MODIFICATION AND AMENDMENT AGREEMENT
Exhibit
10.4
This
Modification and Amendment Agreement (“Agreement”) dated as of May 22,
2006 is
entered
into by and among VoIP, Inc., a Texas corporation (the “Company”) and the
subscribers identified on the signature page hereto (each a “Subscriber” and
collectively “Subscribers”).
WHEREAS,
the Company and the Subscribers are parties to Subscription Agreements
(“Subscription Agreements”) dated January 6, 2006 and February 2, 2006 relating
to aggregate investments by Subscribers of up to $5,331,212.00 and
$2,987,072.00, respectively, of principal amount of promissory notes of the
Company with an original issue discount of 12.121% convertible into shares
of
the Company’s $.001 par value common stock and Warrants in the amounts set forth
on Schedule A attached hereto; and
WHEREAS,
if notified by the Subscribers the Company would be in default of material
terms
of the Transaction Documents upon which the Subscribers may elect to exercise
their rights to accelerate the Maturity Date of the Notes and foreclose on
the
Collateral under the Security Agreement; and
WHEREAS,
the Company and Subscribers desire to restructure the terms of the Transaction
Documents to their mutual benefit.
NOW
THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement, the Company and the Subscribers hereby agree as
follows:
1.
All
the
capitalized terms employed herein shall have the meanings attributed to them
in
the Subscription Agreement and the documents and agreements delivered therewith
(“Transaction Documents”).
2.
(a) Section
1.2 of the Note is amended as follows: “The first Repayment Date shall be the
sooner of August 15, 2006, or the Actual Effective Date of the Registration
Statement.”
(b) Section
2.1(a) of the Note is amended as follows: “Eighty-five percent (85%) of the VWAP
for the fifteen (15) trading days preceding such Repayment Date (“Alternate
Price”), but not less than $0.80”.
(c) Section
3.1 of the Note is amended as follows: “Fixed Conversion Price is
$1.00”.
(d) The
Company will pay accrued Liquidated Damages due through May 31, 2006 in the
amount of $166,366 with shares of the Company’s Common Stock issued at a price
per share of $1.00.
3.
The
exercise prices of the Class A and Class B Common Stock Purchase Warrants are
hereby reduced to $1.00.
4.
Within
three (3) business days of execution of this Agreement, Subscribers shall
exercise their Class C and D Common Stock Purchase Warrants issued on July
5,
2005 and November 1, 2005, respectively, at an exercise price of $0.78, for
an
aggregate number of shares as more fully described on Schedule A hereto (the
“Class C and D Warrant Shares”). The Class C and D Warrant Shares are
effectively registered for resale and may be sold free of restriction pursuant
to the prospectus dated October 18, 2005, which prospectus was subsequently
supplemented, most recently on April 18, 2006.
5.
The
Company will issue to each Subscriber additional Class C and D Common Stock
Purchase Warrants as more fully described on Schedule A hereto exercisable
at
$0.80 (“Replacement Warrants”).
6.
The
Company will file an amended Registration Statement to reflect the terms of
this
Agreement not later than thirty (30) days after the date of this Agreement
and
cause such amended Registration Statement to be declared effective by the
Commission as soon as practicable thereafter, provided however that the required
Effective Date set forth in Section 11.1(iv) of the Subscription Agreement
remains applicable to the amended Registration Statement with respect to all
shares other than those shares underlying the Replacement Warrants and shares
issued as payment of Liquidated Damages described above. A prospectus supplement
will be filed to reflect the terms of this Agreement within one business days
after the date hereof with respect to the Class C and D Warrant Shares. Failure
to comply with the foregoing filing and effective dates shall be a
Non-Registration Event in connection with which Liquidated Damages shall accrue
in the amounts set forth in Section 11.4 of the Subscription Agreement. In
the
event an amendment to the registration statement may not be filed to register
securities which may be issuable pursuant to this Agreement, and such additional
securities, including the shares issued as payment of Liquidated Damages and
the
shares underlying the Replacement Warrants described above, then the Company
agrees to file a Registration Statement in relation to such securities pursuant
to Section 11 of the Subscription Agreement and particularly Section 11.1(iv)
of
the Subscription Agreement, except that in relation to such securities the
Filing Date and Effective Date shall respectively be 180 days and 270 days
after
the date of this Agreement; however, failure to comply with these Filing and
Effective Dates will not cause the accrual of any Liquidated Damages. All such
additional securities are deemed Registrable Securities.
7.
Section
12(a) - Right of First Refusal is amended as follows:
“Until
the Registration Statement has been effective for the public unrestricted resale
of the Registrable Securities for 365 days, the Subscribers shall be given
not
less than seven (7) business days prior written notice of any proposed sale
by
the Company of its common stock or other securities or debt obligations, except
in connection with (i) as a result of the exercise of options or warrants or
conversion of convertible Notes or amounts which are granted, issued or accrue
pursuant to this Agreement, (ii) as has been described in the Reports or Other
Written Information filed with the Commission not later than three business
days
prior to the Closing Date, or delivered to the Subscribers prior to the Closing
Date, (iii) full or partial consideration in connection with a strategic merger,
consolidation or purchase of substantially all of the securities or assets
of
corporation or other entity, (iv)
the
Company’s issuance of securities in connection with strategic license agreements
and other partnering arrangements so long as such issuances are not for the
purpose of raising capital, (v) the Company’s issuance of Common Stock or the
issuance or grants of options to purchase Common Stock pursuant to the Company’s
stock option plans and employee stock purchase plans as they now exist, provided
such options are granted with exercise prices at least equal to the closing
price of the Common Stock on the grant dates, which copies of such plans have
been delivered to the Subscribers, and (vi) Common Stock or instruments
convertible or exchangeable for Common Stock, provided the issue price (or
conversions, exchanges, or exercise prices, whichever is applicable) of such
Common stock or other instrument is not less than 150% of the Conversion Price
in effect at all times (collectively the foregoing are “Excepted
Issuances”).
For
the first six months after the Actual Effective Date, the
Subscribers who exercise their rights pursuant to this Section 12(a) shall
have
the right during the seven (7) business days following receipt of the notice
to
purchase in the aggregate up to 100% and thereafter for the second six months
after the Actual Effective Date up to 50% of all such offered common stock,
debt
or other securities in accordance with the terms and conditions set forth in
the
notice of sale in the same proportion to each other as their purchase of Notes
in the Offering. In the event such terms and conditions are modified during
the
notice period, the Subscribers shall be given prompt notice of such modification
and shall have the right during the seven (7) business days following the notice
of modification, whichever is longer, to exercise such right.”
2
8.
Section
12(b) - Offering Restrictions is amended from “…until the Actual Effective Date”
to “…until three months after the Actual Effective Date”.
9.
The
undersigned waive the rights granted to them pursuant to Section 12(c) - Favored
Nation Provision of the Subscription Agreement only to the extent such rights
would be triggered by the reduction of the exercise price of the Class C and
Class D Warrants and the issuance of the Replacement Warrants pursuant to this
Agreement.
10. The
Company undertakes to make a public announcement describing this Agreement
not
later than the first business day after the execution of this
Agreement.
11.
For
the
benefit of the parties hereto, the Company hereby makes all the representations,
warranties, covenants undertakings and indemnifications contained in the
Transaction Documents including but not limited to the representations and
warranties contained in Section 5(f)(iii) of the Subscription Agreement, as
if
such representations were made by the Company as of this date. The Subscribers
hereby make all of the representations, warranties, covenants, indemnifications
and undertakings contained in the Transaction Documents as if such
representations were made by the Subscribers as of this date.
12.
Subject
to the modifications and amendments provided herein, the Transaction
Documents shall remain in full force and effect, including but not limited
to
the accrual of interest and liquidated damages, if any. Except as expressly
set
forth herein, this Modification and Amendment 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 Subscribers, 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. Except as set forth herein,
the Subscribers reserve all rights, remedies, powers, or privileges
available under the Transaction Documents, at law or otherwise.
This Modification and Amendment 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
13.
Each
of
the undersigned states that he has read the foregoing Agreement and understands
and agrees to it.
14.
This
Modification and Amendment Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and
the
same agreement and shall become effective when counterparts have been signed
by
each party and delivered to any other party, it being understood that all
parties need not sign the same counterpart. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature
is
executed) the same with the same force and effect as if such facsimile signature
were an original thereof.
3
IN
WITNESS WHEREOF, the
undersigned have executed and delivered this Modification and Amendment
Agreement as of the date first written above.
| Company: | Investor: | |||
| VOIP, INC. | ALPHA CAPITAL AKTIENGESELLSCHAFT | |||
| By: | /s/ Xxxx Post | By: | /s/ Xxxxxx Xxxxxxxxx | |
|
Name: Xxxx Post |
Name: Xxxxxx Xxxxxxxxx |
|||
| Title: President | Title: Director | |||
| Investor: | Investor: | |||
| BRISTOL INVESTMENT FUND, LTD. | XXXXX INTERNATIONAL LTD. | |||
| By: | /s/ Xxxx Xxxxxxx | By: | ||
|
Name: Xxxx Xxxxxxx |
Name: |
|||
| Title: Directors | Title: | |||
| Investor: | Investor: | |||
| PLATINUM LONG TERM GROWTH II INC. | CMS CAPITAL | |||
| By: | /s/ Xxxx Xxxxxxxxx | By: | ||
|
Name: Xxxx Xxxxxxxxx |
Name: |
|||
| Title: | Title: | |||
| Investor: | Investor: | |||
|
DKR SOUNDSHORE OASIS HOLDING
FUND LTD.
|
OSHER CAPITAL INC. | |||
| By: | /s/ Xxxx Xxxx | By: | /s/ X. Xxxxxx | |
|
Name: Xxxx Xxxx |
Name: X. Xxxxxx |
|||
| Title: | Title: | |||
| Investor: | Investor: | |||
| GRUSHKO & XXXXXXX, P.C. | WHALEHAVEN CAPITAL FUND LIMITED | |||
| By: | /s/ Xxxxxx Xxxxxxx | By: | /s/ Even Xxxxxxxxxxx | |
|
Name: Xxxxxx Xxxxxxx |
Name: Even Xxxxxxxxxxx |
|||
| Title: Partner | Title: Director | |||
| Investor: | Investor: | |||
| CHESTNUT RIDGE PARTNERS XX | XXXXXXXXXXX LIMITED PARTNERSHIP | |||
| By: | /s/ Xxxxxxx Xxxx | By: | ||
|
Name: Xxxxxxx Xxxx |
Name: |
|||
| Title: CFO | Title: | |||
4
SCHEDULE
A
VOIP
WARRANTS EXERCISE PROPOSAL FROM 7-5-05 AND 11-1-05
CLOSINGS
|
7-5-05
INVESTORS
|
7-5-05
CLASS C WARRANTS 5YR @ $1.37612
|
Proceeds
|
7-5-05
CLASS D WARRANTS 1YR @ $1.60
|
Proceeds
|
|||||||||
|
XXXXXXXXXXX
|
179,688
|
$
|
140,156.64
|
179,688
|
$
|
140,156.64
|
|||||||
|
WHALEHAVEN
|
143,750
|
$
|
112,125.00
|
143,750
|
$
|
112,125.00
|
|||||||
|
XXXXX
INTL
|
89,844
|
$
|
70,078.32
|
89,844
|
$
|
70,078.32
|
|||||||
|
BRISTOL
|
239,583
|
$
|
186,874.74
|
239,583
|
$
|
186,874.74
|
|||||||
|
ALPHA
|
239,583
|
$
|
186,874.74
|
239,583
|
$
|
186,874.74
|
|||||||
|
$
|
0.00
|
||||||||||||
|
TOTAL
|
892,448
|
$
|
696,109.44
|
892,448
|
$
|
696,109.44
|
|||||||
|
11-1-05
INVESTORS
|
11-1-05
CLASS C WARRANTS 5YR @ $1.6503
|
Proceeds
|
11-1-05
CLASS D WARRANTS 1YR @ $1.60
|
Proceeds
|
|||||||||
|
XXXXXXXXXXX
|
179,688
|
$
|
140,156.64
|
179,688
|
$
|
140,156.64
|
|||||||
|
WHALEHAVEN
|
143,750
|
$
|
112,125.00
|
143,750
|
$
|
112,125.00
|
|||||||
|
XXXXX
INTL
|
89,844
|
$
|
70,078.32
|
89,844
|
$
|
70,078.32
|
|||||||
|
BRISTOL
|
239,583
|
$
|
186,874.74
|
239,583
|
$
|
186,874.74
|
|||||||
|
ALPHA
|
239,583
|
$
|
186,874.74
|
239,583
|
$
|
186,874.74
|
|||||||
|
TOTAL
|
892,448
|
$
|
696,109.44
|
892,448
|
$
|
696,109.44
|
|||||||
| TOTAL NET PROCEEDS FROM ALL WARRANTS |
$
|
2,784,437.76 | |||||||||||
*
Footnote: $20,000 in proceeds to be deducted from Alpha Capital pursuant to
exercise of 25,000 Warrants at $0.80 per share.
ALL
WARRANTS EXERCISED WILL BE REPLACED WITH NEWLY ISSUED 5 YR. WARRANTS AT $0.80
AND WILL BE REGISTERED ON NEXT REGISTRATION FILING.
5
