EXHIBIT 10.1
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PROMISSORY NOTE
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MAY 24, 2005
JERSEY CITY, NEW JERSEY $5,000,000
FOR VALUE RECEIVED, the undersigned, IVOICE, INC., a New Jersey corporation
(the "Company"), promises to pay CORNELL CAPITAL PARTNERS, LP (the "Lender") at
000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx, Xxx Xxxxxx 00000 or other address as
the Lender shall specify in writing, the principal sum of FIVE MILLION U.S.
DOLLARS AND 00/100 ($5,000,000) (the "Principal Amount") and interest at the
annual rate of twelve percent (12%) on the unpaid balance pursuant to the
following terms:
Contemporaneously with the execution and delivery of this Note, the Company
and the Lender, as well as the Company's subsidiary(ies) and the Lender, are
entering into a Security Agreement (the "Security Agreements") (collectively,
this Note and the Security Agreements are referred to as the "Transaction
Documents").
1. PRINCIPAL AND INTEREST. For value received, the Company hereby promises to
pay to the order of the Lender in lawful money of the United States of America
and in immediately available funds the principal sum of Five Million Dollars
($5,000,000), together with interest on the unpaid principal of this Note on or
before the two (2) year anniversary of the date hereof.
2. RIGHT OF PREPAYMENT. Notwithstanding the payment(s) pursuant to Section 1,
the Company at its option shall have the right to prepay, with three (3)
business days advance written notice, a portion or all outstanding principal
plus outstanding Interest of this Note.
3. FEES. The Lender shall be entitled to a cash fee equal to five and one-half
percent (5 1/2%) of the gross amount of this Note, a consulting fee of four and
one-half percent (4 1/2%), and a structuring fee in the amount of seven thousand
five hundred dollars ($7,500.00).
4. WAIVER AND CONSENT. To the fullest extent permitted by law and except as
otherwise provided herein, the Company waives demand, presentment, protest,
notice of dishonor, suit against or joinder of any other person, and all other
requirements necessary to charge or hold the Company liable with respect to this
Note.
5. COSTS, INDEMNITIES AND EXPENSES. In the event of default as described
herein, the Company agrees to pay all reasonable fees and costs incurred by the
Lender in collecting or securing or attempting to collect or secure this Note,
including reasonable attorneys' fees and expenses, whether or not involving
litigation, collecting upon any judgments and/or appellate or bankruptcy
proceedings. The Company agrees to pay any
documentary stamp taxes, intangible taxes or other taxes which may now or
hereafter apply to this Note or any payment made in respect of this Note, and
the Company agrees to indemnify and hold the Lender harmless from and against
any liability, costs, attorneys' fees, penalties, interest or expenses relating
to any such taxes, as and when the same may be incurred.
6. EVENT OF DEFAULT. An "Event of Default" shall be deemed to have occurred
upon the occurrence of any of the following: (i) the Company should fail for any
reason or for no reason to make any payment of the interest or principal
pursuant to this Note within ten (10) days of the date due as prescribed herein;
(ii) the Company shall fail to observe or perform any other covenant, agreement
or warranty contained in, or otherwise commit any material breach or default of
any material provision of this Note or any of the Transaction Documents (as
defined herein), which is not cured within ten (10) days notice of the default;
(iii) the Company or any subsidiary of the Company shall commence, or there
shall be commenced against the Company or any subsidiary of the Company under
any applicable bankruptcy or insolvency laws as now or hereafter in effect or
any successor thereto, or the Company or any subsidiary of the Company commences
any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company or any
subsidiary of the Company or there is commenced against the Company or any
subsidiary of the Company any such bankruptcy, insolvency or other proceeding
which remains undismissed for a period of 61 days; or the Company or any
subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or the
Company or any subsidiary of the Company suffers any appointment of any
custodian, private or court appointed receiver or the like for it or any
substantial part of its property which continues undischarged or unstayed for a
period of sixty one (61) days; or the Company or any subsidiary of the Company
makes a general assignment for the benefit of creditors; or the Company or any
subsidiary of the Company shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or the
Company or any subsidiary of the Company shall call a meeting of its creditors
with a view to arranging a composition, adjustment or restructuring of its
debts; or the Company or any subsidiary of the Company shall by any act or
failure to act expressly indicate its consent to, approval of or acquiescence in
any of the foregoing; or any corporate or other action is taken by the Company
or any subsidiary of the Company for the purpose of effecting any of the
foregoing; (iv) the Common Stock of the Company shall cease to be quoted for
trading or listed for trading on the National Association of Securities Dealers
Inc.'s Over the Counter Bulletin Board, Nasdaq SmallCap Market, New York Stock
Exchange, American Stock Exchange or the Nasdaq National Market (each, a
"Subsequent Market") and shall not again be quoted or listed for trading thereon
within five (5) Trading Days of such delisting; or (v) a breach by the Company
of its obligations, or an event of default, under any of the Transaction
Documents, or any other agreements entered into between the Company and the
Lender which is not cured by any applicable cure period set forth therein.
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Upon an Event of Default (as defined above), the entire principal balance
and accrued interest outstanding under this Note, and all other obligations of
the Company under this Note, shall be immediately due and payable without any
action on the part of the Lender, interest shall accrue on the unpaid principal
balance at twenty four percent (24%) or the highest rate permitted by applicable
law, if lower, and the Lender shall be entitled to seek and institute any and
all remedies available to it.
7. MAXIMUM INTEREST RATE. In no event shall any agreed to or actual interest
charged, reserved or taken by the Lender as consideration for this Note exceed
the limits imposed by New Jersey law. In the event that the interest provisions
of this Note shall result at any time or for any reason in an effective rate of
interest that exceeds the maximum interest rate permitted by applicable law,
then without further agreement or notice the obligation to be fulfilled shall be
automatically reduced to such limit and all sums received by the Lender in
excess of those lawfully collectible as interest shall be applied against the
principal of this Note immediately upon the Lender's receipt thereof, with the
same force and effect as though the Company had specifically designated such
extra sums to be so applied to principal and the Lender had agreed to accept
such extra payment(s) as a premium-free prepayment or prepayments.
8. SECURED NATURE OF THE NOTE. This Note is secured by the Pledged Property as
defined in the Security Agreements between the Company and the Lender, and the
Company's subsidiary(ies) and the Lender of even date herewith.
9. ISSUANCE OF CAPITAL STOCK. So long as any portion of this Note is
outstanding, the Company shall not, without the prior written consent of the
Lender, (i) issue or sell shares of common stock or preferred stock without
consideration or for a consideration per share less than the bid price of the
common stock determined immediately prior to its issuance, (ii) issue any
warrant, option, right, contract, call, or other security instrument granting
the holder thereof, the right to acquire common stock without consideration or
for a consideration less than such common stock's bid price value determined
immediately prior to it's issuance, (iii) enter into any security instrument
granting the holder a security interest in any and all assets of the Company, or
(iv) file any registration statement on Form S-8 except for the registration of
a bonafide employee stock option plan. Notwithstanding anything to the contrary,
the Company may issue Common Stock issuable pursuant to the Company's
obligations upon the conversion of bonafide stock options, convertible debt or
Class B Common Stock. For purposes of this Section, Bid Price shall mean the
closing bid price (as reported by Bloomberg L.P.) of the Common Stock on the
principal market (the "Principal Market") or if the Common Stock is not traded
on a Principal Market, the highest reported bid price for the Common Stock, as
furnished by the National Association of Securities Dealers, Inc. The Principal
Market shall mean the Nasdaq National Market, the Nasdaq SmallCap Market, the
American Stock Exchange, the OTC Bulletin Board or the New York Stock Exchange,
whichever is at the time the principal trading exchange or market for the Common
Stock.
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10. CANCELLATION OF NOTE. Upon the repayment by the Company of all of its
obligations hereunder to the Lender, including, without limitation, the
principal amount of this Note, plus accrued but unpaid interest, the
indebtedness evidenced hereby shall be deemed canceled and paid in full. Except
as otherwise required by law or by the provisions of this Note, payments
received by the Lender hereunder shall be applied first against expenses and
indemnities, next against interest accrued on this Note, and next in reduction
of the outstanding principal balance of this Note.
11. SEVERABILITY. If any provision of this Note is, for any reason, invalid or
unenforceable, the remaining provisions of this Note will nevertheless be valid
and enforceable and will remain in full force and effect. Any provision of this
Note that is held invalid or unenforceable by a court of competent jurisdiction
will be deemed modified to the extent necessary to make it valid and enforceable
and as so modified will remain in full force and effect.
12. AMENDMENT AND WAIVER. This Note may be amended, or any provision of this
Note may be waived, provided that any such amendment or waiver will be binding
on a party hereto only if such amendment or waiver is set forth in a writing
executed by the parties hereto. The waiver by any such party hereto of a breach
of any provision of this Note shall not operate or be construed as a waiver of
any other breach.
13. SUCCESSORS. Except as otherwise provided herein, this Note shall bind and
inure to the benefit of and be enforceable by the parties hereto and their
permitted successors and assigns.
14. ASSIGNMENT. This Note shall not be directly or indirectly assignable or
delegable by the Company. The Lender may assign this Note as long as such
assignment complies with the Securities Act of 1933, as amended.
15. NO STRICT CONSTRUCTION. The language used in this Note will be deemed to be
the language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction will be applied against any party.
16. FURTHER ASSURANCES. Each party hereto will execute all documents and take
such other actions as the other party may reasonably request in order to
consummate the transactions provided for herein and to accomplish the purposes
of this Note.
17. NOTICES, CONSENTS, ETC. Any notices, consents, waivers or other
communications required or permitted to be given under the terms hereof must be
in writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) trading day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
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If to Company: iVoice, Inc.
000 Xxxxxxx 00
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, President
and Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxx X. Xxxxx, Esq.
Meritz & Meunz LLP
0000 X Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Lender: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxx Xxxxxxxx, Esq.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) trading days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
18. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The Lender's
remedies provided in this Note shall be cumulative and in addition to all other
remedies available to the Lender under this Note, at law or in equity (including
a decree of specific performance and/or other injunctive relief), no remedy of
the Lender contained herein shall be deemed a waiver of compliance with the
provisions giving rise to such remedy
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and nothing herein shall limit the Lender's right to pursue actual damages for
any failure by the Company to comply with the terms of this Note. No remedy
conferred under this Note upon the Lender is intended to be exclusive of any
other remedy available to the Lender, pursuant to the terms of this Note or
otherwise. No single or partial exercise by the Lender of any right, power or
remedy hereunder shall preclude any other or further exercise thereof. The
failure of the Lender to exercise any right or remedy under this Note or
otherwise, or delay in exercising such right or remedy, shall not operate as a
waiver thereof. Every right and remedy of the Lender under any document executed
in connection with this transaction may be exercised from time to time and as
often as may be deemed expedient by the Lender. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Lender and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the Lender shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, and specific performance
without the necessity of showing economic loss and without any bond or other
security being required.
19. GOVERNING LAW; JURISDICTION. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of New Jersey, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
Jersey or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of New Jersey. Each party hereby
irrevocably submits to the exclusive jurisdiction of the Superior Court of the
State of New Jersey sitting in Xxxxxx County, New Jersey and the United States
Federal District Court for the District of New Jersey sitting in Newark, New
Jersey, for the adjudication of any dispute hereunder or in connection herewith
or therewith, or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
20. NO INCONSISTENT AGREEMENTS. None of the parties hereto will hereafter enter
into any agreement, which is inconsistent with the rights granted to the parties
in this Note.
21. THIRD PARTIES. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or entity, other than the parties
to this Note and their respective permitted successor and assigns, any rights or
remedies under or by reason of this Note.
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22. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THE LENDER TO LOAN TO
THE COMPANY THE MONIES HEREUNDER, THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY
AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.
23. ENTIRE AGREEMENT. This Note (including any recitals hereto) set forth the
entire understanding of the parties with respect to the subject matter hereof,
and shall not be modified or affected by any offer, proposal, statement or
representation, oral or written, made by or for any party in connection with the
negotiation of the terms hereof, and may be modified only by instruments signed
by all of the parties hereto.
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IN WITNESS WHEREOF, this Promissory Note is executed by the undersigned as of
the date hereof.
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: ______________________________
Name: Xxxx Xxxxxx
Its: Portfolio Manager
IVOICE, INC.
By: _____________________________
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive
Officer
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