Stock Purchase Agreement, dated March 11, 2008 issued by iVoice Technology, Inc., a New Jersey corporation, and iVoice, Inc

(a) The Company agrees to pay the Purchaser a Funding Fee equal to ten percent (10%) of the Purchase Price, or One Hundred Forty-four Thousand and Four Hundred and Forty-four Dollars ($144,444).  The Funding Fee shall be deducted from the Purchase Price and the Company hereby authorizes payment of the Funding Fee to the Purchaser from the proceeds of the sale of the Preferred Stock.

 

(b) The Company agrees to issue to the Purchaser a warrant granting the Purchaser the right to purchase at the Warrant Exercise Price that number of Class A Common Stock shares of the Company calculated by dividing the Funding Fee amount, One Hundred Forty-four Thousand and Four Hundred and Forty-four Dollars ($144,444) by the lowest price that the Company had ever issued its Class A Common Stock (the “Warrant Exercise Price”).  A separate Warrant Agreement shall be executed by the Company.

Section 4.1 Organization.  The Company is a corporation duly formed and validly existing under the Laws of the State of New Jersey and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted.  The Company is duly qualified or registered as a foreign corporation to transact business under the Laws of each jurisdiction where the character of its activities or the location of the properties owned or leased by it requires such qualification or registration as set forth on Schedule 4.1..

 

Section 4.2 Authorization.  At the Closing Date the Company will have full corporate power and authority to execute and deliver this Agreement and the Company Ancillary Documents and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Company Ancillary Documents by the Company and the performance by the Company of its obligations hereunder and thereunder and the consummation of the transactions provided for herein and therein at the Closing Date, will have been duly and validly authorized by all necessary corporate action on the part of the Company.  This Agreement and the Company Ancillary Documents shall be as of the Closing Date, duly executed and delivered by the Company and do or shall, as the case may be, constitute the valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms.

 

Section 4.3 Financial Statements.  Schedule 4.3 contains the audited financial statements for the fiscal year ended December 31, 2006 and the unaudited balance sheet as of September 30, 2007.  The financial statements and balance sheet are in conformity with GAAP and have been prepared from, and are in accordance with, the books and records of the Company, which books and records have been maintained on a basis consistent with the past practice of the Company.  The balance sheet fairly presents the financial position of the Company as of the date of such balance sheet.  Since December 31, 2006, there has been no change in any accounting (or tax accounting) policy, practice or procedure of the Company.  The Company maintains accurate books and records reflecting its assets and liabilities and maintains proper and adequate internal accounting controls which provide assurance that (i) transactions are executed in accordance with management’s authorization, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, and (iii) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis.

 

 

The Purchaser hereby represents and warrants to the Company as follows:

 

Section 5.1 Organization.  The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted.

 

Section 5.2 Authorization.  The Purchaser has full corporate power and authority to execute and deliver this Agreement and the Purchaser Ancillary Documents, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Purchaser Ancillary Documents by the Purchaser, the performance by the Purchaser of its obligations hereunder and thereunder, and the consummation of the transactions provided for herein and therein have been duly and validly authorized by all necessary corporate action on the part of the Purchaser.  This Agreement has been and, as of the Closing Date, the Purchaser Ancillary Documents shall be, duly executed and delivered by the Purchaser and do or shall, as the case may be, constitute the valid and binding agreements of the Purchaser, enforceable against the Purchaser in accordance with their respective terms.

 

Section 5.3 Absence of Restrictions and Conflicts.  The execution, delivery and performance of this Agreement and the Purchaser Ancillary Documents, the consummation of the transactions contemplated hereby and thereby and the fulfillment of, and compliance with, the terms and conditions hereof and thereof do not or shall not (as the case may be), with the passing of time or the giving of notice or both, (a) contravene or conflict with any term or provision of the charter documents of the Purchaser, (b) violate or conflict with, constitute a breach of or default under, result in the loss of any benefit under, permit the acceleration of any obligation under or create in any party the right to terminate, modify or cancel any Contract to which the Purchaser is a party, (c) contravene or conflict with any judgment, decree or order of any Governmental Entity to which the Purchaser is a party or by which the Purchaser is bound or (d) contravene or conflict with any statute, Law, rule or regulation applicable to the Purchaser.  No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required with respect to the Purchaser in connection with the execution, delivery or performance of this Agreement or the Purchaser Ancillary Documents or the consummation of the transactions contemplated hereby or thereby.

 

Section 6.1 Conduct of Business by the Company.  For the period commencing on the date hereof and ending on the Closing Date, the  Company shall, except as expressly required hereby and except as otherwise consented to in advance in writing by the Purchaser, conduct the Business in the ordinary course consistent with past practice and shall, except as expressly required hereby and except as otherwise consented to in advance in writing by the Purchaser:

 

(a) use its commercially reasonable efforts to preserve intact the goodwill and business organization of the Company, keep the officers and employees of the Company available to the Purchaser and preserve the relationships and goodwill of the Company with customers, distributors, suppliers, employees and other Persons having business relations with the Company;

 

(b) maintain its existence and good standing in its jurisdiction of organization and in each jurisdiction listed on Schedule 4.1;

 

(c) comply with all applicable Laws;

 

(d) maintain in existing condition and repair (ordinary wear and tear excepted), consistent with past practices, all buildings, offices, shops and other structures located on the Real Property, and all equipment, fixtures and other tangible personal property located on the Real Property;

 

(e) not authorize for issuance or issue and deliver any additional shares of its capital stock or securities convertible into or exchangeable for shares of its capital stock, or issue or grant any right, option or other commitment for the issuance of shares of its capital stock or of such securities, or split, combine or reclassify any shares of its capital stock;

 

(f) not amend or modify its articles of incorporation or bylaws;

 

(g) not declare any dividend, pay or set aside for payment any dividend or other distribution or make any payment to any shareholder, officer or director or any Person with whom any such shareholder, officer or director has any direct or indirect relation, other than the payment of salaries in the ordinary course of business and consistent with past practice;

 

(h) not create any subsidiary, acquire any capital stock or other equity securities of any corporation or acquire any equity or ownership interest in any business or entity;

 

(j) not (i) create, incur or assume any indebtedness, (ii) grant, create, incur or suffer to exist any Lien on the Assets that did not exist on the date hereof, (iii) write-down the value of any asset or investment on the books or records of the Company, except for depreciation and amortization in the ordinary course of business and consistent with past practice, (iv) cancel any debt or waive any claim or right, (v) make any commitment for any capital expenditure to be made on or following the date hereof in excess of $10,000 in the case of any single expenditure or $20,000 in the case of all capital expenditures, (vi) enter into any Contract which cannot be cancelled by the Company on notice of not longer than thirty (30) days and without liability or penalty of any kind, (vii)enter into any Contract which imposes, or purports to impose, any obligations or restrictions on any of its Affiliates, or (viii) settle or compromise any legal proceedings related to or in connection with the Business;

 

(k) not (i) increase in any manner the compensation of, or enter into any new bonus or incentive agreement or arrangement with, any of its employees, officers, directors or consultants, (ii) pay or agree to pay any additional pension, retirement allowance or other employee benefit under any Company Benefit Plan to any of its employees or consultants, whether past or present, except, in each case,  in the ordinary course of business to the extent consistent with past practice of the Company; provided, however, that the Company shall not take any action described in this Section 6.1(k) with respect to (i) any manager, officer or director of the Company or (ii) any Person whose annualized compensation is $60,000 or more or whose annual compensation for the twelve (12)-month period following the Expiration Date is expected to be $60,000 or more;

 

(l) except as required by Applicable Benefit Laws, not adopt, amend or terminate any Company Benefit Plan or increase the benefits provided under any Company Benefit Plan, or promise or commit to undertake any of the foregoing in the future;

 

(m) not enter into a collective bargaining agreement;

 

(n) not enter into any Employment Agreement;

 

(o) perform in all material respects all of its obligations under all Company Contracts and Licenses, and not default or suffer to exist any event or condition that with notice or lapse of time or both could constitute a default under any Company Contract or License (except those being contested in good faith);

 

(p) not increase any reserves for contingent liabilities (excluding any adjustment to bad debt reserves in the ordinary course of business consistent with past practice);

 

(q) maintain in full force and effect and in the same amounts policies of insurance comparable in amount and scope of coverage to that maintained as of the date hereof by or on behalf of the Company;

 

(r) continue to maintain its books and records in accordance with GAAP consistently applied and on a basis consistent with past practice and not make any change in any accounting (or tax accounting) policy, practice or procedure of the Company;

 

(s) continue its current cash and inventory management practices; and

 

(t) not authorize, or commit or agree to take, any of the foregoing actions, which the Company is required not to take without the Purchaser’s prior written consent.

 

Section 6.2 Inspection and Access to Information.  During the period commencing on the date hereof and ending on the Closing Date, the Company shall (and shall cause its officers, directors, employees, auditors and agents to) provide the Purchaser and its accountants, investment bankers, counsel, environmental consultants and other authorized representatives full access, during reasonable hours and under reasonable circumstances, to any and all of its premises, employees (including executive officers), properties, contracts, commitments, books, records and other information (including Tax Returns filed and those in preparation) and shall cause its officers to furnish to the Purchaser and its authorized representatives, promptly upon request therefor, any and all financial, technical and operating data and other information pertaining to the Company and the Business and otherwise fully cooperate with the conduct of due diligence by the Purchaser and its representatives.

The Company hereby acknowledges that the Purchaser does not and shall not waive any right it may have hereunder solely as a result of such notifications and any notification given pursuant to this Section.

 

Section 6.4 Reasonable Efforts; Further Assurances; Cooperation.  Subject to the other provisions hereof, each Party shall each use its reasonable, good faith efforts to perform its obligations hereunder and to take, or cause to be taken, and do, or cause to be done, all things necessary, proper or advisable under applicable Law to cause the transactions contemplated herein to be effected as soon as practicable, but in any event on or prior to the Expiration Date, in accordance with the terms hereof and shall cooperate fully with each other Party and its officers, directors, employees, agents, counsel, accountants and other designees in connection with any step required to be taken as a part of its obligations hereunder, including the following:

 

(a) Each Party shall promptly make its filings and submissions and shall take all actions necessary, proper or advisable under applicable Laws to obtain any required approval of any Governmental Entity with jurisdiction over the transactions contemplated hereby (except that the Purchaser shall have no obligation to take or consent to the taking of any action required by any such Governmental Entity that could adversely affect the Business, the Assets or the transactions contemplated by this Agreement or the Purchaser Ancillary Documents).  The Company shall furnish to the Purchaser all information required for any application or other filing to be made by the Company pursuant to any applicable Law in connection with the transactions contemplated hereby;

 

(b) Each Party shall promptly notify the other Parties of (and provide written copies of) any communications from or with any Governmental Entity in connection with the transactions contemplated hereby;

 

(c) In the event any claim, action, suit, investigation or other proceeding by any Governmental Entity or other Person is commenced that questions the validity or legality of the transactions contemplated hereby or seeks damages in connection therewith, the Parties shall (i) cooperate and use all reasonable efforts to defend against such claim, action, suit, investigation or other proceeding, (ii) in the event an injunction or other order is issued in any such action, suit or other proceeding, use all reasonable efforts to have such injunction or other order lifted, and (iii) cooperate reasonably regarding any other impediment to the consummation of the transactions contemplated hereby; and

 

(d) The Company shall give all notices to third parties and use its best efforts (in consultation with the Purchaser) to obtain all third-party consents (i) necessary, proper or advisable to consummate the transactions contemplated hereby, (ii) required to be given or obtained, including the Required Consents or (iii) required to prevent a Material Adverse Effect, whether prior to, on or following the Closing Date.

 

Section 6.5 Transfer Taxes; Expenses.  Any Taxes or recording fees payable as a result of the purchase and sale of the Shares or any other action contemplated hereby (other than any federal, state, local or foreign Taxes measured by or based upon income or gains imposed upon the Purchaser) shall be paid by the Purchaser.  The Parties shall cooperate in the preparation, execution and filing of all returns, questionnaires, applications and other documents regarding Taxes and all transfer, recording, registration and other fees that become payable in connection with the transactions contemplated hereby that are required or permitted to be filed at or prior to the Closing.  

Section 7.1 Conditions to Obligations of the Purchaser.  The obligations of the Purchaser to consummate the transactions contemplated hereby shall be subject to the fulfillment  (or waiver by the Purchaser) at or prior to the Closing of each of the following additional conditions:

 

(a) Injunction. There shall be no effective injunction, writ or preliminary restraining order or any order of any nature issued or Law passed by a Governmental Entity of competent jurisdiction to the effect that the transactions contemplated hereby may not be consummated as provided herein, no proceeding or lawsuit shall have been commenced by any Governmental Entity for the purpose of obtaining any such injunction, writ or preliminary restraining order and no written notice shall have been received from any Governmental Entity indicating an intent to restrain, prevent, materially delay or restructure the transactions contemplated hereby, in each case where the Closing would (or would be reasonably likely to) result in a material fine or penalty payable by the Purchaser or the Company or a material restriction on the operation of the Business as a result of such matter.

 

(b) Consents. All Required Consents shall have been obtained or made on terms and conditions reasonably satisfactory to the Purchaser.

 

(c) Representations and Warranties.  Each of the representations and warranties of the Company set forth in Article IV shall have been true and correct in all material respects as of the date hereof and shall be true and correct in all material respects as of the Closing Date as though made on and as of the Closing Date, except that those representations and warranties that by their terms are qualified by materiality shall be true and correct in all respects.

 

(d) Performance of Obligations of the Company.  The Company shall have performed in all material respects all covenants and agreements required to be performed by each of them hereunder at or prior to the Closing.

 

(e) No Material Adverse Effect.  Between the date hereof and the Closing Date, there shall not have occurred (nor shall the Purchaser have become aware of) any Material Adverse Effect or any development reasonably likely to result in a Material Adverse Effect.

Section 7.2 Conditions to Obligations of the Company.  The obligations of the Company to consummate the transactions contemplated hereby shall be subject to the fulfillment (or waiver by the Company) at or prior to the Closing of each of the following additional conditions:

 

(a) Injunction.  There shall be no effective injunction, writ or preliminary restraining order or any order of any nature issued by a Governmental Entity of competent jurisdiction to the effect that the Acquisition may not be consummated as provided herein, no proceeding or lawsuit shall have been commenced by any Governmental Entity for the purpose of obtaining any such injunction, writ or preliminary restraining order and no written notice shall have been received from any Governmental Entity indicating an intent to restrain, prevent, materially delay or restructure the transactions contemplated hereby, in each case where the Closing would (or would be reasonably likely to) result in a material fine or penalty payable by the Company or a material restriction on the Company’s operations as a result of such matter.

 

(b) Consents.  All consents, approvals, orders or authorizations of, or registrations, declarations or filings with, any Governmental Entity required in connection with the execution, delivery or performance hereof shall have been obtained or made on terms and conditions reasonably satisfactory to the Company.

 

(c) Representations and Warranties.  Each of the representations and warranties of the Purchaser set forth in Article V shall have been true and correct in all material respects as of the date hereof and shall be true and correct in all material respects as of the Closing Date as though made on and as of the Closing Date, except that those representations and warranties that by their terms are qualified by materiality shall be true and correct in all respects.

 

(d) Performance of Obligations by the Purchaser.  The Purchaser shall have performed all covenants and agreements required to be per­formed by it hereunder on or prior to the Closing Date.

 

(e) Ancillary Documents.  The Purchaser shall have delivered, or caused to be delivered, to the Company the documents listed in Section 8.2.

Section 8.2                Company Closing Deliveries.  At the Closing, the Company, as applicable, shall deliver to the Purchaser the following:

 

(a) a certificate executed by the Company as to compliance with the conditions set forth in Section 7.1(b), (c), and (d) hereof;

 

(b) certificates representing the Preferred Stock, duly endorsed in blank or accompanied by duly executed stock powers or other assignment documents;

 

(c) a certificate by the Secretary or any Assistant Secretary of the Company, dated the Closing Date, as to (1) the good standing of the Company in its jurisdiction of incorporation and in each other jurisdiction where it is qualified to do business, (2) no amendments to the Company’s charter documents and (3) the effectiveness of the resolutions of the board of directors of the Company authorizing the execution, delivery and performance hereof by the Company passed in connection herewith and the transactions contemplated hereby; and

 

(d) all other documents required to be entered into by the Company pursuant hereto or reasonably requested by the Purchaser to convey the Preferred Stock to the Purchaser or to otherwise consummate the transactions contemplated hereby.

 

(e) a Warrant Agreement executed by the Company in favor of the Purchaser.

 

(f) a Security Agreement executed by the Company in favor of the Purchaser.

 

Section 8.3                                 Purchaser Closing Deliveries.  On the Closing, the Purchaser shall have delivered, or caused to be delivered, to the Company the following:

 

(a) the Purchase Price to be paid at Closing in accordance with such Section 3.1;

 

(b) a certificate of an authorized officer as to compliance with the conditions set forth in Section 7.2(c) and (d);

 

(c) a Security Agreement executed by the Purchaser.

 

(d) all other documents required to be entered into or delivered by the Purchaser at or prior to the Closing pursuant hereto or reasonably requested by the Company to convey the Preferred Stock to the Purchaser or to otherwise consummate the transactions contemplated hereby.

Section 10.2 Schedules and Exhibits.  The Schedules and Exhibits are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full herein.

 

Section 10.3 Assignment; Successors in Interest.  No assignment or transfer by any Party of such Party’s rights and obligations hereunder shall be made except with the prior written consent of the other Parties; provided that the Purchaser shall, without the obligation to obtain the prior written consent of any other Party, be entitled to assign this Agreement or all or any part of its rights or obligations hereunder to one or more Affiliates of the Purchaser.  This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns, and any reference to a Party shall also be a reference to the successors and permitted assigns thereof.

 

Section 10.4 Captions.  The titles, captions and table of contents contained herein are inserted herein only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof.  

 

Section 10.5 Controlling Law.  This Agreement shall be governed by and construed and enforced in accordance with the internal Laws of the State of New York without reference to its choice of law rules.

 

Section 10.6 Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such pro­hibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by Law, each Party hereby waives any provision of law that renders any such provision prohibited or unenforceable in any respect.

 

Section 10.7 Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement or the terms hereof to produce or account for more than one of such counterparts.

 

Section 10.8 Enforcement of Certain Rights.  Nothing expressed or implied herein is intended, or shall be construed, to confer upon or give any Person other than the Parties, and their successors or permitted assigns, any right, remedy, obligation or liability under or by reason of this Agreement, or result in such Person being deemed a third-party beneficiary hereof.

 

Section 10.9 Waiver; Amendment.  Any agreement on the part of a Party to any extension or waiver of any provision hereof shall be valid only if set forth in an instrument in writing signed on behalf of such Party.  A waiver by a Party of the performance of any covenant, agreement, obligation, condition, representation or warranty shall not be construed as a waiver of any other covenant, agreement, obligation, condition, representation or warranty.  A waiver by any Party of the performance of any act shall not constitute a waiver of the performance of any other act or an identical act required to be performed at a later time.  This Agreement may not be amended, modified or supplemented except by written agreement of the Parties.

 

Section 10.10            Integration.  This Agreement and the documents executed pursuant hereto supersede all negotiations, agreements and understandings among the Parties with respect to the subject matter hereof and constitute the entire agreement among the Parties with respect thereto.

 

Section 10.11            Interpretation.  Where the context requires, the use of a pronoun of one gender or the neuter is to be deemed to include a pronoun of the appropriate gender.  References herein to any Law shall be deemed to refer to such Law, as amended from time to time, and all rules and regulations promulgated thereunder.

 

Section 10.12            Cooperation Following the Closing.  Following the Closing, each Party shall deliver to the other Parties such further information and documents and shall execute and deliver to the other Parties such further instruments and agreements as any other Party shall reasonably request to consummate or confirm the transactions provided for herein, to accomplish the purpose hereof or to assure to any other Party the benefits hereof.

 

Section 10.13            Transaction Costs.  Except as provided above or as otherwise expressly provided herein, the Parties shall pay their own fees, costs and expenses incurred in connection herewith and the transactions contemplated hereby, including the fees, cost and expenses of its financial advisors, accountants and counsel.

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed, as of the date first above written.