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SECURITIES PURCHASE AGREEMENT
DATED AS OF JUNE 30, 2000
BY AND BETWEEN
PINEHURST/L.O.F., LLC
AND
GLOBAL TELEPHONE COMMUNICATION, INC.
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TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF DEBENTURE AND WARRANT..............................................................5
SECTION 1.1 PURCHASE OF DEBENTURE AND WARRANT.....................................................................5
SECTION 1.2 CLOSING DATE..........................................................................................6
SECTION 1.3 FORM OF PAYMENT.......................................................................................6
ARTICLE II BUYER'S REPRESENTATIONS AND WARRANTIES.................................................................6
SECTION 2.1 INVESTMENT PURPOSE....................................................................................6
SECTION 2.2 ACCREDITED INVESTOR STATUS............................................................................6
SECTION 2.3 RELIANCE ON EXEMPTIONS................................................................................7
SECTION 2.4 INFORMATION...........................................................................................7
SECTION 2.5 NO GOVERNMENTAL REVIEW................................................................................7
SECTION 2.6 TRANSFER OR RESALE....................................................................................7
SECTION 2.7 LEGENDS...............................................................................................8
SECTION 2.8 VALIDITY;ENFORCEMENT..................................................................................8
SECTION 2.9 RESIDENCY.............................................................................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................9
SECTION 3.1 ORGANIZATON AND QUALIFICATION.........................................................................9
SECTION 3.2 AUTHORIZATION;ENFORCEMENT;VALIDITY....................................................................9
SECTION 3.3 CAPITALIZATION.......................................................................................10
SECTION 3.4 ISSUANCE OF SECURITIES...............................................................................10
SECTION 3.5 NO CONFLICTS.........................................................................................11
SECTION 3.6 FINANCIAL STATEMENTS.................................................................................11
SECTION 3.7 ABSENCE OF CERTAIN CHANGES...........................................................................12
SECTION 3.8 ABSENCE OF LITIGATION................................................................................12
SECTION 3.9 ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SECURITIES..............................................12
SECTION 3.10 NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES...................................13
SECTION 3.11 NO GENERAL SOLICITATION.............................................................................13
SECTION 3.12 NO INTEGRATED OFFERING..............................................................................13
SECTION 3.13 DILUTIVE EFFECT.....................................................................................13
SECTION 3.14 EMPLOYEE RELATIONS..................................................................................13
SECTION 3.15 INTELLECTUAL PROPERTY RIGHTS........................................................................14
SECTION 3.16 ENVIORNMENTAL LAWS..................................................................................14
SECTION 3.17 TITLE;LIENS.........................................................................................14
SECTION 3.18 INSURANCE...........................................................................................15
SECTION 3.19 REGULATORY PERMITS..................................................................................15
SECTION 3.20 INTERNAL ACCOUNTING CONTROLS........................................................................15
SECTION 3.21 NO MATERIALLY ADVERSE CONTRACTS,ETC.................................................................15
SECTION 3.22 TAX STATUS..........................................................................................15
SECTION 3.23 TRANSACTIONS WITH AFFILIATES........................................................................16
SECTION 3.24 APPLICATIONS OF TAKEOVER PROTECTIONS................................................................16
SECTION 3.25 RIGHTS AGREEMENT....................................................................................16
SECTION 3.26 FOREIGN CORRUPT PRACTICES...........................................................................16
SECTION 3.27 YEAR 2000 COMPLIANCE...............................................................................17
ARTICLE IV COVENANTS 17
SECTION 4.1 BEST EFFORTS....................................................................................17
SECTION 4.2 FORM D AND BLUE SKY.............................................................................17
SECTION 4.3 REGISTRATION STATEMENT..........................................................................17
SECTION 4.4 REPORTING STATUS................................................................................17
SECTION 4.5 USE OF PROCEEDS.................................................................................18
SECTION 4.6 FINANCIAL INFORMATION...........................................................................18
SECTION 4.7 RESERVATION OF SHARES...........................................................................18
SECTION 4.8 ADDITIONAL FINANCING; RIGHT OF FIRST REFUSAL....................................................18
SECTION 4.9 LISTING.........................................................................................20
SECTION 4.10 EXPENSES........................................................................................20
SECTION 4.11 TRANSACTIONS WITH AFFILIATES....................................................................20
SECTION 4.12 LIMITATION ON FILING REGISTRATION STATEMENTS....................................................21
SECTION 4.13 LETTERS OF CREDIT...............................................................................21
SECTION 4.14 FUTURE INDEBTEDNESS ............................................................................21
ARTICLE V TRANSFER AGENT INSTRUCTIONS............................................................................21
ARTICLE VI CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL........................................................22
SECTION 6.1 DELIVERY OF DOCUMENTS...........................................................................22
SECTION 6.2 PURCHASE PRICE..................................................................................22
SECTION 6.3 REPRESENTATIONS AND WARRANTIES..................................................................23
ARTICLE VII CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE.........................................................23
SECTION 7.1 DELIVERY OF DOCUMENTS...........................................................................23
SECTION 7.2 TRADING OF COMMON STOCK.........................................................................23
SECTION 7.3 REPRESENTATIONS AND WARRANTIES..................................................................23
SECTION 7.4 OPINION.........................................................................................23
SECTION 7.5 DEBENTURE/WARRANT...............................................................................24
SECTION 7.6 BOARD APPROVAL..................................................................................24
SECTION 7.7 RESERVATION OF SHARES...........................................................................24
SECTION 7.8 TRANSFER AGENT..................................................................................24
SECTION 7.9 GOOD STANDING...................................................................................24
SECTION 7.10 OFFICER'S CERTIFICATE...........................................................................24
SECTION 7.11 SECURITIES LAWS.................................................................................24
SECTION 7.12 OTHER...........................................................................................24
ARTICLE VIII INDEMNIFICATION.....................................................................................25
ARTICLE IX GOVERNING LAW; MISCELLANEOUS..........................................................................25
SECTION 9.1 GOVERNING LAW; JURISDICTION; JURY TRIAL.........................................................25
SECTION 9.2 COUNTERPARTS....................................................................................26
SECTION 9.3 HEADINGS........................................................................................26
SECTION 9.4 SEVERABILITY....................................................................................26
SECTION 9.5 ENTIRE AGREEMENT; AMENDMENTS....................................................................26
SECTION 9.6 NOTICES.........................................................................................26
SECTION 9.7 SUCCESSORS AND ASSIGNS..........................................................................28
SECTION 9.8 NO THIRD PARTY BENEFICIARIES....................................................................28
SECTION 9.9 SURVIVAL........................................................................................28
SECTION 9.10 PUBLICITY.......................................................................................29
SECTION 9.11 FURTHER ASSURANCES..............................................................................29
SECTION 9.12 TERMINATION.....................................................................................29
SECTION 9.13 KNOWLEDGE.......................................................................................29
SECTION 9.14 NO STRICT CONSTRUCTION..........................................................................29
SECTION 9.15 REMEDIES........................................................................................29
SECTION 9.16 PAYMENT SET ASIDE...............................................................................30
SCHEDULES
SCHEDULE 3.1 Subsidiaries
SCHEDULE 3.3 Capitalization
SCHEDULE 3.3(i) Preemptive Rights
SCHEDULE 3.3(ii) Debt Securities
SCHEDULE 3.3(iii) Convertible Securities and Warrants Outstanding
SCHEDULE 3.3(iv) Registration Rights
SCHEDULE 3.3(v) Securities Subject to Redemption
SCHEDULE 3.3(vi) Anti-Dilution Triggered
SCHEDULE 3.3(vii) SAR and Phantom Stock Rights
SCHEDULE 3.5 Conflicts
SCHEDULE 3.7 Material Changes
SCHEDULE 3.8 Litigation
SCHEDULE 3.15 Intellectual Property
SCHEDULE 3.17 Title; Liens
SCHEDULE 3.23 Transactions with Affiliates
EXHIBITS
EXHIBIT A Form of Debenture
EXHIBIT B Form of Warrant
EXHIBIT C Form of Registration Rights Agreement
EXHIBIT D Form of Letter of Credit
EXHIBIT E Form of Officer's Certificate
EXHIBIT F Form of Company Counsel Opinion
EXHIBIT G Form of Irrevocable Transfer Agent Instructions
GLOSSARY OF DEFINED TERMS
1933 Act..........................................................................................................6
Affiliate........................................................................................................21
Agreement.........................................................................................................6
Business Day......................................................................................................7
By-laws..........................................................................................................11
Certificate of Incorporation.....................................................................................11
Closing...........................................................................................................6
Closing Date......................................................................................................7
Common Stock......................................................................................................6
Control..........................................................................................................21
Conversion Shares.................................................................................................6
Debenture.........................................................................................................6
Environmental Laws...............................................................................................15
Financial Statements.............................................................................................12
Future Offerings.................................................................................................19
GAAP.............................................................................................................12
Indemnified Liabilities..........................................................................................25
Indemnitees......................................................................................................25
Irrevocable Transfer Agent Instructions..........................................................................22
knowledge........................................................................................................29
Lock-Up Period...................................................................................................19
Material Adverse Effect..........................................................................................10
Offer............................................................................................................19
Principal Market.................................................................................................20
Purchase Price....................................................................................................6
Registration Period..............................................................................................18
Registration Rights Agreement.....................................................................................6
Regulation D......................................................................................................6
Related Party....................................................................................................21
Rule 144..........................................................................................................8
SEC...............................................................................................................6
Securities........................................................................................................7
Subsidiaries.....................................................................................................10
Transaction Documents............................................................................................10
Warrant...........................................................................................................6
Warrant Shares....................................................................................................6
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of June 30,
2000, by and between PINEHURST/L.O.F., LLC, a Cayman Islands limited liability
company (the "Buyer") and GLOBAL TELEPHONE COMMUNICATION, INC., a Nevada
corporation, with offices located at 00 X. Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 60606(the "Company").
RECITALS
WHEREAS, the Company and Buyer are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by either
Section 4(2) of the Securities Act of 1933, as amended ("1933 Act") or Rule 506
of Regulation D ("REGULATION D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the the Act , as amended and the rules
and regulations of the SEC promulgated thereunder.
WHEREAS, the Company has authorized the issuance of a $2,200,000 9.0%
Subordinated Convertible Debenture, which shall be convertible into shares of
the Company's common stock, $.001 par value per share (the "COMMON STOCK") (as
converted, the "CONVERSION SHARES"), in accordance with the terms of the
Subordinated Convertible Debenture, substantially in the form attached hereto as
EXHIBIT A (the "DEBENTURE");
WHEREAS, the Company has authorized the issuance of stock purchase
warrants, in substantially the form attached hereto as EXHIBIT B (the
"WARRANT"), to purchase an aggregate of 1,209,000 shares of Common Stock at
certain exercise prices and that vest as described therein (as exercised,
collectively, the "WARRANT SHARES"); and
WHEREAS, Buyer desires to purchase, and the Company desires to issue and
deliver to Buyer, the Debenture and the Warrant, all upon the terms and
conditions stated in this Agreement;
WHEREAS, upon the closing of the transactions contemplated by this
Agreement, the parties hereto will execute and deliver a Registration Rights
Agreement, in substantially the form attached hereto as EXHIBIT C (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has agreed to
provide certain registration rights under the 1933 Act and applicable state
securities laws.
NOW THEREFORE, in consideration of the mutual covenants of the parties set
forth in this Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and Buyer hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF DEBENTURE AND WARRANT
SECTION 1.1 PURCHASE OF DEBENTURE AND WARRANT.
Subject to the satisfaction (or waiver) of the conditions set forth in
Article 6 and Article 7 below, the Company shall issue and sell to Buyer, and
Buyer agrees to purchase from the Company, the Debenture and the Warrant at the
Closing (the "CLOSING"). The aggregate
purchase price (the "PURCHASE PRICE") for the Debenture and the Warrant at the
Closing shall be $2,200,000.
SECTION 1.2 CLOSING DATE.
The date and time of the Closing (the "CLOSING DATE") shall occur, subject
to notification of satisfaction (or waiver) of the conditions to the Closing set
forth in Article 6 and Article 7 hereof, on June 30, 2000 or such other date as
is mutually agreed to by the Company and the Buyer. Form of Payment.
On the Closing Date, (i) Buyer shall pay the Purchase Price to the Company
for the Debenture and the Warrant, less costs and expenses as described in
SECTION 4.10, and less the principal amount of, and all accrued and unpaid
interest due on the Convertible Promissory Note (defined below) by wire transfer
of immediately available funds in accordance with the Company's written wire
instructions, as delivered to the Buyer within two Business Days prior to the
Closing, and the cancellation and return of the 15% Convertible Promissory Note
dated March 31, 2000 from the Company to the Buyer (the "Convertible Promissory
Note")(ii) the Company shall deliver to Buyer, the Debenture and the Warrant
hereunder, duly executed on behalf of the Company and registered in the name of
Buyer or its designee. "BUSINESS DAY" shall mean any day other than a Saturday
or Sunday or a day on which commercial banks in the City of Chicago, Illinois
are authorized or required by law or executive order to remain closed.
ARTICLE II
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer hereby represents and warrants to the Company that:
SECTION 2.1 INVESTMENT PURPOSE.
Buyer (i) is acquiring the Debenture and the Warrant, (ii) upon conversion
of the Debenture, will acquire the Conversion Shares then issuable, and (iii)
upon exercise of the Warrant, will acquire the Warrant Shares issuable upon
exercise thereof (the Debenture, the Conversion Shares, the Warrant and the
Warrant Shares collectively are referred to herein as the "SECURITIES"), for its
own account for investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act; provided, however, that by
making the representations herein, Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.
SECTION 2.2 ACCREDITED INVESTOR STATUS.
Buyer is an "accredited investor" as that term is defined in Rule 501(a) of
Regulation D.
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SECTION 2.3 RELIANCE ON EXEMPTIONS.
Buyer understands that the Securities are being offered and sold to it in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
Buyer set forth herein in order to determine the availability of such exemptions
and the eligibility of Buyer to acquire such Securities.
SECTION 2.4 INFORMATION.
Buyer and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been requested by
Buyer. Buyer and its advisors, if any, have been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due diligence
investigations conducted by Buyer or its advisors, if any, or its
representatives shall modify, amend or affect Buyer's right to rely on the
Company's representations and warranties as set forth herein. Buyer understands
that its investment in the Securities involves a high degree of risk. Buyer has
sought such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its acquisition of the
Securities.
SECTION 2.5 NO GOVERNMENTAL REVIEW.
Buyer understands that no United States federal or state agency or any
other government or governmental agency has passed on or made any recommendation
or endorsement of the Securities or the fairness or suitability of the
investment in the Securities nor have such authorities passed upon or endorsed
the merits of the offering of the Securities.
SECTION 2.6 TRANSFER OR RESALE.
Buyer understands that except as provided in the Registration Rights
Agreement: (i) the Securities have not been and are not being registered under
the 1933 Act or any state securities laws, and may not be offered for sale,
sold, assigned or transferred unless (A) subsequently registered thereunder, (B)
Buyer shall have delivered to the Company an opinion of counsel, in a generally
acceptable form, to the effect that such Securities to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration, or (C) Buyer provides the Company with reasonable assurance
that such Securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act, as amended (or a successor rule thereto) ("RULE
144"); (ii) any sale of the Securities made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the 0000 Xxx) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to
register such securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
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SECTION 2.7 LEGENDS.
Buyer understands that the certificates or other instruments representing
the Debenture and the Warrant and, until such time as the sale of the Conversion
Shares and the Warrant Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock certificates
representing the Conversion Shares and the Warrant Shares, except as set forth
below, shall bear a restrictive legend in substantially the following form (and
a stop-transfer order may be placed against transfer of such stock
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for sale under the 1933 Act, (ii) in connection with a
sale transaction, such holder provides the Company with an opinion of counsel,
in a generally acceptable form, to the effect that a public sale, assignment or
transfer of the Securities may be made without registration under the 1933 Act,
or (iii) such holder provides the Company with reasonable assurances that the
Securities can be sold pursuant to Rule 144.
SECTION 2.8 VALIDITY; ENFORCEMENT.
This Agreement has been duly and validly authorized, executed and delivered
on behalf of Buyer and is a valid and binding agreement of Buyer enforceable
against Buyer in accordance with its terms, subject as to enforceability to
general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
SECTION 2.9 RESIDENCY.
Buyer is a resident of Cayman Islands.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer that:
SECTION 3.1 ORGANIZATION AND QUALIFICATION.
The Company and each of its "SUBSIDIARIES" (which for purposes of this
Agreement means any entity in which the Company, directly or indirectly, owns
capital stock or holds an equity or similar interest) are corporations duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite corporate
power and authorization to own their properties and to carry on their business
as now being conducted. Each of the Company and its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Agreement, "MATERIAL ADVERSE EFFECT"
means any material adverse effect on the business, properties, assets,
operations, results of operations, or financial condition of the Company and any
of its Subsidiaries, taken as a whole, or on the transactions contemplated
hereby or by the agreements and instruments to be entered into in connection
herewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined below). The Company has
no Subsidiaries except as set forth on SCHEDULE 3.1.
SECTION 3.2 AUTHORIZATION; ENFORCEMENT; VALIDITY.
(i) The Company has the requisite corporate power and authority to
enter into and perform this Agreement, the Debenture, the Warrant, the
Registration Rights Agreement, its obligations pursuant to the Irrevocable
Transfer Agent Instructions (as defined in Article 5), and each of the
other agreements entered into by the parties hereto in connection with the
transactions contemplated by this Agreement (collectively, the "TRANSACTION
DOCUMENTS"), and to issue the Securities in accordance with the terms
hereof and thereof; (ii) the execution and delivery of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including, without limitation the issuance
of the Debenture and the Warrant, and the reservation for issuance and the
issuance of the Conversion Shares and the Warrant Shares issuable upon
conversion or exercise thereof, have been duly authorized by the Company's
Board of Directors and no further consent or authorization is required by
the Company, its Board of Directors or its stockholders; (iii) the
Transaction Documents have been duly executed and delivered by the Company;
and (iv) the Transaction Documents constitute the valid and binding
obligation of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
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moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of creditors' rights and remedies.
SECTION 3.3 CAPITALIZATION.
As of the date hereof, the authorized capital stock of the Company consists
of (i) 25,000,000 shares of Common Stock, of which as of the date hereof,
17,910,751 shares are issued and outstanding, 500,000 shares are reserved for
issuance pursuant to the Company's stock option and purchase plans and 0 shares
are issuable and reserved for issuance pursuant to securities (other than the
Debenture and the Warrant) exercisable or exchangeable for, or convertible into,
shares of Common Stock and (ii) 0 shares of preferred stock, of which as of the
date hereof, 0 shares designated as Series 0 Preferred, which may be converted
into 0 shares of Common Stock, are issued and outstanding. All of such
outstanding shares have been, or upon issuance will be, validly issued and are
fully paid and nonassessable. Except as disclosed on SCHEDULE 3.3, (i) no shares
of the Company's capital stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the
Company, (ii) there are no outstanding debt securities, (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iv) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement), (v) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement, and (vii) the Company does not
have any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to the Buyer true and
correct copies of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "CERTIFICATE OF INCORPORATION"), and the
Company's By-laws, as amended and as in effect on the date hereof (the
"BY-LAWS"), and the terms of all securities convertible into or exercisable for
Common Stock and the rights of the holders thereof in respect thereto.
SECTION 3.4 ISSUANCE OF SECURITIES.
Upon issuance, the Debenture and the Warrant will be, and upon conversion
or exercise in accordance with the Debenture or the Warrant, as the case may be,
the Conversion Shares and the Warrant Shares will be, validly issued, fully paid
and non-assessable and free from all taxes, liens and charges with respect to
the issue thereof, with the holders being entitled to all
10
rights accorded to a holder of Common Stock. As of the closing date, at least
50,000,000 shares of Common Stock (subject to adjustment pursuant to the
Company's covenant set forth in SECTION 4.6 below) shall have been duly
authorized and reserved for issuance upon conversion of the Debenture and upon
exercise of the Warrant. Provided that the representations and warranties of the
Buyer set forth in Sections 2.1 and 2.2 are true and correct when made and as of
the Closing, issuance by the Company of the Securities will be and is exempt
from registration under the provisions of Rule 506 as promulgated under the 1933
Act.
SECTION 3.5 NO CONFLICTS.
Except as disclosed on SCHEDULE 3.5, the execution, delivery and
performance of the Transaction Documents by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby (including,
without limitation, the reservation for issuance and issuance of the Conversion
Shares and the Warrant Shares) will not (i) result in a violation of the
Certificate of Incorporation or the By-laws or (ii) to the knowledge of the
company, conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any material
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or any of its Subsidiaries or by which
any property or asset of the Company or any of its Subsidiaries is bound or
affected., except in each case where such conflict, default, or violation would
not have a material adverse effect. xcept as disclosed on SCHEDULE 3.5, neither
the Company nor its Subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation or By-laws or their organizational
charter or by-laws, respectively. To the knowledge of the Company xcept as
disclosed on SCHEDULE 3.5, neither the Company nor any of its Subsidiaries is in
violation of any term of or in default under any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to Company or its Subsidiaries. The business of
the Company and its Subsidiaries is not being conducted, and shall not be
conducted, in violation of any law, ordinance, regulation of any governmental
entity. Except as specifically contemplated by this Agreement and as required
under the 1933 Act or applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by this Agreement or any other of the
Transaction Documents, in each case in accordance with the terms hereof or
thereof. Except as disclosed on SCHEDULE 3.5, all consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company and its Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
SECTION 3.6 FINANCIAL STATEMENTS.
The Company's balance sheet and statements of income and cash flows for the
fiscal years ended December, 1999 and the Company's balance sheet as of
December, 1999 for the period then ended (all such financial statements being
hereinafter referred to as the "FINANCIAL STATEMENTS") each of which has been
previously delivered to the Buyer, have been prepared in
11
accordance with United States generally accepted accounting principles,
consistently applied ("GAAP"), during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes, may be condensed or summary statements or may be subject to normal
year-end adjustments or accruals consistent with past practice) and fairly
present in all respects the financial position of the Company as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments or accruals consistent with past practice).
SECTION 3.7 ABSENCE OF CERTAIN CHANGES.
Except as disclosed on SCHEDULE 3.7, since [DATE OF LAST AUDITED
FISCAL-YEAR BALANCE SHEET] there has been no material adverse change and no
material adverse development in the business, properties, operations, financial
condition, results of operations of the Company or its Subsidiaries. The Board
of Directors of the Company has not discussed, and the Company has not taken any
steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company or any of its Subsidiaries
have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings.
SECTION 3.8 ABSENCE OF LITIGATION.
There is no action, suit, proceeding, inquiry or investigation before or by
any court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company, the Common Stock or any of the
Company's Subsidiaries or any of the Company's or the Company's Subsidiaries'
officers or directors in their capacities as such, except as set forth in
SCHEDULE 3.8.
SECTION 3.9 ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SECURITIES.
The Company acknowledges and agrees that the Buyer is acting solely in the
capacity of arm's length purchaser with respect to the Transaction Documents and
the transactions contemplated hereby and thereby. The Company further
acknowledges that Buyer is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby and any advice given by
Buyer or any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to Buyer's purchase of the Securities. The Company further represents
to Buyer that the Company's decision to enter into the Transaction Documents has
been based solely on the independent evaluation by the Company and its
representatives.
12
SECTION 3.10 NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES.
No event, liability, development or circumstance has occurred or to the
knowledge of the Company exists, or is contemplated to occur, with respect to
the Company or its Subsidiaries or their respective business, properties,
prospects, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws on a registration
statement filed with the SEC relating to an issuance and sale by the Company of
its Common Stock and which has not been publicly announced.
SECTION 3.11 NO GENERAL SOLICITATION.
Neither the Company, nor any of its affiliates, nor any person acting on its or
their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the 0000 Xxx) in
connection with the offer or sale of the Securities.
SECTION 3.12 NO INTEGRATED OFFERING.
Neither the Company, nor any of its affiliates, nor any person acting on
its or their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of any of the Securities under the 1933 Act or cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
any exchange or automated quotation system on which any of the securities of the
Company are listed or designated, nor will the Company or any of its
Subsidiaries take any action or steps that would require registration of any of
the Securities under the 1933 Act or cause the offering of the Securities to be
integrated with other offerings that would require such registration.
SECTION 3.13 DILUTIVE EFFECT.
The Company understands and acknowledges that the number of Conversion
Shares issuable upon conversion of the Debenture or Warrant Shares issuable upon
exercise of the Warrant will increase in certain circumstances. The Company
further acknowledges that its obligation to issue Conversion Shares upon
conversion of the Debenture in accordance with this Agreement and the Debenture
and its obligation to issue the Warrant Shares upon exercise of the Warrant in
accordance with this Agreement and the Warrant, is, in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.
SECTION 3.14 EMPLOYEE RELATIONS.
Neither the Company nor any of its Subsidiaries is involved in any labor
dispute nor, to the knowledge of the Company or any of its Subsidiaries, is any
such dispute threatened. None of the Company's or its Subsidiaries' employees is
a member of a union, neither the Company nor any of its Subsidiaries is a party
to a collective bargaining agreement, and the Company and its Subsidiaries
believe that their relations with their employees are good. No executive officer
(as defined in Rule 501(f) of the 0000 Xxx) has notified the Company that such
officer intends to leave the Company or otherwise terminate such officer's
employment with the Company. No
13
executive officer, to the best knowledge of the Company and its Subsidiaries,
is, or is now expected to be, in violation of any term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters.
SECTION 3.15 INTELLECTUAL PROPERTY RIGHTS.
To the knowledge of the Company and its Subsidiaries, the Company and its
Subsidiaries own or possess adequate rights or licenses to use all material
trademarks, trade names, service names, service marks, service xxxx
registrations, service names, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary to
conduct their respective businesses as now conducted except as set forth on
SCHEDULE 3.15. Except as set forth on SCHEDULE 3.15, none of the Company's
material trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights have expired or terminated, or are expected to expire or
terminate within two years from the date of this Agreement. The Company and its
Subsidiaries do not have any knowledge of any infringement by the Company or its
Subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service xxxx
registrations, trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by
others and, except as set forth on SCHEDULE 3.15, there is no claim, action or
proceeding being made or brought against, or to the Company's knowledge, being
threatened against, the Company or its Subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service names,
service marks, service xxxx registrations, trade secret or other infringement,
and the Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.
SECTION 3.16 ENVIRONMENTAL LAWS.
To the knowledge of the Company and its Subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval where, in each of the three
foregoing cases, the failure to so comply would have, individually or in the
aggregate, a Material Adverse Effect.
SECTION 3.17 TITLE; LIENS.
The Company and its Subsidiaries have good title to all personal property
owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as are described in SCHEDULE 3.17 or such as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and any of its Subsidiaries.
14
The Company and its Subsidiaries do not own any real property. Any real property
and facilities held under lease by the Company and any of its Subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its Subsidiaries.
SECTION 3.18 INSURANCE.
The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company and its Subsidiaries are engaged. Neither the
Company nor any such Subsidiary has been refused any insurance coverage sought
or applied for and neither the Company nor any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business or operations of the Company and its Subsidiaries, taken as a
whole.
SECTION 3.19 REGULATORY PERMITS.
To the knowledge of the Companies, the Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
SECTION 3.20 INTERNAL ACCOUNTING CONTROLS.
The Company and each of its Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
SECTION 3.21 NO MATERIALLY ADVERSE CONTRACTS, ETC.
Neither the Company nor any of its Subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order, rule or
regulation which in the judgment of the Company's officers has or is expected in
the future to have a Material Adverse Effect.
SECTION 3.22 TAX STATUS.
The Company and each of its Subsidiaries has made or filed all federal
and state income and all other tax returns, reports and declarations required by
any jurisdiction to which it is
15
subject (unless and only to the extent that the Company and each of its
Subsidiaries has set aside on its books reserves reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books reserves reasonably
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. To the knowledge of the
Company after due investigation, there are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know ofno basis for any such claim.
SECTION 3.23 TRANSACTIONS WITH AFFILIATES.
Except as set forth on SCHEDULE 3.23 and other than the grant of stock
options disclosed on SCHEDULE 3.3, none of the officers, directors, or employees
of the Company is presently a party to any transaction with the Company or any
of its Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for the rental of real or
personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
SECTION 3.24 APPLICATION OF TAKEOVER PROTECTIONS.
The Company and its Board of Directors have taken all necessary action, if
any, in order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
or the laws of the state of the Company's incorporation and such other state, to
the extent allowed under such state law, if any, where the Company conducts its
principal operation which is or could become applicable to the Buyer as a result
of the transactions contemplated by this Agreement, including, without
limitation, the Company's issuance of the Securities and Buyer's ownership of
the Securities.
SECTION 3.25 RIGHTS AGREEMENT.
The Company has not adopted a shareholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of Common Stock or
a change in control of the Company.
SECTION 3.26 FOREIGN CORRUPT PRACTICES.
To the knowledge of the Chief Executive Officer, neither the Company, nor
any of its Subsidiaries, nor any director, officer, agent, employee or other
person acting on behalf of the Company or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, the Company or any of its
Subsidiaries used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt
16
Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
SECTION 3.27 YEAR 2000 COMPLIANCE.
The Company has initiated a review and assessment of all areas within its
and each Subsidiaries' business and operations that could be adversely affected
by the "Year 2000 Problem" (that is, the risk that computer applications used by
the Company or any of the Subsidiaries may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to, and any date
after, December 31, 1999). Based on the foregoing, the Company believes that all
of its and its Subsidiaries' computer applications are reasonably expected to be
able to perform properly date-sensitive functions for all dates before and after
January 1, 2000, except to the extent that a failure to do so would not
reasonably be expected to have a Material Adverse Effect.
ARTICLE IV
COVENANTS
SECTION 4.1 BEST EFFORTS.
Each party to this Agreement shall use its best efforts to timely satisfy
each of the conditions to be satisfied by it as provided in Article 6 and
Article 7 of this Agreement.
SECTION 4.2 FORM D AND BLUE SKY.
If the sale of Securities hereunder is made in reliance on Reg "D" under
the 1933 Act, the Company agrees to file a Form D with respect to the Securities
as required under Regulation D and to provide a copy thereof to Buyer promptly
after such filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for or to qualify the Securities for sale to the Buyer at the
Closing pursuant to this Agreement under applicable securities or "Blue Sky"
laws of the states of the United States, and shall provide evidence of any such
action so taken to the Buyer on or prior to the Closing Date. The Company shall
make all filings and reports relating the offer and sale of the Securities
required under applicable securities or "Blue Sky" laws of the states of the
United States following the Closing Date.
SECTION 4.3 REGISTRATION STATEMENT.
As soon as practicable but in no event later than sixty (60) days after the
Closing Date, the Company shall prepare, and file with the SEC a Registration
Statement or Registration Statements (as is necessary) on Form S-1 (or the
available form) covering the resale of the conversion Shares and the Warrant
Shares.
SECTION 4.4 REPORTING STATUS.
Until the earlier of (i) the date which is one year after the date as of
which the Investors (as that term is defined in the Registration Rights
Agreement) may sell all of the Conversion
17
Shares and the Warrant Shares without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto), or (ii) the date on which
(A) the Investors shall have sold all the Conversion Shares and the Warrant
Shares and (B) no amounts under the Debenture are due and owing and no Warrants
are outstanding (the "REGISTRATION PERIOD"), the Company shall file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act would otherwise permit such termination.
SECTION 4.5 USE OF PROCEEDS.
The Company will use the proceeds from the sale of the Debenture and the
related Warrant for certain acquisitions and joint venture partnership capital
contributions and financing obligations, the design, purchase, construction and
installation of the Company's IP telephony network infrastructure, and general
working capital purposes.
SECTION 4.6 FINANCIAL INFORMATION.
The Company agrees to send the following to each Buyer (and their permitted
transferees, if any) during the Registration Period: (i) within two (2) days
after the filing thereof with the SEC, a notice of filing its Annual Report on
Form 10-KSB (or other required form), its Quarterly Reports on Form 10-QSB (or
other required form), any Current Reports on Form 8-K and any registration
statements (other than on Form S-8) or amendments filed pursuant to the 1933
Act; provided, that if any such report is not filed with the SEC through XXXXX
then the Company shall deliver a copy of such report to Buyer by facsimile
within two days after such report is filed with the SEC; and (ii) copies of any
notices and other information made available or given to the stockholders of the
Company generally, contemporaneously with the making available or giving thereof
to the stockholders.
SECTION 4.7 RESERVATION OF SHARES.
At the Closing, the Company shall take all action necessary to have
authorized, and reserved for the purpose of issuance, no less than 150% of the
number of shares of Common Stock needed to provide for the issuance of the
shares of Common Stock upon conversion of the Debenture and 100% of the number
of shares of Common Stock needed to provide for the issuance of the shares of
Common Stock upon exercise of the entire Warrant. Following the Closing Date,
the Company shall take all actions necessary to at all times have authorized,
and reserved for the purpose of issuance, no less than 130% of the number of
shares of Common Stock needed to provide for the issuance of the shares of
Common Stock upon conversion of the Debenture and 100% of the shares of Common
Stock needed to provide for the issuance of the shares of Common Stock upon
exercise of the entire Warrant.
SECTION 4.8 ADDITIONAL FINANCING; RIGHT OF FIRST REFUSAL.
(a) The Company agrees that during the period beginning on the date hereof
and ending on the date that no amounts are due and owing under the Debenture,
neither the Company nor its Subsidiaries will negotiate or contract with any
party to issue any variable-priced debt financing with an equity component or
issue any variable priced securities convertible or exchangeable into or for
equity securities of the Company or any Subsidiary
18
(including debt securities with an equity component) in any form without the
express prior written consent of Buyer, which consent shall not be unreasonably
withheld.
(b) In addition, subject to the exceptions described below, the Company
agrees that during the two (2) year period beginning on the date hereof (the
"LOCK-UP PERIOD"), the Buyer shall have a right of first refusal with respect to
any equity or debt financings by the Company or any Subsidiary in any form
("FUTURE OFFERINGS"). With respect to each Future Offering, the Company or its
Subsidiaries shall not consummate a transaction with a buyer or investor unless
the Company or such Subsidiary first obtains a legally enforceable written offer
for such transaction (the "OFFER") and gives the Buyer or its designee written
notice of the intent to accept such Offer, which notice shall set forth the name
and address of the proposed buyer or investor and all the terms and conditions
of the Offer, and which notice shall constitute an offer to the Buyer or its
designee to participate (x) in full but not in part in such Future Offering (to
the extent such Future Offering is a debt offering or an equity offering for an
amount not in excess of $5,000,000) or (y) in full or in part (to the extent
such Future Offering is an equity offering in excess of $5,000,000) in such
Future Offering, on the same terms and conditions as those contained in the
notice. The Buyer (or its designee) may exercise its right of first refusal by
giving written notice to the Company of its intention to fund or participate in
such Future Offering within five (5) calendar days following the Buyer's receipt
of such notice, which notice to the Company shall state the quantity of
securities to be purchased by the Buyer in such Future Offering. In the event
the Buyer or its designee fails to exercise its right of first refusal and the
Future Offering is not consummated with such third party within forty-five (45)
calendar days of the date of the notice to the Buyer of the Future Offering, the
Company may not consummate the Future Offering unless the offer from the third
party shall be deemed to be a new offer and the right to participate in such
Future Offering is reoffered to the Buyer in accordance with the foregoing
procedure. The Buyer shall not be required to participate or exercise its right
of first refusal with respect to a particular Future Offering in order to
exercise its right of first refusal with respect to later Future Offerings. The
right of first refusal with respect to Future Offerings as described in this
SECTION 4.8 shall not apply to the following Permitted Offerigs (PERMITTED
OFFERINGS): (i) any transaction involving the Company's issuances of securities
(A) as consideration in a merger or consolidation, (B) in connection with any
strategic partnership or joint venture (the primary purpose of which is not to
raise equity capital), or (C) as consideration for the acquisition of a
business, product, license or other assets by the Company, (ii) the issuance of
Common Stock in an underwritten public offering (including a "best efforts"
underwritten public offering), (iii) the issuance of Common Stock in any amount
so long as the price to be paid for such Common Stock is defined at the closing
of such transaction and is not in any way variable in nature, (iv) the issuance
of securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof and listed on
SCHEDULE 3.3, or (v) the grant of additional options or warrants, or the
issuance of additional securities, under any existing Company stock option plan,
restricted stock plan or stock purchase plan for the benefit of the Company's
employees or directors, as in effect on the date hereof without amendment
hereafter, the material terms of which are set forth on SCHEDULE 3.3.
19
SECTION 4.9 LISTING.
The Company shall use its best efforts to promptly secure the listing of
all of the Registrable Securities (as defined in the Registration Rights
Agreement) on NASDAQ Small Cap Market or other available national exchange or
trading market (the "PRINCIPAL MARKET") (subject to official notice of issuance)
and shall maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all Registrable Securities from time to time issuable
under the terms of the Transaction Documents. The Company shall promptly solicit
stockholder approval of the Company's issuance of all of the Securities
described in this Agreement, if such approval will facilitate prompt listing of
the Registrable Securities on the Principal Market. Upon such listing on the
Principal Market neither the Company nor any of its Subsidiaries shall take any
action which would be reasonably expected to result in the delisting or
suspension of the Common Stock on the Principal Market. The Company shall
promptly, and in no event later than the following Business Day, provide to
Buyer copies of any notices it receives from the Principal Market regarding any
continued eligibility of the Common Stock for listing on such automated
quotation system or securities exchange. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this SECTION 4.9.
SECTION 4.10 EXPENSES.
[INTENTIONALLY BLANK]
SECTION 4.11 TRANSACTIONS WITH AFFILIATES.
So long as (i) any amounts under the Debenture are outstanding or (ii)
Buyer owns any Conversion Shares or Warrant Shares, the Company shall not, and
shall cause each of its subsidiaries not to, enter into, amend, modify or
supplement, or permit any subsidiary to enter into, amend, modify or supplement,
any agreement, transaction, commitment or arrangement with any of its or any
subsidiary's officers, directors, persons who were officers or directors at any
time during the previous two years, stockholders who beneficially own 5% or more
of the Common Stock, or affiliates or with any individual related by blood,
marriage or adoption to any such individual or with any entity in which any such
entity or individual owns a 5% or more beneficial interest (each a "RELATED
PARTY"), except for (a) customary employment arrangements and benefit programs
on reasonable terms, (b) any agreement, transaction, commitment or arrangement
on an arms-length basis on terms no less favorable than terms which would have
been obtainable from a person other than such Related Party, or (c) any
agreement, transaction, commitment or arrangement which is approved by a
majority of the disinterested directors of the Company. For purposes hereof, any
director who is also an officer of the Company or any subsidiary of the Company
shall not be a disinterested director with respect to any such agreement,
transaction, commitment or arrangement. "AFFILIATE" or "affiliate" for purposes
hereof means, with respect to any person or entity, another person or entity
that, directly or indirectly, (i) has a 5% or more equity interest in that
person or entity, (ii) has 5% or more common ownership with that person or
entity, (iii) controls that person or entity, or (iv) shares common control with
that person or entity. "CONTROL" or "controls" for purposes hereof means that a
person or entity has the power, direct or indirect, to conduct or govern the
policies of another person or entity.
20
SECTION 4.12 LIMITATION ON FILING REGISTRATION STATEMENTS.
Except in connection with existing registration obligations set forth on
SCHEDULE 3.3(iv), registration obligations set forth herein or in the
Registration Rights Agreement, or with respect to any future offerings permitted
under Section 4.8(b)the Company shall not file a registration statement (other
than the Registration Statement (as defined in the Registration Rights
Agreement) or a registration statement on Form S-8) covering the sale or resale
of shares of Common Stock with the SEC.
SECTION 4.13 LETTERS OF CREDIT.
The Company covenants and agrees that so long as any amounts are
outstanding under the Debenture, it will procure an irrevocable Letter of Credit
in an amount equal to $1,650,000 and maintain an irrevocable Letter of Credit in
an amount equal to the lesser of $1,650,000 or 75% of the outstanding principal
balance of the Debenture, as calculated from time to time, for the benefit of
Buyer, and which Letter of Credit has been issued by a bank satisfactory to
Buyer in its sole discretion and in the form attached hereto as EXHIBIT D.
The Company further covenants and agrees that upon any Event of Default (as
defined in the Debenture) under the Debenture, Buyer shall be permitted to
pursue any and all remedies available to Buyer as the beneficiary of such Letter
of Credit, without regard to amounts and penalties which may otherwise be due
and owing to Buyer under the terms of such Debenture, or any other remedies
available to Buyer as a result of such Event of Default, whether pursuant to
such Debenture, this Agreement or otherwise.
SECTION 4.14 FUTURE INDEBTEDNESS
While there is a principal amount outstanding under the Debenture, the
Company shall not create, incur, assume, or suffer to exist, or permit any of
its Subsidiaries to create, incur, assume, or suffer to exist, any debt other
than (i) existing debt and any refinancing thereof, (ii) the Debenture, (iii)
senior secured indebtedness , and (iv) equipment vendor leases.
ARTICLE V
TRANSFER AGENT INSTRUCTIONS
The Company shall issue irrevocable instructions to its transfer agent, and
any subsequent transfer agent, to issue certificates, registered in the name of
Buyer or its respective nominee(s), for the Conversion Shares and the Warrant
Shares in such amounts as specified from time to time by the Buyer to the
Company upon conversion of amounts outstanding under the Debenture or exercise
of the Warrant (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). Prior to
registration of the Conversion Shares and the Warrant Shares under the 1933 Act,
all such certificates shall bear the restrictive legend specified in SECTION 2.7
of this Agreement. Upon such registration of the Common Shares and the Warrant
Shares under the 1933 Act, the Company shall promptly notify the transfer agent
that any Common Shares and Warrant Shares
21
issued and subject to resale pursuant to the Registration Statement after the
effective date of such Registration Statement shall be issued without such
restrictive legend. The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Article 5, and stop
transfer instructions to give effect to SECTION 2.6 hereof (in the case of the
Conversion Shares and the Warrant Shares, prior to registration of the
Conversion Shares and the Warrant Shares under the 0000 Xxx) will be given by
the Company to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. Nothing in
this Article 5 shall affect in any way the Buyer's obligations and agreements
set forth in SECTION 2.7 to comply with all applicable prospectus delivery
requirements, if any, upon resale of the Securities. If the Buyer provides the
Company with an opinion of counsel, in a generally acceptable form, to the
effect that a public sale, assignment or transfer of the Securities may be made
without registration under the 1933 Act or the Buyer provides the Company with
reasonable assurances that the Securities can be sold pursuant to Rule 144, the
Company shall permit the transfer, and, in the case of the Conversion Shares and
the Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by Buyer and
without any restrictive legend. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Buyer by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Article 5 will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Article 5, that the
Buyer shall be entitled, in addition to all other available remedies, to an
order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any
bond or other security being required.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company hereunder to issue and sell the Debenture and
the Warrant to the Buyer at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing Buyer with prior written
notice thereof:
SECTION 6.1 DELIVERY OF DOCUMENTS.
The Buyer shall have executed each of the Transaction Documents to which it
is a party and delivered the same to the Company.
SECTION 6.2 PURCHASE PRICE.
The Buyer shall have delivered to the Company the Purchase Price for the
Debenture and the Warrant being purchased by the Buyer at the Closing by wire
transfer of immediately available funds pursuant to the wire instructions
provided by the Company, as well as the cancelled Convertible Promissory Note.
22
SECTION 6.3 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Buyer shall be true and correct
in all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date), and the Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Buyer on or prior to the Closing Date.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE
The obligation of the Buyer hereunder to purchase the Debenture and the
Warrant at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for Buyer's sole benefit and may be waived by the Buyer at any time in its sole
discretion by providing the Company with prior written notice thereof:
SECTION 7.1 DELIVERY OF DOCUMENTS.
The Company shall have executed each of the Transaction Documents and
delivered the same to the Buyer.
SECTION 7.2 TRADING OF COMMON STOCK.
The Common Stock shall be quoted on the OTC BB.
SECTION 7.3 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company shall be true and correct
as of the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company on or prior to the Closing Date. The
Buyer shall have received a certificate, executed by each of the Chief Executive
Officer and the Chief Financial Officer of the Company, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may be reasonably
requested by the Buyer including, without limitation, an update as of the
Closing Date regarding the representation contained in SECTION 3.3 above, in the
form attached hereto as EXHIBIT E.
SECTION 7.4 OPINION.
The Buyer shall have received the opinion of the Company's counsel,
Morrision Xxxxx Singer & Xxxxxxxxx, LLP dated as of the Closing Date, in form,
scope and substance reasonably satisfactory to the Buyer and in substantially
the form of EXHIBIT F attached hereto.
23
SECTION 7.5 DEBENTURE/WARRANT.
The Company shall have executed and delivered to the Buyer the Debenture
and the Warrant being purchased by the Buyer at the Closing.
SECTION 7.6 BOARD APPROVAL.
The Board of Directors of the Company shall have adopted resolutions
consistent with SECTION 3.2 above and in a form reasonably acceptable to the
Buyer.
SECTION 7.7 RESERVATION OF SHARES.
As of the Closing Date, the Company shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Debenture and the exercise of the Warrant, at least 3,100,000
shares of Common Stock.
SECTION 7.8 TRANSFER AGENT.
The Irrevocable Transfer Agent Instructions, in the form of EXHIBIT G
attached hereto, shall have been delivered to and acknowledged in writing by the
Company's transfer agent.
SECTION 7.9 GOOD STANDING.
The Company shall have delivered to the Buyer a certified copy of the
Certificate of Incorporation and a certificate of good standing of the Company
and each Subsidiary, in such corporation's state of incorporation issued by the
Secretary of State of such state of incorporation as of a date within 10 days of
the Closing Date.
SECTION 7.10 OFFICER'S CERTIFICATE.
The Company shall have delivered to the Buyer a secretary's certificate,
dated as the Closing Date, as to (i) the resolutions described in SECTION 7.6,
and (ii) the Bylaws, each as in effect at the Closing.
SECTION 7.11 SECURITIES LAWS.
The Company shall have made all filings under all applicable federal and
state securities laws necessary to consummate the issuance of the Securities
pursuant to this Agreement in compliance with such laws.
SECTION 7.12 OTHER.
The Company shall have delivered to the Buyer such other documents relating
to the transactions contemplated by this Agreement as the Buyer or its counsel
may reasonably request.
24
ARTICLE VIII
INDEMNIFICATION
In consideration of the Buyer's execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Buyer and each other holder of
the Securities and all of their stockholders, officers, directors, employees and
direct or indirect investors and any of the foregoing person's agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"INDEMNITEES") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance by the
Company or enforcement of the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, (d) any transaction
financed or to be financed, in whole or in part, directly or indirectly, with
the proceeds of the issuance of the Securities or (e) the status of the Buyer or
such other holder of the Securities as an investor in the Company. To the extent
that the foregoing undertaking by the Company may be unenforceable for any
reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
ARTICLE IX
GOVERNING LAW; MISCELLANEOUS
SECTION 9.1 GOVERNING LAW; JURISDICTION; JURY TRIAL.
All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding
25
by mailing a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES
NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
SECTION 9.2 COUNTERPARTS.
This Agreement may be executed in two or more identical counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party; provided that a facsimile signature shall be considered due
execution and shall be binding upon the signatory thereto with the same force
and effect as if the signature were an original, not a facsimile signature.
SECTION 9.3 HEADINGS.
The headings of this Agreement are for convenience of reference and shall
not form part of, or affect the interpretation of, this Agreement.
SECTION 9.4 SEVERABILITY.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
SECTION 9.5 ENTIRE AGREEMENT; AMENDMENTS.
This Agreement supersedes all other prior oral or written agreements
between the Buyer, the Company, their affiliates and persons acting on their
behalf with respect to the matters discussed herein, and this Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the Buyer, and no provision
hereof may be waived other than by an instrument in writing signed by the party
against whom enforcement is sought.
SECTION 9.6 NOTICES.
Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one business day after deposit with a nationally
recognized
26
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
GLOBAL TELEPHONE COMMUNICATION, Inc.
00 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Suite 1800
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xx. Xxxxxx X. Xxxxxxxxxxx
With a copy to:
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X.Xxxxxx, Esq.
If to the Transfer Agent:
______________________________________
______________________________________
______________________________________
Telephone: ____________________
Facsimile: ____________________
Attention: ____________________
If to the Buyer:
PINEHURST/L.O.F., LLC
C/O JE Xxxxxxx, LLC
000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000)000-0000
Facsimile: (000)000-0000
Attention: Xxxxxx Xxxxxxx
With a copy to:
Xxxxxxxx & Xxxxx
000 X Xxxxx Xx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxxx, Esq.
27
or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party five days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
nationally recognized overnight delivery service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from a nationally recognized
overnight delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.
SECTION 9.7 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Buyer (if Buyer has not assigned all of its rights
hereunder) and Buyer's permitted assigns, if any, including by merger,
consolidation or reorganization, except pursuant to a Special Event, merger,
consolidation or reorganization (as defined in SECTION 2(b)(ii) of the
Debenture) with respect to which the Company has satisfied its obligations under
SECTION 2 of the Debenture. Buyer may assign all or any part of its rights
hereunder to any affiliate of Buyer or to any lender used by Buyer to finance
the transactions contemplated hereby, without the consent of the Company;
provided, however, that any such assignment shall not release the Buyer from its
obligations hereunder unless such obligations are assumed by such assignee and
the Company has consented to such assignment and assumption. Notwithstanding
anything to the contrary contained in the Transaction Documents, Buyer shall be
entitled to pledge the Securities in connection with a bona fide margin account
or to any lender used by Buyer to finance the transactions contemplated hereby.
SECTION 9.8 NO THIRD PARTY BENEFICIARIES.
This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other person.
SECTION 9.9 SURVIVAL.
Unless this Agreement is terminated under SECTION 9.12, the representations
and warranties of the Company and the Buyer contained in Articles 2 and 3, the
agreements and covenants set forth in Article 9, and the indemnification
provisions set forth in Article 8 shall survive the Closing for the period that
the Debenture remains outstanding, and the agreements and covenants set forth in
Articles 4 and 5 shall survive the Closing for the longer of the period
28
that Buyer holds any Securities, or such time as such agreements and covenants
are no longer enforceable under applicable statutes of limitations.
SECTION 9.10 PUBLICITY.
The Buyer shall have the right to approve before issuance any press
releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of Buyer, to make any press release or other public
disclosure with respect to such transactions as is required by applicable law
and regulations (although the Buyer shall be consulted by the Company in
connection with any such press release or other public disclosure prior to its
release and shall be provided with a copy thereof).
SECTION 9.11 FURTHER ASSURANCES.
Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
SECTION 9.12 TERMINATION.
In the event that the Closing shall not have occurred on or before ten (10)
business days from the date hereof due to the Company's or the Buyer's failure
to satisfy the conditions set forth in Articles 6 and 7 above (and the
nonbreaching party's failure to waive such unsatisfied condition(s)), the
nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party; provided, however, that if this
Agreement is terminated pursuant to this SECTION 9.12, the Company shall remain
obligated to reimburse the nonbreaching Buyer for the expenses described in
SECTION 4.9 above.
SECTION 9.13 KNOWLEDGE.
As used herein "KNOWLEDGE" shall mean, with respect to a person,
information that is possessed, or should have been possessed after due inquiry,
by such person.
SECTION 9.14 NO STRICT CONSTRUCTION.
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
SECTION 9.15 REMEDIES.
The Buyer and each holder of the Securities shall have all rights and
remedies set forth in the Transaction Documents and the Debenture and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any person having any rights under any
29
provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
SECTION 9.16 PAYMENT SET ASIDE.
To the extent that the Company makes a payment or payments to the Buyer
hereunder or pursuant to the Debenture or Warrant or the Buyer enforces or
exercises its rights hereunder or thereunder, and such payment or payments or
the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
* * * * * *
30
IN WITNESS WHEREOF, the Buyer and the Company have caused this Agreement to
be duly executed and delivered as of the date first written above.
COMPANY:
GLOBAL TELEPHONE COMMUNICATION, INC.
By: _______________________________________
[Name]
[Title]
BUYER:
PINEHURST/L.O.F., LLC
By: _______________________________________
an authorized signatory
EXHIBIT A
FORM OF DEBENTURE
EXHIBIT B
FORM OF WARRANT
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT D
FORM OF LETTER OF CREDIT
EXHIBIT E
FORM OF OFFICER'S CERTIFICATE
EXHIBIT F
FORM OF COMPANY COUNSEL OPINION
EXHIBIT G
FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
