Exhibit 10.9
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iVoice.com, Inc.
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THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Offering: Up to $275,000
This offering consists of $275,000 of IVoice.com, Inc. Convertible
Debentures, convertible into Common Stock as provided in this Subscription
Agreement. This offering is for a minimum of $150,000 and a maximum of
$275,000
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SUBSCRIPTION AGREEMENT
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SUBSCRIPTION AGREEMENT
This Subscription Agreement ("Agreement") is made between IVoice.com,
Inc., ("Company") a Delaware corporation, and the undersigned prospective
purchaser ("Purchaser") who is subscribing hereby for the Company's convertible
debentures (the "Debentures"), to purchase up to $275,000 of the Company's Class
A Common Stock, par value $.01 per share common stock ("Common Stock"). A copy
of the form of Debenture is attached hereto as Exhibit A. The Debentures being
offered will be separately transferable, to the extent that any such transfer is
permitted by law. The Debentures and the underlying shares of Common Stock are
collectively referred to as the "Securities". This subscription is submitted to
you in accordance with and subject to the terms and conditions described in this
Subscription Agreement together with any Exhibits thereto, relating to an
offering (the "Offering") of the Company's Securities. This Offering is
comprised of an offering of the Securities to accredited investors in accordance
with the exemption from registration under Section 4(2) of the Securities Act of
1933, as amended (the "1933 Act"), and Rule 506 of Regulation D promulgated
under the 1933 Act ("Regulation D").
1. SUBSCRIPTION.
(a) The Purchaser hereby subscribes for that amount of the Company's
Debentures as is stated on the "Signature Page" of this Agreement. The
Debentures shall pay 8% cumulative interest in cash or in freely trading Common
Stock of the Company, at the Company's option, at the time of each conversion.
If accrued interest shall be paid in Common Stock, the number of shares of the
Company's Common Stock to be received shall be determined by dividing the dollar
amount of the dividend by the lesser of: (i) 140% of the closing bid price for
the Common Stock on the Closing Date (as defined below), or (ii) 80% of the
Market Price. "Market Price" shall mean the average of the three (3) lowest
closing bid prices for the Common Stock as reported by Bloomberg, L.P. during
the twenty-two (22) trading days immediately preceding the conversion date. If
the interest is to be paid in cash, the Company shall make such payment within
five (5) business days of the date of conversion. If the accrued interest is to
be paid in Common Stock, said Common Stock shall be delivered to the Purchaser,
or per Purchaser's instructions, within five (5) business days of the date of
conversion. The Debentures are subject to automatic conversion at the end of
five (5) years from the date of issuance at which time all Debentures
outstanding will be automatically converted based upon the formula set forth in
the Debenture. The closing shall be deemed to have occurred on the date the
funds are received by the Company (the "Closing Date").
(b) Conditions Precedent. The following shall be conditions precedent to
funding and release from escrow of the first $150,000 received from the
purchasers: (i) the Company and an investor have signed documentation for a
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$5,000,000 equity credit line financing; (ii) in order for the Company to
receive any tranche of funding, the daily average trading volume of the Common
Stock multiplied by the volume weighted average closing price ("VWAP") for the
thirty (30) trading days preceding funding must be a minimum of $25,000, subject
to waiver by the Purchaser; and (iii) the Company shall cancel and terminate the
equity credit line financing with Swartz Private Equity, LLC. The following
shall be conditions precedent to funding and release from escrow of a second
funding tranche in the amount $125,000 received from the purchasers: (x) the
Company and an investor have signed documentation for a $5,000,000 equity credit
line financing; (y) in order for the Company to receive any tranche of funding,
the daily average trading volume of the Common Stock multiplied by the volume
weighted average closing price ("VWAP") for the thirty (30) trading days
preceding funding must be a minimum of $25,000, subject to waiver by the
Purchaser; and (z) the Company shall have filed a registration statement,
pursuant to the Registration Rights Agreement attached hereto, covering the
common stock to be issued upon conversion of the Debentures issued in this
Offering.
(c) Upon the minimum of $150,000 being received in escrow and subject to
the terms of this Agreement, First Union National Bank ("Escrow Agent") shall
wire the funds to the Company, less fees set forth in this Agreement and
pursuant to the escrow agreement ("Escrow Agreement") entered into by the
Company and May Davis Group, Inc. The Escrow Agent shall also be responsible for
forwarding the Debentures to the respective Purchaser and the name of such
Purchaser will be registered on the Debenture transfer books of the Company as
the record owner. Joseph B. LaRocco has acted as legal counsel for May Davis
Group, Inc. and shall receive a fee of $7,500 for document preparation. Upon
closing of the first $150,000 raised in this Offering Joseph B. LaRocco shall be
wired the sum of $2,500, which shall be credited against the $5,000 he has
already received and May Davis Group, Inc. shall receive a fee of 10% plus 2%
non-accountable expenses.
Upon an additional $125,000 being received in escrow and subject to the
terms of this Agreement, the Escrow Agent shall wire the funds to the Company,
less fees set forth in this Agreement and pursuant to the Escrow Agreement
entered into by the Company and May Davis Group, Inc. The Escrow Agent shall
also be responsible for forwarding the Debentures to the respective Purchaser
and the name of such Purchaser will be registered on the Debenture transfer
books of the Company as the record owner. Upon closing of the second tranche in
the amount of $125,000, May Davis Group, Inc. shall receive a fee of 10% plus 2%
non-accountable expenses.
(d) Joseph B. LaRocco has acted as legal counsel for May Davis Group, Inc.
and may continue to act as legal counsel for May Davis Group, Inc. The Purchaser
has had the opportunity to consult with its own legal and financial advisors
prior to the signing of the Agreement. The Purchaser consents to Joseph B.
LaRocco acting in such capacity as legal counsel for May Davis
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Group, Inc. and waives any claim that such representation represents a conflict
of interest on the part of Joseph B. LaRocco.
(e) The May Davis Group, Inc. shall receive a placement fee of 10% plus 2%
for non-accountable expenses. This 12% shall be wired to The May Davis Group,
Inc. by the Escrow Agent upon the closing of each amount funded pursuant to this
Agreement. The May Davis Group, Inc. shall also receive Warrants to purchase
343,750 shares of Common Stock. The Warrants shall be exercisable anytime after
issuance, for up to five (5) years after issuance and the Common Stock
underlying the Warrant shall carry piggy-back registration rights requiring
registration in this Offering. The Warrants shall be exercisable in whole or in
part at 115% of the closing bid price of the Company's Common Stock on the day
of funding and carry a cash or cashless exercise provision, at the Purchaser's
option.
2. PURCHASER'S REPRESENTATIONS AND WARRANTIES.
The Purchaser represents and warrants to the Company that:
(a) Investment Purpose. The Purchaser is acquiring 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, the Purchaser 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. Purchaser is neither
an underwriter of, nor a dealer in, the Securities and is not participating in
the distribution or resale of the Securities.
(b) Accredited Purchaser Status; Sophisticated Purchaser. The Purchaser is
an "accredited investor" as that term is defined in Rule 501(a) of Regulation D
under the 1933 Act. The Purchaser has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities.
(c) Reliance on Exemptions. The Purchaser 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 the
Purchaser's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Purchaser to acquire such Securities.
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(d) Information. The Purchaser and its advisors, if any, have been
furnished with or have had access to all materials relating to the business,
have had access to all of the Securities Exchange Act of 1934 (the "1934 Act")
filings and press releases filed and issued by the Company, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by the Purchaser. The Purchaser 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 the Purchaser or its advisors, if any, or its representatives shall
modify, amend or affect the Purchaser's right to rely on the Company's
representations and warranties contained in Section 3 below. The Purchaser
understands that its investment in the Securities involves a high degree of
risk. The Purchaser 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.
(e) No Governmental Review. The Purchaser 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.
(f) Transfer or Resale. The Purchaser 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 for resale thereunder and sold, assigned or transferred in accordance
with an effective registration statement, (B) the Purchaser shall have received
from the Company's counsel, an opinion, 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)
the Purchaser provides the Company with assurance reasonably acceptable to the
Company that such Securities can be sold, assigned or transferred pursuant to
Rule 144 promulgated under the 1933 Act (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 1933 Act) 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. The Purchaser
agrees that the sale of the Securities will be in compliance with all applicable
state and federal securities laws, rules and regulations and the rules and
regulations of the Principal Market,
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if applicable. The "Principal Market" shall mean the principal market or
principal securities exchange or trading market on which the Common Stock is
traded or listed.
(g) Legends. The Purchaser understands that, until such time as the
Securities have been transferred to a person who may trade the Common Stock
without restriction under the 1933 Act as contemplated by the Registration
Rights Agreement, the certificates representing the Securities, except as set
forth below, shall bear a restrictive legend in substantially the following
form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (i)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT
(OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF
SECURITIES), OR (iii) IF AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
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 resale under the 1933 Act, (ii) in connection with
a sale transaction, such holder receives from the Company's counsel, an opinion,
in a generally acceptable form, to the effect that a public sale, assignment or
transfer of such Securities may be made without registration under the 1933 Act,
or (iii) such holder provides the Company with assurances reasonably acceptable
to the Company that such Securities can be sold pursuant to Rule 144 without any
restriction as to (A) the number of securities acquired as of a particular date
that can then be immediately sold or (B) manner of sale. The Purchaser covenants
that, in connection with any transfer of Securities by it pursuant to an
effective registration statement under the 1933 Act, it will (i) comply with the
applicable prospectus delivery requirements of the 1933 Act, provided that
copies of a current prospectus relating to such effective registration statement
are or have been supplied to the Purchaser, and (ii) comply with the "Plan of
Distribution" section of the current prospectus relating to such effective
registration statement.
(h) Authorization; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Purchaser and is a valid and
binding agreement of the Purchaser enforceable against the Purchaser 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.
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(i) No Conflicts. The execution, delivery and performance of this
Agreement by the Purchaser and the consummation by the Purchaser of the
transactions contemplated hereby will not (i) result in a violation of the
Articles of Incorporation or the By-laws or (ii) conflict with, or constitute a
material default (or an event which with notice or lapse of time or both would
become a material default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, contract,
indenture, mortgage, indebtedness or instrument to which the Purchaser or any of
its Subsidiaries ("Subsidiaries" means any entity in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar interest) is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree applicable to the Purchaser or any of its Subsidiaries or by which any
property or asset of the Purchaser or any of its Subsidiaries is bound or
affected.
3. COMPANY'S REPRESENTATIONS AND WARRANTIES.
Except as set forth in the Schedules attached hereto, the Company
represents and warrants to the Purchaser that:
(a) Organization and Qualification. The Company and its Subsidiaries are
corporations duly organized and validly existing in good standing under the laws
of the State of Delaware, and have the requisite corporate power and
authorization to own their properties and to carry on their business as now
being conducted. The Company represents and warrants that the Company and its
Subsidiaries are in material compliance, to the extent applicable, with all
reporting obligations under either Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (the "1934 Act"). 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, financial condition or prospects of the
Company and its Subsidiaries, if any, 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 this Agreement, the Registration Rights Agreement and the
Debenture (collectively, the "Transaction Documents").
(b) Authorization; Enforcement; Compliance with Other Instruments. (i) The
Company has the requisite corporate power and authority to enter into and
perform all actions contemplated by the Transaction Documents and to issue the
Common Stock 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,
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including without limitation the reservation for issuance and the issuance of
the Common Stock pursuant to this Agreement, have been duly and validly
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
shareholders, (iii) the Transaction Documents have been duly and validly
executed and delivered by the Company, and (iv) the Transaction Documents
constitute the valid and binding obligations 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, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.
(c) Capitalization. As of the date hereof, the authorized capital stock of
the Company consists of (i) 150,000,000 shares of Class A Common Stock
authorized, of which as of April 1, 2001, 110,236,548 shares were issued and
outstanding, (ii) 700,000 shares of Class B Common Stock authorized, of which as
of April 1, 2001, 364,000 shares are issued and outstanding (Note: one share of
Series B Common Stock is convertible into 100 shares of Series A Common Stock),
and (iii) no shares of Preferred Stock are authorized. All of such outstanding
shares have been, or upon issuance will be, validly issued and are fully paid
and nonassessable. Furthermore, (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 shares of capital stock,
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 and the currently effective Registration Statement on Form
SB-2), (v) there are no outstanding securities 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, (vii) the Company
does not have any stock appreciation rights or "phantom stock" plans or
agreements or any similar plan or agreement and (viii) there is no dispute as to
the class of any shares of the Company's capital stock. The Company has
furnished to the Purchaser, or
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the Purchaser has had access through EDGAR ("Electronic Data Gathering,
Analysis, and Retrieval System") to, true and correct copies of the Company's
Articles of Incorporation, as in effect on the date hereof (the "Articles Of
Incorporation"), and the Company's By-laws, 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 material rights of the holders thereof in respect thereto.
(d) Issuance of Common Stock. At least 400% of the number shares of Common
Stock issuable pursuant to this Agreement based on the closing bid price on the
trading day prior to the filing of the Registration Statement, have been duly
authorized and reserved for issuance pursuant to this Agreement. Upon issuance
in accordance with this Agreement after the effective date of the Registration
Statement, the Common Stock will be validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue thereof.
The issuance by the Company of the Debentures is exempt from registration under
the 1933 Act. In the event the Company cannot register sufficient shares, due to
the remaining number of authorized shares of Common Stock being insufficient,
the Company will use its best efforts to register the maximum number of shares
it can based on the remaining balance of authorized shares and will use its best
efforts to increase the number of its authorized shares as soon as reasonably
practicable.
(e) No Conflicts. 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 will not (i) result in a violation
of the Articles of Incorporation, any Certificate of Designations, Preferences
and Rights of any outstanding series of preferred stock of the Company or the
By-laws or (ii) conflict with, or constitute a material default (or an event
which with notice or lapse of time or both would become a material default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, contract, indenture mortgage,
indebtedness 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 United States federal and state securities laws and
regulations and the rules and regulations of the Principal Market) 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. Neither the Company nor
its Subsidiaries is in violation of any term of, or in default under, the
Articles of Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company or the
By-laws or their organizational charter or by-laws, respectively, or any
contract, agreement, mortgage, indebtedness, indenture, instrument, judgment,
decree or order or any statute, rule or regulation applicable to the Company or
its Subsidiaries, except for possible conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations that would not
individually or in the aggregate have a Material Adverse Effect. The business of
the Company and its Subsidiaries is not
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being conducted, and shall not be conducted, in violation of any law, statute,
ordinance, rule, order or regulation of any governmental authority or agency,
regulatory or self-regulatory agency, or court, except for possible violations
the sanctions for which either individually or in the aggregate would not have a
Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the 1933 Act, the Company is not required to obtain any
consent, authorization, permit or order of, or make any filing or registration
(except the filing of a registration statement) with, any court, governmental
authority or agency, regulatory or self-regulatory agency or other third party
in order for it to execute, deliver or perform any of its obligations under, or
contemplated by, the Transaction Documents in accordance with the terms hereof
or thereof. All consents, authorizations, permits, 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 and are
in full force and effect as of the date hereof. The Company and its Subsidiaries
are unaware of any facts or circumstances which might give rise to any of the
foregoing. The Company is not, and will not be, in violation of the listing
requirements of the Principal Market as in effect on the date hereof and on each
of the Closing Dates and is not aware of any facts which would reasonably lead
to delisting of the Common Stock by the Principal Market in the foreseeable
future.
(f) SEC Documents; Financial Statements. Since January 2000, the Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the
1934 Act (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
Documents"). The Company has delivered to the Purchaser or its representatives,
or they have had access through EDGAR, true and complete copies of the SEC
Documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the 1933 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company included in the
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, 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 or may be condensed or
summary statements) and fairly present in all material respects the financial
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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). No other written
information provided by or on behalf of the Company to the Purchaser which is
not included in the SEC Documents, including, without limitation, information
referred to in Section 3(d) of this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstance under which they are or
were made, not misleading. Neither the Company nor any of its Subsidiaries or
any of their officers, directors, employees or agents have provided the
Purchaser with any material, nonpublic information which was not publicly
disclosed prior to the date hereof and any material, nonpublic information
provided to the Purchaser by the Company or its Subsidiaries or any of their
officers, directors, employees or agents prior to any Closing Date shall be
publicly disclosed by the Company prior to such Closing Date.
(g) Absence of Certain Changes. Except as disclosed in the SEC Documents
filed at least five (5) days prior to the date hereof, since January 2000, there
has been no change or development in the business, properties, assets,
operations, financial condition, results of operations or prospects of the
Company or its Subsidiaries which has had or reasonably could have a Material
Adverse Effect. 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 its Subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings.
(h) Absence of Litigation. Except as disclosed in the SEC Documents, 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 executive officers of 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, in which an
adverse decision could have a Material Adverse Effect.
(i) Acknowledgment Regarding Purchaser's Purchase of the Debentures. The
Company acknowledges and agrees that the Purchaser 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 the Purchaser 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 the Purchaser or any of its respective representatives or
agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to the Purchaser's purchase
of the Securities. The Company further represents to the
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Purchaser 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.
(j) No Undisclosed Events, Liabilities, Developments or Circumstances. No
event, liability, development or circumstance has occurred or exists, or to its
knowledge is contemplated to occur, with respect to the Company or its
Subsidiaries or their respective business, properties, assets, 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.
(k) 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 1933 Act) in connection with the offer or sale of the
Securities.
(l) No Integrated Offering. To its knowledge, 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 under the
1933 Act of the Company's sale and issuance of the Securities to the Purchaser
or cause this Offering to be integrated with prior offerings by the Company for
purposes of the 1933 Act or any applicable shareholder approval provisions,
including, without limitation, under the rules and regulations of the Principal
Market, nor will the Company or any of its Subsidiaries take any action or steps
that would require registration under the 1933 Act of the Company's sale and
issuance of the Securities to the Purchaser or cause the offering of the
Securities to be integrated with other offerings.
(m) Employee Relations. Neither the Company nor any of its Subsidiaries is
involved in any union labor dispute nor, to the knowledge of the Company or any
of its Subsidiaries, is any such dispute threatened. Neither the Company nor any
of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that relations with their employees are
good. No executive officer (as defined in Rule 501(f) of the 1933 Act) has
notified the Company that such officer intends to leave the Company's employ or
otherwise terminate such officer's employment with the Company.
(n) Intellectual Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service mark registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted. None of the Company's trademarks, trade names, service marks,
12
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade secrets or
other intellectual property rights necessary to conduct its business as now or
as proposed to be conducted 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
mark 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 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 mark
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. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties.
(o) Environmental Laws. 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.
(p) Title. The Company and its Subsidiaries have good and marketable title
in fee simple to all real property and good and marketable 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
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 or any of its Subsidiaries. Any real property and facilities held under
lease by the Company or 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.
(q) 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
13
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.
(r) Regulatory Permits. The Company and its Subsidiaries have in full
force and effect all certificates, approvals, authorizations and permits from
the appropriate federal, state, local or foreign regulatory authorities and
comparable foreign regulatory agencies, necessary to own, lease or operate their
respective properties and assets and 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,
approval, authorization or permit, except for such certificates, approvals,
authorizations or permits which if not obtained, or such revocations or
modifications which, would not have a Material Adverse Effect.
(s) 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
generally accepted accounting principles 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.
(t) 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. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
(u) Tax Status. The Company and each of its Subsidiaries has made or filed
all United States federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions 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
14
in good faith and has set aside on its books provision reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. 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 of no basis for any such claim.
(v) Certain Transactions. Except as set forth in the SEC Documents filed
at least ten days prior to the date hereof and except for arm's length
transactions pursuant to which the Company makes payments in the ordinary course
of business upon terms no less favorable than the Company could obtain from
third parties and 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 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.
(w) Dilutive Effect. The Company understands and acknowledges that the
number of shares of Common Stock issuable upon purchases pursuant to this
Agreement will increase in certain circumstances. The Company's executive
officers and directors have studied and fully understand the nature of the
transactions contemplated by this Agreement and recognize that they have a
potential dilutive effect. The board of directors of the Company has concluded,
in its good faith business judgment, that such issuance is in the best interests
of the Company. The Company specifically acknowledges that, subject to such
limitations as are expressly set forth in the Transaction Documents, its
obligation to issue shares of Common Stock upon purchases pursuant to this
Agreement is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other shareholders of the
Company.
(x) Right of First Refusal. The Company shall give The May Davis
Group, Inc. the right of first refusal for future fund raising for 12 months
following the effective date of the registration statement covering this
offering, except for the equity credit line financing and $1,500,000
Debenture offering that the Company is in the process of closing. The May
Davis Group, Inc. shall have ten (10) business days in which to accept such
offers upon receipt of a written term sheet from the Company.
(y) Pending and Threatened Litigation. Except as otherwise disclosed in
Exhibit B, there is (i) no action, suit or proceeding before or by any court,
arbitrator or governmental body now pending or, to the knowledge of the Company,
threatened or contemplated to which the Company or any of its Subsidiaries is or
may be a party or to which the business or property of the
15
Company or any of its Subsidiaries is or may be bound or subject, (ii) no law,
statute, rule, regulation, order or ordinance that has been enacted, adopted or
issued by any Governmental Body or that, to the knowledge of the Company, has
been proposed by any Governmental Body adversely affecting the Company or any of
its Subsidiaries, (iii) no injunction, restraining order or order of any nature
by a federal, state or foreign court or Governmental Body of competent
jurisdiction to which the Company or any of its Subsidiaries is subject issued
that, in the case of clauses (i), (ii) and (iii) above, (A) is reasonably
likely, singly or in the aggregate, to result in a material adverse effect on
the business, condition, (financial or otherwise), operations, earnings,
performance, properties or prospects of the Company, and its Subsidiaries taken
as a whole or (B) would interfere with or adversely affect the issuance of the
Securities or would be reasonably likely to render any of the Transaction
Documents or the Securities, or any portion thereof, invalid or unenforceable.
4. COVENANTS OF THE COMPANY
(a) Best Efforts. The Company shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in the
Transaction Documents.
(b) Reporting Status. Until the earlier of (i) the date on which the
Purchaser may sell all of the Securities acquired pursuant to this Agreement
without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto), or (ii) the date on which the Purchaser has sold all the
Securities issuable hereunder, 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 a reporting company under the 1933 Act.
(c) Use of Proceeds. The Company will use the proceeds from the sale of
the Securities (excluding amounts paid by the Company for escrow fees, legal
fees, filing fees and other fees and expenses related to the sale of these
Securities) for working capital.
(d) Financial Information. The Company agrees to make available to the
Purchaser via EDGAR or other electronic means the following to the Purchaser
during the Registration Period: (i) within five (5) Trading Days after the
filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its
Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any
Registration Statements or amendments filed pursuant to the 1933 Act; (ii) on
the same day as the release thereof, facsimile copies of all press releases
issued by the Company or any of its Subsidiaries, (iii) copies of any notices
and other information made available or given to the shareholders of the Company
generally, contemporaneously with the making available or giving thereof to the
shareholders and (iv) within two (2) calendar days of filing or delivery
thereof, copies of all documents filed with, and all correspondence sent to, the
Principal
16
Market, any securities exchange or market, or the National Association of
Securities Dealers, Inc.
(e) Transactions With Affiliates. 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, shareholders 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 (i) customary employment arrangements and benefit programs on
reasonable terms, (ii) 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 (iii) 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" 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.
(f) Filing of Form 8-K. On or before the date which is five (5) business
days after the Closing Date, the Company shall file a press release and/or a
Current Report on Form 8-K with the SEC describing the terms of the transaction
contemplated by the Transaction Documents in the form required by the 1934 Act,
if such filing is required.
(g) Notice of Certain Events Affecting Registration. The Company shall
promptly notify Purchaser upon the occurrence of any of the following events in
respect of a Registration Statement or related prospectus in respect of an
offering of the Securities: (i) receipt of any request for additional
information by the SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement for amendments
or supplements to the Registration Statement or related prospectus; (ii) the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Shares for sale in any jurisdiction or the
initiation or threatening of any
17
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in such Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case of
a Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the related prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (v) the Company's reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate, and the Company shall promptly make available to Purchaser
any such supplement or amendment to the related prospectus.
(h) Reimbursement. If (i) Purchaser, other than by reason of its
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by any shareholder of the Company,
in connection with or as a result of the consummation of the transactions
contemplated by the Transaction Documents, or if Purchaser is impleaded in any
such action, proceeding or investigation by any person, or (ii) Purchaser, other
than by reason of its negligence or willful misconduct or by reason of its
trading of the Common Stock in a manner that is illegal under the federal
securities laws, becomes involved in any capacity in any action, proceeding or
investigation brought by the SEC against or involving the Company or in
connection with or as a result of the consummation of the transactions
contemplated by the Transaction Documents, or if Purchaser is impleaded in any
such action, proceeding or investigation by any person, then in any such case,
the Company will reimburse Purchaser for its reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith, as such expenses are incurred. In addition, other than with respect
to any matter in which Purchaser is a named party, the Company will pay to
Purchaser the charges, as reasonably determined by Purchaser, for the time of
any officers or employees of Purchaser devoted to appearing and preparing to
appear as witnesses, assisting in preparation for hearings, trials or pretrial
matters, or otherwise with respect to inquiries, hearing, trials, and other
proceedings relating to the subject matter of this Agreement. The reimbursement
obligations of the Company under this section shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any affiliates of Purchaser that are actually named in such
action, proceeding or investigation, and partners, directors, agents, employees,
attorneys, accountants, auditors and controlling persons (if any), as the case
may be, of Purchaser and any such affiliate, and shall be binding upon and inure
to the benefit of any successors, assigns, heirs and personal representatives of
the Company, Purchaser and any such affiliate and any such person.
18
(i) Indemnification. In consideration of the Purchaser's execution and
delivery of the this Agreement and the Registration Rights Agreement and
acquiring the Debentures hereunder 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 Purchaser and all of their shareholders,
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 (i) 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,
(ii) 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, (iii) any cause of action, suit or
claim brought or made against such Indemnitee by a third party and arising out
of or resulting from the execution, delivery, performance or enforcement of the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (iv) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Debentures or (v) the status of the Purchaser or holder of the Debentures
as an investor in the Company, except insofar as any such untrue statement,
alleged untrue statement, omission or alleged omission is made in reliance upon
and in conformity with written information furnished to the Company by the
Purchaser which is specifically intended by the Purchaser for use in the
preparation of any such Registration Statement, preliminary prospectus or
prospectus. 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. The indemnity provisions contained herein
shall be in addition to any cause of action or similar rights the Purchaser may
have, and any liabilities to which the Purchaser may be subject.
5. Cover.
If, the number of Shares represented by any conversion notice become
restricted or are no longer freely trading for any reason, and after the
applicable Closing Date, the Purchaser purchases, in an open market transaction
or otherwise, the Company's Common Stock (the "Covering Shares") in order to
make delivery in satisfaction of a sale of Common Stock by the Purchaser (the
"Sold Shares"), which delivery such Purchaser anticipated to make using the
19
Common Stock to be delivered pursuant to the conversion notice (a "Buy-In"), so
long as the shares issuable upon conversion of this Debenture were freely
trading at the time of conversion, the Company shall pay to the Purchaser, the
Buy-In Adjustment Amount (as defined below). The "Buy-In Adjustment Amount" is
the amount equal to the excess, if any, of (a) the Purchaser's total purchase
price (including brokerage commissions, if any) for the Covering Shares over (b)
the net proceeds (after brokerage commissions, if any) received by the Purchaser
from the sale of the Sold Shares. The Company shall pay the Buy-In Adjustment
Amount to the Purchaser in immediately available funds immediately upon demand
by the Purchaser. By way of illustration and not in limitation of the foregoing,
if the Purchaser purchases Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In with respect to the Common
Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount which
the Company will be required to pay to the Purchaser will be $1,000.
6. PUBLICITY.
The Company and Purchaser shall consult with each other in issuing any
press releases or otherwise making public statements with respect to the
transactions contemplated hereby and no party shall issue any such press release
or otherwise make any such public statement without the prior written consent of
the other party, which consent shall not be unreasonably withheld or delayed,
except that no prior consent shall be required if such disclosure is required by
law, in which such case the disclosing party shall provide the other party with
prior notice of such public statement.
7. Delivery Instructions.
Prior to or on the Closing Date the Company shall deliver to the Purchaser
and Escrow Agent the Pending or Threatened Litigation Schedule to be attached
hereto as Exhibit B and a signed Registration Rights Agreement in the form
attached hereto as Exhibit C. Also, prior to or on the Closing Date the Company
shall deliver to the Purchaser and Escrow Agent an opinion letter signed by
counsel for the Company in the form attached hereto as Exhibit D and a copy of a
fully executed board resolution approving this Offering to be attached as
Exhibit E. The Debentures being purchased hereunder shall be delivered to the
Escrow Agent on or prior to the Closing Date, so that on the Closing Date the
Escrow Agent can deliver the Debentures to the Purchaser and wire the funds,
less fees, to the Company.
8. UNDERSTANDINGS.
The Purchaser understands, acknowledges and agrees with the Company as
follows:
20
(a) This Subscription may be rejected, in whole or in part, by the Company
in its sole and absolute discretion at any time before the date set for closing
unless the Company has given notice of acceptance of the Purchaser's
subscription by signing this Agreement.
(b) The representations, warranties and agreements of the Purchaser and
the Company contained herein and in any other writing delivered in connection
with the transactions contemplated hereby shall be true and correct in all
material respects on and as of the date of the sale of the Debentures, and as of
the date of the conversion thereof, as if made on and as of such date and shall
survive the execution and delivery of this Agreement and the purchase of the
Debentures.
(c) This Offering is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Rule 506 of Regulation D thereunder, which is in part dependent
upon the truth, completeness and accuracy of the statements made by the
Purchaser herein and in the Questionnaire.
9. Litigation.
(a) Forum Selection and Consent to Jurisdiction. Any litigation arising
out of, under, or in connection with, this Agreement or any course of conduct,
course of dealing, statements (whether oral or written) or actions of the
Company or Purchaser shall be brought and maintained exclusively in the courts
of the State of New York. The Company hereby expressly and irrevocably submits
to the jurisdiction of the state and federal courts of the State of New York for
the purpose of any such litigation as set forth above and irrevocably agrees to
be bound by any final judgment rendered thereby in connection with such
litigation. The Company further irrevocably consents to the service of process
by registered mail, postage prepaid, or by personal service within or without
the State of New York. The Company hereby expressly and irrevocably waives, to
the fullest extent permitted by law, any objection which it may have or
hereafter may have to the laying of venue of any such litigation brought in any
such court referred to above and any claim that any such litigation has been
brought in any inconvenient forum. To the extent that the Company has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) with respect to itself or its
property, the Company hereby irrevocably waives such immunity in respect of its
obligations under this Agreement and the other loan documents.
(b) Waiver of Jury Trial. The Purchaser and the Company hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with, this agreement, or any course of conduct, course of dealing,
21
statements (whether oral or written) or actions of the Purchaser or the Company.
The Company acknowledges and agrees that it has received full and sufficient
consideration for this provision and that this provision is a material
inducement for the Purchaser entering into this Agreement.
(c) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York without
regard to the conflicts of laws principles thereof.
10. MISCELLANEOUS.
(a) All pronouns and any variations thereof used herein shall be deemed to
refer to the masculine, feminine, impersonal, singular or plural, as the
identity of the person or persons may require.
(b) Neither this Agreement nor any provision hereof shall be waived,
modified, changed, discharged, terminated, revoked or canceled, except by an
instrument in writing signed by the party effecting the same against whom any
change, discharge or termination is sought.
(c) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered,
received by facsimile transmission and, other than the Notice of Conversion,
sent by registered mail, return receipt requested, addressed: (i) if to the
Company, at IVoice.com, Inc., Attention: Jerome R. Mahoney, CEO, 750 Highway 34,
Matawan, NJ 07747, (p) 732-441-7700, (f) 732-441-9895, with a copy by facsimile
to Meritz & Muenz LLP, Three Hughes Place, Dix Hills, New York 11746 (p)
631-242-7384, (f) 631-242-6715 and (ii) if to the Purchaser, at the address for
correspondence set forth in the Questionnaire, or at such other address as may
have been specified by written notice given in accordance with this Section
10(c), with a copy to May Davis Group, Inc., Attention: Mike Jacobs, One World
Trade Center, Suite 8735, New York, New York 10048 (p) 888-629-3284 (f)
212-775-8169.
(d) If any provision of this Agreement is invalid or unenforceable under
any applicable statue or rule of law, then such provisions shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof that
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof.
(e) This Agreement, together with Exhibits A, B, C, D and E attached
hereto and made a part hereof, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended only
by a writing executed by both parties hereto. An executed facsimile copy of the
Agreement shall be effective as an original. The Exhibits are as follows:
22
Exhibit A - Debenture
Exhibit B - Pending or Threatened Litigation
Exhibit C - Registration Rights Agreement
Exhibit D - Opinion Letter
Exhibit E - Board Resolution Approving the Offering
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK)
23
IVOICE.COM, INC.
QUESTIONNAIRE
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned's subscription to purchase the
Debentures described in the Subscription Agreement may be accepted.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned understands, however, that the Company may
present this Questionnaire to such parties as it deems appropriate if called
upon to establish that the proposed offer and sale of the Securities is exempt
from registration under the Securities Act of 1933, as amended. Further, the
undersigned understands that the offering is required to be reported to the
Securities and Exchange Commission, NASDAQ and to various state securities and
"blue sky" regulators.
IN ADDITION TO SIGNING THE SIGNATURE PAGE, THE UNDERSIGNED MUST COMPLETE
FORM W-9 ATTACHED HERETO.
I. PLEASE CHECK EACH OF THE STATEMENTS BELOW THAT APPLIES.
[ ] 1. The undersigned: (a) has total assets in excess of
$5,000,000; (b) was not formed for the specific purpose of
acquiring the Securities and (c) has its principal place of
business in ___________.
[ ] 2. the undersigned is a natural person whose individual net
worth* or joint net worth with his or her spouse exceeds
$1,000,000.
[ ] 3. the undersigned is a natural person who had an individual income*
in excess of $200,000 in each of 1999 and 2000 and who reasonably
expects an individual income in excess of $200,000 in 2001. Such
income is solely that of the undersigned and excludes the income of
the undersigned's spouse.
[ ] 4. The undersigned is a natural person who, together with his or her
spouse, has had a joint income* in excess of $300,000 in each of
1999 and 2000 and who reasonably expects a joint income in excess of
$300,000 during 2001.
* For purposes of this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In determining "income", an investor should
24
add to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to IRA or Keogh retirement plan,
alimony payments and any amount by which income from long-term capital gains has
been reduced in arriving at adjusted gross income.
[ ] 5. The undersigned is:
(a) a bank as defined in Section 3(a)(2) of the
Securities Act; or
(b) a savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; or
(c) a broker or dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934; or
(d) an insurance company as defined in Section 2(13) of
the Securities Act; or
(e) An investment company registered under the Investment
Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of the Investment Company Act of
1940; or
(f) a small business investment company licensed by the
U.S. Small Business Administration under Section 301 (c) or
(d) of the Small Business Investment Act of 1958; or
[ ] 6. The undersigned is an entity in which all of the equity
owners are accredited investors.
25
II. INVESTOR INFORMATION.
If the undersigned is an individual:
Name _________________________________________
Street Address __________________________________
City, State, Zip Code ___________________________
Phone, Fax ______________________________________
Social Security Number (or Taxpayer Identification Number
_________________________________________________
Send Correspondence to:
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
If the undersigned is a Partnership or Other Entity:
Contact Name ___________________________________
State of Organization ______________________________
Principal Business Address _________________________
City, State, Zip Code ______________________________
Taxpayer Identification Number _____________________
Phone, Fax _____________________________________
26
IVOICE.COM, INC.
SIGNATURE PAGE
Your signature on this Signature Page evidences your agreement to be bound
by the Questionnaire and the Subscription Agreement.
1. The undersigned hereby represents that (a) the information contained in
the Questionnaire is complete and accurate and (b) the undersigned will notify
IVOICE.COM, INC. immediately if any material change in any of the information
occurs prior to the acceptance of the undersigned's subscription and will
promptly send IVOICE.COM, INC. written confirmation of such change.
2. The undersigned signatory hereby certifies that he/she has read and
understands the Subscription Agreement and Questionnaire, and the
representations made by the undersigned in the Subscription Agreement and
Questionnaire are true and accurate.
___________________________________ _________________________
Amount of Debentures subscribed for Date
_________________________
(Purchaser)
By: _____________________
(Signature)
Name: __________________
(Please Type or Print)
Title: ____________________
(Please Type or Print)
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT.
27
COMPANY ACCEPTANCE PAGE
This Subscription Agreement accepted
and agreed to this ____ day of April, 2001
IVOICE.COM, INC.
BY______________________________________
Jerome R. Mahoney, its CEO duly authorized
28
Exhibit B
PENDING OR THREATENDED LITIGATION
Communication Research, Inc. vs. iVoice.com, Inc.
Filed April 2000
Superior Court of New Jersey
Chancery Division
Bergen County
This suit brought by a subtenant against the Company seeking equitable relief
and damages in connection with its tenancy, as well as, conversion of office
furniture and equipment, wrongful eviction, interference of economic relations
and quantum merit.
The law firm Ferrara, Turitz, Harraka & Goldberg, 505 Main Street, Hackensack,
NJ 07601, is defending this action. The Company believes that this action is
without merit and intends to vigorously defend this suit.
Lorelei Personnel, Inc. vs. iVoice.com, Inc.
Filed February 12, 2001
Superior Court of New Jersey
Middlesex County
This action is for consulting\employee placement services allegedly rendered by
Lorelei. The payment terms that Lorelei claims, were never agreed to by iVoice.
Furthermore, the employee referred by Lorelei was terminated within 30 days of
hire for failure to perform in an adequate manner. The plaintiff is seeking
damages of $6,000, plus interest, legal fees and court costs. The Company
believes that this action is without merit and intends to vigorously defend this
suit.
This action is being defended by the law firm Reid Weinman, P.C.,158 Livingston,
Ave., New Brunswick, NJ 08901. The Company believes that this action is without
merit and intends to vigorously defend this suit.
Lighthouse Technical Consulting, Inc. vs. iVoice.com, Inc.
Filed March, 2001
Superior Court of New Jersey
Monmouth County
This action is for failure to pay for consulting\employee placement services
rendered by Lighthouse. IVoice is making monthly payments in the amount of $500
and does not deny that the liability exists.
This action is being defended by the law firm Reid Weinman, P.C.,158 Livingston,
Ave., New Brunswick, NJ 08901. The Company believes that this action is without
merit and intends to vigorously defend this suit.
29
EXHIBIT D
Purchasers of [Company] [Describe Securities] _______________, 2001
Re: [Company]
Ladies and Gentlemen:
This firm has acted as counsel to [Company], a corporation incorporated
under the laws of the State of _________ (the "Company"), in connection with the
proposed issuance and sale of convertible debentures (the "Securities" or
"Debentures") pursuant to the Subscription Agreement (including all Exhibits and
Appendices thereto) (collectively the "Agreements").
In connection with rendering the opinions set forth herein, we have
examined drafts of the Agreement, the Company's Certificate of Incorporation,
and its Bylaws, as amended to date [other documents - describe], the proceedings
of the Company's Board of Directors taken in connection with entering into the
Agreements, and such other documents, agreements and records as we deemed
necessary to render the opinions set forth below.
In conducting our examination, we have assumed the following: (i) that
each of the Agreements has been executed by each of the parties thereto in the
same form as the forms which we have examined, (ii) the genuineness of all
signatures, the legal capacity of natural persons, the authenticity and accuracy
of all documents submitted to us as originals, and the conformity to originals
of all documents submitted to us as copies, (iii) that each of the Agreements
has been duly and validly authorized, executed and delivered by the party or
parties thereto other than the Company, and (iv) that each of the Agreements
constitutes the valid and binding agreement of the party or parties thereto
other than the Company, enforceable against such party or parties in accordance
with the Agreements' terms.
Based upon the subject to the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of __________, is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions where the Company owns or leases properties, maintains employees
or conducts business, except for jurisdictions in which the failure to so
qualify would not have a material adverse effect on the Company, and has all
requisite corporate power and authority to own its properties and conduct its
business.
30
2. The authorized capital stock of the Company consists of _______
shares of Common Stock, ________ par value per share, ("Common Stock") and
______________ Preferred Stock, par value $________ per share; [describe
classes if applicable]
3. The Common Stock is registered pursuant to Section 12(b) or Section
12(g) of the Securities Exchange Act of 1934, as amended and the Company has
timely filed all the material required to be filed pursuant to Sections 13(a) or
15(d) of such Act for a period of at least twelve months preceding the date
hereof;
4. When duly countersigned by the Company's transfer agent and registrar,
and delivered to you or upon your order against payment of the agreed
consideration therefor in accordance with the provisions of the Agreements, the
Securities [and any Common Stock to be issued upon the conversion of the
Securities] as described in the Agreements represented thereby will be duly
authorized and validly issued, fully paid and nonassessable;
5 The Company has the requisite corporate power and authority to enter
into the Subscription Agreement and to sell and deliver the Securities and the
Common Stock to be issued upon the conversion of the Securities as described in
the Agreements; each of the Agreements has been duly and validly authorized by
all necessary corporate action by the Company to our knowledge, no approval of
any governmental or other body is required for the execution and delivery of
each of the Agreements by the Company or the consummation of the transactions
contemplated thereby; each of the Agreements has been duly and validly executed
and delivered by and on behalf of the Company, and is a valid and binding
agreement of the Company, enforceable in accordance with its terms, except as
enforceability may be limited by general equitable principles, bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other laws
affecting creditors rights generally, and except as to compliance with federal,
state, and foreign securities laws, as to which no opinion is expressed;
6. To the best of our knowledge, after due inquiry, the execution,
delivery and performance of the Subscription Agreement and Debenture by the
Company and the performance of its obligations thereunder do not and will not
constitute a breach or violation of any of the terms and provisions of, or
constitute a default under or conflict with or violate any provision of (i) the
Company's Certificate of Incorporation or By-Laws, (ii) any indenture, mortgage,
deed of trust, agreement or other instrument to which the Company is party or by
which it or any of its property is bound, (iii) any applicable statute or
regulation or as other, (iv) or any judgment, decree or order of any court or
governmental body having jurisdiction over the Company or any of its property.
7. The issuance of Common Stock upon conversion of the Debentures in
accordance with the terms and conditions of the Debenture and
31
the Subscription Agreement, will not violate the applicable listing agreement
between the Company and any securities exchange or market on which the Company's
securities are listed.
8. To the best of our knowledge, after due inquiry, there is no pending or
threatened litigation, investigation or other proceedings against the Company.
9. The Company complies with the eligibility requirements for the use of
Form S-3, under the Securities Act of 1933, as amended.
Note: Use this where Registration Rights were included in the offering and
the Company is S-3 eligible.
This opinion is rendered only with regard to the matters set out in the
numbered paragraphs above. No other opinions are intended nor should they be
inferred. This opinion is based solely upon the laws of the United States and
the State of _____________ and does not include an interpretation or statement
concerning the laws of any other state or jurisdiction. Insofar as the
enforceability of the Subscription Agreement and Debenture may be governed by
the laws of other states, we have assumed that such laws are identical in all
respects to the laws of the State of ___________.
The opinions expressed herein are given to you solely for your use in
connection with the transaction contemplated by the Subscription Agreement and
Debenture and may not be relied upon by any other person or entity or for any
other purpose without our prior consent.
Very truly yours,
By: _____________________
32
Schedule 3(a) - Subsidiaries
None.
33
Schedule 3(c) - Capitalization
(c) Capitalization. As of the date hereof, the authorized capital stock of
the Company consists of (i) 150,000,000 shares of Class A Common
Stock authorized, of which as of April 1, 2001, 110,236,548 shares
are issued and outstanding, (ii) 700,000 shares of Class B Common
Stock authorized, of which as of April 1, 2001, 364,000 are issued
and outstanding, (iii) no shares of Preferred Stock are authorized.
All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable.
Note: One share of Class B Common Stock is convertible into one hundred
shares of Class A Common Stock.
It is anticipated that the Company will increase the authorized number of Class
A Common Stock shares to 500 million shares and revise the par value of the
Class A stock from $.01 to $.001. Immediately following the execution of this
Agreement, the Company will file an Information Statement with the Securities
Exchange Commission. Ten days thereafter, the majority of shareholders of the
Company will approve an Amendment to the Certificate of Incorporation increasing
the number of authorized Class A Common Stock shares and revising the par value
of the Class A common stock.
As of April 1, 2001, the Company had 110,236,548 Class A shares issued and
outstanding and 364,000 Class B shares issued and outstanding. Class B shares
hold voting power of 100 shares of Class A stock. Therefore, the outstanding
Class B shares hold a total of 36,400,000 votes.
Jerome Mahoney, President and Chief Executive Officer of the Company holds
voting control of:
39,150,000 Class A votes
36,400,000 Class B votes
75,550,000 votes
Total votes at a meeting of shareholders equals:
110,236,548 Class A votes
36,400,000 Class B votes
146,636,548 Total Votes
Jerry Mahoney holds 51.52% of the votes to authorize an increase in the
authorized Class A shares to 500 million shares and a revision of the par value.
34
Convertible Debentures.
These debentures are convertible into shares of the Company's Class A
Common Stock at the option of the holder by dividing the outstanding principal
and interest by the conversion price which shall equal 50% of the average bid
price during the 20 trading days before the conversion date. As of April 23,
2001, $287,000 remained outstanding.
The Company has been advised by one of the debenture holders that the
Company was in breach of some of the terms of the debentures. The Company has
reached settlement terms with this one previous holder of $50,000 in debentures
regarding the interest and penalties that have been demanded by this former
holder whereby the Company will issue 450,000 shares to this former holder in
full settlement of the former debenture holder's claim.
Due to Related Party
During the period from June 2000 to date, Jerome R. Mahoney, President and
Chief Executive Officer of the Company, sold Common Stock Shares of the Company
and has loaned proceeds of these sales to the Company to fund its working
capital requirements. The Company has executed a promissory note and Security
Agreement in favor of Mr. Mahoney. As of April 23, 2001, the outstanding loan
balance including monies loaned from the proceeds of stock sales, unpaid
compensation, income taxes incurred from the sale of stock and unreimbursed
expenses, totaled $1,568,327.
Under the terms of the loan agreements, the note holder may elect
prepayment of the principal and interest owed pursuant to this Note by issuing
Jerome Mahoney, or his assigns, one Class B common stock share of iVoice.com,
Inc., no par value, for each dollar owed.
35
Schedule 3(e) - Conflicts
It is anticipated that the Company will increase the authorized number of Class
A Common Stock shares to 500 million shares. Immediately following the execution
of this Agreement, the Company will file an Information Statement with the
Securities Exchange Commission. Ten days thereafter, the majority of
shareholders of the Company will approve an Amendment to the Certificate of
Incorporation increasing the number of authorized Class A Common Stock shares.
36
Schedule 3(g) - Material Changes
None.
37
Schedule 3(h) Litigation
Communication Research, Inc. vs. iVoice.com, Inc.
Filed April 2000
Superior Court of New Jersey
Chancery Division
Bergen County
This suit brought by a subtenant against the Company seeking equitable relief
and damages in connection with its tenancy, as well as, conversion of office
furniture and equipment, wrongful eviction, interference of economic relations
and quantum merit.
The law firm Ferrara, Turitz, Harraka & Goldberg, 505 Main Street, Hackensack,
NJ 07601, is defending this action. The Company believes that this action is
without merit and intends to vigorously defend this suit.
Lorelei Personnel, Inc. vs. iVoice.com, Inc.
Filed February 12, 2001
Superior Court of New Jersey
Middlesex County
This action is for consulting\employee placement services allegedly rendered by
Lorelei. The payment terms that Lorelei claims, were never agreed to by iVoice.
Furthermore, the employee referred by Lorelei was terminated within 30 days of
hire for failure to perform in an adequate manner. The plaintiff is seeking
damages of $6,000, plus interest, legal fees and court costs. The Company
believes that this action is without merit and intends to vigorously defend this
suit.
This action is being defended by the law firm Reid Weinman, P.C.,158 Livingston,
Ave., New Brunswick, NJ 08901. The Company believes that this action is without
merit and intends to vigorously defend this suit.
Lighthouse Technical Consulting, Inc. vs. iVoice.com, Inc.
Filed March, 2001
Superior Court of New Jersey
Monmouth County
This action is for failure to pay for consulting\employee placement services
rendered by Lighthouse. IVoice is making monthly payments in the amount of $500
and does not deny that the liability exists.
This action is being defended by the law firm Reid Weinman, P.C.,158 Livingston,
Ave., New Brunswick, NJ 08901. The Company believes that this action is without
merit and intends to vigorously defend this suit.
38
Schedule 3(l) - Intellectual Property
None.
39
Schedule 3(n) Liens
SECURITY AGREEMENT
This SECURITY AGREEMENT dated March 20, 2001, between Jerome Mahoney, an
individual with offices at c/o iVoice.com, Inc. 750 Highway 34, Matawan, New
Jersey 07747 (the "Secured Party") and iVoice.com, Inc., a Delaware corporation,
with offices at 750 Highway 34, Matawan, New Jersey 07747 (the "Debtor").
1. Obligation to Pay. The Debtor concurrently with the execution and delivery of
this AGREEMENT, has borrowed One Million and Five Hundred Thousand and
Sixty-eight Dollars and 0/100 Cents ($1,568,327), from the Secured Party, which
borrowing is evidenced by the Debtor's promissory note., and in consideration
therefor, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Debtor hereby grants the
Secured Party a security interest as set forth in Paragraph 2 herein.
2. Collateral. The Debtor desires to enter into this AGREEMENT for the purpose
of creating a security interest in favor of the Secured Party in the assets
annexed as Exhibit I hereto, in all additions and accessions thereto,
substitutions therefore and all proceeds of their sale or disposition (all
hereinafter referred to collectively as "Assets").
3. Creation of security interest. The Debtor, in order to secure payment of the
debt evidenced by the promissory note originally for the sum of $1,568,327,,
including accrued interest, renewals, extensions thereof and additional
borrowings that shall be evidenced by additional promissory notes; and all costs
and expenses incurred in collection of the hereby grants to the Secured Party a
security interest in the Assets.
4. Debtor's warranties and agreements. The Debtor warrants and agrees that:
(a) Transfer. The Debtor will not: (a) sell or exchange the Assets outside
of the ordinary course of business, (b) lease, encumber or pledge the Assets,
(c) create any security interest therein except that created by this
AGREEMENT, without the prior written consent of the Secured Party.
(b) Filings The Debtor will pay all costs of filing any financing, continuation,
or termination statements with respect to the security interest created by this
Agreement. The Secured Party is hereby appointed the Debtor's attorney-in-fact
to do all acts and things which the Secured Party may deem necessary to perfect
and continue perfected the security interest created by this Agreement and to
protect the goods. A reproduction of this Agreement, or any financing statement
signed by the Debtor, is sufficient as a financing statement.
(c) Place of business The Debtor will promptly notify the Secured Party of any
change in the location of any place of business and of the establishment of any
new place of business.
40
5. Default and remedies. In the event of default in the payment of the debts
referred to in paragraph 1, or any past or future advances, expenditures, or
liabilities hereby secured, or in the due observance or performance or any of
the other conditions or agreements hereof; or if any of the warranties of the
Debtor shall prove to be false or misleading; or if the Debtor shall become
insolvent or shall be adjudicated a bankrupt, or if bankruptcy, insolvency,
reorganization, arrangement, debt adjustment, or liquidation proceedings, or
receivership proceedings in which the Debtor is alleged to be insolvent or
unable to pay his debts as they mature, shall be instituted by or against the
Debtor, and the Debtor shall consent to the same or admit in writing the
material allegations of the petition filed in such proceedings, or such
proceedings shall not be dismissed within 30 days after their institution; then,
upon the occurrence of any of the above events, the Secured Party may declare
the unpaid balance of the debt and all advances, expenditures, and liabilities
immediately due and payable without demand or notice, and the Secured Party may
enter judgment on such note or otherwise reduce such debt, advances,
expenditures, and liabilities to judgment, and in addition proceed to exercise
one or more of the rights accorded by the Uniform Commercial Code in force in
the State of Nevada at the date of this Agreement. It is understood and agreed
that this Agreement has been made and entered into pursuant to the Uniform
Commercial Code and that the Secured Party has all rights and remedies accorded
thereby. If any provisions of the Agreement shall for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof, but this Agreement shall be construed as if such
invalid or unenforceable provision had never been contained in this Agreement.
6. Benefit. The rights and privileges of the Secured Party under this Agreement
shall inure to the benefit of its successors and assigns. All covenants,
warranties, and agreements of the Debtor contained in this Agreement are joint
and several and shall bind personal representatives, heirs, successors and
assigns.
Jerome Mahoney
By: _____________________ Date: ______________
iVoice.com, Inc.
By: _____________________ Date: ______________
Name: ____________________ Title: _____________________
EXHIBIT I
All assets of the Debtor including by not limited to intellectual property,
patents, trademarks, software, artwork, copyrighted materials, accounts
receivable and all proceeds, cash, inventory, office equipment, telephones,
furniture, and motor vehicles. Additionally, all proceeds payable to the Debtor
under the Key Man life insurance policy issued by Massachusetts Mutual Policy
Number 11073319.
41
Schedule 3(t) - Certain Transactions
See Schedule 3(n)
42