LOAN AGREEMENT
Exhibit
10.4
LOAN
AGREEMENT,
dated as
of December 18, 2007 (this “Agreement”), between VOIP INC., a Texas corporation
(“Borrower”), and the parties identified on Schedule A hereto (together with its
successors and assigns, each a “Lender” and collectively,
“Lenders”)
IN
CONSIDERATION of the mutual covenants herein contained, Borrower and Lender
agree as follows:
I. DEFINITIONS.
1.1 General
Terms.
For
purposes of this Agreement the following terms shall have the following
meanings:
“Account
Debtor” means the Customers or any other person or entity who is or may become
obligated upon a Receivable;
“Accounts”
means all amounts due and to become due to Borrower from the Customers and
other
accounts, contract rights, chattel paper, instruments and documents, whether
now
owned or to be acquired by Borrower, provided that the same arise in connection
with the sale of Inventory;
“Affiliate”
of any Person shall mean (a) any Person which, directly or indirectly, is in
control of, is controlled by, or is under common control with such Person,
or
(b) any Person who is a director or officer (i) of such Person. For purposes
of
this definition, control of a Person shall mean the power, direct or indirect,
(x) to vote 20% or more of the securities having ordinary voting power for
the
election of directors or, in the case of a Person other than a corporation,
individuals who perform similar functions;
“Agreement”
shall mean this Loan Agreement, as amended, restated, modified and supplemented
from time to time;
“Business
Day” shall mean any day other than a day on which commercial banks in New York
are authorized or required by law to close;
“Closing
Date” shall mean the date hereof;
“Default”
shall mean an event which, with the giving of notice or passage of time or
both,
would constitute an Event of Default;
“Dollar”
and the sign “$” shall mean lawful money of the United States of
America;
“Escrow
Agent” shall have the meaning set forth in the Lockbox Escrow
Agreement;
“Event
of
Default” shall mean the occurrence of any of the events set forth in Article
IX;
“Governmental
Body” shall mean any nation or government, any state or other political
subdivision thereof or any entity exercising the legislative, judicial,
regulatory or administrative functions of or pertaining to a
government;
“Intercreditor
Agreement” shall mean the intercreditor agreement between the Borrower, Lenders
and other signatories thereto, entered into on or about the date of this
Agreement;
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“Lender”
shall have the meaning ascribed to such term in the preamble to this Agreement
and shall include each Person which becomes a transferee, successor or assign
of
Lender.;
“Lockbox
Account” means an escrow account to be established by Escrow Agent with
Citibank, N.A. (Depository Bank), or such other account designated by
Lender;
“Lockbox
Escrow Agreement” shall mean the Lockbox Escrow Agreement, as amended, restated,
modified or supplemented from time to time, a form of which is attached hereto
as Exhibit
A;
“Lockbox
Notes” shall have the meaning as set forth in the Intercreditor
Agreement;
“Material
Adverse Effect” shall mean a material adverse effect on (a) the condition,
operations, assets, business or prospects of Borrower (b) Borrower’s ability to
pay the Obligations in accordance with the terms thereof, (c) the value of
the
Accounts, or Lender’s lien on the Accounts or the priority of any such lien, (d)
Material Adverse Effect as defined in the Transaction Documents, or (e) the
practical realization of the benefits of Lender’s rights and remedies under this
Agreement and the Transaction Documents;
“Obligations”
and/or “Indebtness” shall mean and include any and all of Borrower’s
indebtedness and/or liabilities to Lender of every kind, nature and description,
direct or indirect, secured or unsecured, joint, several, joint and several,
absolute or contingent, due or to become due, now existing or hereafter arising,
contractual or tortious, liquidated or unliquidated, regardless of how such
indebtedness or liabilities arise or by what agreement or instrument they may
be
evidenced or whether evidenced by any agreement or instrument (including all
interest accruing after the commencement of any bankruptcy or similar proceeding
whether or not enforceable in such proceeding), and all obligations of Borrower
to Lender to perform acts or refrain from taking any action;
“Payment
Office” shall mean c/o Grushko & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxx, XX 00000, or such other office of Lender, which it may designate
by notice to Borrower to be the Payment Office;
“Person”
shall mean any individual, sole proprietorship, partnership, corporation,
business trust, joint stock company, trust, unincorporated organization,
association, limited liability company, institution, public benefit corporation,
joint venture, entity or government (whether Federal, state, county, city,
municipal or otherwise, including any instrumentality, division, agency, body
or
department thereof);
“Receivables”
means all rights to the payment of money now owned or hereafter acquired by
Borrower, whether due or to become due and whether or not earned by performance
including, but not limited to, Accounts, chattel paper, instruments, general
intangibles, and all guaranties and security therefor and all contracts relating
thereto and all returned and repossessed goods; provided that the same arise
in
connection with the extension of credit provided to Borrower by Lender pursuant
to this Agreement;
“Subscription
Agreement” shall mean the subscription agreement between the Borrower and
Lenders, entered into on or about the date of this Agreement;
“Term”
shall have the meaning set forth in Section 12.1;
“Termination
Date” shall have the meaning set forth in Section 12.2;
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“Transaction
Documents” shall mean the Subscription Agreement, Lockbox Notes, Intercreditor
Agreement, the Security Agreement, Collateral Agent Agreement, Funds Escrow
Agreement and Lockbox Escrow Agreement between Borrower and Lender and any
and
all other agreements, instruments and documents now or hereafter executed by
Borrower delivered to Lender in respect of the transactions contemplated by
this
Agreement;
“UCC”
shall mean the Uniform Commercial Code as in effect in the State of New York
from
time
to time.
1.2 Certain
Matters of Construction.
The
terms “herein”, “hereof” and “hereunder” and other words of similar import refer
to this Agreement as a whole and not to any particular section, paragraph or
subdivision. Each reference to a Section, an Exhibit or a Schedule shall be
deemed to refer to a Section, an Exhibit or a Schedule, as applicable, of this
Agreement unless otherwise specified. Any pronoun used shall be deemed to cover
all genders. Wherever appropriate in the context, terms used herein in the
singular also include the plural and vice versa. Unless otherwise provided,
all
references to any agreements to which Lender is a party, shall include any
and
all modifications or amendments thereto and any and all extensions or renewals
thereof.
II. RECEIVABLES.
2.1 Receivables
in Lockbox Account.
Pursuant
to the terms of the Subscription Agreement and Intercreditor Agreement, an
aggregate of up to $6,020,695.20 will be or has been loaned by Lenders to
Borrower as evidenced by the Lockbox Notes, which repayment will be made
pro-rata to Lenders with the Receivables to be received into the Lockbox
Account. Borrower will provide to Lender a listing of all Receivables to be
received into the Lockbox Account (“Schedule 2.1”).
2.2 Repayment.
To
ensure the timely repayment of the Lockbox Notes, all remittances and proceeds
of Receivables obtained or received by the Borrower will be received in trust
for Lender, and the Borrower will remit such remittances and proceeds within
three (3) Banking Days from the date of receipt to Borrower pursuant to Section
4.2 below unless Lenders instruct Borrower in writing that such proceeds of
the
Lockbox are to be released to Borrower.
2.3 Security
Interest.
For the
payment and performance of the Obligation, Borrower hereby assigns to Lender,
the Borrower’s a continuing interest in the Receivables, together with all
security thereof and all of the Borrower’s right, title and interest in and to
the merchandise represented by such Receivables, including, without limitation,
all of the Borrower’s rights to stoppage in transit, replevin and reclamation
and as an unpaid vendor as provided in the UCC and the Bankruptcy Code. This
Agreement represents a Security Agreement under the UCC and, together with
all
attendant documentation, constitutes the full agreement between Lender and
the
Borrower. The security interest described herein is in addition to the security
interest granted to Lender pursuant to the Other Security
Agreement.
III. FEES
AND OTHER MATTERS.
3.1 Computation
of Fees.
Fees
hereunder shall be computed on the basis of a year of 365 days and for the
actual number of days elapsed. If any payment to be made hereunder becomes
due
and payable on a day other than a Business Day, the due date thereof shall
be
extended to the next succeeding Business Day.
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3.2 Exculpation
of Liability.
Nothing
herein contained shall be construed to constitute Lender as Borrower’s agent for
any purpose whatsoever, nor shall Lender be responsible or liable for any
payments with respect to the Accounts.
IV. DISTRIBUTION
OF ACCOUNTS RECEIVABLE.
4.1 Deposits.
(a) Borrower
will cause the Account Debtor's deposit of all remittances and proceeds with
respect to the sale or transfer of the inventory, whether by wire, cash or
check, into the Lockbox Account with the Depository Bank. Borrower and any
Affiliates, shareholders, directors, officers, employees, agents of Borrower
and
all Persons acting for or in concert with Borrower shall, acting as trustee
for
Lender, receive, as the sole and exclusive property of Lender, any monies,
checks, notes, drafts or any other payments relating to or proceeds of Accounts
or Collateral which come into their possession or under their control and
immediately upon receipt, shall remit the same or cause the same to be remitted,
in kind, to the Lockbox Account.
(b)
Borrower agrees that all payments made to such Lockbox Account or otherwise
received by Lender as proceeds of the Receivables, constitutes Collateral and
will be applied on account of the Indebtedness as provided in Section 4.2
below.
(c)
Borrower agrees to pay to Lender and Escrow Agent any and all reasonable fees,
costs and expenses (if any) which Lender and Escrow Agent incurs in connection
with opening and maintaining the Lockbox Account and depositing for collection
by Lender any check or item of payment received or delivered to Depository
Bank
or Lender on account of the Indebtedness and Borrower further agrees to
reimburse Lender and Escrow Agent for any claims asserted by Depository Bank
in
connection with the Lockbox Account or any returned or uncollected checks
received by Depository Bank for deposit in the Lockbox Account.
4.2 Application
of Collected Receivables.
Within
three (3) Business Days of Lender's receipt of any Receivables in the Lockbox,
such Receivables will be applied in the following manner and
priority:
(a) For
ninety (90) days from the date of this Agreement the funds in the Lockbox
Account shall be released for the expenses of the Borrower, other than the
Lockbox Notes, solely as directed by the Lenders in their absolute
discretion.
(b) Commencing
ninety one (91) days from the date of this Agreement until the sooner of the
Obligations have been satisfied or this Agreement other terminates, the funds
in
the Lockbox Account shall be released for any expenses of the Borrower,
including repayment of the Lockbox Notes, solely as directed by the Lenders
in
their absolute discretion.
4.3 Payment
of Borrower’s Expenses. Xxxxxx
Xxxxxx, the Chief Accounting Officer of the Borrower (“Xxxxxx”), shall compile a
list of the expenses and accounts payable of the Borrower (the “Expense List”)
and submit the Expense List to the Escrow Agent for review and approval. Upon
receipt of the Expense List the Escrow Agent will review the list and submit
to
Xxxxxx a list of the expenses and accounts payable that are approved. Escrow
Agent will use its best efforts to respond to any Expense Lists submitted to
the
Escrow Agent by 10:30 am Eastern Time on the same day of submission. The Escrow
Agent will then wire the funds necessary to cover the approved expenses and
accounts payable to the Borrower’s account. Borrower will provide the Escrow
Agent with copies of the check ledger and wire confirmations to show that the
funds wired to the Borrower’s account were only used for approved expenses and
accounts payable. Borrower will also provide the Escrow Agent with copies of
all
monthly statements it receives on its bank accounts. If at any time Xxxxxx
is no
longer the person who will be responsible for the Borrower’s obligations under
this Section 4.3 the procedures for dispensing the funds necessary for the
Borrower to pay expenses and accounts payable are subject to change at the
sole
discretion of the Lenders.
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In
order
to facilitate the maintainence of proper internal controls for the Borrower,
Escrow Agent shall notify Borrower as to any expenses or accounts payable that
are paid directly from the Lockbox Account to Borrower’s creditors by the end of
the business day in which such expenses or accounts payable are released. Escrow
Agent shall also provide to Borrower a weekly report of all cash flow in the
Lockbox Account, reconciled to beginning and ending cash balances and a copy
of
relevant monthly Lockbox Account bank statements.
V. REPRESENTATIONS
AND WARRANTIES.
Borrower hereby represents and warrants to Lender as
follows:
5.1 Organization,
Good Standing and Qualification.
Borrower is a corporation duly organized, validly existing and in good standing
under the laws of Texas. Borrower has the power and authority to own and operate
its properties and assets, to execute and deliver this Agreement and the
Transaction Documents and to carry on its business as presently conducted.
Borrower is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all jurisdictions in which the nature
of
its activities and of its properties (both owned and leased) makes such
qualification necessary.
5.2 Authorization;
Binding Obligations.
All
corporate action on the part of Borrower (including the respective officers
and
directors) necessary for the authorization of this Agreement and the Transaction
Documents, the performance of all obligations of Borrower hereunder and
thereunder and the authorization, sale, issuance and delivery of the Lockbox
Notes has been taken or will be taken. This Agreement and the Transaction
Documents, when executed and delivered, will be valid and binding obligations
of
Borrower, enforceable against each such person in accordance with their terms,
except:
(a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors’ rights;
and
(b) general
principles of equity that restrict the availability of equitable or legal
remedies.
5.3 Liabilities.
Except
as disclosed in Borrower's Form 10-KSB for the year ended December 31, 2006
as
filed with the Securities and Exchange Commission (the “Commission”), together
with all subsequently filed Forms 10-QSB, 8-K, and filings made with the
Commission available at the XXXXX website (collectively, the “Reports”),
Borrower does not have any contingent liabilities, except current liabilities
incurred in the ordinary course of business.
5.4 Title
to Properties and Assets; Liens, Etc.
Except
as disclosed in the Reports, Borrower has good and marketable title to its
properties and assets, and good title to its leasehold estates, in each case
subject to no mortgage, pledge, lien, lease, encumbrance or charge. Borrower
is
in compliance with all material terms of each lease to which it is a party
or is
otherwise bound.
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5.5 Compliance
with Other Instruments.
Except
as disclosed in the Reports, Borrower is not in violation or default of (x)
any
term of its certificate of incorporation or bylaws, or (y) any provision of
any
agreement to which it is party or by which it is bound or of any judgment,
decree, order or writ. The execution, delivery and performance of and compliance
with this Agreement and the Transactions Documents will not, with or without
the
passage of time or giving of notice, be in conflict with or constitute a default
under any such term or provision, or result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of
Borrower or the suspension, revocation, impairment, forfeiture or nonrenewal
of
any permit, license, authorization or approval applicable to Borrower, its
business or operations or any of its assets or properties.
5.6 Litigation.
Except
as disclosed in the Reports or on Schedule 5.6 hereto, there is no action,
suit,
proceeding or investigation pending or, to Borrower’s knowledge, currently
threatened against Borrower; nor is there is any basis to assert any of the
foregoing. Borrower is not a party nor subject to the provisions of any order,
writ, injunction, judgment or decree of any Governmental Body or
instrumentality. Other than as disclosed on Schedule 5.6 hereto, there is no
action, suit, proceeding or investigation by Borrower currently pending or
which
Borrower intends to initiate.
5.7 Tax
Returns and Payments.
Except
as disclosed on Schedule 5.7, Borrower has timely filed all tax returns
(federal, state and local) required to be filed by it. All taxes shown to be
due
and payable on such returns, any assessments imposed, and all other taxes due
and payable by Borrower on or before the Closing Date, have been paid or will
be
paid prior to the time they become delinquent. Borrower has not been
advised:
(a) that
any
of its returns, federal, state or other, have been or are being audited as
of
the date hereof; or
(b) of
any
deficiency in assessment or proposed judgment to its federal, state or other
taxes.
There
is
no tax to be imposed upon its properties or assets of Borrower as of the date
of
this Agreement that is not adequately provided for.
5.8 Compliance
with Laws; Permits.
Borrower is not in violation of any applicable statute, rule, regulation, order
or restriction of any Governmental Body in respect of the conduct of its
business or the ownership of its properties. No governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection
with
the execution and delivery of this Agreement or any Transaction Documents.
Borrower has all material franchises, permits, licenses and any similar
authority necessary for the conduct of its business as now being conducted
by
it.
5.9 Environmental
and Safety Laws.
Borrower is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation. No hazardous materials are used or have been used,
stored, or disposed of by Borrower or, to Borrower’s knowledge, by any other
Person on any property owned, leased or used by Borrower.
5.10 Full
Disclosure.
Borrower has provided Lender with all information requested by Lender in
connection with its decision to purchase the Lockbox Notes, including all
information Borrower believe is reasonably necessary to make such investment
decision. Neither this Agreement nor the Transaction Documents contain any
untrue statement of a material fact nor omit to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading. Any financial projections
and other estimates provided to Lender by Borrower were based on Borrower’s
experience in the industry and on assumptions of fact and opinion as to future
events which Borrower, at the date of the issuance of such projections or
estimates, believed to be reasonable.
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5.11 Patriot
Act.
Borrower certifies that, to the best of Borrower’s knowledge, Borrower has not
been designated, and is not owned or controlled, by a “suspected terrorist” as
defined in Executive Order 13224. Borrower hereby acknowledges that Lender
seeks
to comply with all applicable laws concerning money laundering and related
activities. In furtherance of those efforts, Borrower hereby represents,
warrants and agrees that: (i) none of the cash or property that Borrower will
pay or will contribute to Lender has been or shall be derived from, or related
to, any activity that is deemed criminal under United States law; and (ii)
no
contribution or payment by Borrower to Lender, to the extent that they are
within Borrower’s control shall cause Lender to be in violation of the United
States Bank Secrecy Act, the United States International Money Laundering
Control Act of 1986 or the United States International Money Laundering
Abatement and Anti-Terrorist Financing Act of 2001. Borrower shall promptly
notify Lender if any of these representations ceases to be true and accurate.
Borrower shall provide Lender any additional information regarding Borrower
that
Lender deem necessary or convenient to ensure compliance with all applicable
laws concerning money laundering and similar activities. Borrower understands
and agrees that if at any time it is discovered that any of the foregoing
representations are incorrect, or if otherwise required by applicable law or
regulation related to money laundering similar activities, Lender may undertake
appropriate actions to ensure compliance with applicable law or regulation,
including but not limited to segregation and/or redemption of Lender’ investment
in Borrower. Borrower further understands that Lender may release confidential
information about Borrower and, if applicable, any underlying beneficial owners,
to proper authorities if Lender, in its sole discretion, determines that it
is
in the best interests of Lender in light of relevant rules and regulations
under
the laws set forth in subsection (ii) above.
VI. COVENANTS
OF BORROWER.
Borrower
covenants with Lender as follows:
6.1 Access
to Facilities.
Borrower will permit any representatives designated by Lender upon 24-hours
written notice and during normal business hours, at such person’s expense and
accompanied by a representative of Borrower, to:
(a) visit
and
inspect any of the properties of Borrower;
(b) examine
the corporate and financial records of Borrower make copies thereof or extracts
therefrom; and
(c) discuss
the affairs, finances and accounts of Borrower with the directors, officers
and
independent accountants of Borrower.
6.2 Taxes.
Borrower will promptly pay and discharge, or cause to be paid and discharged,
when due and payable, all lawful taxes, assessments and governmental charges
or
levies imposed upon the income, profits, property or business of Borrower;
provided, however, that any such tax, assessment, charge or levy need not be
paid if the validity thereof shall currently be contested in good faith by
appropriate proceedings and if Borrower shall have set aside on its books
adequate reserves with respect thereto, and provided, further, that Borrower
will pay all such taxes, assessments, charges or levies forthwith upon the
commencement of
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6.3 Confidentiality.
Borrower will not disclose, and will not include in any public announcement,
the
name of Lender, unless expressly agreed to by Lender or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.
VII. INDEMNIFICATION.
7.1
Borrower
shall indemnify, hold harmless, reimburse and defend Escrow Agent, Lender,
and
each of Escrow Agent’s and Lender’s officers, directors, agents, Affiliates,
control persons, and shareholders, against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature
(collectively, “Losses”) incurred by or imposed on Lender that results, arises
out of or is based upon, directly or indirectly, (i) breach of any
representation by Borrower or breach of any warranty by Borrower in this
Agreement or the Transaction Documents, (ii) breach or default in performance
by
Borrower of any covenant by Borrower hereunder or under the Transaction
Documents or (iii) any action taken by any Governmental Body that has or may
have an adverse effect on the ability of Borrower to conduct its business in
the
ordinary course.
7.2 Lender
agrees to indemnify, hold harmless, reimburse and defend Borrower and each
of
Borrower’s officers, directors, agents, Affiliates, control persons against any
claim, cost, expense, liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or imposed upon Borrower
or
any such person which results, arises out of or is based upon (i) any material
misrepresentation by Lender in this Agreement or the Transaction Documents;
or
(ii) after any applicable notice and/or cure periods, any breach or default
in
performance by Lender of any covenant or undertaking to be performed by Lender
hereunder, or any other agreement entered into by Borrower and Lender, relating
hereto.
VIII. INFORMATION
AS TO BORROWER.
Borrower
shall, until satisfaction in full of the Obligations and the termination of
this
Agreement:
8.1 Litigation.
Promptly
notify Lender in writing of the commencement of any litigation, suit or
administrative proceeding affecting Borrower, whether or not the claim is
covered by insurance.
8.2 Material
Occurrences.
Promptly
notify Lender in writing upon the occurrence of (a) any Event of Default or
Default; and (b) any other development in the business or affairs of Borrower
which could reasonably be expected to have a Material Adverse Effect; in each
case describing the nature thereof and the action Borrower proposes to take
with
respect thereto.
8.3 Additional
Information.
Furnish
Lender with such additional information as Lender shall reasonably request
in
order to enable Lender to determine whether the covenants and conditions of
this
Agreement and the Lockbox Notes have been complied with by
Borrower.
8.4 Notices
of Adverse Events.
Furnish
Lender with prompt notice of (a) any lapse or other termination of any consent,
license or permit issued to Borrower by any Governmental Body or any other
Person that is material to the operation of Borrower’s business, (b) any refusal
by any Governmental Body or any other Person to renew or extend any such
consent, license or permit; and (c) copies of any periodic or special reports
filed by Borrower with any Governmental Body or Person, if such reports indicate
any material change in the business, operations, affairs or condition of any
Borrower, or if copies thereof are requested by Lender or any Lender, and (d)
copies of any notices and other communications from any Governmental Body which
relate to Borrower.
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8.5 Additional
Documents.
Execute
and deliver to Lender, upon request, such documents and agreements as Lender
may, from time to time, reasonably request to carry out the
IX. EVENTS
OF DEFAULT.
The
occurrence of any one or more of the following events shall constitute an “Event
of Default”:
9.1 failure
by Borrower to pay any principal or interest on the Obligations when due,
whether at maturity or by reason of acceleration pursuant to the terms of this
Agreement or by notice of intention to prepay, or by required prepayment or
failure to pay any other liabilities or make any other payment, fee or charge
provided for herein when due or in any Transaction Document;
9.2 issuance
of a notice of lien, levy assessment, injunction attachment or service against
any portion of any Borrower’s property which is not stayed or lifted within
fifteen (15) days or bonded pending appeal;
9.3 failure
or neglect of Borrower to perform, keep or observe any term, provision,
condition, covenant herein contained herein or in any Transaction Document
(to
the extent such breach is not otherwise embodied in any other provision of
this
Article IX for which a different grace or cure period is specified or which
constitute an immediate Event of Default, which is not cured within five (5)
Business Days after the occurrence of such Event of Default;
9.4 any
judgment or judgments are rendered or judgment liens filed against Borrower
for
an aggregate amount in excess of $10,000 which within thirty (30) days of such
rendering or filing is not either satisfied, stayed or discharged of record;
9.5 Borrower
or any Affiliate of Borrower shall (a) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of
its
property, (b) make a general assignment for the benefit of creditors, (c)
commence a voluntary case under any state or federal bankruptcy laws (as now
or
hereafter in effect), (d) be adjudicated a bankrupt or insolvent, (e) file
a
petition seeking to take advantage of any other law providing for the relief
of
debtors, (f) acquiesce to, or fail to have dismissed, within thirty (30) days,
any petition filed against it in any involuntary case under such bankruptcy
laws, or (g) take any action for the purpose of effecting any of the
foregoing;
9.6 Borrower
shall admit in writing its inability, or be generally unable, to pay its debts
as they become due or cease operations of its present business;
9.7 any
change in the condition or affairs of Borrower (financial or otherwise) which
will likely have a Material Adverse Effect;
9.8 any
provision of this Agreement shall, for any reason, cease to be valid and binding
on Borrower, or Borrower shall so claim in writing to Lender;
9.9 any
Governmental Body shall (i) revoke, terminate, suspend or adversely modify
any
license or permit of Borrower or (ii) commence proceedings to suspend, revoke,
terminate or adversely modify any such license or permit and such proceedings
shall not be dismissed or discharged within forty-five (45) days, or (iii)
schedule a hearing on the renewal of, or the necessity to obtain, any license
or
permit necessary for the continuation of Borrower’s business; and
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9.10 any
Event
of Default as described in the Transaction Documents dated as of the date
herein.
X. LENDER’
RIGHTS AND REMEDIES AFTER DEFAULT.
10.1 Rights
and Remedies.
Upon the
occurrence of any Event of Default and at any time thereafter at the option
of
Lender all Obligations shall be immediately due and payable and Lender shall
have the right to terminate this Agreement. Upon the occurrence of any Event
of
Default, Lender shall have the right to exercise any and all other rights and
remedies provided for herein, under the UCC and at law or equity generally.
10.2 Application
of Proceeds.
The
proceeds realized from the sale of any Accounts shall be applied as follows:
first, to the reasonable costs, expenses and attorneys’ fees and expenses
incurred by Lender for collection and for acquisition, completion, protection,
removal, sale and delivery of the Accounts; second, to fees payable in
connection with this Agreement; third, to the pro-rata principal of the Lockbox
Notes and all other fees, costs, expenses and indemnities due under this
Agreement , fourth, to all other Obligations and the to the Company. If any
deficiency shall arise, Borrower shall remain liable to Lender. If it is
determined by an authority of competent jurisdiction that a disposition by
Lender did not occur in a commercially reasonably manner, Lender may obtain
a
deficiency judgment for the difference between the amount of the Obligation
and
the amount that a commercially reasonable sale would have yielded. Lender will
not be considered to have offered to retain the Accounts in satisfaction of
the
Obligations unless Lender has entered into a written agreement with Borrower
to
that effect.
10.3 Lender’s
Discretion.
Except
as otherwise provided herein, Lender shall have the right in its sole discretion
to determine which rights, liens, security interests or remedies Lender may
at
any time pursue, relinquish, subordinate, or modify or to take any other action
with respect thereto and such determination will not in any way modify or affect
any of Lender’s or Lender’s rights hereunder.
10.4 Setoff.
In
addition to any other rights which Lender may have under applicable law, upon
the occurrence of an Event of Default, Lender shall have a right to apply
Borrower property held by such Lender to reduce the Obligations.
10.5 Rights
and Remedies not Exclusive.
The
enumeration of the foregoing rights and remedies is not intended to be
exhaustive and the exercise of any right or remedy shall not preclude the
exercise of any other right or remedy provided for herein or otherwise provided
by law, all of which shall be cumulative and not alternative.
XI. WAIVERS
AND JUDICIAL PROCEEDINGS.
11.1 Waiver
of Notice.
Borrower
hereby waives notice of non-payment of any of the Accounts, demand, presentment,
protest and notice thereof with respect to any and all instruments, notice
of
acceptance hereof, notice of loans or advances made, credit extended, Accounts
received or delivered, or any other action taken in reliance hereon, and all
other demands and notices of any description, except such as are expressly
provided for herein.
11.2 Delay.
No delay
or omission on Lender’s part in exercising any right, remedy or option shall
operate as a waiver of such or any other right, remedy or option or of any
default.
10
11.3 Jury
Waiver.
EACH
PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF
ANY CLAIM OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY
TRANSACTION, DOCUMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS
AGREEMENT OR ANY TRANSACTION DOCUMENT OR THE TRANSACTIONS RELATED HERETO OR
THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY TO THIS AGREEMENT
HEREBY CONSENTS THAT ANY SUCH CLAIM, OR CAUSE OF ACTION SHALL BE DECIDED BY
COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT
TO
TRIAL BY JURY.
XII. EFFECTIVE
DATE AND TERMINATION.
12.1 Term.
This
Agreement, which shall inure to the benefit of and shall be binding upon the
respective successors and permitted assigns of Borrower and Lender, shall become
effective on the date hereof and shall continue in full force and effect until
the earliest to occur of (a) a date not less than thirty (30) days after Lender
gives notice of such date to Borrower of termination, (b) the date on which
this
Agreement shall be terminated in accordance with the provisions hereof or (c)
upon satisfaction of the Obligations; (the “Termination Date”; such period
referred to herein as the “Term”).
12.2 Termination.
The
termination of this Agreement shall not affect Lender’s rights, or any of the
Obligations having their inception prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into, rights or interests created or Obligations
have been fully disposed of, concluded or liquidated. The rights granted to
Lender hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrower’s Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of Borrower have been paid, satisfied or performed in full.
Accordingly, Borrower waives any rights which it may have under Section 9-513
of
the UCC to demand the filing of termination statements with respect to the
Accounts, and Lender shall not be required to send such termination statements
to Borrower, or to file them with any filing office, unless and until this
Agreement shall have been terminated in accordance with its terms and all
Obligations paid in full in immediately available funds. All representations,
warranties, waivers and agreements contained herein shall survive termination
hereof until all Obligations are paid or performed in full.
XIII. WAIVER
OF SUBROGATION.
13.1 Waiver
of Subrogation.
Borrower
expressly waives any and all rights of subrogation, reimbursement, indemnity,
exoneration, contribution of any other claim which Borrower may now or hereafter
have against any Person directly or contingently liable for the Obligations
hereunder, or against or with respect to Borrower’s property (including, without
limitation, any property which is collateral for the Obligations), arising
from
the existence or performance of this Agreement, until termination of this
Agreement and repayment in full of the Obligations.
11
XIV. MISCELLANEOUS.
14.1 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York applied to contracts to be performed wholly within the State
of New York, without giving effect to rules regarding conflicts of law. Any
judicial proceeding by involving, directly or indirectly, any matter or claim
in
any way arising out of, related to or connected with this Agreement or any
Transaction Document shall be brought only in a federal or state court located
in the State and County of New York and in no other court. By execution and
delivery of this Agreement, Borrower and Lender accept for itself and in
connection with its properties, generally and unconditionally, the exclusive
jurisdiction of such court, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. Borrower hereby waives
personal service of any and all process upon it and consents that all such
service of process may be made by registered mail (return receipt requested)
directed to Borrower at its address set forth in Section 14.4 and service so
made shall be deemed completed five (5) days after the same shall have been
so
deposited in the mails of the United States of America, or, at Lender’s option,
by service upon Borrower. Nothing herein shall affect the right to serve process
in any manner permitted by law. Borrower and Lender waive any objection to
jurisdiction and venue of any action instituted hereunder and shall not assert
any defense based on lack of jurisdiction or venue or based upon forum non
conveniens.
14.2 Entire
Understanding.
This
Agreement and the Transaction Documents contain the entire understanding between
Borrower and Lender and supersedes all prior agreements and understandings,
if
any, relating to the subject matter hereof. Neither this Agreement nor any
portion or provisions hereof may be changed, modified, amended, waived,
supplemented, discharged, cancelled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by
the
party to be charged. Borrower acknowledges that it has been advised by counsel
in connection with the execution of this Agreement and the Transaction Documents
and is not relying upon oral representations or statements inconsistent with
the
terms and provisions of this Agreement.
14.3 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of Borrower and Lender
and their respective successors and assigns, except that Borrower may not assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of Lender.
14.4 Notice.
Any
notice or request hereunder may be given to Borrower and Lender at their
respective addresses set forth below or at such other address as may hereafter
be specified in a notice designated as a notice of change of address under
this
Section. Any notice or request hereunder shall be given by (a) hand delivery,
(b) overnight courier, (c) registered or certified mail, return receipt
requested, or (d) telecopy to the number set out below (or such other number
as
may hereafter be specified in a notice designated as a notice of change of
address) with electronic confirmation of its receipt. Any notice or other
communication required or permitted pursuant to this Agreement shall be deemed
given (a) when personally delivered to any officer of the party to whom it
is
addressed, (b) on the earlier of actual receipt thereof or two (2) days
following posting thereof by certified or registered mail, postage prepaid,
or
(c) upon actual receipt thereof when sent by a recognized overnight delivery
service or (d) upon actual receipt thereof when sent by telecopier to the number
set forth below with electronic confirmation of its receipt, in each case
addressed to each party at its address set forth below or at such other address
as has been furnished in writing by a party to the other by like
notice:
|
(A)
|
If
to Lender at:
|
To
the names, addresses and facsimile
|
|
numbers
listed on Schedule A hereto
|
||
|
With
a copy to:
|
Grushko
& Xxxxxxx, P.C.
|
|
|
000
Xxxxx Xxxxxx, Xxxxx 0000
|
||
|
Xxx
Xxxx, XX 00000
|
||
|
Fax:
(000) 000-0000
|
||
|
(B)
|
If
to Borrower at:
|
|
|
151
So. Xxxxxx Road, Suite 3000
|
||
|
Xxxxxxxxx
Xxxxxxx, XX 00000
|
||
|
Attn:
Xxxxxxx Xxxxxxx, CEO
|
||
|
Fax:
(000) 000-0000
|
||
|
With
a copy to:
|
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
|
|
|
00
Xxxxxxxx, 00xx Xxxxx
|
||
|
Xxx
Xxxx, XX 00000
|
||
|
Attn:
Xxxx Xxxx, Esq.
|
||
|
Fax:
(000) 000-0000
|
12
14.5 Severability.
If any
part of this Agreement is contrary to, prohibited by, or deemed invalid under
applicable laws or regulations, such provision shall be inapplicable and deemed
omitted to the extent so contrary, prohibited or invalid, but the remainder
hereof shall not be invalidated thereby and shall be given effect so far as
possible.
14.6 Expenses.
All
costs and expenses including, without limitation, (i) reasonable attorneys’ fees
and disbursements incurred by Lender (a) in all efforts made to enforce payment
of any of the Obligations or effect collection of any Accounts, or (b) in
connection with the entering into, modification, amendment, administration
and
enforcement of this Agreement or the Transaction Documents or any consents
or
waivers hereunder or thereunder, or (c) in instituting, maintaining, preserving,
enforcing and foreclosing on Lender’s security interest in any of the Accounts,
whether through judicial proceedings or otherwise, or (d) in defending or
prosecuting any actions or proceedings arising out of or relating to Lender’s
transactions with Borrower and (ii) reasonable fees and disbursements incurred
by Lender in connection with any appraisals of the Accounts, field examinations,
collateral analysis or monitoring or other business analysis conducted by
outside Persons in connection with this Agreement and the Transaction Documents,
may be charged to Borrower’s Account and shall be part of the
Obligations.
14.7 Injunctive
Relief.
Borrower
recognizes that if Borrower fails to perform, observe or discharge any of its
obligations under this Agreement, any remedy at law may prove to be inadequate
relief to Lender; therefore, Lender, if Lender so requests, shall be entitled
to
temporary and permanent injunctive relief in any such case without the necessity
of proving that actual damages are not an adequate remedy.
14.8 Consequential
Damages.
Lender
shall not be liable to Borrower for consequential damages arising from any
breach of contract, tort or other wrong relating to the establishment,
administration or collection of the Obligations.
14.9 Captions.
The
captions at various places in this Agreement are intended for convenience only
and do not constitute and shall not be interpreted as part of this
Agreement.
14.10 Counterparts;
Telecopied Signatures.
This
Agreement may be executed in any number of and by different parties hereto
on
separate counterparts, all of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same agreement.
Any signature delivered by a party by facsimile transmission shall be deemed
to
be an original signature hereto.
14.11
Construction.
The
parties acknowledge that each party and its counsel have reviewed this Agreement
and that the normal rule of construction to the effect that any ambiguities
are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments, schedules or exhibits
thereto.
13
In
witness thereof each of the undersigned states that he has read the foregoing
Loan Agreement and understands and agrees to it.
|
VOIP,
INC.
|
|
|
the
“Borrower”
|
|
|
By:___________________________________
|
“LENDERS”
|
________________________________________
|
|
|
ALPHA
CAPITAL ANSTALT f/k/a ALPHA CAPITAL AKTIENGESELLSCHAFT
|
|
|
________________________________________
|
_______________________________________
|
|
BRIO
CAPITAL L.P.
|
BRISTOL
INVESTMENT FUND, LTD.
|
|
________________________________________
|
_______________________________________
|
|
CENTURION
MICROCAP, X.X.
|
XXXXXXXX
RIDGE PARTNERS LP
|
|
________________________________________
|
_______________________________________
|
|
GRUSHKO
& XXXXXXX, P.C. .
|
CMS
CAPITAL
|
|
________________________________________
|
_______________________________________
|
|
DOUBLE
U MASTER FUND X.X.
|
XXXXX
INTERNATIONAL LTD.
|
|
________________________________________
|
_______________________________________
|
|
OSHER
CAPITAL INC.
|
PLATINUM
LONG TERM GROWTH I INC.
|
|
_______________________________________
|
|
|
WHALEHAVEN
CAPITAL FUND LTD.
|
|
|
ESCROW
AGENT:
|
|
|
_______________________________________
|
|
|
GRUSHKO
& XXXXXXX, P.C.
|
|
14
Schedule
A
|
Xxxxx
International Ltd.
|
|
|
Pradafant
0
|
00xx
Xxxxxx Xxxxxxxxxxxx Xxxxxxx
|
|
0000
Furstentums
|
Xxxxx
Xxxxx, 00xx Xxxxx, Xxxxxx
|
|
Xxxxx,
Xxxxxxxxxxxx
|
Xxxxxxxx
of Panama
|
|
Fax:
***
|
***
|
|
Brio
Capital, X.X.
|
Xxxxxxx
& Xxxxxxx, P.C.
|
|
000
Xxxxxxxxx Xxxx
|
000
Xxxxx Xxxxxx, Xxxxx 0000
|
|
Xxxxxxxxxx,
XX 00000
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
Fax:
***
|
***
|
|
Bristol
Investment Fund, Ltd.
|
Iroquois
Capital
|
|
c/o
Bristol Capital Advisers, LLC
|
000
Xxxxxxxxx Xxxxxx, 00xx Floor
|
|
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
|
Xxx
Xxxx, XX 00000
|
|
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
|
***
|
|
Fax:
***
|
|
|
Osher
Capital
|
|
|
Centurion
Microcap, L.P.
|
0
Xxxxxxxxx Xxxx
|
|
0000
Xxxxxx X
|
Xxxxxx
Xxxxxx, XX 00000
|
|
Xxxxxxxx,
XX 00000
|
***
|
|
Fax:
***
|
|
|
Platinum
Long term Growth II, Inc.
|
|
|
Chestnut
Ridge Partners, L.P.
|
000
Xxxx 00xx Xxxxxx
|
|
00
Xxxx Xxxxxxxxx
|
Xxx
Xxxx, XX 00000
|
|
Xxxxxxxxx
Xxxx, XX 00000
|
***
|
|
Fax:
***
|
|
|
Whalehaven
Capital Fund Limited
|
|
|
CMS
Capital
|
c/o
FWS Capital Ltd.
|
|
0000
Xxx Xxxx Xxxxxxxxx, Xxxxx 000
|
3rd
Floor, 00 Xxx-Xxxxxxx Xxxx
|
|
Xxxxxxxx
Xxxx, XX 00000
|
Xxxxxxxx,
Xxxxxxx XX00
|
|
***
|
Fax:
***
|
|
Double
U Master Fund, L.P.
|
|
|
c/o
Navigator Management, Ltd.
|
|
|
Harbor
House, Xxxxxxxxxx Xxxxx, X.X Xxx 000
|
|
|
Xxxx
Xxxx BVI
|
|
|
***
|
EXHIBIT
A
Lockbox
Escrow Agreement
15
