DEFAULT WAIVER AGREEMENT
Exhibit
10.1
THIS
DEFAULT WAIVER AGREEMENT, dated as of October 31, 2007 (this “Agreement”),
among
VoIP Inc. (“Borrower”),
the
parties identified on Schedule A hereto (“Secured
Lenders”)
(each
a “Party”
and
collectively the “Parties”).
W
I T N E
S S E T H:
WHEREAS,
Secured Lenders have entered into financing arrangements with the Borrower
pursuant to which the Secured Lenders were issued certain notes and the rights
to first refusal of any future financing; and
WHEREAS,
the Borrower is not in material compliance with the terms of the Secured Lender
Transaction Documents and the Borrower and Secured Lenders wish to waive certain
past defaults under the terms and conditions set forth in this
Agreement.
NOW
THEREFORE, in consideration of the mutual benefits accruing to Secured Lenders
and Borrower and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree
as follows:
| 1. |
DEFINITIONS.
|
As
used
in this Agreement, the following terms shall have the meanings ascribed to
them
below:
“Financing
Defaults”
means
the Borrower’s failure to offer the Recent Financing to the Secured Lenders and
the Borrower’s failure to use fifteen percent (15%) of the Recent Financing to
pay off the Notes.
“Recent
Financing”
means
the financing the Borrower completed with ▇▇▇▇▇ ▇▇▇▇▇ on September 26, 2007,
referenced in the Form 8K filed by the Borrower with the Securities Exchange
Commission (“SEC”) on October 2, 2007.
“Secured
Lenders Transaction
Documents”
means
all agreements, instruments and other documents that Borrower and/or Secured
Lenders entered into on or about July 5, 2005, January 6, 2006, February 2,
2006, October 17, 2006, February 1, 2007, February 16, 2007, April 6, 2007,
July
27, 2007, and September 12, 2007 respectively, and all transaction documents
as
defined in such agreements, instruments and other documents together with all
documents related thereto, as may have been amended.
| 2. | ACKNOWLEDGEMENTS, ASSIGNMENTS AND PAYMENT. |
2.1
Acknowledgement
of Defaults.
Borrower acknowledges that it is in material default of numerous covenants,
undertakings and terms of the Secured Lender Transaction Documents.
2.2 Price
Reset. The
conversion price of all outstanding notes payable to the Secured Lenders is
reset to the lesser of (i) $0.50 or (ii) seventy percent (70%) of the three
(3)
lowest closing bid prices for the ten (10) days prior to
the
conversion or exercise date and the exercise price of all outstanding warrants
issued to the Secured Lenders is reset to the $0.50.
2.3
Conversion
Limitations.
Each
Subscriber agrees that in each Calendar month all if its conversions will be
limited to the greater of (i) 10% of the amount of debt owed to it as of the
date of this Agreement or (ii) conversions resulting in the issuance of common
stock of the Borrower equaling fifteen percent (15%) of the trading volume,
per
calendar month on a non-cumulative basis, of the Borrower’s common stock as
reported by Bloomberg, L.P.
2.4 Acknowledgement. Borrower
hereby acknowledges that it has informed ▇▇▇▇▇ ▇▇▇▇▇ and he has agreed, that
any
security interests he has in any assets of the Borrower or any of its
subsidiaries are subordinate to the security interests of the Secured
Lenders.
2.5 Warrant
Registration. Borrower
shall file with the Securities Exchange Commission (“SEC”) one or more Forms
SB-2 registration statements (as defined below) (or such other form that it
is
eligible to use) in order to register the shares underlying all warrants now
outstanding to the Secured Lenders (the “Warrants”), for resale and distribution
under the 1933 Act. The Registration Statement with respect to the Common Stock
issuable upon exercise of the Warrants (“Registration Statement”) must be filed
not later than sixty (60) days from the date of this Agreement (“Filing Date”)
and declared effective by the Commission not later than one hundred and twenty
(120) days after the Filing Date (“Effective Date”).
2.6 Registration
Restrictions.
Pursuant to Section 9(n) of the Subscription Agreement dated January 6, 2006,
between Borrower and Secured Lenders and any such other substantially similar
provision contained in the Secured Lenders Transaction Documents, the Borrower
is prohibited from filing registration statements to register securities other
than those allowed in the Subscription Agreement dated January 6, 2006, between
Borrower and Secured Lenders and any such other substantially similar provision
contained in the Secured Lenders Transaction Documents. The Secured Lenders
each
waive such prohibition solely in connection with the Registration Statement
required to be filed by this Agreement.
5
2.7
Default
Waiver.
The
Secured Lenders hereby waive solely the Financing Defaults.
2.8 Public
Disclosure.
Borrower
will file a form 8-K with the SEC within 3 business days of the date of this
Agreement.
2.9 Effect
on Transaction Documents. Subject
to the waivers and amendments provided herein, all of the terms and conditions
of the Transaction Documents shall continue in full force and effect after
the
execution of this Agreement and shall not be in any way changed, modified or
superseded by the terms set forth herein, including but not limited to, any
other obligations the Borrower may have to the Secured Lenders under the
Transaction Documents. Except as expressly set forth herein,
this Agreement shall not be deemed to be a waiver, amendment or
modification of any provisions of the Transaction Documents or of any right,
power or remedy of the Secured Lenders, or constitute a waiver of any provision
of the Transaction Documents (except to the extent herein set forth), or any
other document, instrument and/or agreement executed or delivered in connection
therewith, in each case whether arising before or after the date hereof or
as a
result of performance hereunder or thereunder. The Secured Lenders reserve
all rights, remedies, powers, or privileges available under the Transaction
Documents, at law or otherwise. This Agreement shall not constitute a
novation or satisfaction and accord of the Transaction Documents or any other
document, instrument and/or agreement executed or delivered in connection
therewith.
| 3. | MISCELLANEOUS. |
3.1 Successors
and Assigns.
This
Agreement shall be binding upon, and inure to the benefit of, the successors
and
permitted assigns of the Parties. Neither party hereto may assign or permit
the
assignment of its obligations without first requiring the assignee of such
obligation to assume such assigning party’s rights and obligations under this
Agreement. Except as required by the preceding sentence, neither party may
assign its rights or obligations under this Agreement without the other party’s
prior written consent.
3.2 Governing
Law; Jurisdiction; Waiver of Jury Trial.
This
Agreement shall be governed by and construed under the laws of the State of
New
York applicable to contracts made and to be performed entirely within the State
of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the State and County of New York
for
the adjudication of any dispute hereunder or in connection herewith or therewith
or with any transaction contemplated hereby or thereby, 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. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. EACH PARTY HEREBY IRREVOCABLY
AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO
THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT OR
THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS AGREEMENT AND HAS HAD
AN
OPPORTUNITY TO SEEK SEPARATE COUNSEL OF ITS OWN CHOICE TO REVIEW THIS AGREEMENT,
(III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION
3.2.
3.3 Injunctive
Relief.
Each
Party acknowledges and agrees that a breach by it of its obligations hereunder
will cause irreparable harm to the other and that the remedy or remedies at
law
for any such breach will be inadequate and agrees, in the event of any such
breach, in addition to all other available remedies, the non-breaching party
shall be entitled to an injunction restraining any breach and requiring
immediate and specific performance of such obligations without the necessity
of
showing economic loss or the posting of any bond.
6
3.4 Severability.
In the
event that any provision of this Agreement becomes or is declared by a court
of
competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision; provided
that in
such case the parties shall negotiate in good faith to replace such provision
with a new provision which is not illegal, unenforceable or void, as long as
such new provision does not materially change the economic benefits of this
Agreement to the parties.
3.5
Counterparts/Execution.
This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but
one
and the same instrument. This Agreement may be executed by facsimile signature
and delivered by facsimile transmission.
3.6 Notices.
Any
notice, demand or request required or permitted to be given by the respective
parties hereto pursuant to the terms of this Agreement shall be in writing
and
shall be deemed delivered (i) when delivered personally or by verifiable
facsimile transmission, unless such delivery is made on a day that is not a
Business Day, in which case such delivery will be deemed to be made on the
next
succeeding Business Day, (ii) on the next Business Day after timely delivery
to
an overnight courier and (iii) on the Business Day actually received if
deposited in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed as follows:
|
To
Borrower:
|
VoIP,
Inc.
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|
151
So. ▇▇▇▇▇▇ Road, Suite 3000
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▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
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|
Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO
|
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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With
a copy by telecopier only to:
|
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|
Sichenzia
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
|
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▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
|
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|
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
|
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Attn:
▇▇▇▇ ▇▇▇▇, Esq.
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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To
Secured Lenders:
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To
the addresses and facsimile numbers listed
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on
Schedule A hereto.
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With
a copy by telecopier only to:
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Grushko
& ▇▇▇▇▇▇▇, P.C.
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▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
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▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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Any
Party
may change the address(es) to which all notices, requests and other
communications are to be sent by giving written notice of such address change
to
the other Parties in conformity with this Section
3.6,
but
such change shall not be effective until notice of such change has been received
by the other Party.
3.7 Entire
Agreement; Amendments.
This
Agreement constitutes the entire agreement between the parties with regard
to
the subject matter hereof and thereof, superseding all prior agreements or
understandings, whether written or oral, between or among the parties. No
amendment, modification or other change to this Agreement or waiver of any
agreement or other obligation of the parties under this Agreement may be made
or
given unless such amendment, modification or waiver is set forth in writing
and
is signed by Assignors and Secured Lenders.
Any
waiver or consent shall be effective only in the specific instance and for
the
specific purpose for which given.
3.8 Headings.
The
headings used in this Agreement are used for convenience only and are not to
be
considered in construing or interpreting this Agreement.
[REST
OF
THIS PAGE LEFT INTENTIONALLY BLANK]
7
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as
of the day and year first above written.
BORROWER
| VOIP INC. |
|
/s/
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
|
Name: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Title: Chief
Executive Officer
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SECURED
LENDERS
|
/s/
ALPHA CAPITAL ANSTALT f/k/a ALPHA CAPITAL
AKTIENGESELLSCHAFT
|
||
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ALPHA
CAPITAL ANSTALT f/k/a ALPHA CAPITAL AKTIENGESELLSCHAFT
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||
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/s/
BRIO CAPITAL L.P.
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/s/
BRISTOL INVESTMENT FUND, LTD.
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BRIO
CAPITAL L.P.
|
BRISTOL
INVESTMENT FUND, LTD.
|
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/s/
CENTURION MICROCAP, L.P.
|
/s/
CHESTNUT RIDGE PARTNERS LP
|
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CENTURION
MICROCAP, ▇.▇.
|
▇▇▇▇▇▇▇▇
RIDGE PARTNERS LP
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/s/
DKR SOUNDSHORE OASIS HOLDING FUND LTD.
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/s/
CMS CAPITAL
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DKR
SOUNDSHORE OASIS HOLDING FUND LTD.
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CMS
CAPITAL
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By:
DKR Oasis Management Company, its investment manager
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||
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/s/
DOUBLE U MASTER FUND L.P.
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/s/
▇▇▇▇▇ INTERNATIONAL LTD.
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DOUBLE
U MASTER FUND ▇.▇.
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▇▇▇▇▇
INTERNATIONAL LTD.
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/s/
GRUSHKO & ▇▇▇▇▇▇▇, P.C.
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/s/
IROQUOIS MASTER FUND, LTD.
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GRUSHKO
& ▇▇▇▇▇▇▇, P.C.
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IROQUOIS
MASTER FUND, LTD.
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/s/
OSHER CAPITAL INC.
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/s/
PLATINUM LONG TERM GROWTH II INC.
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OSHER
CAPITAL INC.
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PLATINUM
LONG TERM GROWTH II INC.
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/s/
▇▇▇▇▇▇▇▇▇▇▇ LIMITED PARTNERSHIP
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/s/
WHALEHAVEN CAPITAL FUND LTD.
|
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▇▇▇▇▇▇▇▇▇▇▇
LIMITED PARTNERSHIP
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WHALEHAVEN
CAPITAL FUND LTD.
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ACKNOWLEDGEMENT
▇▇▇▇▇
▇▇▇▇▇ hereby acknowledges that any security interest he has in any assets of
VoIP, Inc. or any of its subsidiaries is subordinate to the security interests
granted to the Secured Lenders and may only be collected upon once the Secured
Lenders are paid in full.
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8
SCHEDULE
A
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Alpha
Capital Anstalt
|
▇▇▇▇▇
International Ltd.
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Pradafant
▇
|
▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇
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9490
Furstentums
|
Republic
of Panama
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Vaduz,
Lichtenstein
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(▇▇▇)
▇▇▇-▇▇▇▇
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Fax:
▇▇▇-▇▇-▇▇▇▇▇▇▇▇
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Brio
Capital, ▇.▇.
|
▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, P.C.
|
|
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
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|
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
|
|
(▇▇▇)
▇▇▇-▇▇▇▇
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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Bristol
Investment Fund, Ltd.
|
Iroquois
Master Fund, Ltd.
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c/o
Bristol Capital Advisers, LLC
|
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
Floor
|
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▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
|
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
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Los
Angeles, California ▇▇▇▇▇
|
(▇▇▇)
▇▇▇-▇▇▇▇
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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Attn:
▇▇▇ ▇▇▇▇, Esq.
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Centurion
Microcap, ▇.▇.
|
▇▇▇▇▇
Capital
|
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▇▇▇▇
▇▇▇▇▇▇ ▇
|
▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
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|
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
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Chestnut
Ridge Partners, L.P.
|
Platinum
Long term Growth II, Inc.
|
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▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
|
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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(212)
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CMS
Capital
|
▇▇▇▇▇▇▇▇▇▇▇
Limited Partnership
|
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▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
|
▇▇▇▇▇▇▇
▇▇▇. ▇▇▇ ▇▇▇
|
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
Canada
|
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|
(▇▇▇)
▇▇▇-▇▇▇▇
|
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DKR
Soundshore Oasis Holding Fund, Ltd.
|
Whalehaven
Capital Fund Limited
|
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▇/▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇.▇.
|
▇/▇
▇▇▇ ▇▇▇▇▇▇▇ Ltd.
|
|
▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
|
3rd
Floor, ▇▇ ▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇
|
|
▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇
|
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
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Double
U Master Fund, L.P.
|
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c/o
Navigator Management, Ltd.
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Harbor
House, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇ ▇▇▇ ▇▇▇
|
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▇▇▇▇
▇▇▇▇ BVI
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(▇▇▇)
▇▇▇-▇▇▇▇
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9