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EXHIBIT 10.2
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of April 26th, 2000 by and
between INTERCONTINENTAL TELECOMMUNICATIONS CORPORATION, a Florida corporation,
d/b/a XXX.xxx (the "Company"), and Millennium Investment Capital Corp., a
British Virgin Islands corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Purchaser desires to subscribe for, and the Company
desires to issue 147,420 shares of Common Stock, $0.0001 par value, of the
Company;
WHEREAS, at the closing of the transaction contemplated hereunder, the
Company and the Purchaser shall have executed and delivered an Investor Rights
Agreement, in substantially the form attached hereto as Exhibit B, setting forth
the rights and obligations relating to the holders of the Common Stock (the
"Investor Rights Agreement");
WHEREAS, on or prior to the closing of the transactions contemplated
hereunder the Company and each of the persons set forth in Schedule I shall have
entered into an Employment Agreement, in substantially the form attached hereto
as Exhibit C (each an "Employment Agreement," and together, the "Employment
Agreements");
WHEREAS, on or prior to the closing of the transactions contemplated
hereunder, the Company shall enter into a Non-Compete Agreement, in
substantially the form attached hereto as Exhibit D, with each of the officers
of the Company (each a "Non-Compete Agreement," and together, the "Non-Compete
Agreements"); and
WHEREAS, on or prior to the closing of the transactions
contemplated hereunder, the Company shall enter into a Proprietary Information
and inventions agreement, in substantially the form attached hereto as Exhibit
E, with selected officers, employees and consultants of the Company (each an
"Invention Agreement," and together, the "Invention Agreements").
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINITIONS
As used in this Agreement, and unless the context requires a different
meaning, the following terms have the meanings indicated:
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"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person; provided, however, that, an Affiliate shall include
any entity that directly or indirectly (including through limited partner or
general partner interests) owns more than 10% of any class of the equity of any
other entity.
"Agreement" shall mean this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof, from time to time.
"Applicable Law" shall mean any constitution, statute, law, rule,
regulation, ordinance, judgment, order, decree, Permit, or any published
directive, guideline, requirement or other governmental restriction which has
the force of law, or any determination by, or interpretation of any of the
foregoing by, any judicial authority, binding on a given person whether in
effect as of the date hereof or as of any date thereafter.
"Audit Date" shall have the meaning set forth in Section 2.5 of this
Agreement.
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to close.
"Closing" shall have the meaning set forth in Section 4.3 of this
Agreement.
"Closing Date" shall mean April 26th, 2000.
"Commission" shall mean, at any time, the Securities and Exchange
Commission or any other Federal agency then administering the Securities Act and
other Federal securities laws.
"Common Stock" shall have the meaning set forth in the recitals of this
Agreement.
"Company" shall have the meaning set forth in the first paragraph of
this Agreement.
"Company Property" shall mean any real property and improvements owned,
leased, used, operated or occupied by any Transaction Party.
"Damages" shall have the meaning set forth in Section 9.1 of this
Agreement.
"Documents" shall mean, collectively, this Agreement, the Investor
Rights Agreement, the Employment Agreements, the Non-Compete Agreements and the
Invention Agreements.
"Dollars" and "$" shall mean United States Dollars.
"Encumbrances" shall have the meaning set forth in Section 2.6 of this
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
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"GAAP" shall have the meaning set forth in Section 2.5 of this
Agreement.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness for borrowed money or for the deferred purchase price of property
or services, (ii) all indebtedness of the type otherwise described in this
definition secured by any lien on any property owned by such Person or any of
its Subsidiaries, (iii) capitalized lease obligations, (iv) all guarantees of
any type of indebtedness otherwise described in this definition, (v) all
obligations of such Person to pay a specified purchase price for goods or
services, whether or not delivered or accepted, i.e., take-or-pay or similar
obligations and (vi) interest rate protection hedging agreements, currency
hedging agreements or commodity hedging agreements.
"Initial Offering" shall have the meaning set forth in Section. 7.1(c)
of this Agreement.
"Investor Rights Agreement" shall have the meaning set forth in the
recitals of this Agreement.
"Leases" shall have the meaning set forth in Section 2.6 of this
Agreement.
"Material Adverse Effect" shall have the meaning set forth in Section
2.1 of this Agreement.
"Permit" shall mean any material Federal, state, local, foreign or
other governmental or other third party permit (including occupancy permit),
certificate, license, consent and authorization held by the Company or its
Subsidiaries.
"Permitted Business" shall mean any business in which any of the
Transaction Parties are engaged in on the Closing Date, and any reasonable
extensions thereof; PROVIDED, HOWEVER, that such businesses are not primarily
operated in any country which is the target of any United States boycott laws,
embargo laws, or the substantial equivalent thereof.
"Permitted Encumbrances" shall have the meaning set forth in Section
2.6 of this Agreement.
"Person" shall mean and include natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"Purchaser" shall have the meaning set forth in the first paragraph of
this Agreement.
"Purchase Price" shall have the meaning set forth in Section 4.2 of
this Agreement.
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"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
"Securities Laws" shall mean the Securities Act, the Exchange Act and
the rules and regulations promulgated thereunder and under any applicable state
securities laws.
"Subsidiary" shall have the meaning set forth in Section 2.4(a) of this
Agreement.
"Transaction Party" shall have the meaning set forth in Section 2.1 of
this Agreement.
ARTICLE II
REPRESENTATIONS OF THE COMPANY
In order to induce the Purchaser to enter into this Agreement and to
purchase the Common Stock, the Company represents and warrants to and agrees
with the Purchaser as follows:
2.1 EXISTENCE AND GOOD STANDING. The Company and each of its
Subsidiaries (each a "Transaction Party," and collectively, the "Transaction
Parties") is a Person, duly organized, validly existing and in good standing, or
the equivalent thereof, under the laws of the jurisdiction of its organization.
Each Transaction Party has the requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
as proposed to be conducted. Except as set forth in Schedule 2.1, each
Transaction Party is duly qualified or licensed to do business and is in good
standing, or the equivalent thereof, and is authorized to do business, in each
jurisdiction in which the character or location of the properties owned, leased
or operated by such entity or the nature of the business conducted by such
entity makes such qualification or license necessary, except where any such
failure to be duly qualified or licensed or in good standing, or the equivalent
thereof, would not have a material adverse effect on the business, operations,
financial condition or results of operations of the Transaction Parties, taken
as a whole, or on the ability of the Company to perform its obligations under
any of the Documents (a "Material Adverse Effect").
2.2 CAPITAL STOCK. Immediately prior to giving effect to the
transactions contemplated hereby, the Company had an authorized capitalization
consisting of 30,000,000 shares of Common Stock, no par value per share ("Common
Stock") of which 11,267,845 shares of Common Stock were outstanding and
10,368,810 shares were being held in reserve for issuance upon the exercise of
outstanding stock options and existing warrants. All outstanding shares of
capital stock of the Company (including, without limitation, those purchased by
the Purchaser hereunder) have been, and, on the Closing Date, will be duly
authorized and validly issued and fully paid and non-assessable. Except as set
forth on Schedule 2.2, there will be no outstanding subscriptions, options,
warrants, rights, calls, commitments, conversion rights, rights of exchange,
plans or other agreements or commitments, contingent or otherwise, of any
character providing for the purchase, redemption, acquisition, retirement,
issuance or sale by any Transaction Party of any shares of capital stock of any
Transaction Party or other securities
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exchangeable or convertible into capital stock of any Transaction Party, in each
case subject to adjustment based on the exercise of outstanding stock options
and existing warrants since April 26, 2000 and there are no stock appreciation
rights or phantom stock plans outstanding. Schedule 2.2 sets forth the aggregate
number of shares of Common Stock which, as of April 26, 2000, the Company is
obligated to issue in connection with each specific item set forth on Schedule
2.2 and described in the immediately preceding sentence, after giving effect to
the transactions contemplated thereby. In addition, except as set forth in
Schedule 2.2, there are no rights, agreements, restrictions or encumbrances
(such as preemptive rights, rights of first refusal, rights of first offer,
proxies, voting agreements, voting trusts, registration rights agreements,
shareholders agreements, etc., whether or not any Transaction Party is a party
thereto) nor are there any restrictions on the transferability or sale of such
capital stock pursuant to any provision of law, contract or otherwise with
respect to the purchase, sale or voting of any shares of capital stock of any
Transaction Party (whether outstanding or issuable upon conversion, exchange or
exercise of any other security of any Transaction Party). Except as set forth in
Schedule 2.2, no Transaction Party has any outstanding bonds, debentures, notes
or other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities the holders of which have the
right to vote). The shares of Common Stock are duly and validly authorized,
fully paid and nonassessable, and free and clear of all Encumbrances (as defined
herein) and preemptive or other similar rights other than Encumbrances, and
pre-emptive or similar rights which may have been granted by the Purchaser.
2.3 AUTHORIZATION AND VALIDITY OF THE DOCUMENTS. The Company has the
requisite power and authority to execute and deliver the Documents to which it
is a party and to perform its obligations thereunder. The execution, delivery
and performance of the Documents by the Company and the performance of its
obligations hereunder have been duly authorized and approved by all necessary
action (including, without limitation, all action of the Board of Directors, or
the equivalent thereof, and shareholders or other required Persons of the
Company) and no other action on the part of such persons is necessary to
authorize the execution, delivery and performance of the Documents by the
Company. Each of the Documents has been duly executed and delivered by the
Company and, assuming due execution thereof by the other parties thereto, is a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding brought in equity or at law).
2.4 SUBSIDIARIES AND INVESTMENTS. (a) Schedule 2.4 attached hereto
lists each Person in which the Company owns, directly or indirectly, any equity
security (each a "Subsidiary").
(b) Set forth on Schedule 2.4 lists the jurisdictions in which
each Subsidiary is qualified or licensed to do business.
(c) Each Subsidiary has the equity capitalization (including
minority ownership) set forth in Schedule 2.4. All of the outstanding shares of
capital stock or other equity securities, as the case may be, of each Subsidiary
have been duly authorized and validly
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issued, are fully paid and nonassessable and are not subject to, nor were they
issued in violation of, any preemptive rights, and, except as set forth in
Schedule 2.4, are owned, of record and beneficially, by the Company or a
Subsidiary, free and clear of all Encumbrances. There are no outstanding
options, warrants, rights, subscriptions, claims of any character, agreements,
obligations, convertible or exchangeable securities, or other commitments,
contingent or otherwise relating to the capital stock or other equity
securities, as the case may be, of any Subsidiary, pursuant to which such
Subsidiary, the Company or any other Subsidiary is or may become obligated to
issue or purchase any shares of capital stock or other equity securities of such
Subsidiary or any securities convertible into, exchangeable for, or evidencing
the right to subscribe for, any capital stock or other equity securities of such
Subsidiary other than such rights granted to the Company or a subsidiary of the
Company.
(d) There are no restrictions of any kind which prevent or
restrict the payment of dividends by any Subsidiary.
2.5 FINANCIAL STATEMENTS. (a) The Company has delivered to Purchaser
its audited financial statements (balance sheet and statement of operations,
statement of changes in shareholders' equity and statement of cash flows,
including notes thereto) at April 30, 1999 (the "Audit Date") (the "Financial
Statements"). The Financial Statements have been prepared in accordance with
United States generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods indicated and with each other, except
that the unaudited Financial Statements may not contain all footnotes required
by GAAP. The Financial Statements fairly present the financial condition and
operating results of the Company as of the date, and for the periods, indicated
therein. Other than as disclosed in the Financial Statements, the Company has no
material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the Audit Date and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under GAAP to be reflected in the Financial
Statements, which, in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of the Company. Except
as disclosed in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with GAAP.
(b) Each of the balance sheets included in the Financial
Statements (including any related notes and schedules) fairly presents the
financial position of the Company as of its date and each of the statements of
operations, shareholders' equity (deficit) and cash flows included in or
incorporated by reference into the Financial Statements (including any related
notes and schedules) fairly presented the results of operations, retained
earnings or cash flows, as the case may be, of the entity or entities to which
it relates for the periods set forth therein, in each case in accordance with
GAAP consistently applied during the periods involved, except as may be noted
therein and except, in the case of the unaudited statements, subject to normal
recurring year-end adjustments.
2.6 TITLE TO PROPERTIES; ENCUMBRANCES; LEASES. (a) Except as set forth
on Schedule 2.6(A), the Transaction Parties do not own, in fee or otherwise, any
interest in any real property material to its business, other than leasehold
interests and easements. Except for such
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properties and assets which have been sold or otherwise disposed of in the
ordinary course of business, each of the Transaction Parties has good title to
its material properties and assets (whether real, personal, mixed, tangible or
intangible), subject to no encumbrance, lien, charge or other restriction of any
kind or character ("Encumbrances"), except for (i) Encumbrances for current
taxes, assessments or governmental charges or levies on property not yet due and
delinquent, (ii) Encumbrances arising by operation of law and (iii) other
Encumbrances which could not reasonably be expected to have a Material Adverse
Effect (Encumbrances of the type described in clauses (i) - (iii) above are
hereinafter sometimes referred to as "Permitted Encumbrances"). Each Transaction
Party owns or otherwise has the right to use all of the property now used and
material to the operation of the business of the Transaction Parties taken as a
whole, which personal property is in good operating condition and repair,
ordinary wear and tear excepted and substantially fit for the purpose for which
they are being utilized and constitutes all of the property necessary to conduct
its business as it is presently being conducted.
(b) Schedule 2.6(B) attached hereto contains an accurate and
complete list of all material property (whether real, personal, mixed, tangible
or intangible) leased or sub-leased by the Transaction Parties, including all
amendments, extensions and other modifications (the "Leases"). Except as
otherwise set forth in Schedule 2.6(B), each Lease is in full force and effect;
the Transaction Parties have a good and valid leasehold interest in and to all
of the leased property, subject to no Encumbrances, except Permitted
Encumbrances; all payments, rents and additional rents due to date from any of
the Transaction Parties in respect of each such Lease have been paid; no
Transaction Party has received notice that it is in default under any Lease;
and, to the knowledge of each of the Transaction Parties, there exists no event,
occurrence, condition or act (including the consummation of the Transaction)
which, with the giving of notice, the lapse of time or the happening of any
further event or condition, would become a default by any Transaction Party
under any such Lease or which brings into question the validity or effectiveness
of any such Lease.
2.7 MATERIAL CONTRACTS. Except as set forth on Schedule 2.7 and
Schedule 2.2 attached hereto, no Transaction Party is bound by (a) any
agreement, contract or commitment providing for annual payments of more than
$500,000, (b) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other distribution in
respect of its capital stock providing for annual payments of more than
$500,000, (c) any agreement, indenture or instrument relating to Indebtedness
providing for annual payments of more than $500,000, (d) any agreement or
contract with any Affiliate providing for annual payments of more than $500,000,
(e) any interconnection agreement providing for annual payments of more than
$500,000, (f) employment agreement, consulting agreement (which entitles any
Person to over $200,000 per year) or any other similar type of contract or (g)
any agreement, contract or commitment limiting the ability of any Transaction
Party to engage in any line of business or to compete with any Person or to
otherwise acquire property or conduct business in any area. Except as otherwise
set forth on Schedule 2.7, each contract or agreement set forth on Schedule 2.7
(or required to be set forth in Schedule 2.7) is in full force and effect and
there exists no material default or material event of default or to the
knowledge of each of the Transaction Parties, event, occurrence, condition or
act (including the consummation of the sale contemplated hereby) which, with the
giving of notice, the lapse of time or the happening of any other material event
or condition, would become a default or event of default thereunder.
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2.8 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery
of this Agreement and the other Documents by the Company to which it is a party
and compliance by the Company with the terms and provisions hereof and thereof
and the issuance of the Common Stock by the Company and the consummation of the
transactions contemplated hereby does not and will not (a) violate or contravene
any provision of the articles of incorporation (or equivalent thereof) or bylaws
(or equivalent thereof) of any Transaction Party, (b) violate or contravene any
statute, rule, regulation, licensing requirement, order or decree of any court,
arbitrator or any other public body or authority by which any Transaction Party
is bound or by which any of its properties or assets are bound, (c) require any
filing with, or permit, consent authorization, qualification or approval of, or
exemption from, or the giving of any notice to, any governmental or regulatory
body, agency or authority, or any other Person (other than required filings
under the Exchange Act) or (d) result in a violation or breach of, conflict
with, constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of any Transaction Party under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease, franchise agreement or any other instrument
or obligation to which any Transaction Party is bound, or by which it or any of
its properties or assets may be bound.
2.9 LITIGATION. There is no action, suit, proceeding at law or in
equity, arbitration or administrative or other proceeding by or before (or, to
the knowledge of each of the Transaction Parties, any investigation by) any
governmental or other instrumentality or agency pending, or, to the knowledge of
each of the Transaction Parties, threatened, against or affecting any
Transaction Party or any such entity's properties or rights which could
reasonably be expected to have a Material Adverse Effect. No Transaction Party
is subject to any judgment, order or decree entered in any lawsuit or proceeding
which could reasonably be expected to have a Material Adverse Effect.
2.10 COMPLIANCE WITH LAWS. Each of the Transaction Parties is in
compliance in all material respects with all Applicable Laws, regulations,
licensing requirements, orders, judgments and decrees and have obtained all
required governmental approvals and permits in each jurisdiction in which they
currently do business, in each case except where the failure to do so would not
have a Material Adverse Effect on the Company or any Subsidiary. Without
limiting the generality of the foregoing, each of the Transaction Parties is in
compliance in all respects with the United States Foreign Corrupt Practices Act
of 1977, as amended.
2.11 EMPLOYMENT RELATIONS. The Transaction Parties are in substantial
compliance with all Federal, state or other applicable laws, domestic or
foreign, respecting employment and employment practices, terms and conditions of
employment and wages and hours, and have not, and are not, engaged in any unfair
labor practice and there is no labor strike, dispute, slowdown or stoppage
actually pending or threatened against or involving any Transaction Party.
2.12 SECURITIES LAW COMPLIANCE. Assuming that the representations set
forth in Article III are true and correct, the offering, issuance, sale and
delivery of the Common Stock to the Purchaser is exempt from the registration
requirements of the Securities Act. The Company
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has complied with, or is exempt from, all registration requirements of all
applicable state securities laws, or foreign securities law, in connection with
the offering, issue, sale and delivery of the Common Stock.
2.13 TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule
2.21, none of the Transaction Parties has entered into any transaction or series
of related transactions, whether or not in the ordinary course of business, with
any Affiliate of any Transaction Party, pursuant to which any Transaction Party
maintains any existing obligations and which involves the payment of more than
$60,000 per annum.
2.14 PERMITS. The Company has delivered or made available to Purchaser
for inspection a true and correct copy of each Permit. Each Permit can be
renewed or transferred in the ordinary course of business by the Company or its
Subsidiaries, except where the failure to obtain such transfer or renewal would
not have Material Adverse Effect. Any applications for the renewal of any such
Permit which are due prior to the Closing Date or will be timely filed prior to
the Closing Date. No proceeding to modify, suspend, revoke, withdraw, terminate
or otherwise limit any such Permit is pending or threatened and the Company does
not know of any valid basis for such proceeding. No administrative or
governmental action has been taken or threatened, in connection with the
expiration, continuance or renewal of any such Permit and the Company does do
not know of any valid basis for any such proceeding.
2.15 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule 2.15,
no agent, broker, person or firm acting on behalf of the Company is, or will be,
entitled to any commission or broker's or finder's fees from any Transaction
Party, or from any Person controlling, controlled by or under common control
with any Transaction Party, in connection with the transactions contemplated
hereby.
ARTICLE III
REPRESENTATIONS OF THE PURCHASER
In order to induce the Company to enter into this Agreement and in
order to induce the Company to issue the Common Stock, the Purchaser represents,
warrants and agrees as follows:
3.1 EXISTENCE AND GOOD STANDING; POWER AND AUTHORITY. The Purchaser is
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its organization. The Purchaser has the requisite power and
authority to execute and deliver the Documents to which it is a party and
perform its obligations thereunder. Each of the Documents to which it is a party
has been duly authorized and approved by the Purchaser, and assuming due
execution by the other parties thereto is a valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms, except
to the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws effecting the
enforcement of creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding brought
in equity or law).
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3.2 RESTRICTIVE DOCUMENTS. The Purchaser is not subject to any
mortgage, lien, lease, agreement, instrument, order, law, rule, regulation,
judgment or decree, or any other restriction of any kind or character, which
would prevent consummation by the Purchaser of the transactions contemplated
hereby.
3.3 PURCHASE FOR INVESTMENT. (a) The Purchaser will acquire the Common
Stock for its own account for investment and not with a view toward any resale
or distribution thereof.
(b) The Purchaser understands that the Common Stock have not
been registered under the Securities Act or under any state securities laws and
may not be sold or transferred unless they are subsequently registered under the
Securities Act and any applicable state or other securities laws, or unless
exemptions from registration under such laws are available;
(c) The Purchaser represents that it is experienced in
investment matters, fully understands the transactions contemplated by this
Agreement, has the knowledge and experience in financial matters as to be
capable of evaluating the merits and risks of its investment and has the
financial ability and resources to bear the economic risks of its investment;
(d) The Purchaser is an "accredited investor" as defined in
Rule 501(a) under the Securities Act.
(e) Purchaser believes it has received all the information it
considers necessary or appropriate for deciding whether to purchase the Common
Stock. Purchaser further represents that it has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of the Common Stock and the business, properties,
prospects and financial condition of the Company.
3.4 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting
on behalf of the Purchaser is, or will be, entitled to any commission or
broker's or finder's fees from any Transaction Party, or from any Person
controlling, controlled by or under common control with any Transaction Party,
in connection with the transactions contemplated hereby.
3.5 RESTRICTED SECURITIES. Purchaser understands that the Common Stock
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may not be resold without registration
under the Act, except in certain limited circumstances. In this regard,
Purchaser represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the Act.
3.6 LEGENDS. It is understood that the certificates evidencing the
Common Stock may bear one or all of the following legends:
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(a) "These securities have not been registered under any
federal or state securities laws and may not be sold, offered for sale, pledged
or hypothecated in the absence of a registration statement in effect with
respect to the securities under applicable securities law or an opinion of
counsel satisfactory to the Company that such sale, pledge, offer or
hypothecation does not violate applicable securities laws.
(b) Any legend required by applicable blue sky law.
ARTICLE IV
ISSUANCE OF SECURITIES; PAYMENT OF SUBSCRIPTION PRICE; CLOSINGS
4.1 ISSUANCE OF COMMON STOCK. Subject to the terms and conditions set
forth in this Agreement, on the Closing Date, the Company agrees to sell to the
Purchaser, and the Purchaser agrees to purchase from the Company, the Common
Stock. Delivery of the Common Stock to be purchased by the Purchaser pursuant to
this Agreement shall be made, pursuant to Section 4.4, on the Closing Date by
the Company to the Purchaser, against payment of the Purchase Price.
4.2 PURCHASE PRICE. Subject to the terms and conditions set forth in
this Agreement, in full consideration for the sale by the Company of the Common
Stock to the Purchaser, the Purchaser shall deliver to the Company $600,000 (the
"Purchase Price") on the Closing Date, by wire transfer of immediately available
funds to the accounts specified by the Company and listed on Schedule 4.2
attached hereto.
4.3 TIME AND PLACE OF CLOSINGS. The deliveries made on the Closing Date
(the "Closing") shall take place at 10:00 a.m. on the Closing Date, or such
other time as the Company and the Purchaser shall mutually agree. Unless
otherwise required by either party hereto, the deliveries required at closing
shall be effected by facsimile transmission, with original documents to be sent
via overnight delivery.
4.4 CLOSING DELIVERIES. At the Closing the Company shall deliver, or
cause to be delivered, to the Purchaser the following: (i) certificates
representing the number of shares of Common Stock to be issued and delivered,
the Closing, free and clear of all Encumbrances with all necessary share
transfer and other documentary stamps attached at the expense of the Company,
(ii) evidence or copies of any consents, approvals, orders, qualifications,
agreements or waivers required pursuant to Article V, and (iii) all certificates
and other instruments and documents required by this Agreement to be delivered
by the Company to the Purchaser at or prior to the Closing.
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ARTICLE V
CONDITIONS TO THE PURCHASER'S OBLIGATIONS
The obligations of the Purchaser to purchase the Common Stock
contemplated by this Agreement is conditioned upon satisfaction, at or prior to
the Closing, of the following conditions:
5.1 GOOD STANDING AND OTHER CERTIFICATES. The Purchaser shall have
received (a) a copy of the certificate of incorporation or other organizational
documents of the Company, including all amendments thereto, certified by the
Secretary of Florida, (b) a certificate from the Secretary of State or other
appropriate official of the respective State or country of incorporation or
formation to the effect that the Company is in good standing and listing all
charter documents of such entity, and (c) a copy of the Bylaws of the Company
and the resolutions of the Board of Directors of the Company authorizing the
transactions contemplated hereby, certified by the Secretary of the Company as
being true and correct and in effect on the Closing Date.
5.2 TRUTH OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Company contained in this Agreement and
the other Documents, shall be true and correct in all material respects on and
as of such Closing Date other than such representations and warranties made as
of a specific date, which shall be true and correct in all material respects as
of such date, with the same effect as though such representations and warranties
had been made on and as of such date.
5.3 PERFORMANCE OF AGREEMENTS. The Company shall be in compliance with
the Documents in all material respects, shall have performed in all material
respects all of its agreements and covenants thereunder which are required
thereunder to be performed prior to the Closing Date.
5.4 NO LITIGATION. No action or proceeding shall have been instituted
or, to the knowledge of each of the Transaction Parties, threatened before a
court or other government body or by any public authority to restrain or
prohibit any of the transactions contemplated by the Documents.
5.5 THIRD PARTY CONSENTS; GOVERNMENTAL APPROVALS. All consents,
approvals, authorizations, exemptions or waivers required in connection with the
consummation of the transactions contemplated by the Documents shall have been
received.
5.6 CERTIFICATE OF DESIGNATION. No Certificate of Designation has been
filed in relation to this offering.
5.7 INVESTOR RIGHTS AGREEMENT; EMPLOYMENT AGREEMENTS; NON-COMPETE
AGREEMENTS; INVENTION AGREEMENTS. The Company shall deliver the Investor Rights
Agreement to the Purchaser together with copies of each of the Employment
Agreements, the Non-Compete Agreements and the Invention Agreements.
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ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATIONS
The issuance of the Common Stock by the Company is conditioned upon
satisfaction, at or prior to the Closing, of the following conditions:
6.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct on and as of the Closing Date other than such representatives and
warranties made as of a specific date, which shall be true and correct in all
material respects as of such date, with the same effect as though such
representations and warranties had been made on and as of such date.
6.2 THIRD PARTY CONSENTS; GOVERNMENTAL APPROVALS. All consents,
approvals authorizations, exemptions or waivers, if any, required in connection
with the consummation of the transactions contemplated by this Agreement shall
have been received.
6.3 PERFORMANCE OF AGREEMENT. The Purchaser shall have performed in all
material respects, its obligations under this Agreement.
6.4 NO LITIGATION. No action or proceeding shall be instituted or, to
the knowledge of the Purchaser, threatened before a court or other government
body or any public authority to restrain or prohibit any of the transactions
contemplated hereby.
ARTICLE VII
POST-CLOSING AGREEMENTS
7.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. (a) For so long as the
Purchaser holds the Common Stock or shares of common stock obtained in
connection with the Common Stock, the Company shall deliver to Purchaser:
(i) within 45 days after the end of each of the first three
quarterly accounting periods in each fiscal year, consolidated
statements of earnings, shareholders' equity and cash flows of the
Company for such fiscal quarter, and a consolidated balance sheet of
the Company as of the end of such fiscal quarter, all prepared in
accordance with GAAP, consistently applied, subject to normal year-end
adjustments, and certified by the chief financial officer or controller
of the Company.
(ii) within 90 days after the end of each fiscal year, audited
consolidating and consolidated statements of earnings, shareholders'
equity and cash flows of the Company for such fiscal year, and
consolidated and consolidating balance sheets of the Company as of the
end of such fiscal year, setting forth in each case comparisons to
comparable budgeted figures and comparable figures for the preceding
fiscal year, all prepared in
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accordance with GAAP, consistently applied, and certified by, (a) with
respect to the consolidated portions of such statements, an independent
accounting firm of national recognition (such certification to be
accompanied by a copy of such firm's annual management letter to the
management of the Company) and (b) with respect to the consolidating
portions of such statements, the chief financial officer or controller
of the Company.
(b) For so long as Purchaser holds one hundred percent (100%)
of the Common Shares purchased hereunder the Company shall provide Purchaser:
(i) within 30 days following the end of each month, statements
of earnings, shareholders' equity and cash flows of the Company for
such month, prepared by the Company in the ordinary course of its
business.
(ii) prior to each fiscal year, the Company's proposed budget
for such year, setting forth the expected revenues, expenses and
capital expenditures on a monthly and quarterly basis.
(c) Notwithstanding anything herein in this Section 7.1 to the
contrary, the rights of Purchaser under this Section 7.1 shall terminate upon a
firmly underwritten public offering of the Common Stock ("Initial Offering") or
when the Company first becomes subject to the periodic reporting requirements of
Sections 12(g) or 15(d) of the 1934 Act, whichever event shall occur first.
7.2 RESERVATION OF COMMON STOCK; VALID ISSUANCE. (a) The Company shall
at all times reserve for issuance free from preemptive rights and other rights
to preempt or subscribe, (i) a number of shares of Common Stock at least equal
to the number of shares of Common Stock issuable upon conversion or exercise of
all securities of the Company convertible into Common Stock.
(b) The shares of Common Stock when issued in accordance with
their respective terms, will be validly issued, fully paid and nonassessable,
free of all preemptive or similar rights, and shall be delivered free and clear
of all Encumbrances.
7.3 BOARD APPROVAL. Until the effective date of the Initial Offering,
without the prior approval of the Company's Board of Directors, the Company
shall not, and shall not allow any of its Subsidiaries to:
(i) hire any officer of the Company;
(ii) adopt any bonus program covering officers and key
employees;
(iii) adopt any employee stock option programs or make any
grants under any such program;
(iv) adopt or approve any annual budget, business or financial
plan;
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(v) purchase or lease any real estate;
(vi) enter into any obligation or commitment, including
capital equipment leases or purchases, with a total value greater than
$500,000 or which are not permitted under most recent business plan or
budget approved by the Board of Directors of the Company; or
(vii) engage corporate counsel, an accounting firm or an
investment bank.
ARTICLE VIII
SURVIVAL
8.1 SURVIVAL. Except as expressly provided in this Agreement, the
covenants contained in this Agreement shall survive the Closing Date
indefinitely. The representations and warranties of the Company and the
Purchaser contained in this Agreement and the schedules and certificates
delivered in connection herewith shall survive until one year from the date
hereof, except that the representations and warranties contained in Section 2.10
shall survive until the expiration of the applicable statute of limitations
period (after giving effect to any extensions or waivers thereof) and such
representations and warranties may be relied upon by the Purchaser regardless of
any investigation made at any time by or on behalf of the Purchaser; provided,
that the Purchaser shall not be entitled to assert claims with respect to any
representation or warranty as to which it had, as of the Closing Date, actual
knowledge that such representation or warranty was false or incorrect.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION. The Company agrees to indemnify and hold the
Purchaser and its officers, directors, employees, Affiliates and agents, and any
successors thereto (and any officers, directors, employees, Affiliates and
agents of such successors) harmless from any liability, damage, deficiency,
demand, claim, suit, action, or cause of action, fine, penalty, loss, cost,
expense, including without limitation, reasonable attorney fees ("Damages")
incurred or suffered as a result of the failure of any representation or
warranty made by the Company pursuant to this Agreement, any schedule or exhibit
to this Agreement or any certificates delivered pursuant thereto to be true and
correct as of the date hereof and on the Closing Date.
9.2 CONTRIBUTION. To the extent that the undertaking to indemnify, pay
or hold harmless the Purchaser pursuant to Section 9.1 of this Agreement may be
unenforceable, the Company shall make the maximum contribution to the payment
and satisfaction of each of the indemnified liabilities which is permissible
under applicable law.
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9.3 LIMITATION ON INDEMNIFICATION. The Company shall not be liable
under this Article IX for a breach of a representation or warranty unless the
aggregate amount of Damages exceeds $250,000; provided, however, that in the
event the amount of Damages exceeds $250,000 in the aggregate, the Company shall
be responsible for only the amount of Damages in excess of $250,000. In no event
shall the amount of Company's obligation under this Article IX for a breach of
representations or warranties exceed One Million Dollars.
ARTICLE X
MISCELLANEOUS
10.1 KNOWLEDGE OF THE TRANSACTION PARTIES. Where any representation or
warranty made by the Company contained in this Agreement is expressly qualified
by reference to its knowledge, such knowledge shall be deemed to exist if the
matter should be within the knowledge of any director, executive officer or
other senior member of management (including, without limitation, the Company's
internal counsel) of the Company.
10.2 EXPENSES. Each party to this agreement shall bear its own expenses
in preparing and executing this transaction.
10.3 GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of Florida applicable to agreements executed and to be performed solely
within such State, without regard to any laws, rules or regulations regarding
conflicts of law.
10.4 CAPTIONS. The Article and Section captions used herein are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
10.5 PUBLICITY. Except as otherwise required by law, none of the
parties hereto shall issue any press release or make any other public statement,
in each case relating to, connected with or arising out of this Agreement or the
matters contained herein or therein, without obtaining the prior approval of the
Purchaser and the Company to the contents and the manner of presentation and
publication thereof.
10.6 NOTICES. Any notice or other communication required or permitted
under this Agreement shall be sufficiently given if delivered in person or sent
by telecopy or by registered or certified mail, postage prepaid, addressed as
follows:
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if to the Company:
Notice Address:
Intercontinental Telecommunications Corporation
C/O: Xxxxx & XxXxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and if to the Purchaser:
Millenium Investment Capital Corp.
Xxx Xxxxx, 000, Xxxx 00
Xxxxxxxxxxxx - Xxx Xxxxx - 00000-000
Telephone: 000-00-00-000-0000
Telecopier: 011-55-11-3663-6138
or such other address or number as shall be furnished in writing by any such
party, and such notice or communication shall be deemed to have been given upon
automatic confirmation of receipt by the receiving machine if sent by
telecopier, upon delivery if delivered in person, and upon mailing if mailed.
10.7 PARTIES IN INTEREST. The Company may not transfer, assign or
pledge any of its rights in, or otherwise grant any rights to any Person in,
this Agreement. The Purchaser may with the Company's prior written approval,
transfer any of its rights hereunder and any assignee or transferee of the
Common Stock (other than transferees receiving the Common Stock pursuant to a
registered sale or a sale pursuant to Rule 144 of the Securities Act).
10.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
10.9 ENTIRE AGREEMENT. This Agreement and the Investor Rights
Agreement, including the exhibits, schedules, and other documents referred to
herein and therein which form a part hereof and thereof, contain the entire
understanding of the parties hereto with respect to the subject matter contained
herein and therein. This Agreement and the Investor Rights Agreement supersede
all prior agreements and understandings between the parties with respect to such
subject matter.
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10.10 AMENDMENTS. This Agreement may not be changed orally, but only by
an agreement in writing signed by the Purchaser and the Company.
10.11 SEVERABILITY. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
10.12 THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto (and, in the case of the
Purchaser, its transferees) and those Persons entitled to indemnification
pursuant to Article IX hereof.
10.13 JURISDICTION. (a) Each of the parties hereto hereby irrevocably
acknowledges and consents that any legal action or proceeding brought with
respect to any of the obligations arising under or relating to this Agreement
may be brought in the federal or state courts of the State of Florida or in the
United States District Court, as the party bringing such action or proceeding
may elect and each of the parties hereto hereby irrevocably submits to and
accepts with regard to any such action proceeding, for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each party hereby further irrevocably waives any claim that any such
courts lack jurisdiction over such party, and agrees not to plead or claim, in
any legal action or proceeding with respect to this Agreement or the
transactions contemplated hereby brought in any of the aforesaid courts, that
any such court lacks jurisdiction over such party. Each party irrevocably
consents to the service of process in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party, at its address for notices set forth in Section 10.6, such service
to become effective 10 days after such mailing. Each party hereby irrevocably
waives any objection to such service of process and further irrevocably waives
and agrees not to plead or claim in any action or proceeding commenced hereunder
or under any other documents contemplated hereby that service of process was in
any way invalid or ineffective. The foregoing shall not limit the rights of any
party to serve process in any other manner permitted by law. The foregoing
consents to jurisdiction shall not constitute general consents to service of
process for any purpose except as provided above and shall not be deemed to
confer rights on any Person other than the respective parties to this Agreement.
(b) To the fullest extent permitted by applicable law, each of
the parties hereto hereby irrevocably waives the objection which it may not or
hereafter have to the laying of the venue of any suit, action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby in any of the Courts referred to in Section 10.13(a) and hereby further
irrevocably waives and agrees not to plead or claim that any such court is not a
convenient forum for any such suit, action or proceeding.
(c) The parties hereto agree that any judgment obtained by any
party hereto or its successors or assigns in any action, suit or proceeding
referred to above may, in the discretion of such party (or its successors, or
assigns), be enforced in any jurisdiction, to the extent permitted by applicable
law.
* * * * *
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IN WITNESS WHEREOF the Purchaser has signed this Securities Purchase
Agreement and the Company has caused its corporate name to be hereunto
subscribed by its officers thereunto duly authorized, all as of the day and year
first above written.
INTERCONTINENTAL TELECOMMUNICATIONS
CORPORATION
By: /s/ XXXXXXX X. ST. LAURENT
------------------------------
Name: Xxxxxxx X. St. Laurent
-----------------------------
Title: Secretary
----------------------------
MILLENIUM INVESTMENT CAPITAL CORP.
By: /s/ XXXX X. XXXXXXX
------------------------------
Name: Xxxx X. Xxxxxxx
------------------------------
Title: Secretary
----------------------------
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