IP GLOBAL VOICE, INC.
Stock Purchase Agreement
August 26, 2003
TABLE OF CONTENTS
Page
Schedule A - Investment Commitment
Exhibit A - Convertible Note
Exhibit B - Company Warrant
Exhibit C - Swap Stock Preferred Warrant
Exhibit D - Shareholders Agreement
Exhibit E - Capitalization of the Company
IP GLOBAL VOICE, INC.
COMMON STOCK
PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of the 26th day of August, 2003, by and between IP GLOBAL VOICE,
INC., a Delaware corporation (the "Company"), and IP VOICE
COMMUNICATIONS, INC., a Nevada corporation ("IPVC").
RECITALS
A. IPVC desires to acquire six million (6,000,000) shares of
the issued and outstanding common stock, $0.0001 par value, of
the Company (the "Commitment Stock"), two million two hundred
fifty thousand (2,250,000) shares of its common stock (the "Swap
Stock") and a Common Stock purchase warrant (the "Company
Warrant") entitling the holder to purchase one million
(1,000,000) shares of Common Stock for an aggregate purchase
price of one dollar ($1.00), and the Company wishes to issue to
IPVC such securities, which, upon the Closing (as defined below)
shall represent fifty-one percent (51%) of the issued and
outstanding capital stock of the Company on a fully diluted basis
(the "Majority Block").
B. In exchange for the Commitment Stock and the Swap Stock,
IPVC shall lend to the Company five hundred thousand dollars
($500,000) and shall commit to invest an additional four million
five hundred forty thousand dollars ($4,540,000) on or before
March 31, 2004.
C. The parties also desire to enter into a shareholders
agreement that shall include, among other things, an agreement
among the shareholders as to the constitution of the Board of
Directors, restrictions on transfer of stock, and a preemptive
right of IPVC with respect to issuances of new securities of the
Company.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Securities by the Company. Subject to
the terms and conditions of this Agreement, IPVC agrees to
purchase at the Closing and the Company agrees to sell and issue
to IPVC at the Closing the following securities:
(a) A convertible promissory note (the "Convertible Note")
in the form attached hereto as Exhibit A in the total principal
amount of five hundred thousand dollars ($500,000); and
(b) Six million (6,000,000) shares of Common Stock (the
"Commitment Stock"); and
(c) A Common Stock purchase warrant (the "Company Warrant")
entitling the holder to purchase one million (1,000,000) shares
of Common Stock for an aggregate purchase price of one dollar
($1.00) in the form attached hereto as Exhibit B; and
(d) Two million two hundred fifty thousand (2,250,000)
shares of Common Stock (the "Swap Stock").
The Commitment Stock and the Swap Stock shall be
nontransferable until performance by IPVC of the Investment
Commitment and the Company shall maintain "stop transfer"
instructions with its transfer agent until such time as the
Investment Commitment has been performed.
1.2 Sale and Issuance of Securities and other Consideration by
IPVC. Subject to the terms and conditions of this Agreement,
IPVC agrees to tender the cash indicated below in exchange for
the Convertible Note and the Company agrees to purchase at the
Closing and IPVC agrees to sell and issue to the Company at the
Closing the following securities and other consideration:
(a) Cash in the aggregate amount of four hundred thousand
dollars ($400,000) and the cancellation of an outstanding note
(the "Note") in the principal amount of one hundred thousand
dollars ($100,000) to the order of IPVC.; and
(b) a commitment (the "Investment Commitment") to invest in the
Company an additional four million five hundred thousand dollars
($4,500,000) on or before March 31, 2004, on the terms and
conditions set forth on Schedule A, which is hereby made a part
of this Agreement; and
(c) a warrant (the "Swap Stock Preferred Warrant") to
purchase an amount of convertible preferred stock of IPVC for an
aggregate purchase price of one dollar ($1.00), with dividend and
liquidation preference over all other series of capital stock of
IPVC issued subsequent to the Swap Stock Preferred Warrant, equal
to the number of shares of Swap Stock issued by the Company
multiplied by $0.85 per share, such that the Company shall
receive IPVC convertible preferred stock with a value (assuming
conversion to common stock) of one million nine hundred twelve
thousand five hundred dollars ($1,912,500), subject to pro-rata
adjustment in the event of a Company financing at a pre-money
valuation lower than $10,290,000, in the form attached hereto as
Exhibit C. The Swap Stock Preferred Warrant shall not be
exercisable unless and until IPVC performs its Investment
Commitment, and shall remain exercisable for one year thereafter.
1.3 Closing
. The transactions contemplated by this Agreement shall
take place at the offices of IP Global Voice, Inc., 000
Xxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, at
10:00 a.m. on September 15, 2003, or at such other time and place
as the Company and IPVC shall mutually agree, either orally or in
writing (which time and place are designated as the "Closing").
At the Closing, the Company and IPVC shall deliver to each other
certificates representing shares, note and warrant instruments
and cash as outlined above and in Sections 4 and 5, below. IPVC
shall surrender to the Company for cancellation at the Closing
the Note and/or shall execute an instrument of cancellation in
form and substance acceptable to the Company.
1.4 Forfeiture of Commitment Stock and Swap Stock and
Termination of Swap Stock Preferred Warrant. In the event that,
on March 31, 2004, IPVC has not performed its Investment
Commitment (as set forth in detail on Schedule A), the Commitment
Stock and the Swap Stock shall be forfeited back to the Company
and IPVC shall have no rights to securities of the Company
thereby and the Swap Stock Preferred Warrant shall terminate and
the Company shall have no rights to securities of IPVC thereby.
The Commitment Stock, the Swap Stock and the Swap Stock Preferred
Warrant shall be held in escrow, maintained by counsel for the
Company, until the Investment Commitment has been performed by
IPVC.
2. Representations, Warranties and Covenants of the Company
. The Company hereby represents, warrants and covenants to
IPVC that:
2.1 Organization; Good Standing; Qualification
. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, has all requisite corporate power and authority to own
and operate its properties and assets and to carry on its
business as now conducted and as presently proposed to be
conducted, to execute and deliver this Agreement, the Convertible
Note, the Commitment Stock, the Company Warrant, the Shareholders
Agreement, and any other agreement to which the Company is a
party, the execution and delivery of which is contemplated hereby
(the "Ancillary Agreements"), to issue and sell the Commitment
Stock, the Swap Stock and the Common Stock issuable upon exercise
of the Company Warrant, and to carry out the provisions of this
Agreement, the Shareholders Agreement and any Ancillary
Agreement. The Company is duly qualified and is authorized to
transact business and is in good standing as a foreign
corporation in each jurisdiction in which the failure so to
qualify would have a material adverse effect on its business,
properties or financial condition.
2.2 Authorization
. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the
Shareholders Agreement and any Ancillary Agreement, the
performance of all obligations of the Company hereunder and
thereunder at the Closing and the authorization, issuance (or
reservation for issuance), sale and delivery of the Commitment
Stock, the Swap Stock and the Company Warrant being sold
hereunder and the Common Stock issuable upon exercise of the
Company Warrant has been taken or will be taken prior to the
Closing, and this Agreement, the Shareholders Agreement and any
Ancillary Agreement, when executed and delivered, will constitute
valid and legally binding obligations of the Company, enforceable
in accordance with their respective terms except (a) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of
creditors' rights generally and (b) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies.
2.3 Valid Issuance of Preferred and Common Stock
. The Commitment Stock, Swap Stock and the Company Warrant
that is being purchased by IPVC hereunder, when issued, sold and
delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued,
fully paid and nonassessable, and will be free of restrictions on
transfer other than restrictions on transfer under this Agreement
and the Shareholders Agreement and under applicable state and
federal securities laws. The Common Stock issuable upon conver
sion of the Company Warrant purchased under this Agreement has
been duly and validly reserved for issuance and, upon exercise in
accordance with the Company Warrant (Exhibit B) will be duly and
validly issued, fully paid and nonassessable, and will be free of
restrictions on transfer other than restrictions on transfer
under this Agreement and the Shareholders Agreement and under
applicable state and federal securities laws.
2.4 Governmental Consents
. No consent, approval, qualification, order or authoriza
tion of, or filing with, any local, state or federal governmental
authority is required on the part of the Company in connection
with the Company's valid execution, delivery or performance of
this Agreement, the offer, sale or issuance of the Commitment
Stock, the Swap Stock or the Company Warrant by the Company or
the issuance of Common Stock upon exercise of the Company
Warrant, except such filings as have been made prior to the
Closing, except that any notices of sale required to be filed
with the Securities and Exchange Commission under Regulation D of
the Securities Act of 1933, as amended (the "Securities Act"), or
such post-closing filings as may be required under applicable
state securities laws, which will be timely filed within the
applicable periods therefor.
2.5 Capitalization and Voting Rights
. The authorized capital of the Company consists, or will
consist prior to the Closing, of:
(a) Preferred Stock. No preferred stock of the Company has been
authorized, issued or is outstanding.
(b) Common Stock. Ten million (10,000,000) shares of common
stock ("Common Stock"), par value $.0001, of which six million
nine hundred thousand (6,900,000) shares are issued and
outstanding.
(c) The outstanding shares of Common Stock have been issued in
accordance with the registration or qualification provisions of
the Securities Act and any relevant state securities laws or
pursuant to valid exemptions therefrom. Except for (i) an
aggregate of two million one hundred thousand (2,100,000) shares
of Common Stock reserved for purchase upon exercise of options to
be granted in the future to employees, directors and consultants
pursuant to the Company's 2003 Stock Option Plan (the "Company
Plan"), there are not outstanding any options, warrants, rights
(including conversion or preemptive rights and rights of first
refusal), or agreements for the purchase or acquisition from the
Company of any shares of its capital stock. Except for the
Shareholders Agreement, the Company is not a party or subject to
any agreement or understanding, and, to the best of the Company's
knowledge, there is no agreement or understanding between any
persons that affects or relates to the voting or giving of
written consents with respect to any security or the voting by a
director of the Company.
2.6 Taxes. All taxes due or payable by the Company, and
all interest and penalties thereon, whether disputed or not,
other than taxes which are not yet due and payable, have been
paid in full. All tax returns, statements, reports, forms and
other documents required to be filed in connection therewith have
been duly and timely filed (and no extension of any filing date
applicable thereto has been requested or granted) and were
correct and complete in all respects.
2.7 Litigation
. There is no claim, investigation, litigation, action,
suit, or proceeding, administrative or judicial, pending or
threatened against the Company or any officer or director of the
Company, at law or in equity, before any federal, state, local,
or foreign court, or regulatory agency, or other governmental
authority, including, without limitation, any unfair labor
practice or grievance proceedings or otherwise, which, if decided
adverse to the Company, would have a material impact on the
Company. The Company has not received any complaints from any of
its customers or suppliers within the last six months, which
complaints could reasonably be expected individually or in the
aggregate, to have a potential adverse effect on the assets,
prospects, operations, employee relations, rights or condition of
the Company's business.
2.8 Proprietary Rights. The Company owns or is licensed or
is otherwise entitled to exercise, without restriction, all
rights to all patents, trademarks, trade names, service marks,
copyrights, mask works, trade secrets and other intellectual
property rights, if any, and any applications or registrations,
and all inventions, mask work layouts, net lists, schematics,
technical drawings, technology, know-how, processes, formulas,
algorithms, computer software programs, documentation, and all
other tangible and intangible information or material in any
form, used by the Company in its business as of the Closure Date
or proposed to be used in the business without any conflict with
or infringement of the rights of others (collectively, the
"Company Proprietary Rights").
2.9 Disclosure
. The Company has provided IPVC with all the information
reasonably available to the Company without undue expense that
IPVC has requested for deciding whether to engage in the
transaction described in this Agreement and all information that
the Company believes is reasonably necessary to enable IPVC to
make such decision. To the best of the Company's knowledge after
reasonable investigation, neither this Agreement nor any other
written statements or certificates made or delivered in
connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the
statements herein or therein, in the light of the circumstances
under which they were made, not misleading.
2.10 Offering
. Subject in part to the truth and accuracy of IPVC's
representations set forth in this Agreement, the offer, sale and
issuance of the securities as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act,
and neither the Company nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss
of such exemption.
2.11 Changes.
To the best knowledge of the Company, since the date of
incorporation of the Company, there has not been any event or
condition of any type that has materially and adversely affected
the business, properties, prospects or financial condition of the
Company.
2.12 Purchase Entirely for Own Account.
This Agreement is made with the Company in reliance upon the
Company's representation to IPVC that the Swap Stock Preferred
Warrant be purchased by the Company and the preferred stock
issuable upon exercise of the Swap Stock Preferred Warrant
(collectively, the "IPVC Securities") will be acquired for
investment for the Company's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that the Company has no present intention of
selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, the Company further
represents that the Company does not have any contract,
undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third
person, with respect to any of the IPVC Securities.
2.13 Reliance Upon the Company's Representations.
The Company understands that the IPVC Securities are not,
and any preferred stock or common stock acquired on exercise
thereof at the time of issuance may not be, registered under the
Securities Act on the ground that the sale provided for in this
Agreement and the issuance of securities hereunder is exempt from
registration under the Securities Act pursuant to section 4(2)
thereof, and that IPVC's reliance on such exemption is based on
the Company's representations set forth herein. The Company
realizes that the basis for the exemption may not be present if,
notwithstanding such representations, the Company has in mind
merely acquiring the IPVC Securities for a fixed or determinable
period in the future, or for a market rise, or for sale if the
market does not rise. The Company has no such intention.
2.14 Receipt of Information.
The Company believes it has received all the information it
considers necessary or appropriate for deciding whether to
purchase the IPVC Securities. The Company further represents
that it has had an opportunity to ask questions and receive
answers from IPVC regarding the terms and conditions of the
offering of the IPVC Securities and the business, properties,
prospects and financial condition of IPVC and to obtain
additional information (to the extent IPVC possessed such
information or could acquire it without unreasonable effort or
expense) necessary to verify the accuracy of any information
furnished to the Company or to which the Company had access. The
foregoing, however, does not limit or modify the representations
and warranties of IPVC in Section 3 of this Agreement or the
right of the Company to rely thereon.
2.15 Investment Experience.
The Company represents that the Company is experienced in
evaluating and investing in securities of companies in the
development stage and acknowledges that the Company is able to
fend for itself, can bear the economic risk of its investment,
and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of
the investment in the IPVC Securities. The Company also
represents it has not been organized for the purpose of acquiring
the IPVC Securities.
2.16 [Reserved].
2.17 Restricted Securities.
The Company understands that the IPVC Securities may not be
sold, transferred or otherwise disposed of without registration
under the Securities Act or an exemption therefrom, and that in
the absence of an effective registration statement covering the
IPVC Securities or an available exemption from registration under
the Securities Act, the IPVC Securities must be held
indefinitely.
2.18 Legends.
To the extent applicable, each certificate or other document
evidencing the IPVC Securities shall be endorsed with the legends
set forth below, and the Company covenants that, except to the
extent such restrictions are waived by IPVC, the Company shall
not transfer the shares represented by any such certificate
without complying with the restrictions on transfer described in
the legends endorsed on such certificate:
(d) The following legend under the Act:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND
MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND
QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF
FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION AND QUALIFICATION UNDER
FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED."
(e) Any legend imposed or required by IPVC's Certificate of
Incorporation, Bylaws, or shareholders' agreement that may be in
place from time to time or applicable state securities laws.
2.19 Covenants of the Company. Until the earliest to occur
of 1) such time as the Commitment Stock and the Swap Stock is
forfeited in accordance with the provisions of Section 1.4, and
2) until such time as the Convertible Note has been converted
into equity securities of the Company, without the prior written
consent of IPVC, the Company shall not:
(f) license or sub-license any of its intellectual property,
except in the ordinary course of its business;
(g) make any capital expenditures outside of the ordinary course
of business in excess of $25,000;
(h) incur any debt outside of the ordinary course of business in
excess of $25,000 (specifically excluding vendor debt), unless
such debt is necessary to maintain the viability of the Company;
and
(i) consummate a merger or sale of all or substantially all of
its assets.
2.20 Assets. As of the Closing, the Company shall hold
all assets of IP Effect, LLC deemed material by the Company
including, but not limited to, the management team, with their
skills, experience and relationships, marketing materials and
other assets. No representation is provided herein with respect
to specific contracts or accounts of IP Effect, LLC.
3. Representations, Warranties and Covenants of IPVC.
IPVC hereby represents, warrants and covenants to the
Company that:
3.1 Organization; Good Standing; Qualification
. IPVC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada, has
all requisite corporate power and authority to own and operate
its properties and assets and to carry on its business as now
conducted and as presently proposed to be conducted, to execute
and deliver this Agreement, the Stock Swap Preferred Warrant, the
Shareholders Agreement, and any other agreement to which the
Company is a party, the execution and delivery of which is
contemplated hereby (the "Ancillary Agreements"), to issue and
sell the preferred stock issuable upon exercise of the Stock Swap
Preferred Warrant, and to carry out the provisions of this
Agreement, the Shareholders Agreement and any Ancillary
Agreement. The Company is duly qualified and is authorized to
transact business and is in good standing as a foreign
corporation in each jurisdiction in which the failure so to
qualify would have a material adverse effect on its business,
properties or financial condition.
3.2 Authorization
. All corporate action on the part of IPVC, its officers,
directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the Shareholders
Agreement and any Ancillary Agreement, the performance of all
obligations of IPVC hereunder and thereunder at the Closing and
the authorization, issuance (or reservation for issuance), sale
and delivery of the Swap Stock Preferred Warrant being sold
hereunder and the preferred stock issuable upon exercise of the
Swap Stock Preferred Warrant has been taken or will be taken
prior to the Closing, and this Agreement, the Shareholders
Agreement and any Ancillary Agreement, when executed and
delivered, will constitute valid and legally binding obligations
of IPVC, enforceable in accordance with their respective terms
except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (b) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
3.3 Valid Issuance of Preferred Stock
. The preferred stock issuable upon exercise of the Swap
Stock Preferred Warrant purchased under this Agreement has been
duly and validly reserved for issuance and, upon exercise in
accordance with the Swap Stock Preferred Warrant (Exhibit C) will
be duly and validly issued, fully paid and nonassessable, and
will be free of restrictions on transfer other than restrictions
on transfer under this Agreement and under applicable state and
federal securities laws.
3.4 Governmental Consents
. No consent, approval, qualification, order or authoriza
tion of, or filing with, any local, state or federal governmental
authority is required on the part of IPVC in connection with
IPVC's valid execution, delivery or performance of this
Agreement, the offer, sale or issuance of the Swap Stock
Preferred Warrant by IPVC or the issuance of preferred stock upon
exercise of the Swap Stock Preferred Warrant, except such filings
as have been made prior to the Closing, except that any notices
of sale required to be filed with the Securities and Exchange
Commission under Regulation D of the Securities Act of 1933, as
amended (the "Securities Act"), or such post-closing filings as
may be required under applicable state securities laws, which
will be timely filed within the applicable periods therefor.
3.5 Capitalization and Voting Rights
. The authorized capital of IPVC consists, or will consist
prior to the Closing, of:
(a) Preferred Stock. ____________________________.
(b) Common Stock. __________ shares of common stock ("Common
Stock"), par value $____, of which __________ shares are issued
and outstanding.
(c) The outstanding shares of Common Stock have been issued in
accordance with the registration or qualification provisions of
the Securities Act and any relevant state securities laws or
pursuant to valid exemptions therefrom. Except for (i) the con
version privileges of the Series __ Preferred Stock, and
(iii) __________________________, there are not outstanding any
options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), or agreements for the
purchase or acquisition from IPVC of any shares of its capital
stock. IPVC is not a party or subject to any agreement or under
standing, and, to the best of IPVC's knowledge, there is no
agreement or understanding between any persons that affects or
relates to the voting or giving of written consents with respect
to any security or the voting by a director of IPVC.
3.6 Taxes. All taxes due or payable by IPVC, and all
interest and penalties thereon, whether disputed or not, other
than taxes which are not yet due and payable, have been paid in
full. All tax returns, statements, reports, forms and other
documents required to be filed in connection therewith have been
duly and timely filed (and no extension of any filing date
applicable thereto has been requested or granted) and were
correct and complete in all respects.
3.7 Litigation
. There is no claim, investigation, litigation, action,
suit, or proceeding, administrative or judicial, pending or
threatened against IPVC or any officer or director of IPVC, at
law or in equity, before any federal, state, local, or foreign
court, or regulatory agency, or other governmental authority,
including, without limitation, any unfair labor practice or
grievance proceedings or otherwise, which, if decided adverse to
IPVC, would have a material impact on IPVC. IPVC has not
received any complaints from any of its customers or suppliers
within the last six months, which complaints could reasonably be
expected individually or in the aggregate, to have a potential
adverse effect on the assets, prospects, operations, employee
relations, rights or condition of IPVC's business.
3.8 Proprietary Rights. IPVC owns or is licensed or is
otherwise entitled to exercise, without restriction, all rights
to all patents, trademarks, trade names, service marks,
copyrights, mask works, trade secrets and other intellectual
property rights, if any, and any applications or registrations,
and all inventions, mask work layouts, net lists, schematics,
technical drawings, technology, know-how, processes, formulas,
algorithms, computer software programs, documentation, and all
other tangible and intangible information or material in any
form, used by IPVC in its business as of the Closure Date or
proposed to be used in the business without any conflict with or
infringement of the rights of others (collectively, the "IPVC
Proprietary Rights").
3.9 Disclosure
. IPVC has provided the Company with all the information
reasonably available to IPVC without undue expense that the
Company has requested for deciding whether to engage in the
transaction described in this Agreement and all information that
IPVC believes is reasonably necessary to enable the Company to
make such decision. To the best of IPVC's knowledge after
reasonable investigation, neither this Agreement nor any other
written statements or certificates made or delivered in
connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the
statements herein or therein, in the light of the circumstances
under which they were made, not misleading.
3.10 Offering
. Subject in part to the truth and accuracy of the
Company's representations set forth in this Agreement, the offer,
sale and issuance of the IPVC Securities as contemplated by this
Agreement are exempt from the registration requirements of the
Securities Act, and neither IPVC nor any authorized agent acting
on its behalf will take any action hereafter that would cause the
loss of such exemption.
3.11 Changes. To the best knowledge of IPVC, since May 15,
2003,, there has not been any event or condition of any type that
has materially and adversely affected the business, properties or
financial condition of IPVC.
3.12 Purchase Entirely for Own Account.
This Agreement is made with the Company in reliance upon
IPVC's representation to the Company that the Commitment Stock,
the Swap Stock and the Company Warrant to be purchased by IPVC
and the Common Stock issuable upon exercise of the Company
Warrant (collectively, the "Company Securities") will be acquired
for investment for IPVC's own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part
thereof, and that IPVC has no present intention of selling,
granting any participation in, or otherwise distributing the
same. By executing this Agreement, IPVC further represents that
IPVC does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with
respect to any Company Securities.
3.13 Reliance Upon IPVC's Representations.
IPVC understands that the Company Securities are not, and
any Common Stock acquired on exercise thereof at the time of
issuance may not be, registered under the Securities Act on the
ground that the sale provided for in this Agreement and the
issuance of securities hereunder is exempt from registration
under the Securities Act pursuant to section 4(2) thereof, and
that the Company's reliance on such exemption is based on IPVC's
representations set forth herein. IPVC realizes that the basis
for the exemption may not be present if, notwithstanding such
representations, IPVC has in mind merely acquiring the Securities
for a fixed or determinable period in the future, or for a market
rise, or for sale if the market does not rise. IPVC has no such
intention.
3.14 Receipt of Information.
IPVC believes it has received all the information it
considers necessary or appropriate for deciding whether to
purchase the Company Securities. IPVC further represents that it
has had an opportunity to ask questions and receive answers from
the Company regarding the terms and conditions of the offering of
the Company Securities and the business, properties, prospects
and financial condition of the Company and to obtain additional
information (to the extent the Company possessed such information
or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to
IPVC or to which IPVC had access. The foregoing, however, does
not limit or modify the representations and warranties of the
Company in Section 2 of this Agreement or the right of IPVC to
rely thereon.
3.15 Investment Experience.
IPVC represents that IPVC is experienced in evaluating and
investing in securities of companies in the development stage and
acknowledges that IPVC is able to fend for itself, can bear the
economic risk of its investment, and has such knowledge and
experience in financial and business matters that it is capable
of evaluating the merits and risks of the investment in the
Company Securities. IPVC also represents it has not been organ
ized for the purpose of acquiring the Company Securities.
3.16 [Reserved].
3.17 Restricted Securities.
IPVC understands that the Company Securities may not be
sold, transferred or otherwise disposed of without registration
under the Securities Act or an exemption therefrom, and that in
the absence of an effective registration statement covering the
Company Securities or an available exemption from registration
under the Securities Act, the Company Securities must be held
indefinitely. In particular, IPVC is aware that the Company
Securities may not be sold pursuant to Rule 144 promulgated under
the Securities Act unless all of the conditions of that Rule are
met. Among the conditions for use of Rule 144 is the
availability of current information to the public about the
Company. Such information is not now available and the Company
has no present plans to make such information available.
3.18 Legends.
To the extent applicable, each certificate or other document
evidencing the Company Securities shall be endorsed with the
legends set forth below, and IPVC covenants that, except to the
extent such restrictions are waived by the Company, IPVC shall
not transfer the shares represented by any such certificate
without complying with the restrictions on transfer described in
the legends endorsed on such certificate:
(j) The following legend under the Act:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND
MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND
QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF
FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION AND QUALIFICATION UNDER
FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED."
(k) Any legend imposed or required by the Company's Certificate
of Incorporation or Bylaws or applicable state securities laws.
(l) In addition, the certificates representing the Commitment
Stock and the Swap Stock shall bear the following additional
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO VOTING PROVISIONS CONTAINED IN A SHAREHOLDERS AGREEMENT
ENTERED INTO BY ALL OF THE SHAREHOLDERS OF THE COMPANY, ARE
SUBJECT TO A RISK OF FORFEITURE CONTAINED IN A STOCK
PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE HOLDER AND
ARE FURTHER SUBJECT TO A STOP ORDER IMPOSED BY THE COMPANY
ON THE SECURITIES AND MAY NOT BE TRANSFERRED EXCEPT UPON THE
EXPRESS WRITTEN CONDITION OF THE COMPANY."
3.19 Covenants of IPVC. Until such time as IPVC has
performed the Investment Commitment, IPVC shall not engage in
"competition" with the Company, whether directly, indirectly
through a third party or otherwise. For purposes of this
covenant, "competition" shall mean owning more than a five
percent (5%) equity interest in, operating, managing, advising,
being employed by, or providing consulting services to any
person, enterprise, firm, or corporation which is engaged in the
IP Centrex business.
4. Conditions of IPVC's Obligations at Closing.
The obligations of IPVC under this Agreement are subject to
the fulfillment on or before the Closing of each of the following
conditions, the waiver of which shall not be effective unless
consented thereto in writing:
4.1 Representations and Warranties.
The representations and warranties of the Company contained
in Section 2 shall be true on and as of the Closing with the same
effect as though such representations and warranties had been
made on and as of the date of the Closing.
4.2 Performance.
The Company shall have performed and complied with all
agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with on
or before the Closing.
4.3 Compliance Certificate.
The President of the Company shall deliver to IPVC at the
Closing a certificate certifying that the conditions specified in
Sections __, __, __ and __ have been fulfilled.
4.4 Board Approval. IPVC shall have received evidence of
approval of the transactions contemplated by this agreement from
the Board of Directors of the Company in a form satisfactory to
IPVC.
4.5 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and
substance to IPVC's special counsel, which shall have received
all such counterpart original and certified or other copies of
such documents as it may reasonably request.
4.6 Convertible Note. The Company shall have executed and
delivered to IPVC the Convertible Note in the form attached
hereto as Exhibit A.
4.7 The Commitment Stock Certificate. The Company shall issue
to IPVC a Common Stock certificate representing six million
shares of Common Stock in a form satisfactory to IPVC.
4.8 The Company Warrant. The Company shall have executed and
delivered to IPVC the Company Warrant in the form attached
hereto as Exhibit B.
4.9 The Swap Stock Certificate. The Company shall issue to
IPVC a Common Stock certificate representing two million two
hundred fifty thousand (2,250,000) shares of Common Stock in a
form satisfactory to IPVC.
4.10 Shareholders Agreement
. The Company and each shareholder of the Company,
including IPVC, shall have entered into the Shareholders
Agreement in the form attached hereto as Exhibit D.
4.11 Capitalization Table. The Capitalization of the
Company at the Closing shall be as set forth on Exhibit E.
5. Conditions of the Company's Obligations at Closing
. The obligations of the Company to IPVC under this
Agreement are subject to the fulfillment on or before the Closing
of each of the following conditions by IPVC:
5.1 Representations and Warranties.
5.2 The representations and warranties of IPVC contained in
Section __ shall be true on and as of the Closing with the same
effect as though such representations and warranties had been
made on and as of the Closing.
5.3 Performance.
IPVC shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are
required to be performed or complied with on or before the
Closing.
5.4 Compliance Certificate.
The President of IPVC shall deliver to IPVC at the Closing a
certificate certifying that the conditions specified in Sections
__,__,__ and __ have been fulfilled.
5.5 Board Approval. The Company shall have received evidence of
approval of the transactions contemplated by this agreement from
the Board of Directors of IPVC in a form satisfactory to the
Company.
5.6 Qualifications. All authorizations, approvals or permits,
if any, of any governmental authority or regulatory body of the
United States or of any state including, without limitation, the
National Association of Securities Dealsers ("NASD") and the
National Association of Securities Dealers Automated Quotation
system ("Nasdaq") that are required in connection with the
transactions contemplated by this Agreement shall be duly
obtained and effective as of the Closing.
5.7 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and
substance to special counsel for the Company, which shall have
received all such counterpart original and certified or other
copies of such documents as it may reasonably request.
5.8 Cash. The Company shall have received from IPVC, by
certified check or wire transfer satisfactory to special counsel
for the Company, the amount of four hundred thousand dollars
($400,000).
5.9 Investment Commitment. IPVC shall have entered into the
Investment Commitment as set forth in Schedule A.
5.9 Swap Stock Preferred Warrant. IPVC shall have entered
into the Swap Stock Warrant in the form attached hereto as
Exhibit C.
5.10 Shareholders Agreement
. The Company and each shareholder of the Company,
including IPVC, shall have entered into the Shareholders
Agreement in the form attached hereto as Exhibit D.
5.11 Capitalization Table. The Capitalization of the
Company at the Closing, and as anticipated after the Company's
proposed institutional financing, shall be as set forth on
Exhibit E.
6. Survival; Indemnification Against Loss
6.1 Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by
any party hereto. The representations and warranties made herein
shall survive the Closing of the transactions contemplated hereby
until the third (3rd) anniversary of the date heretof. All
statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of any party hereto
pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to be representations and
warranties by such party hereunder as of the date of such
certificate or instrument.
6.2 IPVC's Indemnification.
(a) IPVC hereby agrees to defend and indemnify and, effective as
of the Closing, does indemnify the Company, and the Company's
officers, directors, employees, agents, representatives and
affiliated companies against, and agrees to indemnify and hold
each of them harmless from, any and all losses, claims, damages,
penalties, liabilities, fines, injuries, costs and expenses
(including attorneys' fees, administrative expenses, prejudgment
interest and court costs), incurred or suffered by any of them
relating to or arising out of or in connection with any or all of
the following:
(i) Any material breach or material non-fulfillment of or any
material inaccuracy in any representation, warranty or covenant
made by IPVC or failure by IPVC to perform any obligation or
covenant to be performed by it pursuant to this Agreement or any
document delivered at Closing;
(ii) Any claim by a party other than IPVC against the Company
based in whole or in part on acts or omissions of IPVC prior to
or subsequent to the Closing Date.
6.3 The Company's Indemnification.
(a) The Company hereby agrees to defend and indemnify and,
effective as of the Closing, does indemnify IPVC, and IPVC's
officers, directors, employees, agents, representatives and
affiliated companies against, and agrees to indemnify and hold
each of them harmless from, any and all losses, claims, damages,
penalties, liabilities, fines, injuries, costs and expenses
(including attorneys' fees, administrative expenses, prejudgment
interest and court costs), incurred or suffered by any of them
relating to or arising out of or in connection with any or all of
the following:
(i) Any material breach or material non-fulfillment of or any
material inaccuracy in any representation, warranty or covenant
made by the Company or failure by the Company to perform any
obligation or covenant to be performed by it pursuant to this
Agreement or any document delivered at Closing (provided that the
non-fulfillment of the Investment Commitment shall not constitute
a ground for indemnity herein);
(ii) Any claim by a party other than the Company
against IPVC based in whole or in part on acts or omissions
of The Company prior to or subsequent to the Closing Date
6.4 Indemnification Procedures.
(a) Promptly upon obtaining knowledge of any claim, event,
statement of facts or demand which has given rise to, or could
reasonably give rise to, a claim for indemnification hereunder,
any party seeking indemnification under this Section 6 (an
"indemnified Party") shall give written notice of such claim or
demand ("Notice of Claim") to the party from which
indemnification is sought (an "indemnifying Party"), setting
forth the amount of the claim. The indemnified Party shall
furnish to the Indemnifying Party, in reasonable detail, such
information as it may have with respect to such indemnification
claim (including copies of any summons, complaint or other
pleading which may have been served on it and any written claim,
demand, invoice, billing or other document evidencing or
asserting the same). No failure or delay by the Indemnified
Party in the performance of the foregoing shall reduce or
otherwise affect the obligation of any Indemnifying Party to
indemnify and hold the Indemnified Party harmless, except to the
extent that such failure or delay shall have adversely affected
the Indemnifying Party's ability to defend against, settle or
satisfy any liability, damage, loss, claim or demand for which
the Indemnified Party is entitled to indemnification hereunder.
(b) Promptly after receipt of notice of any claim by a third
party which might give rise to indemnification hereunder, the
Indemnified Party shall notify the Indemnifying Party in writing
specifying, in reasonable detail, the nature and amount of the
claim. The Indemnifying Party shall be entitled to assume and
have the sole control of the defense and settlement of such
action or claim; provided, however, that:
(i) The Indemnified Party shall be entitled to participate in
the defense of such claim and, in connection therewith, to employ
counsel at its own expense;
(ii) without the prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld, the
Indemnifying Party shall not consent to the entry of any judgment
or enter into any settlement that requires any action other than
the payment of money.
(c) In the event the Indemnifying Party elects to assume control
of the defense of any such action in accordance with the
foregoing provisions, (i) the Indemnifying Party shall not be
liable to the Indemnified Party for any legal fees, costs and
expenses incurred by the Indemnified Party in connection with the
defense thereof and (ii) the Indemnified Party shall fully
cooperate with the Indemnifying Party in such defense. If the
Indemnifying Party does not assume control of the defense of such
claim in accordance with the foregoing provisions, the
Indemnified Party shall have the right to defend such claim, in
which case the Indemnifying Party shall pay all reasonable costs
and expenses of such defense. The Indemnified Party shall
conduct such defense in good faith and shall have the right to
settle the matter with the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably
withheld.
(d) Except for third-party claims being defended in good faith,
the Indemnifying Party shall satisfy its obligations hereunder in
cash within thirty (30) days after the Date of Notice of Claim.
(e) The term "Date of Notice of Claim" as used in this
Section 6 shall mean either: (1) the third business day after the
date of the postmark on the registered or certified mail
containing the Notice of Claim; or (2) if the Notice of Claim is
personally delivered, the date of such personal delivery.
7. Miscellaneous.
7.1 Entire Agreement.
This Agreement and the documents referred to herein consti
tute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically
set forth herein or therein.
7.2 Survival of Warranties.
The warranties, representations and covenants of the Company
and IPVC contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the
Closing.
7.3 Successors and Assigns.
Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the
parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
7.4 Governing Law.
This Agreement shall be governed by and construed under the
laws of the State of Delaware.
7.5 Counterparts.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.6 Titles and Subtitles.
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
7.7 Notices.
Unless otherwise provided, any notice and other
communications required or permitted under this Agreement shall
be in writing and shall be mailed by United States first-class
mail, postage prepaid, sent by facsimile or delivered personally
by hand or by a nationally recognized courier addressed to the
party to be notified at the address indicated for such party
below, or at such other address as such party may designate by
ten (10) days advance written notice to the other parties hereto.
All such notices and other written communications shall be
effective on the date of mailing, confirmed facsimile transfer or
delivery.
If to the Company: IP Global Voice, Inc.
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, President
If to IPVC: ___________________
___________________
___________________
7.8 Finders' Fees.
Each party hereto represents that it neither is nor will be
obligated for any finders' fee or commission in connection with
this transaction. IPVC agrees to indemnify and to hold harmless
the Company from any liability for any commission or compensation
in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which
IPVC or any of its officers, employees or representatives is
responsible. The Company agrees to indemnify and hold harmless
IPVC from any liability for any commission or compensation in the
nature of a finder's fee (and the costs and expenses of defending
against such liability or asserted liability) for which the
Company or any of its officers, employees or representatives is
responsible.
7.9 Expenses.
Each party shall bear it own expenses with respect to the
negotiation, execution, delivery and performance of this
Agreement.
7.10 Attorneys' Fees.
If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the Shareholders Agreement
or any Ancillary Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and disbursements
in addition to any other relief to which such party may be
entitled.
7.11 Amendments and Waivers.
Any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and
IPVC.
6.12 Severability.
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement
shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
IP GLOBAL VOICE, INC.., a
Delaware corporation
By
Xxxxx Xxxxxx, President
IP VOICE COMMUNICATIONS, INC.,
a Nevada corporation
By
Its
SCHEDULE A
IPVC INVESTMENT COMMITMENT AND RIGHT TO MATCH THIRD PARTY OFFERS
IPVC shall have the right, on or before March 31, 2004, and has
committed pursuant to the Agreement, to invest $4.5 million in
the Company, in addition to the Convertible Note amount (the
"Financing") at a pre-money valuation for the entire Company of
$10,290,000. Other terms and conditions of the Financing shall
be as agreed to by IPVC and the Company.
If, on or prior to December 31, 2003, IPVC has not invested an
additional $4.5 million in the Company and the Company receives a
term sheet from a potential investor not affiliated with IPVC for
the investment of at least $1 million at a pre-money valuation
that is agreed to by the board of directors of the Company (a
"Third Party Offer"), then the Company shall provide written
notice to IPVC of its receipt of such term sheet and a summary of
the material terms thereof. IPVC shall then have a first right
for 45 days to invest in the Company the same amount (net of the
$500,000 loan amount and any other amounts that IPVC has
previously invested in the Company), at the same valuation and
upon the same terms and conditions as contained in the Third
Party Offer. If IPVC does not match the Third Party Offer within
such 45-day period, then the Company shall be entitled to accept
the Third Party Offer. Upon the Company's closing of the Third
Party Offer, IPVC shall return to the Company the Commitment
Stock and the Swap Stock, and the Company shall return to IPVC
the Swap Stock Preferred Warrant. In any case if, on March 31,
0000, XXXX has not met its Investment Commitment (has not
invested an additional $4.5 million in the Company), IPVC shall
return to the Company the Commitment Stock and the Swap Stock,
and the Company shall return to IPVC the Swap Stock Preferred
Warrant.
If, following December 31, 2003 through and including Xxxxx 00,
0000, XXXX has not invested an additional $4.5 million in the
Company and the Company receives a Third Party Offer, then the
Company shall provide written notice to IPVC of its receipt of
the Third Party Offer and a summary of the material terms
thereof. IPVC shall then have a first right for 15 days to
invest in the Company the same amount (net of the $500,000 loan
amount and any other amounts that IPVC has previously invested in
the Company), at the same valuation and upon the same terms and
conditions as contained in the Third Party Offer. If IPVC does
not match the Third Party Offer within such 15-day period, then
the Company shall be entitled to accept the Third Party Offer.
