Document:

Exhibit 10.11

 

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: December 12, 2007

  	
  Principal: U.S. $2,000,000

  

 

FOR VALUE
RECEIVED, StarVox Communications, Inc., a California
corporation (the “Company”) and a
wholly owned subsidiary of StarVox Communications, Inc., a Delaware
corporation formerly known as U.S. Wireless Data, Inc. (“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, 2008, 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 at the Maturity Date to the record holder of this 

 

 

Debenture on the Maturity
Date, in cash.  Interest accrues at the
Interest Rate on all outstanding unpaid Principal.  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;

 

(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) 

 

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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)
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;

 

(ix)                                any
Event of Default (as defined in the Other Debentures) occurs and is continuing
with respect to any Other Debentures;

 

(x)                                   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;

 

(xi)                                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, 

 

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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; and

 

(xii)                             the
Company’s failure to obtain, within ten (10) Business Days following the
Issuance Date, the agreement of all of the holders of the convertible notes set
forth on Schedule 3(s) to the Securities Purchase Agreement to extend the
maturity date of such notes to November 7, 2008 (except with respect to
any such note which has been converted to common stock of the Parent in
accordance with its terms).

 

(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 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 

 

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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 “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 

 

5

 

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.

 

(8)                                COVENANTS.

 

(a)                                  Rank.  All payments due under this Debenture (a) shall
rank pari passu with all Other Debentures,
subject to the Subordination Agreement, as defined in the Securities Purchase
Agreement, and (b) shall be senior in right of payment to all other
Indebtedness of the Company and its Subsidiaries.

 

6

 

(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

 

(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

 

7

 

(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 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 

 

8

 

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.

 

(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.

 

9

 

(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.

 

(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.

 

10

 

(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 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.

 

11

 

(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
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:

 

12

 

(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.

 

(q)                                 “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.

 

13

 

(r)                                    “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.

 

(s)                                  “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 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.

 

(t)                                    “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.

 

14

 

(u)                                 “Principal Market” means the NASD OTC Bulletin Board.

 

(v)                                 “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.

 

(w)                               “Registrable Securities” shall have the meaning set forth in
the Registration Rights Agreement.

 

(x)                                   “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.

 

(y)                                 “Registration Statement” shall have the meaning set forth in
the Registration Rights Agreement.

 

(z)                                   “Required Holders” means the holders of Debentures
representing at least a majority of the aggregate principal amount of the
Debentures then outstanding.

 

(aa)                            “SEC” means the United States Securities and Exchange
Commission.

 

(bb)                          “SEC Documents” shall have the meaning set forth in the
Securities Purchase Agreement.

 

(cc)                            “Securities Purchase Agreement” means that certain securities
purchase agreement dated as of June 1, 2007 by and among the Parent, the
Company and the initial holders of the Debentures, as amended to date, pursuant
to which the Company issued the Debenture.

 

(dd)                          “Security Agreement” means the Pledge and Security Agreement
dated as of June 1, 2007 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.

 

(ee)                            “Security Documents” means the Security Agreement, 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.

 

(ff)                                “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 

 

15

 

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.

 

(gg)                          “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/
  T.E. Rowley

  	
   

  
	
   

  	
  Name:

  	
  Thomas
  E. Rowley

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
						

 

 

[Senior Secured Debenture—DKR]

 

 

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

 

	
   

  	
  STARVOX
  COMMUNICATIONS., A 

  DELAWARE CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  T.E. Rowley

  	
   

  
	
   

  	
  Name:

  	
  Thomas
  E. Rowley

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
						

 

 

[Senior Secured Debenture—DKR]Exhibit 10.12

 

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: 
  December 12, 2007

  	
   

  	
  Principal: 
  U.S. $1,100,000

  

 

FOR
VALUE RECEIVED, StarVox Communications, Inc., a
California corporation (the “Company”) and a
wholly owned subsidiary of StarVox Communications, Inc., a Delaware
corporation formerly known as U.S. Wireless Data, Inc. (“Parent”), hereby promises to pay to the order of Trinad
Capital Master 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, 2008, 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 at the
Maturity Date to the record holder of this

 

 

Debenture on the
Maturity Date, in cash.  Interest accrues
at the Interest Rate on all outstanding unpaid Principal.  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;

 

(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)

 

2

 

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) 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;

 

(ix)                                any
Event of Default (as defined in the Other Debentures) occurs and is continuing
with respect to any Other Debentures;

 

(x)                                   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;

 

(xi)                                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,

 

3

 

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; and

 

(xii)                             the
Company’s failure to obtain, within ten (10) Business Days following the
Issuance Date, the agreement of all of the holders of the convertible notes set
forth on Schedule 3(s) to the Securities Purchase Agreement to extend the
maturity date of such notes to November 7, 2008 (except with respect to
any such note which has been converted to common stock of the Parent in
accordance with its terms).

 

(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 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

 

4

 

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 “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

 

5

 

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.

 

(8)                                COVENANTS.

 

(a)                                  Rank.  All payments due under this Debenture (a) shall
rank pari passu with all Other Debentures,
subject to the Subordination Agreement, as defined in the Securities Purchase
Agreement, and (b) shall be senior in right of payment to all other
Indebtedness of the Company and its Subsidiaries.

 

6

 

(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

 

(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

 

7

 

(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 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

 

8

 

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.

 

(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.

 

9

 

(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.

 

(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.

 

10

 

(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 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.

 

11

 

(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
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:

 

12

 

(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.

 

(q)                                 “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.

 

13

 

(r)                                    “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.

 

(s)                                  “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 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.

 

(t)                                    “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.

 

14

 

(u)                                 “Principal Market” means the NASD OTC Bulletin Board.

 

(v)                                 “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.

 

(w)                               “Registrable Securities” shall have the meaning set forth in
the Registration Rights Agreement.

 

(x)                                   “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.

 

(y)                                 “Registration Statement” shall have the meaning set forth in
the Registration Rights Agreement.

 

(z)                                   “Required Holders” means the holders of Debentures
representing at least a majority of the aggregate principal amount of the
Debentures then outstanding.

 

(aa)                            “SEC” means the United States Securities and Exchange
Commission.

 

(bb)                          “SEC Documents” shall have the meaning set forth in the
Securities Purchase Agreement.

 

(cc)                            “Securities Purchase Agreement” means that certain securities
purchase agreement dated as of June 1, 2007 by and among the Parent, the
Company and the initial holders of the Debentures, as amended to date, pursuant
to which the Company issued the Debenture.

 

(dd)                          “Security Agreement” means the Pledge and Security Agreement
dated as of June 1, 2007 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.

 

(ee)                            “Security Documents” means the Security Agreement, 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.

 

(ff)                                “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

 

15

 

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.

 

(gg)                          “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/ T.E. Rowley

  	
   

  	 

	 
	
   

  	
  Name:

  	
  Thomas E. Rowley

  	 

	 
	
   

  	
  Title:

  	
  Chief Executive Officer

  	 

							

 

 

[Senior Secured Debenture—Trinad]

 

 

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

 

	
   

  	
  STARVOX
  COMMUNICATIONS., A

  
	
   

  	
  DELAWARE
  CORPORATION

  
	
   

  	
   

  
	 
	
   

  	
  By:

  	
     /s/ T.E. Rowley

  	
   

  	 

	 
	
   

  	
  Name:

  	
  Thomas E. Rowley

  	 

	 
	
   

  	
  Title:

  	
  Chief Executive Officer

  	 

							

 

 

[Senior Secured Debenture—Trinad]

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