company believes that a notice
contains material, nonpublic information relating to the Company or its
Subsidiaries, the Company so shall indicate to such Holder contemporaneously
with delivery of such notice, and in the absence of any such indication, the
Holder shall be allowed to presume that all matters relating to such notice do
not constitute material, nonpublic information relating to the Company or its
Subsidiaries.
[Signature Page Follows]

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     IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed as of the Issuance Date set out above.

            StarVox Communications, Inc.,
a California corporation
      By:   /s/ Thomas Rowley         Name:   Thomas Rowley        Title:  
Chief Executive Officer   

 

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     By signing below, Parent agrees to be bound by and subject to Section 6 and
Section 8 of this Debenture.

            U.S. Wireless Data, Inc.,
a Delaware corporation
      By:   /s/ Thomas Rowley         Name:   Thomas Rowley        Title:  
Chief Executive Officer