Document:

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Exhibit 10.9

FORM OF

INDEMNIFICATION AGREEMENT

                    THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made as
of _________, 2007 by and
among Encore Energy Partners GP LLC, a Delaware limited liability company (the “Company”), Encore
Energy Partners LP, a Delaware limited partnership (the “Partnership”), and
____________ (“Indemnitee”).

PRELIMINARY STATEMENT

                    WHEREAS, qualified persons are reluctant to serve organizations as directors or officers or in
other capacities unless they are provided with adequate protection against risks of claims and
actions against them arising out of their service to and activities on behalf of such
organizations;

                    WHEREAS, the parties hereto recognize that the legal risks and potential liabilities, and the
threat thereof, associated with lawsuits filed against persons serving the Company, the Partnership
and/or their respective subsidiaries, and the resultant substantial time, expense and anxiety spent
and endured in defending lawsuits bears no reasonable relationship to the compensation received by
such persons, and thus poses a significant deterrent and increased reluctance on the part of
experienced and capable individuals to serve the Company, the Partnership and/or their respective
subsidiaries;

                    WHEREAS, the uncertainties related to obtaining adequate insurance and indemnification have
increased the difficulty of attracting and retaining such persons;

                    WHEREAS, it is reasonable, prudent and necessary for the Company and the Partnership to
contractually agree to indemnify such persons to the fullest extent permitted by law, so that such
persons will serve or continue to serve the Company, the Partnership and/or their respective
subsidiaries free from undue concern that they will not be adequately indemnified; and

                    WHEREAS, the Indemnitee is willing to serve, continue to serve and to take on additional
service for an on behalf of the Company and the Partnership on the condition that the Indemnitee is
indemnified according to the terms of this Agreement;

                    NOW, THEREFORE, in consideration of the premises and the covenants herein, the parties to this
Agreement agree as follows:

                    Section 1. Services by Indemnitee. Indemnitee will serve, or continue to serve, as a
Functionary of the Company or the Partnership and, as Indemnitee, the Company and the Partnership
may agree, as a Functionary of one or more Related Enterprises. Indemnitee may at any time and for
any reason resign from any such service, subject to any other contractual obligation or any
obligation applicable law imposes. This Agreement is not and is not to be construed as an
employment contract by the Company or any other Related Enterprise with Indemnitee or as otherwise
affecting Indemnitee’s status, if any, as an employee of the Company, the Partnership or any
Related Enterprise.

 

 

                    Section 2. Indemnification. (a) If and whenever:

     (1) Indemnitee was or is, or is threatened to be made, a party to any Proceeding by
reason of:

     (A) the fact that Indemnitee serves or served as (1) a Functionary of the
Company or the Partnership or, at the request of the Company or the Partnership, (2)
a Functionary of a Related Enterprise; or

     (B) the actual or alleged service or conduct of Indemnitee in Indemnitee’s
capacity as that Functionary, including any act actually or allegedly done or not
done by Indemnitee;

     and

     (2) Indemnitee (A) engaged in the service or conduct at issue in that Proceeding in
good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company or the Partnership and, in the event that Proceeding was or is
a criminal action or proceeding involving Indemnitee’s conduct, (B) had no reasonable cause
to believe that that conduct was unlawful,

the Company and the Partnership will, or will cause another Partnership Entity to, indemnify
Indemnitee against, and hold Indemnitee harmless from and in respect of:

     (1) in the case of each Claim in that Proceeding, other than a Company Claim, all
liabilities and losses, including the amounts of all judgments, penalties and fines,
including excise taxes, and amounts paid in settlement, Indemnitee has suffered or will
suffer, and all Expenses Indemnitee reasonably has incurred or will incur, as a result of or
in connection with that Claim; and

     (2) in the case of each Company Claim in that Proceeding, all Expenses Indemnitee
reasonably has incurred or will incur as a result of or in connection with that Company
Claim; provided, however, that the Company and the Partnership will not have any obligation
under this clause (2) to, or to cause another Partnership Entity to, indemnify Indemnitee
against, or hold Indemnitee harmless from or in respect of, any Company Claim as to which
Indemnitee was or is adjudged to be liable to the Company or any Related Enterprise unless,
and only to the extent that, the Court of Chancery or the court in which that Company Claim
was or is brought determines on application that, despite the adjudication of liability, but
in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled
to indemnity for such of those Expenses as the Court of Chancery or that other court shall
deem proper.

     (b) If and whenever Indemnitee was or is, or is threatened to be made, a party to any
Proceeding of any type to which Section 2(a) refers and has been successful, on the merits or
otherwise, in defense of that Proceeding, or in defense of any Claim therein, the Company and the
Partnership will, or will cause another Partnership Entity to, indemnify Indemnitee against, and
hold Indemnitee harmless from and in respect of, all Expenses Indemnitee reasonably has

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incurred in connection therewith. The rights of Indemnitee under this Section 2(b) are in
addition to, and independent of, the rights of Indemnitee under Sections 2(a) or 2(c).

     (c) If and whenever Indemnitee was, or reasonably could have been expected to have been, or
is, or reasonably could be expected to be, by reason of the knowledge of facts Indemnitee actually
or allegedly has obtained in the course of his service as (1) a Functionary of the Company or the
Partnership or, at the request of the Company or the Partnership, (2) a Functionary of a Related
Enterprise, a witness in or a deponent in connection with any Proceeding to which Indemnitee was or
is not a party, the Company and the Partnership will, or will cause another Partnership Entity to,
indemnify Indemnitee against, and hold Indemnitee harmless from and in respect of, all Expenses
Indemnitee reasonably has incurred or will incur in connection therewith. The rights of Indemnitee
under this Section 2(c) are in addition to, and independent of, the rights of Indemnitee under
Sections 2(a) or 2(b).

                    Section 3. Advancement of Expenses. (a) If and whenever Indemnitee is, or is threatened to be
made, a party to any Proceeding that may give rise to a right of Indemnitee to indemnification
under Section 2(a), the Company and the Partnership will, or will cause another Partnership Entity
to, advance all Expenses reasonably incurred by or on behalf of Indemnitee in connection with that
Proceeding within five (5) days after the Company or the Partnership receives a statement or
statements from Indemnitee requesting the advance or advances from time to time, whether prior to
or after final disposition of that Proceeding. Each such statement must reasonably evidence the
Expenses incurred by or on behalf of Indemnitee and include or be preceded or accompanied by an
undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it ultimately is
determined that Indemnitee is not entitled to be indemnified by the Company and the Partnership
under Section 2(a) against those Expenses. The Company and the Partnership will accept any such
undertaking without reference to the financial ability of Indemnitee to make repayment. If the
Company, the Partnership or another Partnership Entity advances Expenses in connection with any
Claim as to which Indemnitee has requested or may request indemnification under Section 2(a) and a
determination is made under Section 5(c) that Indemnitee is not entitled to that indemnification,
Indemnitee will not be required to reimburse the Company, the Partnership or that other Partnership
Entity for those advances until the 180th day following the date of that determination; provided,
however, that if Indemnitee timely commences and thereafter prosecutes in good faith a judicial
proceeding or arbitration under Section 7(a) or otherwise to obtain that indemnification,
Indemnitee will not be required to reimburse the Company, the Partnership or that other Partnership
Entity for those Expenses until a determination in that proceeding or arbitration that Indemnitee
is not entitled to that indemnification has become final and nonappealable.

     (b) The Company, the Partnership or another Partnership Entity may advance Expenses under
Section 3(a) to Indemnitee or, at the Company’s and the Partnership’s option, directly to the
Person to which those Expenses are owed, and Indemnitee hereby consents to any such direct payment,
to Indemnitee’s legal counsel or any other Person.

     (c) For the avoidance of doubt, the parties agree that the provisions of this Section 3 shall
be applicable during the pendancy of any determination of the right of the Indemnitee to
indemnification under Section 2(a), including the pendancy of any court or arbitration proceeding
contemplated by Section 7.

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                    Section 4. Notification and Defense of Claims. (a) If Indemnitee receives notice, otherwise
than from the Company or the Partnership, that Indemnitee is or will be made, or is threatened to
be made, a party to any Proceeding in respect of which Indemnitee intends to seek indemnification
hereunder, Indemnitee must promptly notify the Company and the Partnership in writing of the nature
and, to Indemnitee’s knowledge, status of that Proceeding. If this Section 4(a) requires
Indemnitee to give such a notice, but Indemnitee fails to do so, that failure will not relieve the
Company or the Partnership from, or otherwise affect, the obligations the Company or the
Partnership may have to indemnify Indemnitee under this Agreement, unless the Company and the
Partnership can establish that the failure has resulted in actual prejudice to the Company and the
Partnership.

                    (b) Except as this Section 4(b) otherwise provides below, in the case of any Proceeding in
respect of which Indemnitee seeks indemnification hereunder:

     (1) the Company, the Partnership any Related Enterprise that also may be obligated to
indemnify Indemnitee in respect of that Proceeding will be entitled to participate at its
own expense in that Proceeding;

     (2) the Company, the Partnership or that Related Enterprise, or either of them, will be
entitled to assume the defense of all Claims, other than (i) Company Claims, if any, and
(ii) other Claims, if any, as to which Indemnitee shall reasonably reach the conclusion
described in clause (C) of the next sentence, in that Proceeding against Indemnitee by
prompt written notice of that election to Indemnitee; and

     (3) if clause (2) above entitles the Company or that Related Enterprise to assume the
defense of any of those Claims and it delivers to Indemnitee notice of that assumption under
clause (2), the Company and the Partnership will not be liable to Indemnitee hereunder for
any fees or expenses of legal counsel for Indemnitee which Indemnitee incurs after
Indemnitee receives that notice.

Indemnitee will have the right to employ Indemnitee’s own legal counsel in that Proceeding, but, as
clause (3) of the preceding sentence provides, will bear the fees and expenses of that counsel
unless:

     (A) the Company or the Partnership has authorized Indemnitee in writing to retain that
counsel;

     (B) the Company or the Partnership shall not within a reasonable period of time
actually have employed counsel to assume the defense of those Claims; or

     (C) Indemnitee shall have (A) reasonably concluded that a conflict of interest may
exist between Indemnitee, on the one hand, and the Company or the Partnership, on the other
hand, as to the defense of one or more of those Claims and (B) communicated that conclusion
to the Company and the Partnership in writing.

                    (c) The Company and the Partnership will not be obligated hereunder to, or to cause another
Partnership Entity to, indemnify Indemnitee against or hold Indemnitee harmless from and in respect
of any amounts paid, or agreed to be paid, by Indemnitee in settlement of any

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Claim against Indemnitee which Indemnitee effects without the Company’s or the Partnership’s
prior written consent. The Company and the Partnership will not settle any Claim against
Indemnitee in any manner that would impose any penalty or limitation on Indemnitee without
Indemnitee’s prior written consent. Neither the Company, the Partnership nor Indemnitee will
unreasonably delay or withhold consent to any such settlement the other party proposes to effect.

                    Section 5. Procedure for Determination of Entitlement to Indemnification. (a) To obtain
indemnification under this Agreement, Indemnitee must submit to the Company and the Partnership a
written request therefor which includes, or is accompanied by, such documentation and information
as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to
what extent Indemnitee is entitled to that indemnification. Indemnitee may request indemnification
hereunder at any time and from time to time as Indemnitee deems appropriate in Indemnitee’s sole
discretion. In the case of any request for indemnification under Section 2(a) as to any Claim
which is pending or threatened at the time Indemnitee delivers that request to the Company and the
Partnership and would not be resolved with finality, whether by judgment, order, settlement or
otherwise, on payment of the indemnification requested, the Company and the Partnership may defer
the determination under Section 5(c) of Indemnitee’s entitlement to that indemnification to a date
that is no later than 45 days after the effective date of that final resolution if the Board
concludes in good faith that an earlier determination would be materially prejudicial to the
Company, the Partnership or a Related Enterprise.

                    (b) On written request by Indemnitee under Section 5(a) for indemnification under Section
2(a), the determination of Indemnitee’s entitlement to that indemnification will be made:

     (1) if Indemnitee will be a director or officer of the Company or the Partnership at
the time that determination is made, under Section 5(c) in each case; or

     (2) if Indemnitee will not be a director or officer of the Company or the Partnership
at the time that determination is made, under Section 5(c) in any case, if so requested in
writing by Indemnitee or so directed by the Board, or, in the absence of that request and
direction, as the Board shall duly authorize or direct.

                    (c) Each determination of Indemnitee’s entitlement to indemnification under Section 2(a) to
which this Section 5(c) applies will be made as follows:

     (1) by a majority vote of the Disinterested Directors, even though less than a quorum;
or

     (2) by a committee of Disinterested Directors designated by a majority vote of the
Disinterested Directors, even though less than a quorum; or

     (3) if (A) there are no Disinterested Directors or (B) a majority vote of the
Disinterested Directors so directs, by an Independent Counsel in a written opinion to the
Board, a copy of which the Company and the Partnership will deliver to Indemnitee;

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provided, however, that if Indemnitee has so requested in Indemnitee’s request for indemnification,
an Independent Counsel will make that determination in a written opinion to the Board, a copy of
which the Company and the Partnership will deliver to Indemnitee.

                    (d) If it is determined that Indemnitee is entitled to indemnification under Section 2(a), the
Company and the Partnership will, or will cause another Partnership Entity to, subject to the
provisions of Section 5(f):

     (1) within 10 days after that determination pay to Indemnitee all amounts (A)
theretofore incurred by or on behalf of Indemnitee in respect of which Indemnitee is
entitled to that indemnification by reason of that determination and (B) requested from the
Company or the Partnership in writing by Indemnitee; and

     (2) thereafter on written request by Indemnitee, pay to Indemnitee within 10 days after
that request such additional amounts theretofore incurred by or on behalf of Indemnitee in
respect of which Indemnitee is entitled to that indemnification by reason of that
determination.

Indemnitee will cooperate with the person, persons or entity making the determination under Section
5(c) with respect to Indemnitee’s entitlement to indemnification under Section 2(a), including
providing to such person, persons or entity, on reasonable advance request, any documentation or
information that is:

                    (1) not privileged or otherwise protected from disclosure;

                    (2) reasonably available to Indemnitee; and

                    (3) reasonably necessary to that determination.

                    (e) If an Independent Counsel is to make a determination under Section 5(c) of entitlement to
indemnification under Section 2(a), it will be selected by the Company and the Partnership with the
consent of the Indemnitee (which consent shall not be unreasonably withheld). The Company and the
Partnership will pay any and all reasonable fees and expenses the Independent Counsel incurs in
connection with acting under Section 5(c), and the Company and the Partnership will pay all
reasonable fees and expenses incident to the procedures this Section 5(e) sets forth, regardless of
the manner in which the Independent Counsel is selected or appointed. If Indemnitee becomes
entitled to, and does, initiate any judicial proceeding or arbitration under Section 7, the Company
and the Partnership will terminate its engagement of the person or firm acting as Independent
Counsel, whereupon that person or firm will be, subject to the applicable standards of professional
conduct then prevailing, relieved of any further responsibility in the capacity of Independent
Counsel.

                    (f) The amount of any indemnification against Expenses to which Indemnitee becomes entitled
under any provision hereof, including Section 2(a), will be determined subject to the provisions of
this Section 5(f). Indemnitee will have the burden of showing that Indemnitee actually has
incurred the Expenses for which Indemnitee requests indemnification. If the Company, the
Partnership or a Partnership Entity has made any advance in respect of any Expense incurred by
Indemnitee without objecting in writing to Indemnitee at the time of the

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advance to the reasonableness thereof, the incurrence of that Expense by Indemnitee will be
deemed for all purposes hereof to have been reasonable. In the case of any Expense as to which
such an objection has been made, or any Expense for which no advance has been made, the incurrence
of that Expense will be presumed to have been reasonable, and the Company and the Partnership will
have the burden of proof to overcome that presumption.

                    Subject to the provisions of the preceding paragraph, the advancement of Expenses to
Indemnitee under Section 3 will not, of itself, create a presumption that the Proceeding or Claim
therein to which those Expenses relate is a Proceeding or Claim of the type to which Section 2(a)
applies. If the Company or the Partnership, prior to or in connection with the making any advance
of Expenses under Section 3 to or for the benefit of Indemnitee, notifies Indemnitee in writing
that the Proceeding or any Claim therein is or reasonably could be expected to be in whole or in
any specified part not one to which Section 2(a) applies, Indemnitee will, to the extent those
Expenses are reasonably allocable among the claims, issues and matters involved in that Proceeding,
cause Indemnitee’s counsel and other service providers to effect that allocation.

                    Section 6. Presumptions and Effect of Certain Proceedings. (a) In making a determination
under Section 5(c) with respect to entitlement to indemnification under Section 2(a), the person,
persons or entity making that determination must presume that Indemnitee is entitled to that
indemnification if Indemnitee has submitted a request for indemnification in accordance with
Section 5(a), and the Company and the Partnership will have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of any determination
contrary to that presumption.

                    (b) The termination of any Proceeding or of any Claim therein, by judgment, order, settlement
or conviction, or on a plea of nolo contendere or its equivalent, will not, except as this
Agreement otherwise expressly provides, of itself adversely affect the right of Indemnitee to
indemnification hereunder or, in the case of any determination under Section 5(c) of Indemnitee’s
entitlement to indemnification under Section 2(a), create a presumption that Indemnitee did not act
in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company or the Partnership or, with respect to any criminal action or proceeding,
that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

                    (c) Any service of Indemnitee as a Functionary of the Company, the Partnership or any Related
Enterprise which imposes duties on, or involves services by, Indemnitee with respect to any Related
Enterprise that is an employee benefit or welfare plan or related trust, if any, or the
participants or beneficiaries of that plan or trust will be deemed for all purposes hereof as
service at the request of the Company and the Partnership. Any action Indemnitee takes or omits to
take in connection with any such plan or trust will, if taken or omitted in good faith by
Indemnitee and in a manner Indemnitee reasonably believed to be in the interest of the participants
in or beneficiaries of that plan or trust, be deemed to have been taken or omitted in a manner “not
opposed to the best interests of the Company and the Partnership” for all purposes hereof.

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                    Service by a person as an agent or representative of an Enterprise means service on behalf of
that Enterprise in its relations with persons and entities other than the Affiliates and
Functionaries of that Enterprise.

                    (d) For purposes of any determination hereunder as to whether Indemnitee has performed
services or engaged in conduct on behalf of any Enterprise in good faith, Indemnitee will be deemed
to have acted in good faith if Indemnitee acted in reliance on the records of the Enterprise or on
information, opinions, reports or statements, including financial statements and other financial
information, concerning the Enterprise or any other Person which were prepared or supplied to
Indemnitee by:

     (1) one or more of the officers or employees of the Enterprise;

     (2) appraisers, engineers, investment bankers, legal counsel or other Persons as to
matters Indemnitee reasonably believed were within the professional or expert competence of
those Persons; and

     (3) any committee of the board of directors or equivalent managing body of the
Enterprise of which Indemnitee is or was, at the relevant time, not a member;

provided, however, that if Indemnitee has actual knowledge as to any matter that makes any such
reliance unwarranted as to that matter, this Section 6(d) will not entitle Indemnitee to any
presumption that Indemnitee acted in good faith respecting that matter.

                    (e) For purposes of any determination hereunder as to whether Indemnitee is entitled to
indemnification under Section 2(a), neither the knowledge nor the conduct of any other Functionary
of the Company, the Partnership or any Related Enterprise, other than Indemnitee, shall be imputed
to Indemnitee, but Indemnitee will be irrebutably presumed to have read and understood the
Company’s and the Partnership’s code of business conduct for purposes of any determination under
the Charter Documents or this Agreement as to whether Indemnitee has performed services or engaged
in conduct on behalf of any Enterprise in good faith.

                    (f) Indemnitee will be deemed a party to a Proceeding for all purposes hereof if Indemnitee is
named as a defendant or respondent in a complaint or petition for relief in that Proceeding,
regardless of whether Indemnitee ever is served with process or makes an appearance in that
Proceeding.

                    (g) If Indemnitee serves or served as a Functionary of a Related Enterprise, that service will
be deemed to be “at the request of the Company and the Partnership” for all purposes hereof
notwithstanding that the request is not evidenced by a writing or shown to have been made orally.
In the event the Company or the Partnership were to extend the rights of indemnification and
advancement of Expenses hereunder to Indemnitee’s serving at the request of the Company or the
Partnership as a Functionary of any Enterprise other than the Company, the Partnership or a Related
Enterprise, Indemnitee must show that the request was made by the Board or at its authorization.

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                    Section 7. Remedies of Indemnitee in Certain Cases. (a) If Indemnitee makes a written
request in compliance with Section 5(a) for indemnification under Section 2(a) and either:

     (1) no determination as to the entitlement of Indemnitee to that indemnification is
made before the last to occur of (A) the close of business on the date, if any, the Company
or the Partnership has specified under Section 5(a) as the outside date for that
determination or (B) the elapse of the 45-day period beginning the day after the date the
Company or the Partnership receives that request; or

     (2) a determination is made under Section 5(c) that Indemnitee is not entitled to that
indemnification in whole or in any part in respect of any Claim to which that request
related,

Indemnitee will be entitled to an adjudication from the Court of Chancery of Indemnitee’s
entitlement to that indemnification. Alternatively, Indemnitee, at Indemnitee’s option, may seek
an award in arbitration to be conducted by a single arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. In the case of any determination under
Section 5(c) that is adverse to Indemnitee, Indemnitee must commence any such judicial proceeding
or arbitration within 180 days following the date on which Indemnitee first has the right to
commence that proceeding under this Section 7(a) or Indemnitee will be bound by that determination
for all purposes of this Agreement.

                    (b) If a determination has been made under Section 5 that Indemnitee is not entitled to
indemnification hereunder, any judicial proceeding or arbitration commenced under this Section 7
will be conducted in all respects as a de novo trial or arbitration on the merits, and Indemnitee
will not be prejudiced by reason of that adverse determination. In any judicial proceeding or
arbitration commenced under this Section 7, the Company and the Partnership will have the burden of
proving that Indemnitee is not entitled to indemnification hereunder, and the Company and the
Partnership may not, for any purpose, refer to or introduce into evidence any determination under
Section 5(c) which is adverse to Indemnitee.

                    (c) If a determination has been made under Section 5 that Indemnitee is entitled to
indemnification hereunder, the Company and the Partnership will be bound by that determination in
any judicial proceeding or arbitration Indemnitee thereafter commences under this Section 7 or
otherwise, absent:

     (1) a misstatement by Indemnitee of a material fact, or an omission by Indemnitee of a
material fact necessary to make Indemnitee’s statements not materially misleading, in
connection with Indemnitee’s request for indemnification; or

     (2) a prohibition of that indemnification under applicable law.

                    (d) If Indemnitee, under this Section 7 or otherwise, seeks a judicial adjudication of or an
award in arbitration to enforce Indemnitee’s rights under this Agreement, Indemnitee will be
entitled to recover from the Company and the Partnership, and will be indemnified by the Company
and the Partnership against, any and all Expenses reasonably incurred by or on behalf of Indemnitee
in that judicial adjudication or arbitration, but only if

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Indemnitee prevails therein. If it is determined in that judicial adjudication or arbitration
that Indemnitee is entitled to receive part of, but not all, the indemnification or advancement of
expenses sought, the expenses incurred by Indemnitee in connection with that judicial adjudication
or arbitration will be appropriately prorated between those in respect of which this Agreement
entitles Indemnitee to indemnification and those Indemnitee must bear.

                    (e) In any judicial proceeding or arbitration under this Section 7, the Company and the
Partnership:

     (1) will not, and will not permit any other Person acting on its behalf to, assert that
the procedures or presumptions this Agreement establishes are not valid, binding and
enforceable; and

     (2) will stipulate that it is bound by all the provisions hereof.

                    Section 8. Non-exclusivity; Survival of Rights; Insurance; Subrogation. (a) The rights to
indemnification and advancement of Expenses and the remedies this Agreement provides are not and
will not be deemed exclusive of any other rights or remedies to which Indemnitee may at any time be
entitled under applicable law, the Company’s or the Partnership’s Charter Documents, any agreement,
a vote of unitholders of the Company or the Partnership or Disinterested Directors, or otherwise,
but each such right or remedy hereunder will be cumulative with all such other rights and remedies.
No amendment, alteration or termination of this Agreement or any provision hereof will limit or
restrict any right of Indemnitee hereunder in respect of any action Indemnitee has taken or omitted
in Indemnitee’s capacity as a Functionary of the Company, the Partnership or any Related Enterprise
prior to that amendment, alteration or termination.

                    (b) If the Company or the Partnership maintains an insurance policy or policies providing
liability insurance for Functionaries of the Company, the Partnership or of any Related Enterprise
who serve or served in the same capacities as Indemnitee, Indemnitee will be covered by the policy
or policies in accordance with its or their terms to the maximum extent of the coverage available
for any such Functionary under the policy or policies. If the Company or the Partnership receives
written notice from any source of a pending Proceeding to which Indemnitee is a party and in
respect of which Indemnitee might be entitled to indemnification under Section 2(a) and the Company
or the Partnership then maintains any such policy of which Indemnitee is a beneficiary, the Company
and the Partnership will:

     (1) promptly give notice of that Proceeding to the relevant insurers in accordance with
the applicable policy procedures; and

     (2) thereafter take all action necessary to cause those insurers to pay, on behalf of
Indemnitee, all amounts payable in accordance with the applicable policy terms as a result
of that Proceeding;

provided, however that the Company and the Partnership need not comply with the provisions of this
sentence if its failure to do so would not actually be prejudicial to Indemnitee in any material
respect.

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                    (c) The Company and the Partnership will not be liable under this Agreement to make or cause
to be made any payment of amounts otherwise indemnifiable hereunder, or to make or cause to be made
any advance this Agreement otherwise requires it to make or cause to be made, to or for the account
of Indemnitee, if and to the extent that Indemnitee has otherwise actually received or had applied
for Indemnitee’s benefit that payment or advance or obtained the entire benefit therefrom under any
insurance policy, any other contract or agreement or otherwise.

                    (d) If the Company or the Partnership makes or causes to be made any payment hereunder, it
will be subrogated to the extent of that payment to all the rights of recovery of Indemnitee, who
will execute all papers required and take all action necessary to secure those rights, including
execution of such documents as are necessary to enable the Company and the Partnership to bring
suit to enforce those rights.

                    (e) The Company’s and the Partnership’s obligation to make or cause to be made any payment or
advance hereunder to or for the account of Indemnitee with respect to Indemnitee’s service at the
request of the Company or the Partnership as a Functionary of any Related Enterprise will be
reduced by any amount Indemnitee has actually received as indemnification or advancement of
expenses from that Related Enterprise.

                    Section 9. Duration of Agreement; Binding Effect. This Agreement will continue until and
terminate on the later of:

     (1) 10 years after the date that Indemnitee has ceased to serve as a Functionary of the
Company, the Partnership and each Related Enterprise that Indemnitee served at the request
of the Company or the Partnership; or

     (2) one year after the final, nonappealable termination of any Proceeding then pending
in respect of which Indemnitee is granted rights of indemnification or advancement of
Expenses hereunder and of any proceeding commenced by Indemnitee under Section 7 or
otherwise.

This Agreement will be binding on the Company, the Partnership and its successors and assigns and
will inure to the benefit of Indemnitee and his spouse, if Indemnitee resides in Texas or another
community property state, heirs, executors and administrators.

                    Section 10. Severability. If any provision or provisions hereof is or are invalid, illegal
or unenforceable for any reason whatsoever:

     (1) the validity, legality and enforceability of the remaining provisions hereof,
including each portion of any Section containing any such invalid, illegal or unenforceable
provision which is not itself invalid, illegal or unenforceable, will not in any way be
affected or impaired thereby;

     (2) such provision or provisions will be deemed reformed to the extent necessary to
conform to applicable law and to give the maximum effect to the intent of the parties
hereto; and

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     (3) to the fullest extent possible, the provisions hereof, including each portion of
any Section containing any such invalid, illegal or unenforceable provision which is not
itself invalid, illegal or unenforceable, will be construed so as to give effect to the
intent manifested thereby.

                    Section 11. Exceptions to Right of Indemnification or Advancement of Expenses. No provision
in this Agreement will obligate the Company or the Partnership to pay or cause to be paid any
indemnity to or for the account of Indemnitee, or to advance or cause to be advanced Expenses under
Section 3, in connection with or as a result of:

     (1) any Claim made against Indemnitee for an accounting of profits, under Section 16(b)
of the Exchange Act or similar provision of state statutory or common law, from the purchase
and sale, or sale and purchase, by Indemnitee of securities of the Company, the Partnership
or any Related Enterprise;

     (2) any Company Claim made against Indemnitee for:

     (A) any unauthorized conversion to personal use, embezzlement or
misappropriation of assets of the Company, the Partnership or any Related Enterprise
or any transaction from which Indemnitee derived an improper personal benefit;

     (B) any forgery or alteration of negotiable instruments of the Company, the
Partnership or any Related Enterprise;

     (C) any falsification of the records or financial statements of the Company,
the Partnership or any Related Enterprise for personal or other reasons; or

     (D) any breach of a contractual obligation to pay or repay or otherwise return
money to the Company, the Partnership or any Related Enterprise; or

     (3) except for any Claim initiated by Indemnitee, whether as a cause of action or as a
defense to a cause of action under Section 7 or otherwise, to enforce or establish, by
declaratory judgment or otherwise, Indemnitee’s rights or remedies hereunder, any Claim
initiated by Indemnitee without the prior authorization of the Board against the Company,
the Partnership or any Related Enterprise or any of their respective present or former
Functionaries.

                    Section 12. Counterparts. This Agreement may be executed in one or more counterparts, each
of which will for all purposes be deemed to be an original but all of which together will
constitute one and the same agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this Agreement.

                    Section 13. Headings. The headings of the Sections hereof are inserted for convenience only
and do not and will not be deemed to constitute part of this Agreement or to affect the
construction thereof.

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     Section 14. Definitions and Definitional Provisions. (a) For purposes of this Agreement:

     “Affiliate” has the meaning Exchange Act Rule 12b-2 specifies.

     “Board” means the Board of Directors of the Company.

     “Charter Documents” means, with respect to any Enterprise at any time, in each case as
amended, modified and supplemented at that time:

     (1) the articles or certificate of formation, incorporation or organization, or
the equivalent organizational documents, of that entity;

     (2) the bylaws or limited liability company agreement or regulations, limited
partnership agreement, or the equivalent governing documents, of that entity; and

     (3) each document setting forth the designation, amount and relative rights,
limitations and preferences of any class or series of that entity’s capital stock or
other equity interests.

     “Claim” means any claim for damages or a declaratory, equitable or other substantive
remedy, or any other issue or matter, in any Proceeding.

     “Company Claim” means any Claim brought by or in the right of the Company, the
Partnership or a Related Enterprise against Indemnitee.

     “Court of Chancery” means the Court of Chancery of the State of Delaware.

     “Disinterested Director” means a director of the Company who is not and was not a party
to the Proceeding, or any Claim therein, in respect of which indemnification is sought by
Indemnitee hereunder.

     “Enterprise” means any business trust, corporation, joint venture, limited liability
company, partnership or other entity or enterprise, including any operational division of
any entity or any operational group of entities or divisions of entities, or any employee
benefit or welfare plan or related trust.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Expenses” include all attorneys’ fees, retainers, court costs, transcript costs, fees
of experts, witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, all other disbursements or expenses of
the types customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding. Should any payments by the Company, the Partnership or a
Related Enterprise to or for the account of Indemnitee under this Agreement be determined to
be subject to any federal, state or local income or excise tax, “Expenses”

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also will include such amounts as are necessary to place Indemnitee in the same
after-tax position, after giving effect to all applicable taxes, Indemnitee would have been
in had no such tax been determined to apply to those payments.

     “Functionary” of any Enterprise means any natural person who is a director, officer,
manager, administrator, employee, agent, representative or other functionary of that
Enterprise, including, in the case of any employee benefit or welfare plan, any member of
any committee administering that plan or any individual to whom the duties of that committee
are delegated.

     “Independent Counsel” means in the case of any determination under Section 5 a law
firm, or a member of a law firm that or who is experienced in matters of corporation law and
neither presently is, nor in the past five years has been, retained to represent:

     (1) the Company, the Partnership or any of their Affiliates or Indemnitee in
any matter material to any such Person; or

     (2) any other party to the Proceeding giving rise to a claim for
indemnification hereunder.

     Notwithstanding the foregoing, the term “Independent Counsel” does not include at any time
any Person who, under the applicable standards of professional conduct then prevailing,
would have a conflict of interest in representing either the Company or a Related Enterprise
or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

     “Partnership Entity” means any Related Enterprise of the Company or the Partnership,
other than an employee benefit or welfare plan or its related trust, if any.

     “Person” means any natural person, sole proprietorship, corporation, partnership,
limited liability company, business trust, unincorporated organization or association,
mutual company, joint stock company, joint venture or any other entity of any kind having a
separate legal status or any estate, trust, union or employee organization or governmental
authority.

     “Proceeding” includes any threatened, pending or completed action, suit, arbitration,
alternate dispute resolution procedure, investigation, inquiry or other threatened, actual
or completed proceeding, whether of a civil, criminal, administrative, investigative or
private nature and irrespective of the initiator thereof, and any appeal in any such
proceeding.

     “Related Enterprise” means at any time any Enterprise:

     (1) 50% or more of the outstanding capital stock or other ownership interests
of which, or the assets of which, the Company or the Partnership owns or controls,
or previously owned or controlled, directly or indirectly, at that time;

-14-

 

     (2) 50% or more of the outstanding voting power of the outstanding capital
stock or other ownership interests of which the Company or the Partnership owns or
controls, or previously owned or controlled, directly or indirectly, at that time;

     (3) that is, or previously was, an Affiliate of the Company or the Partnership
which the Company or the Partnership controls, or previously controlled, by
ownership, contract or otherwise and whether alone or together with another Person,
directly or indirectly, at that time; or

     (4) if that Enterprise is an employee benefit or welfare plan or related trust,
whose participants or beneficiaries are present or former employees of the Company,
the Partnership or any other Related Enterprise.

                (b) This Agreement uses the words “herein,” “hereof” and “hereunder” and words of similar
import to refer to this Agreement as a whole and not to any provision of this Agreement, and the
words “Section” and “Preliminary Statement” refer to Sections of and the Preliminary Statement in
this Agreement, unless it otherwise specifies.

                (c) Whenever the context so requires, the singular number includes the plural and vice versa,
and a reference to one gender includes the other gender and the neuter.

                (d) The word “including,” and, with correlative meaning, the word “include,” means including,
without limiting the generality of any description preceding that word, and the words “shall” and
“will” are used interchangeably and have the same meaning.

                (e) The language this Agreement uses will be deemed to be the language the parties hereto have
chosen to express their mutual intent, and no rule of strict construction will be applied against
either party hereto.

                Section 15. Modification and Waiver. No supplement to or modification or amendment of this
Agreement will be binding unless executed in writing by both parties hereto. No waiver of any
provision hereof will be deemed or will constitute a waiver of any other provision hereof, whether
or not similar, nor will any such waiver constitute a continuing waiver.

                Section 16. Reliance. The Company and the Partnership confirm and agree with Indemnitee that
it has entered into this Agreement and assumed the obligations this Agreement imposes on it in
order to induce Indemnitee to serve, or continue to serve, as a Functionary of the Company or a
Related Enterprise. The Company and the Partnership acknowledge that Indemnitee is relying on this
Agreement in so serving.

                Section 17. Notices. All notices, requests, demands and other communications hereunder must
be in writing or by electronic transmission and will be deemed delivered and received:

     (1) if personally delivered or if delivered by telex, telegram, facsimile,
electronic transmission or courier service, when actually received by the party to
whom the notice or communication is sent; or

-15-

 

     (2) if delivered by mail, whether actually received or not, at the close of
business on the third business day in the city in which the Company’s and the
Partnership’s principal executive office is located next following the day when
placed in the U.S. mail, postage prepaid, certified or registered, addressed to the
appropriate party at the address of that party set forth below, or at such other
address as that party may designate by notice in writing or by electronic
transmission to the other party in accordance herewith:

     (3) If to Indemnitee, to:

with a copy, which will not constitute notice for purposes of this
Agreement, to such legal counsel, if any, as Indemnitee may designate in
writing or by electronic transmission; and

     (4) If to the Company or the Partnership , to:

Encore Energy Partners GP LLC

777 Main Street, Suite 1400

Fort Worth, Texas 76102-5356

Attention: Corporate Secretary

Fax No.: (817) 877-9955

E-mail: __________@encoreacq.com

                Section 18. Contribution. If it is established, under Section 5(c) or otherwise, that
Indemnitee has the right to be indemnified under Section 2(a) in respect of any claim, but that
right is unenforceable by reason of any applicable law or public policy, then, to the fullest
extent applicable law permits, the Company and the Partnership, in lieu of indemnifying or causing
the indemnification of Indemnitee under Section 2(a), will, or will cause a Partnership Entity to,
contribute to the amount Indemnitee has incurred, whether for judgments, fines, penalties, excise
taxes, amounts paid or to be paid in settlement or for Expenses reasonably incurred, in connection
with that Claim, in such proportion as is deemed fair and reasonable in light of all the
circumstances of that Claim in order to reflect:

     (1) the relative benefits Indemnitee and the Partnership have received as a result of
the event(s) or transaction(s) giving rise to that Claim; or

     (2) the relative fault of Indemnitee and of the Partnership and its other Functionaries
in connection with those event(s) or 
transaction(s).

                Section 19. Governing Law; Submission to Jurisdiction. This Agreement and the legal
relations among the parties will be governed by, and construed and enforced in accordance

-16-

 

with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except
with respect to any arbitration Indemnitee commences under Section 7 or as Section 2(a) expressly
contemplates otherwise, the Company, the Partnership and Indemnitee hereby irrevocably and
unconditionally:

     (1) agree that any action or proceeding arising out of or in connection with this
Agreement will be brought only in the Court of Chancery and not in any other state or
federal court in the United States of America or any court in any other country;

     (2) consent to submit to the exclusive jurisdiction of the Court of Chancery for
purposes of any action or proceeding arising out of or in connection with this Agreement;

     (3) waive any objection to the laying of venue of any such action or proceeding in the
Court of Chancery; and

     (4) waive, and agree not to plead or to make, any claim that any such action or
proceeding brought in the Court of Chancery has been brought in an improper or otherwise
inconvenient forum.

                    Section 20. Entire Agreement. This Agreement constitutes the entire agreement and
understanding among the Company, the Partnership and Indemnitee, and supersedes all prior oral,
written or implied agreements and understandings of the Company, the Partnership and Indemnitee
with respect to the subject matter hereof.

-17-

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day
and year first above written.

	 	 	 	 	 
	 	ENCORE ENERGY PARTNERS GP LLC

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

	 	 	 	 	 
	 	ENCORE ENERGY PARTNERS LP

 	 
	 	By:  	Encore Energy Partners GP LLC,
 	 
	 	  	its general partner 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

	 	 	 	 	 
	 	INDEMNITEE:

 	 
	 	 	 
	 	[Name] 	 
	 	 	 
	 

-18-exv10w12

 

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

 

 

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;

2

 

               (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;

3

 

               (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

4

 

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

5

 

“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

7

 

               (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

8

 

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.

9

 

     (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.

10

 

     (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

11

 

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

12

 

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

14

 

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.

15

 

          (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]

16

 

     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 	 

 

 

	 	 	 	 	 

     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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]