EXHIBIT 10.5
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SHAREHOLDERS'AGREEMENT
SHAREHOLDERS' AGREEMENT, dated as of January 6, 2006 (this
"Agreement"), among ▇▇▇▇▇▇ Pharmaceuticals, Inc., a New Jersey corporation (the
"Company"), iVoice, Inc., a New Jersey corporation ("iVoice"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇., a natural person residing at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇ ▇. ▇▇▇▇▇, a natural person residing at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ("▇▇▇▇▇", and
together with ▇▇▇▇▇▇, the "Major Shareholders"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a natural
person residing at ▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, a natural person residing at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a natural person residing at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, a natural person residing at ▇▇
▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇ are each individually
referred to herein as "Series A Preferred Shareholder" and collectively as the
"Series A Preferred Shareholders," and, together with iVoice, the
"Shareholders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company was formed by the merger of ▇▇▇▇▇▇ Pharmaceuticals
Ltd., a New York corporation ("TPL"), with and into ▇▇▇▇▇▇ Pharmaceuticals, Ltd.
(f/k/a iVoice Acquisition Corp.), a New Jersey corporation ("iVoice
Acquisition"), pursuant to the terms of that certain Agreement and Plan of
Merger, by and among the iVoice, iVoice Acquisition, TPL and the Series A
Preferred Shareholders, dated as of the date hereof (the "Merger Agreement");
and
WHEREAS, pursuant to the Merger, (i) the Series A Preferred
Shareholders acquired and hold one hundred percent (100%) of the shares of
Series A Preferred Stock of the Company, no par value per share (the "Series A
Preferred Stock"), (ii) iVoice acquired and holds (A) 325 shares of the Series B
Preferred Stock of the Company, no par value per share (the "Series B Preferred
Stock"), and (B) a Convertible Debenture in the principal amount of Three
Hundred Sixty Thousand Dollars ($360,000), (C) an Administrative Services
Convertible Debenture in the principal amount of One Hundred Thousand Dollars
($100,000), and (D) one hundred (100) shares of the Common Stock of the Company,
no par value per share and (iii) iVoice is obligated under the Merger Agreement
to purchase additional shares of Series B Preferred Stock and additional
Convertible Debentures of the Company on the terms set forth in the Merger
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, iVoice and the Series A Preferred Shareholders hereby agree
as follows:
ARTICLE I
SPIN-OFF TRANSACTIONS
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SECTION 1.01. General. iVoice, the Company and each of the Series A
Preferred Shareholders hereby agree that iVoice shall have the right and
obligation, in
accordance with the provisions of this Article I, to distribute the shares of
Common Stock then held by iVoice (but not the shares of Series B Preferred
Stock, the Debentures, or any other security of the Company now or then held by
iVoice) to the stockholders of iVoice (in each case, a "Spin-Off Transaction"),
and iVoice shall not consummate a Spin-Off Transaction unless such Spin-Off
Transaction is conducted pursuant to the terms of this Article I.
SECTION 1.02. Option of iVoice. Each Series A Preferred Shareholder hereby
acknowledges and agrees that at any time on or after the first (1st) anniversary
of the date of this Agreement, iVoice may, at its sole and absolute discretion,
consummate a Spin-Off Transaction; provided, however, that iVoice hereby
covenants and agrees not to consummate a Spin-Off Transaction at any time prior
to the first anniversary of the date of this Agreement.
SECTION 1.03. Instruction of the Series A Preferred Shareholders.
iVoice hereby agrees, that if, at any time after the second (2nd) anniversary of
the date of this Agreement, but prior to the fifth (5th) anniversary of the date
of this Agreement, iVoice receives a written request (a "Spin-Off Instruction")
executed by Series A Preferred Shareholders holding at least eighty percent
(80%) of the shares of Series A Preferred Stock, iVoice shall use its
commercially reasonable efforts to consummate a Spin-Off Transaction, including,
but not limited to, causing and assisting the Company in the preparation and
filing of an appropriate registration statement under the Securities Act of
1933, as amended (the "Securities Act"). Once received by iVoice, the Spin-Off
Instruction shall be irrevocable. Notwithstanding anything else in this
Agreement, iVoice shall be under no obligation to consummate, pursue or take any
other action in furtherance of a Spin-Off Transaction if at any time iVoice
determines, in its sole and exclusive judgment, after consulting with its
counsel, that any such action would result in a violation of any law, rule or
regulation by either iVoice or any of its shareholders.
SECTION 1.04. Obligations of iVoice in a Spin-Off Transaction. In any
Spin-Off Transaction, iVoice will use its commercially reasonable efforts to
cause the Company to file a registration statement under the Securities Act and
a registration statement registering the Common Stock under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and/or any other filing as
may be required by the Securities and Exchange Commission.
SECTION 1.05. Obligations of the Company in a Spin-Off Transaction. All
expenses incurred by the Company and/or iVoice in connection with any Spin-Off
Transaction, including those expenses incurred in connection with related
registrations, filings or qualifications, including, without limitation, all
registration, listing and qualifications fees, printers, mailing expenses, legal
and accounting fees, shall be paid by the Company.
SECTION 1.06. Obligations of the Shareholders in a Spin-Off
Transaction. Each Shareholder hereby agrees that in the event of a Spin-Off
Transaction is initiated pursuant to this Section 1.06, each Shareholder shall
vote all of its voting securities in favor of any stock split or combination
that creates total outstanding capital of thirty million (30,000,000) shares as
of the date of the consummation of the Spin-Off Transaction, assuming the
conversion of the Series A Preferred Stock, but not the conversion of the
Convertible Debentures or the Administrative Services Debenture or the Series B
Preferred Stock, while preserving the proportionate holdings of Common Stock
(assuming the conversion of the Series A Preferred Stock) among the
Shareholders.
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ARTICLE II
RESTRICTIONS ON TRANSFER
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SECTION 2.01. Restriction on Transfer. No Series A Preferred
Shareholder may transfer, sell, assign, exchange, mortgage, pledge, hypothecate
or otherwise dispose of (i) any Series A Preferred Stock or (ii) any other
security exchanged or substituted for Series A Preferred Stock or into which
Series A Preferred Stock is converted in any recapitalization, reorganization,
merger, exchange transaction or other business combination transaction,
including Common Stock (together "Class A Securities"), until the second
anniversary of the date on which all of the shares of Common Stock issued upon
the conversion of the Series B Preferred Stock and, if applicable, the
Debentures have been registered for resale under the Securities Act following a
Spin-Off Transaction; provided, however, a Series A Preferred Shareholder may
transfer Class A Securities to such Series A Preferred Shareholder's Relative,
or to a custodian, trustee or other fiduciary for the account of the Series A
Preferred Shareholder or the Series A Preferred Shareholder's Relative or
extended family in connection with an estate planning transaction; provided
that, in each such case, any transferee agrees to the restrictions herein and in
any other Transaction Document, as to such transferred securities as if such
transferee was a Series A Preferred Shareholder. As used in this Section 2.01,
"Relative" shall mean a (i) minor or adult lineal descendant, (ii) spouse or a
minor or adult lineal descendant thereof, (iii) sibling (whether by half or
whole blood) or a minor or adult lineal descendant thereof, or (iv) cousin or a
minor or adult lineal descendant thereof.
SECTION 2.02. Stop Transfer Orders and Legends. Each Series A Preferred
Shareholder acknowledges and agrees that "stop transfer" instructions shall be
placed against the shares of Class A Securities on the transfer books of the
Company until such time as the shares of Class A Securities are available for
resale in accordance with all applicable law and the terms of this Agreement and
that the certificates evidencing the shares of Class A Securities shall bear the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE
STATE SECURITIES LAWS AND NEITHER THE SHARES NOR ANY INTEREST THEREIN
MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER
SUCH ACT AND THE RULES AND REGULATIONS THEREUNDER AND IN THE ABSENCE OF
REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER ANY APPLICABLE
STATE SECURITIES LAWS. THE TRANSFER OF THE SHARES IS ALSO SUBJECT TO
THE RESTRICTIONS SET FORTH IN THAT CERTAIN SHAREHOLDERS' AGREEMENT
DATED JANUARY __, 2006 BETWEEN THE COMPANY AND THE REGISTERED OWNER OF
THE SHARES.
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ARTICLE III
BOARD OBSERVATION RIGHTS
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The Shareholders and the Company hereby agree that in the event that
neither of the Major Shareholders is serving as a director of the Company, that
each of the Major Shareholders shall have the right to attend any meeting of the
Company's board of directors as a non-voting observer.
ARTICLE IV
FURTHER OBLIGATIONS
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SECTION 4.01. Chief Financial Officer. The Company agrees that it will
use its commercially reasonable efforts to hire a Chief Financial Officer (who
need not be hired on a full-time basis) acceptable to iVoice, in its sole
discretion. The Company further agrees that such Chief Financial Officer shall
not be terminated by the Company without the prior written consent of iVoice.
SECTION 4.02. No Dividends. The Company agrees that it will not declare
or pay a dividend within the two (2) years following the date of this Agreement.
Each Shareholder agrees that it will not undertake for any such dividend to be
declared or paid within such two (2) year period.
SECTION 4.03. No Additional Series A Preferred Stock. The Company
agrees that it will not issue additional shares of Series A Preferred Stock
without the prior written consent of holders of at least seventy five percent
(75%) of the Series A Preferred Stock then outstanding.
SECTION 4.04. Operating Budget. The Company agrees that it will operate
on the basis of the budget attached hereto as Exhibit A.
ARTICLE V
GENERAL PROVISIONS
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SECTION 5.01. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally, against written receipt thereof,
or by overnight courier to the parties at the following addresses or sent by
electronic transmission, with confirmation received, to the telecopy numbers
specified below (or at such other address or telecopy number for a party as
shall be specified by like notice):
(a) If to iVoice:
iVoice, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company:
▇▇▇▇▇▇ Pharmaceuticals, Inc.
c/o iVoice, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to a Series A Preferred Shareholder, then to the address listed
on the applicable Series A Preferred Shareholder's counterpart signature page.
SECTION 5.02. Amendment. This Agreement may be amended by the parties
hereto by at any time prior to the Effective Time. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
SECTION 5.03. Waiver. Any party hereto may with respect to any other
party hereto (a) extend the time for the performance of any of the obligations
or other acts, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, or (c) waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 5.04. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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SECTION 5.05. Severability.
(a) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon a determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
SECTION 5.06. Entire Agreement. This Agreement, together with the other
Transaction Documents, constitutes the entire agreement and supersedes all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matters hereof and thereof, except as
otherwise expressly provided herein.
SECTION 5.07. Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except (i) that all or any of the rights and
obligations of iVoice hereunder may be assigned by iVoice to any transferee of
all or any part of its Common Stock or Series B Preferred Stock and shares
issuable upon conversion of the Class B Preferred Stock and Debentures upon
delivery by such transferee of a counterpart signature page to this Agreement by
which such transferee shall be bound by the terms of this Agreement had the
transferee executed in the same capacity of iVoice and (ii) that all or any of
the rights and obligations of each Class A Preferred Shareholder hereunder may
be assigned by such Class A Preferred Shareholder as permitted by and subject to
the provisions of Section 2.01.
SECTION 5.08. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation.
SECTION 5.09. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 5.10. Governing Law; Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New Jersey applicable to contracts
executed and fully performed within the State of New Jersey.
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(b) Each of the parties hereto submits to the exclusive jurisdiction of
the state and federal courts of the United States located in the State of New
Jersey with respect to any claim or cause of action arising out of this
Agreement or the transactions contemplated hereby.
(c) Each of the parties to this Agreement (i) consents to submit itself
to the personal jurisdiction of such court in the event that any dispute arises
out of this Agreement or any of the transactions contemplated by this Agreement,
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (iii)
agrees that it will not bring any action in relation to this Agreement or any of
the other transactions contemplated by this Agreement in any court other than
such court in the State of New Jersey.
SECTION 5.11. Counterparts. This Agreement may be executed in two or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 5.12. WAIVER OF JURY TRIAL. THE COMPANY AND EACH SHAREHOLDER
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
▇▇▇▇▇▇ PHARMACEUTICALS, INC.
By
_______________________________________
Name:
Title:
IVOICE, INC.
By
_______________________________________
Name:
Title:
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__________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Address:
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax:
__________________________________________
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Address:
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Fax:
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Address:
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Fax:
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Address:
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax:
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Address:
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Fax:
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Address:
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Fax:
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