Document:

exh10_1.htm

     

    
      

      

    

    
 

    

     

    Exhibit
10.1

     

    GUARANTY

     

     

    
    

     

    
      	 New York, New
      York	 February 24,
      2010

    

     

     

    FOR VALUE
RECEIVED, and in consideration of credit extended by the Lenders (as defined
below) to or for the account of Rapid Link, Incorporated, a Delaware corporation
(the “Company”), from time
to time and at any time and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of the undersigned
(and each of them if more than one, the liability under this Guaranty being
joint and several) (jointly and severally referred to as “Guarantors” or “the undersigned”)
unconditionally guaranties to the Creditor Parties (as defined below), their
successors, endorsees and assigns the prompt payment when due (whether by
acceleration or otherwise) of all present and future obligations and liabilities
of any and all kinds of the Company to the Creditor Parties and of all
instruments of any nature evidencing or relating to any such obligations and
liabilities upon which the Company or one or more parties and the Company is or
may become liable to the Creditor Parties, whether incurred by the Company as
maker, endorser, drawer, acceptor, guarantor, accommodation party or otherwise,
and whether due or to become due, secured or unsecured, absolute or contingent,
joint or several, and however or whenever acquired by the Creditor Parties,
whether arising under, out of, or in connection with (i) that certain Master
Security Agreement dated as of the date hereof (as amended, restated, modified
and/or supplemented from time to time, the “Security Agreement”)
by and among the Company, Guarantor, the lenders named therein or which
thereafter became or become a party thereto (each a “Lender” and
collectively, the “Lenders”) and LV
Administrative Services, Inc., as administrative and collateral agent for the
Lenders (in such capacity, the “Agent”) (the Lenders
and the Agent, each a “Creditor Party” and
collectively, the “Creditor Parties”),
(ii) that certain Secured Term Note dated on or about the date hereof issued by
the Company to the Lenders (as amended, restated, modified and/or supplemented
from time to time, the “Note”) and (iii) all
other documents, instruments or agreements relating to or executed in connection
therewith or any documents, instruments or agreements referred to therein (the
Security Agreement, the Note and each such document, instrument and agreement,
as each may be amended, modified, restated or supplemented from time to time,
are collectively referred to herein as the “Documents”), whether
now existing or hereafter arising, direct or indirect, liquidated or
unliquidated, absolute or contingent, due or not due and whether under, pursuant
to or evidenced by a note, agreement, guaranty, instrument or otherwise (all of
which are herein collectively referred to as the “Obligations”), and
irrespective of the genuineness, validity, regularity or enforceability of such
Obligations, or of any instrument evidencing any of the Obligations or of any
collateral therefor or of the existence or extent of such collateral, and
irrespective of the allowability, allowance or disallowance of any or all of the
Obligations in any case commenced by or against the Company under Title 11,
United States Code, including, without limitation, obligations or indebtedness
of the Company for post-petition interest, fees, costs and charges that would
have accrued or been added to the Obligations but for the commencement of such
case.  Terms not otherwise defined herein shall have the meaning
assigned such terms in the Security Agreement.  In furtherance of the
foregoing, the undersigned hereby agrees as follows:

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    1. Limitation on
Liability.  Notwithstanding anything in this Guaranty to the
contrary, the aggregate maximum liability of the undersigned hereunder shall not
exceed, at any time, One Million Two Hundred Fifty Thousand Dollars ($1,250,000)
plus interest thereon together with all costs, fees and expenses (including
expenses for legal services of every kind) relating to or incidental to the
enforcement or protection of the rights of the Creditor Parties
hereunder.

     

    2. No
Impairment.  The Creditor Parties may at any time and from time
to time, either before or after the maturity thereof, without notice to or
further consent of the undersigned, extend the time of payment of, exchange or
surrender any collateral for, renew or extend any of the Obligations or increase
or decrease the interest rate thereon, or any other agreement with the Company
or with any other party to or person liable on any of the Obligations, or
interested therein, for the extension, renewal, payment, compromise, discharge
or release thereof, in whole or in part, or for any modification of the terms
thereof or of any agreement between any Creditor Party and the Company or any
such other party or person, or make any election of rights the Creditor Parties
may deem desirable under the United States Bankruptcy Code, as amended, or any
other federal or state bankruptcy, reorganization, moratorium or insolvency law
relating to or affecting the enforcement of creditors’ rights generally (any of
the foregoing, an “Insolvency Law”)
without in any way impairing or affecting this Guaranty.  This
Guaranty shall be effective regardless of the subsequent incorporation, merger
or consolidation of the Company, or any change in the composition, nature,
personnel or location of the Company and shall extend to any successor entity to
the Company, including a debtor in possession or the like under any Insolvency
Law.

     

    3. Guaranty
Absolute.  Subject to Section 6(c) hereof, each of the
undersigned jointly and severally guarantees that the Obligations will be paid
strictly in accordance with the terms of the Documents and/or any other
document, instrument or agreement creating or evidencing the Obligations,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Company with
respect thereto.  Guarantors hereby knowingly accept the full range of
risk encompassed within a contract of “continuing guaranty” which risk includes
the possibility that the Company will contract additional indebtedness,
obligations and liabilities for which Guarantors may be liable hereunder after
the Company’s financial condition or ability to pay its lawful debts when they
fall due has deteriorated, whether or not the Company has properly authorized
incurring such additional indebtedness, obligations and
liabilities.  The undersigned acknowledge that (i) no oral
representations, including any representations to extend credit or provide other
financial accommodations to the Company, have been made by any Creditor Party to
induce the undersigned to enter into this Guaranty and (ii) any extension of
credit to the Company shall be governed solely by the provisions of the
Documents.  The liability of each of the undersigned under this
Guaranty shall be absolute and unconditional, in accordance with its terms, and
shall remain in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever, including, without limitation: (a) any
waiver, indulgence, renewal, extension, amendment or modification of or
addition, consent or supplement to or deletion from or any other action or
inaction under or in respect of the Documents or any other instruments or
agreements relating to the Obligations or any assignment or transfer of any
thereof, (b) any lack of validity or enforceability of any Document or other
documents, instruments or agreements relating to the Obligations or any
assignment or transfer of any thereof, (c) any furnishing of any additional
security to the Creditor Parties or their assignees or any acceptance thereof or
any release of any security by the Creditor Parties or their assignees, (d) any
limitation on any party’s liability or obligation under the Documents or any
other documents, instruments or agreements relating to the Obligations or any
assignment or transfer of any thereof or any invalidity or unenforceability, in
whole or in part, of any such document, instrument or agreement or any term
thereof, (e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to the
Company, or any action taken with respect to this Guaranty by any trustee or
receiver, or by any court, in any such proceeding, whether or not the
undersigned shall have notice or knowledge of any of the foregoing, (f) any
exchange, release or nonperfection of any collateral, or any release, or
amendment or waiver of or consent to departure from any guaranty or security,
for all or any of the Obligations or (g) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the
undersigned.  Any amounts due from the undersigned to the Creditor
Parties shall bear interest until such amounts are paid in full at the highest
rate then applicable to the Obligations.  Obligations include
post-petition interest whether or not allowed or allowable.

     

     

     

     

    
      
        
        

      

      
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    4. Waivers.

     

    (a) This
Guaranty is a guaranty of payment and not of collection.  The Creditor
Parties shall be under no obligation to institute suit, exercise rights or
remedies or take any other action against the Company or any other person or
entity liable with respect to any of the Obligations or resort to any collateral
security held by it to secure any of the Obligations as a condition precedent to
the undersigned being obligated to perform as agreed herein and each of the
Guarantors hereby waives any and all rights which it may have by statute or
otherwise which would require the Creditor Parties to do any of the
foregoing.  Each of the Guarantors further consents and agrees that
the Creditor Parties shall be under no obligation to marshal any assets in favor
of Guarantors, or against or in payment of any or all of the
Obligations.  The undersigned hereby waives all suretyship defenses
and any rights to interpose any defense, counterclaim or offset of any nature
and description which the undersigned may have or which may exist between and
among any Creditor Party, the Company and/or the undersigned with respect to the
undersigned’s obligations under this Guaranty, or which the Company may assert
on the underlying debt, including but not limited to failure of consideration,
breach of warranty, fraud, payment (other than cash payment in full of the
Obligations), statute of frauds, bankruptcy, infancy, statute of limitations,
accord and satisfaction, and usury.

     

    (b) Each of
the undersigned further waives (i) notice of the acceptance of this Guaranty, of
the making of any such loans or extensions of credit, and of all notices and
demands of any kind to which the undersigned may be entitled, including, without
limitation, notice of adverse change in the Company’s financial condition or of
any other fact which might materially increase the risk of the undersigned and
(ii) presentment to or demand of payment from anyone whomsoever liable upon any
of the Obligations, protest, notices of presentment, non-payment or protest and
notice of any sale of collateral security or any default of any
sort.

     

    (c) Notwithstanding
any payment or payments made by the undersigned hereunder, or any setoff or
application of funds of the undersigned by any Creditor Party, the undersigned
shall not be entitled to be subrogated to any of the rights of such Creditor
Party against the Company or against any collateral or guarantee or right of
offset held by such Creditor Party for the payment of the Obligations, nor shall
the undersigned seek or be entitled to seek any contribution or reimbursement
from the Company in respect of payments made by the undersigned hereunder, until
all amounts owing to the Creditor Parties by the Company on account of the
Obligations are indefeasibly paid in full and the Lenders’ obligation to extend
credit pursuant to the Documents has been irrevocably terminated.  If,
notwithstanding the foregoing, any amount shall be paid to the undersigned on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid in full and the Lenders’ obligation to extend credit pursuant
to the Documents shall not have been terminated, such amount shall be held by
the undersigned in trust for the Creditor Parties, segregated from other funds
of the undersigned, and shall forthwith upon, and in any event within two (2)
business days of, receipt by the undersigned, be turned over to the Agent in the
exact form received by the undersigned (duly endorsed by the undersigned to the
Agent, if required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Agent may determine, subject to the provisions
of the Documents.  Any and all present and future debts, obligations
and liabilities of the Company to any of the undersigned are hereby waived and
postponed in favor of, and subordinated to the full payment and performance of,
all present and future debts and Obligations of the Company to the Creditor
Parties.

     

     

     

    
      
        
        

      

      
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    5. Security.  All
sums at any time to the credit of the undersigned and any property of the
undersigned in any Creditor Party’s possession or in the possession of any bank,
financial institution or other entity that directly or indirectly, through one
or more intermediaries, controls or is controlled by, or is under common control
with, such Creditor Party (each such entity, an “Affiliate”) shall be
deemed held by such Creditor Party or such Affiliate, as the case may be, as
security for any and all of the undersigned’s obligations and liabilities to the
Creditor Parties and to any Affiliate of the Creditor Parties, no matter how or
when arising and whether under this or any other instrument, agreement or
otherwise.

     

    6. Representations and
Warranties.  Each of the undersigned hereby jointly and
severally represents and warrants (all of which representations and warranties
shall survive until all Obligations are indefeasibly satisfied in full and the
Documents have been irrevocably terminated), that:

     

    (a) Corporate
Status.  It is a corporation, partnership or limited liability
company, as the case may be, duly formed, validly existing and in good standing
under the laws of its jurisdiction of formation indicated on the signature page
hereof and has full power, authority and legal right to own its property and
assets and to transact the business in which it is engaged.

     

    (b) Authority and
Execution.  It has full power, authority and legal right to
execute and deliver, and to perform its obligations under, this Guaranty and has
taken all necessary corporate, partnership or limited liability company, as the
case may be, action to authorize the execution, delivery and performance of this
Guaranty.

     

    (c) Legal, Valid and Binding
Character.  This Guaranty constitutes its legal, valid and
binding obligation enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting the
enforcement of creditor’s rights and general principles of equity that restrict
the availability of equitable or legal remedies.

     

     

     

    
      
        
        

      

      
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    (d) Violations. The
execution, delivery and performance of this Guaranty will not violate any
requirement of law applicable to it or any contract, agreement or instrument to
which it is a party or by which it or any of its property is bound or result in
the creation or imposition of any mortgage, lien or other encumbrance other than
in favor of the Agent, for the ratable benefit of the Creditor Parties, on any
of its property or assets pursuant to the provisions of any of the foregoing,
which, in any of the foregoing cases, could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.

     

    (e) Consents or
Approvals.  No consent of any other person or entity
(including, without limitation, any creditor of the undersigned) and no consent,
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guaranty by it, except to the extent that the failure to
obtain any of the foregoing could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.

     

    (f) Litigation.  No
litigation, arbitration, investigation or administrative proceeding of or before
any court, arbitrator or governmental authority, bureau or agency is currently
pending or, to the best of its knowledge, threatened (i) with respect to this
Guaranty or any of the transactions contemplated by this Guaranty or (ii)
against or affecting it, or any of its property or assets, which, in each of the
foregoing cases, if adversely determined, could reasonably be expected to have a
Material Adverse Effect.

     

    (g) Financial
Benefit.  It has derived or expects to derive a financial or
other advantage from each and every loan, advance or extension of credit made
under the Documents or other Obligation incurred by the Company to the Creditor
Parties.

     

    (h) Solvency.  As
of the date of this Guaranty, (a) the fair saleable value of its assets exceeds
its liabilities and (b) it is meeting its current liabilities as they
mature.

     

    7. Acceleration.

     

    (a) If any
breach of any covenant or condition or other event of default shall occur and be
continuing under any agreement made by the Company or any of the undersigned to
any Creditor Party, or either the Company or any of the undersigned should at
any time become insolvent, or make a general assignment, or if a proceeding in
or under any Insolvency Law shall be filed or commenced by, or in respect of,
any of the undersigned, or if a notice of any lien, levy, or assessment is filed
of record with respect to any assets of any of the undersigned by the United
States of America or any department, agency, or instrumentality thereof, or if
any taxes or debts owing at any time or times hereafter to any one of them
becomes a lien or encumbrance upon any assets of the undersigned in any Creditor
Party’s possession, or otherwise, any and all Obligations shall for purposes
hereof, at the Creditor Parties’ option, be deemed due and payable without
notice notwithstanding that any such Obligation is not then due and payable by
the Company.

     

     

     

    
      
        
        

      

      
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    (b) Each of
the undersigned will promptly notify the Agent of any default by such
undersigned in its respective performance or observance of any term or condition
of any agreement to which the undersigned is a party if the effect of such
default is to cause, or permit the holder of any obligation under such agreement
to cause, such obligation to become due prior to its stated maturity and, if
such an event occurs, the Creditor Parties shall have the right to accelerate
such undersigned’s obligations hereunder.

     

    8. Payments from
Guarantors.  The Creditor Parties, in their sole and absolute
discretion, with or without notice to the undersigned, may apply on account of
the Obligations any payment from the undersigned or any other guarantors, or
amounts realized from any security for the Obligations, or may deposit any and
all such amounts realized in a non-interest bearing cash collateral deposit
account to be maintained as security for the Obligations.

     

    9. Costs.  The
undersigned shall pay on demand, all costs, fees and expenses (including
expenses for legal services of every kind) relating or incidental to the
enforcement or protection of the rights of the Creditor Parties hereunder or
under any of the Obligations.

     

    10. No
Termination.  This is a continuing irrevocable guaranty and
shall remain in full force and effect and be binding upon the undersigned, and
each of the undersigned’s successors and assigns, until all of the Obligations
have been indefeasibly paid in full and the Lenders’ obligation to extend credit
pursuant to the Documents has been irrevocably terminated.  If any of
the present or future Obligations are guarantied by persons, partnerships,
corporations or other entities in addition to the undersigned, the death,
release or discharge in whole or in part or the bankruptcy, merger,
consolidation, incorporation, liquidation or dissolution of one or more of them
shall not discharge or affect the liabilities of any of the undersigned under
this Guaranty.

     

    11. Recapture.  Anything
in this Guaranty to the contrary notwithstanding, if any Creditor Party receives
any payment or payments on account of the liabilities guaranteed hereby, which
payment or payments or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver, or any other party under any Insolvency Law, common law or
equitable doctrine, then to the extent of any sum not finally retained by the
Creditor Parties, the undersigned’s obligations to the Creditor Parties shall be
reinstated and this Guaranty shall remain in full force and effect (or be
reinstated) until payment shall have been made to the Creditor Parties, which
payment shall be due on demand.

     

    12. Books and
Records.  The books and records of the Agent showing the
account between the Creditor Parties and the Company shall be admissible in
evidence in any action or proceeding, shall be binding upon the undersigned for
the purpose of establishing the items therein set forth and shall constitute
prima facie proof thereof.

     

    13. No
Waiver.  No failure on the part of any Creditor Party to
exercise, and no delay in exercising, any right, remedy or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise by any
Creditor Party of any right, remedy or power hereunder preclude any other or
future exercise of any other legal right, remedy or power.  Each and
every right, remedy and power hereby granted to the Creditor Parties or allowed
it by law or other agreement shall be cumulative and not exclusive of any other,
and may be exercised by the Creditor Parties at any time and from time to
time.

     

     

     

    
      
        
        

      

      
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    14. WAIVER OF JURY
TRIAL.  EACH OF THE UNDERSIGNED DESIRES THAT ITS DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, EACH OF THE UNDERSIGNED HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN ANY CREDITOR PARTY, AND/OR ANY
OF THE UNDERSIGNED ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS GUARANTY, ANY
DOCUMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

     

    15. GOVERNING LAW;
JURISDICTION.  THIS GUARANTY CANNOT BE CHANGED OR TERMINATED
ORALLY, AND SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  EACH
OF THE UNDERSIGNED HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY OF THE
UNDERSIGNED, ON THE ONE HAND, AND ANY CREDITOR PARTY, ON THE OTHER HAND,
PERTAINING TO THIS GUARANTY OR ANY OF THE DOCUMENTS OR TO ANY MATTER ARISING OUT
OF OR RELATED TO THIS GUARANTY OR ANY OF THE DOCUMENTS; PROVIDED, THAT EACH OF
THE UNDERSIGNED ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK;
AND FURTHER PROVIDED, THAT NOTHING IN THIS GUARANTY SHALL BE DEEMED OR OPERATE
TO PRECLUDE THE CREDITOR PARTIES FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION
IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF ANY CREDITOR PARTY.  EACH OF THE
UNDERSIGNED EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH UNDERSIGNED HEREBY
WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS.  EACH OF THE UNDERSIGNED
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH UNDERSIGNED IN ACCORDANCE WITH SECTION 19 AND THAT SERVICE SO
MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH UNDERSIGNED’S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.

     

     

     

     

    
      
        
        

      

      
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    16. Understanding With Respect
to Waivers and Consents.  Each Guarantor warrants and agrees
that each of the waivers and consents set forth in this Guaranty is made
voluntarily and unconditionally after consultation with outside legal counsel
and with full knowledge of its significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which such Guarantor
otherwise may have against the Company, any Creditor Party or any other person
or entity or against any collateral.  If, notwithstanding the intent
of the parties that the terms of this Guaranty shall control in any and all
circumstances, any such waivers or consents are determined to be unenforceable
under applicable law, such waivers and consents shall be effective to the
maximum extent permitted by law.

     

    17. Severability.  To
the extent permitted by applicable law, any provision of this Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     

    18. Amendments,
Waivers.  No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the undersigned therefrom shall in any
event be effective unless the same shall be in writing executed by each of the
undersigned directly affected by such amendment and/or waiver and the
Agent.

     

    19. Notice.  All
notices, requests and demands to or upon the undersigned, shall be in writing
and shall be deemed to have been duly given or made (a) when delivered, if by
hand, (b) three (3) days after being sent, postage prepaid, if by
registered or certified mail, (c) when confirmed electronically, if by
facsimile, or (d) when delivered, if by a recognized overnight delivery service
in each event, to the numbers and/or address set forth beneath the signature of
the undersigned.

     

    20. Successors.  Each
Creditor Party may, from time to time, without notice to the undersigned, sell,
assign, transfer or otherwise dispose of all or any part of the Obligations
and/or rights under this Guaranty.  Without limiting the generality of
the foregoing, each Creditor Party may assign, or grant participations to, one
or more banks, financial institutions or other entities all or any part of any
of the Obligations.  In each such event, the Creditor Parties, their
Affiliates and each and every immediate and successive purchaser, assignee,
transferee or holder of all or any part of the Obligations shall have the right
to enforce this Guaranty, by legal action or otherwise, for its own benefit as
fully as if such purchaser, assignee, transferee or holder were herein by name
specifically given such right.  The Creditor Parties shall have an
unimpaired right to enforce this Guaranty for its benefit with respect to that
portion of the Obligations which the Creditor Parties have not disposed of,
sold, assigned, or otherwise transferred.

     

    21. Joinder.  It
is understood and agreed that any person or entity that desires to become a
Guarantor hereunder, or is required to execute a counterpart of this Guaranty
after the date hereof pursuant to the requirements of any Document, shall become
a Guarantor hereunder by (x) executing a joinder agreement in form and substance
satisfactory to the Agent, (y) delivering supplements to such exhibits and
annexes to such Documents as the Agent shall reasonably request and/or as may be
required by such joinder agreement and (z) taking all actions as specified in
this Guaranty as would have been taken by such Guarantor had it been an original
party to this Guaranty, in each case with all documents required above to be
delivered to the Agent and with all documents and actions required above to be
taken to the reasonable satisfaction of the Agent.

     

     

     

    
      
        
        

      

      
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    22. Release.  Nothing
except indefeasible payment in full of the Obligations shall release any of the
undersigned from liability under this Guaranty.

     

    23. Remedies Not
Exclusive.  The remedies conferred upon the Creditor Parties in
this Guaranty are intended to be in addition to, and not in limitation of any
other remedy or remedies available to the Creditor Parties.

     

    24. Limitation of Obligations
under this Guaranty.  Each Guarantor and each Creditor Party
(by its acceptance of the benefits of this Guaranty) hereby confirms that it is
its intention that this Guaranty not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent
Conveyance Act of any similar Federal or state law.  To effectuate the
foregoing intention, each Guarantor and each Creditor Party (by its acceptance
of the benefits of this Guaranty) hereby irrevocably agrees that the Obligations
guaranteed by such Guarantor shall be limited to such amount as will, after
giving effect to such maximum amount and all other (contingent or otherwise)
liabilities of such Guarantor that are relevant under such laws and after giving
effect to any rights to contribution pursuant to any agreement providing for an
equitable contribution among such Guarantor and the other Guarantors (including
this Guaranty), result in the Obligations of such Guarantor under this Guaranty
in respect of such maximum amount not constituting a fraudulent transfer or
conveyance.

     

    [REMAINDER
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        9

        
          

        

      

      
         

      

    

    

     

    IN
WITNESS WHEREOF, this Guaranty has been executed by the undersigned as of the
date and year here above written.

     

    
    

    

    
    

     

    
      	 	 MR. PREPAID,
      INC.
	 	 
	 	 
	 	 By:                                                                          
      
	 	        
      Name:
	 	        
      Title:
	 	 
	 	 
	 	 Address:
	 	                                                             
      
	 	                                                             
      
	 	 Telephone:
	 	 Facsimile:
	 	 State of
      Formation: Florida

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      SIGNATURE
PAGE TO

      GUARANTYexh10_2.htm

     

    
      

      

    

    
      EXHIBIT
10.2

     

    MASTER
SECURITY AGREEMENT

     

    
      	
              To:

            	
              LV
      Administrative Services, Inc., as
Agent

            

    

    
      	
               
      

            	
              c/o
      Valens Capital Management, LLC

            

    

    
      	
               
      

            	
              335
      Madison Avenue, 10th
      Floor

            

    

    
      	
               
      

            	
              New
      York, NY 10017

            

    

     

    Date:
February 24, 2010

     

    To Whom
It May Concern:

     

    1. To secure
the payment of all Obligations (as hereafter defined), each of the undersigned
parties (other than the Agent (as defined below)) and each other entity that is
required to enter into this Master Security Agreement (each an “Assignor” and,
collectively, the “Assignors”) hereby
assigns and grants to the Agent, for the ratable benefit of the Creditor Parties
(as hereafter defined), a continuing security interest in all of the following
property now owned or at any time hereafter acquired by such Assignor, or in
which such Assignor now has or at any time in the future may acquire any right,
title or interest (the “Collateral”): all
cash, cash equivalents, accounts, accounts receivable, deposit accounts,
inventory, equipment, goods, fixtures, documents, instruments (including,
without limitation, promissory notes), contract rights, commercial tort claims
set forth on Schedule B
attached hereto, general intangibles (including, without limitation, payment
intangibles and an absolute right to license on terms no less favorable than
those current in effect among such Assignor’s affiliates), chattel paper,
supporting obligations, investment property (including, without limitation, all
partnership interests, limited liability company membership interests and all
other equity interests owned by any Assignor), letter-of-credit rights,
trademarks, trademark applications, tradestyles, patents, patent applications,
copyrights, copyright applications and other intellectual property in which such
Assignor now has or hereafter may acquire any right, title or interest, all
proceeds and products thereof (including, without limitation, proceeds of
insurance) and all additions, accessions and substitutions thereto or
therefor.  All items of Collateral which are defined in the UCC shall
have the meanings set forth in the UCC.  For purposes hereof, the term
“UCC” means the
Uniform Commercial Code as the same may, from time to time, be in effect in the
State of New York; provided, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, the Agent’s (as hereafter defined) security interest
in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions of this Master Security Agreement (as amended, modified, restated
and/or supplemented from time to time, this “Agreement”) relating
to such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions; provided further, that to the extent
that the UCC is used to define any term herein and such term is defined
differently in different Articles or Divisions of the UCC, the definition of
such term contained in Article or Division 9 shall govern.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    2. The term
“Obligations”
as used herein shall mean and include (a) all debts, liabilities and obligations
owing by Mr. Prepaid, Inc. (“Mr. Prepaid”) to any
Creditor Party (as hereafter defined) arising under, out of, or in connection
with that certain (i) Guaranty dated as of the date hereof executed by Mr.
Prepaid in favor of the Creditor Parties (as amended, modified, restated and/or
supplemented from time to time, the “Guaranty”), (b) all
debts, liabilities and obligations owing by Rapid Link, Incorporated (“Rapid Link”) to any
Creditor Party arising under, out of, or in connection with that certain Secured
Term Note dated on or about the date hereof issued by Rapid Link to the Lenders
(as amended, modified, restated and/or supplemented from time to time, the
“Note”) and (c)
all debts, liabilities and obligations owing by any Assignor and/or Debtor to
any Creditor Party arising under, out of, or in connection with each of the
other documents, instruments or agreements relating to or executed in connection
with the foregoing (such other documents, instruments and agreements, together
with the Guaranty and the Note, as each may be amended, modified, restated or
supplemented from time to time, collectively, the “Documents”), and in
connection with any documents, instruments or agreements relating to or executed
in connection with the Documents or any documents, instruments or agreements
referred to therein or otherwise, and in connection with any other indebtedness,
obligations or liabilities of each such Assignor to any Creditor Party, whether
now existing or hereafter arising, direct or indirect, liquidated or
unliquidated, absolute or contingent, due or not due and whether under, pursuant
to or evidenced by a note, agreement, guaranty, instrument or otherwise,
including, without limitation, obligations and liabilities of each Assignor for
post-petition interest, fees, costs and charges that accrue after the
commencement of any case by or against such Assignor and/or Debtor under any
bankruptcy, insolvency, reorganization or like proceeding (collectively, the
“Debtor Relief
Laws”) in each case, irrespective of the genuineness, validity,
regularity or enforceability of such Obligations, or of any instrument
evidencing any of the Obligations or of any collateral therefor or of the
existence or extent of such collateral, and irrespective of the allowability,
allowance or disallowance of any or all of the Obligations in any case commenced
by or against any Assignor under any Debtor Relief Law.  For purposes
hereof, the following terms shall have the following meanings:  (a)
“Creditor
Party” shall mean Valens U.S. SPV I, LLC, Valens Offshore SPV II Corp.,
Laurus Master Fund, Ltd. (In Liquidation) (collectively, the “Lenders”) and Agent
and (b) “Agent” shall mean LV Administrative Services, Inc. as administrative
and collateral agent for Lenders.

     

    3. Each
Assignor hereby jointly and severally represents, warrants and covenants to
Agent, for the benefit of the Creditor Parties, that:

     

    
      	
              (a)  

            	
              it
      is a corporation, partnership or limited liability company, as the case
      may be, validly existing, in good standing and formed under the respective
      laws of its jurisdiction of formation set forth on Schedule A, and
      each Assignor will provide the Agent thirty (30) days’ prior written
      notice of any change in any of its respective jurisdiction of
      formation;

            

    

     

    
      	
              (b)  

            	
              its
      legal name is as set forth in its Certificate of Incorporation or other
      organizational document (as applicable) as amended through the date hereof
      and as set forth on Schedule A
      attached hereto, and it will provide the Agent thirty (30) days’ prior
      written notice of any change in its legal
name;

            

    

     

     

     

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              (c)  

            	
              its
      organizational identification number (if applicable) is as set forth on
      Schedule
      A hereto, and it will provide the Agent thirty (30) days’ prior
      written notice of any change in its organizational identification
      number;

            

    

     

    
      	
              (d)  

            	
              it
      is the lawful owner of its Collateral and it has the sole right to grant a
      security interest therein and will defend the Collateral against all
      claims and demands of all persons and
entities;

            

    

     

    
      	
              (e)  

            	
              it
      will keep its Collateral free and clear of all attachments, levies, taxes,
      liens, security interests and encumbrances of every kind and nature
      (“Encumbrances”),
      except (i) Encumbrances securing the Obligations, (ii) Encumbrances
      securing indebtedness of each such Assignor not to exceed $50,000 in the
      aggregate for all such Assignors so long as all such Encumbrances are
      removed or otherwise released to the Agent’s satisfaction within ten (10)
      days of the creation thereof and (iii) Encumbrances identified on Schedule C
      hereto;

            

    

     

    
      	
              (f)  

            	
              it
      will, at its and the other Assignors’ joint and several cost and expense,
      keep the Collateral in good state of repair (ordinary wear and tear
      excepted) and will not waste or destroy the same or any part thereof other
      than ordinary course discarding of items no longer used or useful in its
      or such other Assignors’ business;

            

    

     

    
      	
              (g)  

            	
              it
      will not, without the Agent’s prior written consent, sell, exchange, lease
      or otherwise dispose of any Collateral, whether by sale, lease or
      otherwise, except for the sale of inventory in the ordinary course of
      business and for the disposition or transfer in the ordinary course of
      business during any fiscal year of obsolete and worn-out equipment or
      equipment no longer necessary for its ongoing needs, having an aggregate
      fair market value of not more than $25,000 and only to the extent
      that:

            

    

     

    
      	
              (i)  

            	
              the
      proceeds of each such disposition are used to acquire replacement
      Collateral which is subject to the Agent’s first priority perfected
      security interest, or are used to repay the Obligations or to pay general
      corporate expenses; or

            

    

     

    
      	
              (ii)  

            	
              following
      the occurrence of an Event of Default which continues to exist the
      proceeds of which are remitted to the Agent to be held as cash collateral
      for the Obligations;

            

    

     

    
      	
              (h)  

            	
              (i)
      it will insure or cause the Collateral to be insured in the Agent’s name
      (as an additional insured and lender loss payee) against loss or damage by
      fire, theft, burglary, pilferage, loss in transit and such other hazards
      as the Agent shall specify in amounts and under policies by insurers
      acceptable to the Agent and all premiums thereon shall be paid by such
      Assignor and the policies delivered to the Agent.  If any such
      Assignor fails to do so, the Agent may procure such insurance and the cost
      thereof shall be promptly reimbursed by the Assignors, jointly and
      severally, and shall constitute Obligations;
and

            

    

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                  

              	
                (ii) it
      will expressly agree that if additional loss payees and/or lender loss
      payees, other than the Agent, are named to the Collateral, the Agent will
      always be assigned to first lien position until all Obligations have been
      satisfied;

              

      

    

     

    
      	
              (i)  

            	
              it
      will at all reasonable times allow the Creditor Parties or their
      respective representatives free access to and the right of inspection of
      the Collateral;

            

    

     

    
      	
              (j)  

            	
              such
      Assignor (jointly and severally with each other Assignor) hereby
      indemnifies and saves the Agent and each other Creditor Party harmless
      from all loss, costs, damage, liability and/or expense, including
      reasonable attorneys’ fees, that the Agent and each other Creditor Party
      may sustain or incur to enforce payment, performance or fulfillment of any
      of the Obligations and/or in the enforcement of this Master Security
      Agreement or in the prosecution or defense of any action or proceeding
      either against the Agent, any other Creditor Party or any Assignor
      concerning any matter growing out of or in connection with this Master
      Security Agreement, and/or any of the Obligations and/or any of the
      Collateral except to the extent caused by the Agent’s or any Creditor
      Party’s own gross negligence or willful misconduct (as determined by a
      court of competent jurisdiction in a final and non-appealable decision);
      and

            

    

     

    
      	
              (k)  

            	
              all
      commercial tort claims (as defined in the Uniform Commercial Code as in
      effect in the State of New York) held by any Assignor are set forth on
      Schedule
      B to this Master Security Agreement; each Assignor hereby agrees
      that it shall promptly, and in any event within five (5) Business Days
      after the same is acquired by it, notify the Agent of any commercial tort
      claim acquired by it and unless otherwise consented to in writing by the
      Agent, it shall enter into a supplement to this Master Security Agreement
      granting to the Agent a security interest for the ratable benefit of the
      Creditor Parties in such commercial tort claim, securing the
      Obligations.

            

    

     

    4. Rapid
Link hereby covenants to Agent, for the benefit of the Creditor Parties,
that:

     

    
      	
              (a)  

            	
              As
      soon as available, and in any event within ninety (90) days after the end
      of each fiscal year of Rapid Link, Rapid Link’s audited financial
      statements with a report of independent certified public accountants of
      recognized standing selected by Rapid Link and acceptable to the Agent
      (the “Accountants”),
      which annual financial statements shall be without qualification and shall
      include each of Rapid Link’s and its Subsidiaries’ balance sheet as at the
      end of such fiscal year and the related statements of each of Rapid Link’s
      and its Subsidiaries’ income, retained earnings and cash flows for the
      fiscal year then ended, prepared on a consolidating and consolidated
      basis, all in reasonable detail and prepared in accordance with generally
      accepted accounting principals, practices and procedures in effect from
      time to time in the United States of America (“GAAP”),
      together with (i) if and when available, copies of any management letters
      prepared by the Accountants; and (ii) a certificate of Rapid Link’s
      President, Chief Executive Officer or Chief Financial Officer stating that
      such financial statements have been prepared in accordance with GAAP and
      whether or not such officer has knowledge of the occurrence of any Default
      or Event of Default and, if so, stating in reasonable detail the facts
      with respect thereto;

            

    

     

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (b)  

            	
              As
      soon as available and in any event within forty five (45) days after the
      end of each fiscal quarter of Rapid Link, an unaudited/internal balance
      sheet and statements of income, retained earnings and cash flows of each
      of Rapid Link and each of its Subsidiaries as at the end of and for such
      quarter and for the year to date period then ended, prepared on a
      consolidating and consolidated basis, in reasonable detail and stating in
      comparative form the figures for the corresponding date and periods in the
      previous year, all prepared in accordance with GAAP, subject to year-end
      adjustments and accompanied by a certificate of Rapid Link’s President,
      Chief Executive Officer or Chief Financial Officer, stating (i) that such
      financial statements have been prepared in accordance with GAAP, subject
      to year-end audit adjustments, and (ii) whether or not such officer has
      knowledge of the occurrence of any Event of Default hereunder not
      theretofore reported and remedied and, if so, stating in reasonable detail
      the facts with respect thereto;

            

    

     

    
      	
              (c)  

            	
              As
      soon as available and in any event within twenty-five (25) days after the
      end of each calendar month, an unaudited/internal balance sheet and
      statements of income, retained earnings and cash flows of each of Rapid
      Link and its Subsidiaries as at the end of and for such month and for the
      year to date period then ended, prepared on a consolidating and
      consolidated basis, in reasonable detail and stating in comparative form
      the figures for the corresponding date and periods in the previous year,
      all prepared in accordance with GAAP, subject to year-end adjustments and
      accompanied by a certificate of Rapid Link’s President, Chief Executive
      Officer or Chief Financial Officer, stating (i) that such financial
      statements have been prepared in accordance with GAAP, subject to year-end
      audit adjustments, and (ii) whether or not such officer has knowledge of
      the occurrence of any Event of Default hereunder not theretofore reported
      and remedied and, if so, stating in reasonable detail the facts with
      respect thereto; and

            

    

     

    
      	
              (d)  

            	
              Promptly
      after (i) the filing thereof, copies, if any, of Rapid Link’s most recent
      registration statements and annual, quarterly, monthly or other regular
      reports which Rapid Link files with the Securities and Exchange
      Commission, and (ii) the issuance thereof, copies of such financial
      statements, reports and proxy statements as Rapid Link shall send to its
      stockholders.

            

    

     

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

    5. The
occurrence of any of the following events or conditions shall constitute an
“Event of
Default” under this Master Security Agreement:

     

    
      	
              (a)  

            	
              any
      Obligation shall fail to be paid when
due;

            

    

     

    
      	
              (b)  

            	
              any
      covenant or any other term or condition of this Master Security Agreement
      or any other Document is breached in any material respect and such breach,
      to the extent subject to cure, shall continue without remedy for a period
      of fifteen (15) days after the occurrence
  thereof;

            

    

     

    
      	
              (c)  

            	
              any
      representation or warranty, or statement made or furnished to the Agent or
      any other Creditor Party under this Master Security Agreement or any other
      Document by any Assignor or on any Assignor’s behalf should prove to any
      time be false or misleading in any material respect on the date as of
      which made or deemed made;

            

    

     

    
      	
              (d)  

            	
              the
      loss, theft, substantial damage, destruction, sale or encumbrance to or of
      any of the Collateral or the making of any levy, seizure or attachment
      thereof or thereon except to the
extent:

            

    

     

    
      	
              (i)  

            	
              such
      loss is covered by insurance proceeds which are used to replace the item
      or repay the Agent; or

            

    

     

    
      	
              (ii)  

            	
              said
      levy, seizure or attachment does not secure indebtedness in excess of
      $100,000 in the aggregate for all Assignors and such levy, seizure or
      attachment has been removed or otherwise released within ten (10) days of
      the creation or the assertion
thereof;

            

    

     

    
      	
              (e)  

            	
              if
      any Assignor shall (i) apply for, consent to or suffer to exist the
      appointment of, or the taking of possession by, a receiver, custodian,
      trustee or liquidator of itself or of all or a substantial part of its
      property, (ii) make a general assignment for the benefit of creditors,
      (iii) commence a voluntary case under the federal bankruptcy laws (as now
      or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v)
      file a petition seeking to take advantage of any other law providing for
      the relief of debtors, (vi) acquiesce to, or fail to have dismissed,
      within thirty (30) days, any petition filed against it in any involuntary
      case under such bankruptcy laws, or (vii) take any action for the purpose
      of effecting any of the foregoing;

            

    

     

    
      	
              (f)  

            	
              any
      Assignor shall admit in writing its inability, or be generally unable to
      pay its debts as they become due or cease operations of its present
      business;

            

    

     

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (g)  

            	
              any
      Assignor directly or indirectly sells, assigns, transfers, conveys, or
      suffers or permits to occur any sale, assignment, transfer or conveyance
      of any assets of such Company or any interest therein, except as permitted
      herein;

            

    

     

    
      	
              (h)  

            	
              if
      Mr. Prepaid attempts to terminate, or challenges the validity of, its
      liability under the Guaranty; or

            

    

     

    
      	
              (i)  

            	
              an
      Event of Default shall have occurred under and as defined in any
      Document.

            

    

     

    6. Upon the
occurrence of any Event of Default and at any time thereafter, the Agent may
declare all Obligations immediately due and payable and the Agent shall have the
remedies of a secured party provided in the UCC as in effect in the State of New
York, this Agreement and other applicable law.  Upon the occurrence of
any Event of Default and at any time thereafter, the Agent will have the right
to take possession of the Collateral and to maintain such possession on any
Assignor’s premises or to remove the Collateral or any part thereof to such
other premises as the Agent may desire.  Upon the Agent’s request,
each Assignor shall assemble or cause the Collateral to be assembled and make it
available to the Agent at a place designated by the Agent.  The Agent
may, if it so elects, seek the appointment of a receiver or keeper to take
possession of the Collateral and to enforce any of the Agent’s remedies (for the
benefit of the Agent and the Creditor Parties), with respect to such appointment
without prior notice or hearing as to such appointment.  If any
notification of intended disposition of any Collateral is required by law, such
notification, if mailed, shall be deemed properly and reasonably given if mailed
at least ten (10) days before such disposition, postage prepaid, addressed to
the applicable Assignor either at such Assignor’s address shown herein or at any
address appearing on the Agent’s records for such Assignor.  Any
proceeds of any disposition of any of the Collateral shall be applied by the
Agent to the payment of all expenses in connection with the sale of the
Collateral, including reasonable attorneys’ fees and other legal expenses and
disbursements and the reasonable expenses of retaking, holding, preparing for
sale, selling, and the like, and any balance of such proceeds may be applied by
the Agent toward the payment of the Obligations in such order of application as
the Agent may elect, and each Assignor shall be liable for any
deficiency.  For the avoidance of doubt, following the occurrence and
during the continuance of an Event of Default, the Agent shall have the
immediate right to withdraw any and all monies contained in any deposit account
in the name of any Assignor and controlled by the Agent and apply same to the
repayment of the Obligations (in such order of application as the Agent may
elect).  The parties hereto each hereby agree that the exercise by any
party hereto of any right granted to it or the exercise by any party hereto of
any remedy available to it (including, without limitation, the issuance of a
notice of redemption, a borrowing request and/or a notice of default), in each
case, hereunder, under the Guaranty, under the Note or under any other Document
shall not constitute confidential information and no party shall have any duty
to the other party to maintain such information as confidential.

     

    7. If any
Assignor defaults in the performance or fulfillment of any of the terms,
conditions, promises, covenants, provisions or warranties on such Assignor’s
part to be performed or fulfilled under or pursuant to this Master Security
Agreement, the Agent may, at its option without waiving its right to enforce
this Master Security Agreement according to its terms, immediately or at any
time thereafter and without notice to any Assignor, perform or fulfill the same
or cause the performance or fulfillment of the same for each Assignor’s joint
and several account and at each Assignor’s joint and several cost and expense,
and the cost and expense thereof (including reasonable attorneys’ fees) shall be
added to the Obligations and shall be payable on demand with interest thereon at
the highest rate permitted by law, or, at the Agent’s option, debited by the
Agent from any other deposit accounts in the name of any Assignor and controlled
by the Agent.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

     

    8. Each
Assignor hereby appoints the Agent, or any other Person whom the Agent may
designate as such Assignor’s attorney, with power to:  (a)(i) execute
any security related documentation on such Assignor’s behalf and to supply any
omitted information and correct patent errors in any documents executed by such
Assignor or on such Assignor’s behalf; (ii) to file financing statements against
such Assignor covering the Collateral (and, in connection with the filing of any
such financing statements, describe the Collateral as “all assets and all
personal property, whether now owned and/or hereafter acquired” (or any
substantially similar variation thereof)); (iii) sign such Assignor’s name on
any invoice or bill of lading relating to any accounts receivable, drafts
against account debtors, schedules and assignments of accounts receivable,
notices of assignment, financing statements and other public records,
verifications of accounts receivable and notices to or from account debtors; and
(iv) to do all other things the Agent deems necessary to carry out the terms of
Section 1 of this Master Security Agreement and (b) upon the occurrence and
during the continuance of an Event of Default; (i) endorse such Assignor’s name
on any checks, notes, acceptances, money orders, drafts or other forms of
payment or security that may come into the Agent’s possession; (ii) sign such
Assignor’s name on any invoice or bill of lading relating to any accounts
receivable, drafts against account debtors, schedules and assignments of
accounts receivable, notices of assignment, financing statements and other
public records, verifications of accounts receivable and notices to or from
account debtors; (iii) verify the validity, amount or any other matter relating
to any accounts receivable by mail, telephone, telegraph or otherwise with
account debtors; (iv) do all other things necessary to carry out this Agreement,
any other Ancillary Agreement and all other related documents; and (v) notify
the post office authorities to change the address for delivery of such
Assignor’s mail to an address designated by the Agent, and to receive, open and
dispose of all mail addressed to such Assignor.  Each Assignor hereby
ratifies and approves all acts of the attorney and neither the Agent nor the
attorney will be liable for any acts of commission or omission, nor for any
error of judgment or mistake of fact or law other than gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision).  This power being coupled with an
interest, is irrevocable so long as any Obligations remains unpaid.

     

    9. No delay
or failure on the Agent’s part in exercising any right, privilege or option
hereunder shall operate as a waiver of such or of any other right, privilege,
remedy or option, and no waiver whatsoever shall be valid unless in writing,
signed by the Agent and then only to the extent therein set forth, and no waiver
by the Agent of any default shall operate as a waiver of any other default or of
the same default on a future occasion.  The Creditor Parties’ books
and records containing entries with respect to the Obligations shall be
admissible in evidence in any action or proceeding, shall be binding upon each
Assignor for the purpose of establishing the items therein set forth and shall
constitute prima facie proof thereof.  The Agent shall have the right
to enforce any one or more of the remedies available to the Agent, successively,
alternately or concurrently.  Each Assignor agrees to join with the
Agent in executing such documents or other instruments to the extent required by
the UCC in form satisfactory to the Agent and in executing such other documents
or instruments as may be required or deemed necessary by the Agent for purposes
of affecting or continuing the Agent’s security interest in the
Collateral.

     

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

     

    10. The
Assignors shall jointly and severally pay all of the Agent’s and each other
Creditor Party’s out-of-pocket costs and expenses, including reasonable fees and
disbursements of in-house or outside counsel and appraisers, in connection with
the preparation, execution and delivery of the Documents, and in connection with
the prosecution or defense of any action, contest, dispute, suit or proceeding
concerning any matter in any way arising out of, related to or connected with
any Document.  The Assignors shall also jointly and severally pay all
of the Agent’s and each other Creditor Party’s reasonable fees, charges,
out-of-pocket costs and expenses, including fees and disbursements of counsel
and appraisers, in connection with (a) the preparation, execution and delivery
of any waiver, any amendment thereto or consent proposed or executed in
connection with the transactions contemplated by the Documents, (b) the Agent’s
obtaining performance of the Obligations under the Documents, including, but not
limited to the enforcement or defense of the Agent’s security interests,
assignments of rights and liens hereunder as valid perfected security interests,
(c) any attempt to inspect, verify, protect, collect, sell, liquidate or
otherwise dispose of any Collateral, (d) any appraisals or re appraisals of any
property (real or personal) pledged to the Agent by any Assignor as Collateral
for, or any other Person as security for, the Obligations hereunder and (e) any
consultations in connection with any of the foregoing.  The Assignors
shall also jointly and severally pay the Agent’s and each other Creditor Party’s
customary bank charges for all bank services (including wire transfers)
performed or caused to be performed by the Agent or any other Creditor Party for
any Assignor at any Assignor’s request or in connection with any Assignor’s loan
account (if any) with the Agent or any other Creditor Party.  All such
costs and expenses together with all filing, recording and search fees, taxes
and interest payable by the Assignors to the Agent shall be payable on demand
and shall be secured by the Collateral.  If any tax by any nation or
government, any state or other political subdivision thereof, and any agency,
department or other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government (each, a
“Governmental
Authority”) is or may be imposed on or as a result of any transaction
between any Assignor, on the one hand, and the Agent and/or any other Creditor
Party on the other hand, which the Agent and/or any other Creditor Party is or
may be required to withhold or pay, the Assignors hereby jointly and severally
indemnify and hold the Agent and each other Creditor Party harmless in respect
of such taxes, and the Assignors will repay to the Agent or such other Creditor
Party the amount of any such taxes which shall be charged to the Assignors’
account; and until the Assignors shall furnish the Agent and such other Creditor
Party with indemnity therefor (or supply the Agent and such other Creditor Party
with evidence satisfactory to it that due provision for the payment thereof has
been made), the Creditor Parties may hold without interest any balance standing
to each Assignor’s credit (if any) and the Agent shall retain its liens in any
and all Collateral.

     

    11. THIS
MASTER SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.  All of the rights, remedies, options, privileges and elections
given to the Agent hereunder shall inure to the benefit of the Agent’s
successors and assigns.  The term “Agent” as herein used
shall include the Agent, any parent of the Agent’s, any of the Agent’s
subsidiaries and any co-subsidiaries of the Agent’s parent, whether now existing
or hereafter created or acquired, and all of the terms, conditions, promises,
covenants, provisions and warranties of this Agreement shall inure to the
benefit of each of the foregoing, and shall bind the representatives, successors
and assigns of each Assignor.

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

    12. Each
Assignor hereby consents and agrees that the state and federal courts located in
the County of New York, State of New York shall have exclusive jurisdiction to
hear and determine any claims or disputes between Assignor, on the one hand, and
the Agent and/or any other Creditor Party, on the other hand, pertaining to this
Master Security Agreement or to any matter arising out of or related to this
Master Security Agreement, provided, that the Agent, each other Creditor Party
and each Assignor acknowledges that any appeals from those courts may have to be
heard by a court located outside of the County of New York, State of New York,
and further provided, that nothing in this Master Security Agreement shall be
deemed or operate to preclude the Agent from bringing suit or taking other legal
action in any other jurisdiction to collect, the Obligations, to realize on the
Collateral or any other security for the Obligations, or to enforce a judgment
or other court order in favor of the Agent.  Each Assignor expressly
submits and consents in advance to such jurisdiction in any action or suit
commenced in any such court, and each Assignor hereby waives any objection which
it may have based upon lack of personal jurisdiction, improper venue or forum non conveniens.  Each
Assignor hereby waives personal service of the summons, complaint and other
process issues in any such action or suit and agrees that service of such
summons, complaint and other process may be made by registered or certified mail
addressed to such assignor at the address set forth on the signature lines
hereto and that service so made shall be deemed completed upon the earlier of
such Assignor’s actual receipt thereof or three (3) days after deposit in the
U.S. mails, proper postage prepaid.

     

    The
parties desire that their disputes be resolved by a judge applying such
applicable laws.  Therefore, to achieve the best combination of the
benefits of the judicial system and of arbitration, the parties hereto waive all
rights to trial by jury in any action, suit, or proceeding brought to resolve
any dispute, whether arising in contract, tort, or otherwise between the Agent
and/or any other Creditor Party, and/or any Assignor arising out of, connected
with, related or incidental to the relationship established between them in
connection with this Master Security Agreement or the transactions related
hereto.

     

    13. This
Master Security Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute one
instrument.  Any signature delivered by a party by facsimile or
electronic transmission shall be deemed to be an original signature
hereto.

     

     

     

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

     

    14. It is
understood and agreed that any person or entity that desires to become an
Assignor hereunder, or is required to execute a counterpart of this Master
Security Agreement after the date hereof pursuant to the requirements of any
Document, shall become an Assignor hereunder by (x) executing a joinder
agreement in form and substance satisfactory to the Agent, (y) delivering
supplements to such exhibits and annexes to such Documents as the Agent shall
reasonably request and (z) taking all actions as specified in this Master
Security Agreement as would have been taken by such Assignor had it been an
original party to this Master Security Agreement, in each case with all
documents required above to be delivered to the Agent and with all documents and
actions required above to be taken to the reasonable satisfaction of the
Agent.

     

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        11

        
          

        

      

      
         

      

    

    

     

    15. All
notices from the Agent to any Assignor shall be sufficiently given if mailed or
delivered to such Assignor’s address set forth below.

     

    
    

    

    
    

     

    
      	 	 Very truly
      yours,
	 	 
	 	  MR.
      PREPAID, INC.
	 	 
	 	 
	 	 By:                                                                         
      
	 	       
      Name:
	 	       
      Title:
	 	 
	 	 
	 	 Address:
	 	                                                                                    
	 	                                                                                    
	 	 Attention:
	 	 Facsimile
      No.:
	 	 
	 	 
	 	 RAPID LINK,
      INCORPORATED
	 	 
	 	 
	 	 By:                                                                         
      
	 	       
      Name:
	 	      
       Title:
	 	 
	 	 
	 	 Address:
	 	                                                                                    
	 	                                                                                    
	 	 Attention:
	 	 Facsimile
      No.:
	 	 

    

     

    

     

    
    

    AGREED
AND ACKNOWLEDGED:

     

    LV
ADMINISTRATIVE SERVICES, INC.,

    as
Agent

     

     

    
      By:                                                             
   

    

    
           
Name:

      
             
Title:

      

    

     

     

     

    
 

    
      
        
          
            	
                     

                  	 
      	
                    SIGNATURE
      PAGE TO

                    MASTER
      SECURITY AGREEMENT

                  

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    SCHEDULE
A

     

    
      	
              Entity

            	
              Jurisdiction of
      Formation

            	
              Organizational

              Identification
      Number

            
	
              Mr.
      Prepaid, Inc.

            	
              Florida

            	
              P07000031463

            
	
              Rapid
      Link, Incorporated

            	
              Delaware

            	
              2986938

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

    

    
 

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    SCHEDULE
B

     

    COMMERCIAL TORT
CLAIMS

     

    None.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    

    
      
        
          
            	
                     

                  	 
      	 
      

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    SCHEDULE
C

     

    PERMITTED
ENCUMBRANCES

     

    Lien in
favor of Blackbird Corporation (“Blackbird”), the lien
priorities with respect to which are governed by the terms of a Subordination
Agreement dated as of February 24, 2010 by and among the Creditor Parties and
Blackbird.

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