Letter of Intent for Acquisition of Intellectual Property between NGM TEC, Inc. and iVoice, Inc.

Summary

NGM TEC, Inc. and iVoice, Inc. have signed a letter of intent outlining the proposed sale of iVoice's intellectual property, including patents, source code, customer lists, and reseller agreements, to NGM for $6.25 million in cash, stock, and convertible securities. The agreement also includes a sales commission arrangement and consulting services from iVoice. Certain terms are binding, but the transaction is subject to due diligence and final documentation. If specific conditions, such as SEC registration, are not met, iVoice may foreclose on the collateral.

EX-10.1 2 exh10-1_12931.txt LETTER OF INTENT EXHIBIT 10.1 ------------ (NGM Group, Inc. Letterhead) September 3, 2004 Mr. Jerry Mahoney iVoice, Inc. 750 Route 34 Matawan, NJ 07747 Re: Letter of Intent to Acquire Intellectual Property Dear Mr. Mahoney: I am pleased to provide you with this letter of intent which sets forth our understanding with respect to the proposed terms and conditions under which NGM TEC, Inc. (hereinafter "NGM") will acquire all rights, title, and interests in that certain intellectual property (hereinafter, the "IP") detailed in Paragraph C herein from iVoice, Inc. ("iVoice"). This letter of intent is subject to the completion of our due diligence and the preparation and execution of definitive documents The covenants in paragraphs E, G, H, I, J and N are binding upon the parties whether or not the parties reach a definitive agreement with respect to the sale of the IP. While the terms and conditions of this letter of intent are non-binding as to the parties hereto (except where otherwise noted), the parties agree to act in good faith towards negotiating and executing a binding purchase and sale agreement substantially incorporates the terms and conditions enunciated herein. This letter of intent describes a proposed transaction involving the sale and purchase of the IP as follows: A. Consideration The purchase price of the IP shall be $6,250,000, payable as follows: (i) $500,000 in cash at closing, and an additional $500,000 in cash no later 1 than sixty days from the date of closing. A promissory note to this effect, secured by the IP, shall be executed by and between the parties. NGM shall issue to iVoice those number of shares of NGM's s fully paid and non-assessable Common Stock equal to $2,250,000. The price per share utilized to determine the number of shares tendered shall be equal to the lowest price per share paid by outside investors for NGM stock at any time in the sixty (60) days prior to the closing of the transaction contemplated herein. For the purposes of this paragraph, any shares issued pursuant to the exercise of currently outstanding warrants or options of NGM shall not count towards the computation of lowest price paid by outside investors. Only shares newly issued pursuant to a private placement or some other financing in the sixty (60) day time period shall count towards determining the lowest price paid. .. NGM will file with the Securities and Exchange Commission a Registration Statement, on Form S-1, SB-2, S-3 or such other suitable form, registering the stock tendered by NGM pursuant to paragraph A (ii) above, no later than five (5) business days from the date of closing. Upon receipt of notification from the Securities and Exchange Commission that the registration has been declared effective, iVoice will distribute, in the form of a dividend, all of such shares to its shareholders. iii) NGM shall issue to IVoice $2,900,000 of NGM Convertible Preferred Stock. NGM will register the shares 2 underlying the Convertible Preferred Stock in the registration statement with the SEC. Once NGM's Common Stock has commenced trading on the Principal Market, iVoice will be entitled, at its option, to convert, and sell on the same day, at any time and from time to time, until redemption in full of this Preferred Stock, all or any part of the face amount of the Preferred Stock, into shares of NGM's common stock, at the price per share equal to an amount equal to eighty percent (80%) of the lowest closing bid price of NGM's Common Stock, as quoted by Bloomberg, LP (the "Closing Bid Price"), for the five (5) trading days immediately preceding the Conversion Date. NGM shall further have the right to redeem the Preferred Stock, in whole or in part, at any time, in an amount equal to one hundred twenty percent (120%) of the face amount of the Preferred Stock to be redeemed. iv) NGM will issue to iVoice a $100,000 5% 2 year secured convertible note. NGM will register the shares underlying the convertible note in the registration statement with the SEC. Once NGM's Common Stock has commenced trading on the Principal Market, iVoice will be entitled, at its option, to convert, and sell on the same day, at any time and from time to time, until payment in full of this Debenture, all or any part of the principal amount of the Debenture, plus accrued interest, into shares of the NGM's common stock, at the price per share equal to eighty percent (80%) of the lowest closing bid price of the Company's Common Stock, as quoted by Bloomberg, LP (the "Closing Bid Price"), for the five (5) trading days immediately preceding the Conversion Date. The note shall be secured by all 3 assets conveyed by iVoice to NGM in the transaction contemplated herein. Failure to go effective with the SEC as per A(ii) or, alternatively, failure to acquire a public shell per A (v), shall constitute an event of default on the note, and shall provide iVoice with the opportunity to foreclose on the collateral. The note shall be secured by all assets conveyed by iVoice to NGM in the transaction contemplated herein. . NGM shall not have the right to pre-pay or retire the Convertible Note until such time that the Convertible Preferred Stock, as described in Paragraph A (iii) above, has been either converted in full to Common Stock or redeemed in full. v) In the event that the SEC fails to declare NGM's registration statement effective on or before February 1, 2005, NGM will acquire, no later than March 31, 2005, a reporting bulletin board shell, and shall reverse merge its business operations into such shell. NGM will then again file a registration statement to register iVoice's shares in accordance with paragraphs (ii), (ii), and (iv) above. Failure to go effective with the SEC as per this paragraph, or, alternatively, failure to acquire a public shell in accordance with this paragraph, shall constitute an event of default on the Convetible Note described in Paragraph A (iv) herein, and shall provide iVoice with the right to foreclose on the collateral. B. Intellectual Property NGM shall acquire all right, title, and interest from iVoice in the following assets: i) The source code and all documentation relating to iVoice's speech engine; 4 ii) Patent No. 6,563,911 , which covers speech enabled, automatic telephone dialer using names, including seamless interface with computer-based address book programs. Patent No. 6,671,354, which covers speech enabled, automatic telephone dialer using names, including seamless interface with computer-based address book programs without the use of a PBX. 980.010 Patent/Application Serial No. 10/055,854 , which is a patent pending Entitled: "Telephone Application Programming Interfaced-Based, Speech Enabled Automatic Telephone Dialer Using Names" iii) The source code and documentation relating to iVoice's suite of speech applications, including Auto Attendant. iv) iVoice's customer list v) iVoice's agreements with resellers C. Sales Commission Agreement NGM will enter into a sales commission agreement with iVoice, Inc. to provide guidance and counsel relating to the sales and marketing of the IP. The terms of such agreement shall be mutually agreed upon prior to closing. In addition to a sales commission structure, the agreement will provide for a mutually agreed upon number of hours of consulting for iVoice to provide NGM during the first forty five (45) days following the date of closing on a no-cost basis. After that initial forty five (45) day period, iVoice will provide NGM with consulting services, on an as requested basis, at the rate of $150 per hour, plus reimbursement of any and all expenses which have been pre-approved by NGM prior to the time that such expenses were incurred. 5 D. Omitted Intentionally E. Expenses The parties hereto shall each be responsible for any and all of their own expenses associated with the transaction contemplated herein. NGM acknowledges that no banker, broker or finder is due or entitled to any fee or compensation as a result of the transaction contemplated herein. iVoice shall be responsible for fees due and owing Bristol Townsend & Co., Inc. F. Pre-Closing Covenants The parties will use their best efforts to obtain all necessary third party and government consents (including all certificates, permits, approvals, and assignments required in connection with the merger). G. Best Efforts The parties agree to negotiate in good faith, and to use their best efforts to (a) to execute a definitive agreement with respect to the purchase and sale of the IP as expeditiously as possible, on or before October 1, 2004, and (b) close the transaction on the date of execution of the definitive agreement. H. Conditions to Obligation Neither NGM nor iVoice will be obligated to consummate the transaction contemplated hereby unless and until the parties have reached a definitive agreement as to all the terms and conditions of the acquisition. I. Due Diligence iVoice agrees to cooperate with NGM's due diligence investigation of the IP and to provide NGM and its representatives with prompt access to all books, records, contracts, and other information pertaining to the IP (the "Due Diligence Information"). 6 J. Confidentiality NGM will use the Due Diligence Information solely for the purpose of its due diligence investigation of the IP, and unless and until the parties consummate the transaction contemplated herein, NGM, its affiliates, directors, officers, employees, advisors and agents will keep the Due Diligence Information strictly confidential. K. Closing It is the intention of the parties hereto to close this transaction on or about October 1, 2004. L. Term of Letter of Intent This letter of intent shall become effective only upon receipt of an executed copy of this letter by iVoice from NGM. M. License To Speech Engine NGM acknowledges that iVoice will be entering into a license agreement with one of its subsidiaries relating to the use of the speech engine with it's IVR product. NGM will assume this license as part of the IP acquisition. The license shall provide for a license fee of $1000 for the software development kit ("SDK"), and an additional payment of $400 per port N. NGM acknowledges and agrees that iVoice will be filing a Form 8-K with the Securities and Exchange Commission relating to the execution of the letter of intent between our companies, and that iVoice will furthermore issue a press release announcing the execution of the letter of intent. O. iVoice acknowledges that NGM is in the process of discussing a potential merger with a third company. In the event that 7 NGM merges with such company prior to the consummation of the transaction contemplated herein, the parties acknowledge that all securities due to be issued to iVoice as consideration for the sale of the IP may be in securities of this third company, and that the same pricing formulas as detailed in Paragraph A herein shall continue to control the issuance of such shares.. If you are in agreement with the terms of this letter of intent, please sign where indicated below. Upon receipt of the signed copy, we will proceed with our plans for consummating the transaction in a timely manner. Sincerely, --------------------- President AGREED TO AND ACCEPTED BY: iVoice, Inc. - --------------------------- BY: Jerry Mahoney TITLE: Chief Executive Officer 8