EXHIBIT 10.5
THIRD AMENDMENT TO SUBORDINATED LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO SUBORDINATED LOAN AND SECURITY AGREEMENT AND
WARRANT AGREEMENT ("Third Amendment") is dated as of August 3, 2005, by and
among CAERUS, INC., a Delaware corporation ("Caerus"), VOLO COMMUNICATIONS,
INC., a Delaware corporation ("Volo"), CAERUS NETWORKS, INC., a Delaware
corporation ("CNI"), CAERUS BILLING, INC., a Delaware corporation ("CBI"), the
VOLO SUBSIDIARIES (as defined in the Loan Agreement referenced herein; Caerus,
Volo, CNI, CBI and the Volo Subsidiaries are sometimes collectively referred to
herein as the "Borrowers" and individually as a "Borrower"), and CEDAR BOULEVARD
LEASE FUNDING LLC, a Delaware limited liability company ("Lender").
RECITALS
--------
A. Borrowers and Lender are parties to the Subordinated Loan and Security
Agreement dated as of June 1, 2004, as amended by the First Amendment to
Subordinated Loan and Security Agreement (the "First Amendment"), dated as of
July 22, 2004, and by the Second Amendment to Subordinated Loan and Security
Agreement (the "First Amendment"), dated as of August 27, 2004 and by the
Consent and Waiver Agreement, dated as of May 31, 2005 (as so amended, the "Loan
Agreement"), pursuant to which Lender agreed to provide certain financial
accommodations to or for the benefit of Borrowers upon the terms and conditions
contained therein. Unless otherwise defined herein, capitalized terms or matters
of construction defined or established in the Loan Agreement shall be applied
herein as defined or established therein.
B. VOIP, Inc. and the other guarantors that are signatory hereto
guarantied the obligations of Borrowers to Cedar in connection with the Loan
Agreement.
C. VOIP, Inc. and Borrowers have asked for Cedar's consent to certain
transactions contemplated pursuant to an Asset Purchase Agreement, dated August
1, 2005, between Parent and WQN (the "Asset Purchase Agreement").
D. As a condition to giving such consent, Lender and the Borrowers
have agreed that certain provisions of the Loan Agreement shall be amended upon
effectiveness of this Third Amendment.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrowers and Lender hereby agree as follows:
1. Ratification and Incorporation of Loan Agreement and Other Loan
Documents. Each Borrower hereby acknowledges, confirms and ratifies all of the
terms and conditions set forth in, and all of its obligations under, the Loan
Agreement and the other Loan Documents, as amended hereby.
2. Amendment of Loan Agreement.
a. Section 2.01(e) is hereby amended such that:
(i) the payment due on August 1, 2005 shall equal the accrued
but unpaid interest through July 31, 2005, in the amount of $53,446;
and
(ii) commencing with the payment due on September 1, 2005,
regular monthly principal and interest payments of $234,175.38 will
be reinstated and will be due on the first day of each month until
the Maturity Date, with the total deferred principal in the amount
of $542,188.14 resulting from the interest only payments made on
June 1, July 1, and August 1 also being due and payable at the
Maturity Date, together with any accrued but unpaid interest on such
principal.
b. Section 9.01 of the Loan Agreement is hereby further amended by
adding the following additional Events of Default by adding the following
new paragraphs (q) and (r) immediately after paragraph (p):
c. VOIP, Inc. ("Parent") becomes obligated to make any payments to
WQN, Inc. under that certain Convertible Note (the "WQN Note") to be
issued by Parent in favor of WQN, Inc. ("WQN") upon closing of the asset
purchase transactions contemplated in that certain Asset Purchase
Agreement, dated August 1, 2005, between Parent and WQN because Parent
fails to file a Certificate of Designation establishing a series of
Preferred Stock as required under the WQN Note (as the same may be amended
from time to time)
d. On or before September 5, 2005, any of Parent or any of the other
parties guarantying the obligations of Borrowers hereunder shall fail to
deliver account control agreements in accordance with Section 9-104 and
9-106 of the UCC with respect to each of the Deposit Accounts and other
accounts where Investment Property is held by Parent and each of the other
guarantors.
3. Entire Agreement. This Third Amendment, together with the Loan
Agreement and the other Loan Documents, is the entire agreement between the
parties hereto with respect to the subject matter hereof. This Amendment
supersedes all prior and contemporaneous oral and written agreements and
discussions with respect to the subject matter hereof. Except as otherwise
expressly modified herein, the Loan Documents shall remain in full force and
effect.
4. Miscellaneous.
a. Counterparts. This Third Amendment may be executed in identical
counterpart copies, each of which shall be an original, but all of which
shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Third Amendment by facsimile
transmission shall be effective as delivery of a manually executed
counterpart thereof.
b. Headings. Section headings used herein are for convenience of
reference only, are not part of this Third Amendment, and are not to be
taken into consideration in interpreting this Third Amendment.
c. Governing Law. This Third Amendment shall be governed by, and
construed and enforced in accordance with, the laws of the State of
Illinois applicable to contracts made and performed in such state, without
regard to the principles thereof regarding conflict of laws.
d. Effect. Upon the effectiveness of this Third Amendment, from and
after the date hereof, each reference in the Loan Agreement to "this
Agreement," "hereunder," "hereof," or words of like import shall mean and
be a reference to Loan Agreement as amended hereby, and each reference in
the other Loan Documents to "the Loan Agreement," "thereunder," "thereof,"
or words of like import shall mean and be a reference to the Loan
Agreement as amended hereby.
e. No Novation. Except as expressly provided in this Third
Amendment, the execution, delivery, and effectiveness of this Third
Amendment shall not (a) limit, impair, constitute a waiver of, or
otherwise affect any right, power, or remedy of Lender under the Loan
Agreement or any other Loan Document, (b) constitute a waiver of any
provision in the Loan Agreement or in any of the other Loan Documents or
(c) alter, modify, amend, or in any way affect any of the terms,
conditions, obligations, covenants, or agreements contained in the Loan
Agreement, all of which are ratified and affirmed in all respects and
shall continue in full force and effect.
f. Conflict of Terms. In the event of any inconsistency between the
provisions of this Third Amendment and any provision of the Loan
Agreement, the terms and provisions of this Third Amendment shall govern
and control.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, this Third Amendment to Loan Agreement has been duly
executed as of the date first written above.
"BORROWERS"
CAERUS, INC. VOLO COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
CAERUS NETWORKS, INC. CAERUS BILLING, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF ARIZONA, INC. VOLO COMMUNICATIONS OF CALIFORNIA,
INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF COLORADO, INC. VOLO COMMUNICATIONS OF CONNECTICUT,
INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF DELAWARE, INC. VOLO COMMUNICATIONS OF FLORIDA, INC.,
dba Volo Communications Group of
Florida, Inc.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF GEORGIA, INC. VOLO COMMUNICATIONS OF IDAHO, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF ILLINOIS, INC. VOLO COMMUNICATIONS OF INDIANA, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF MARYLAND, INC. VOLO COMMUNICATIONS OF MASSACHUSETTS,
INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF MICHIGAN, INC. VOLO COMMUNICATIONS OF NEVADA, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF NEW HAMPSHIRE, VOLO COMMUNICATIONS OF NEW JERSEY,
INC. INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
--------------------------------------- -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF NEW YORK, INC. VOLO COMMUNICATIONS OF NORTH
CAROLINA, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF OHIO, INC. VOLO COMMUNICATIONS OF PENNSYLVANIA,
INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF RHODE ISLAND, VOLO COMMUNICATIONS OF SOUTH
INC. CAROLINA, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF TEXAS, INC. VOLO COMMUNICATIONS OF VERMONT, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF VIRGINIA, INC. VOLO COMMUNICATIONS OF WASHINGTON,
D.C., INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
VOLO COMMUNICATIONS OF WISCONSIN, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------------ -------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
"LENDER"
CEDAR BOULEVARD LEASE FUNDING LLC
By: /s/ Xxxxxxxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxxxxxxx Xxxxxxxx
Title: Authorized Signatory
ACKNOWLEDGEMENT AND REAFFIRMATION BY GUARANTORS:
The following parties acknowledge reciept of this Third Amendment and reaffirm
its respective obligations under that certain Guaranty and that certain Security
Agreement, each dated as of May 21, 2005, by VOIP, INC., EGLOBALPHONE, VOIP
SOLUTIONS, INC., VCG TECHNOLOGIES, INC., and VOX CONSULTING GROUP, INC., in
favor of Lender, and as a material inducement to cause Lender to enter into the
Third Amendment, each Guarantor represents, warrants and covenants to Lender
that, as of the date hereof, such Guarantor has no cause of action (at law, in
equity or otherwise) against Lender (including, without limitation, any offset,
defense, deduction or counterclaim) with respect to the Loan, the Loan Documents
or any Borrower's or Guarantor's obligations to Lender, or pursuant to any
document or instrument executed or delivered in connection with any of the
foregoing.
VOIP, INC. EGLOBALPHONE, INC.
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
------------------------------------ ---------------------------------
Name: Xxxxxx Xxxxxxx Name: Xxxxxx Xxxxxxx
Title:CEO Title:CEO
VOIP SOLUTIONS, INC. VCG CONSULTING GROUP, INC.
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
------------------------------------ ---------------------------------
Name: Xxxxxx Xxxxxxx Name: Xxxxxx Xxxxxxx
Title:CEO Title:CEO
VOX CONSULTING GROUP, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title:CEO
