SETTLEMENT AGREEMENT AND RELEASE
Exhibit
10.3
SETTLEMENT
AGREEMENT AND RELEASE
THIS
SETTLEMENT AGREEMENT AND RELEASE ("Agreement") is dated as of May 23, 2007
by
and between CROSS COUNTRY CAPITAL PARTNERS, L.P. ("Cross Country"), and VOIP,
INC. ("VoIP").
WHEREAS,
Cross Country and VoIP entered into a certain Subscription Agreement dated
as of
August 26, 2005, as amended on November 16, 2005 (the “Subscription
Agreement”);
WHEREAS,
pursuant to the Subscription Agreement, Cross Country purchased from VoIP a
certain number of warrants and shares of VoIP’s stock;
WHEREAS,
on or about September 25, 2006 Cross Country brought an action against VoIP
entitled Cross
Country Capital Partners, LP v. VoIP, Inc.,
Cause
No. 06-10030 (the “Action”) in the District Court for Dallas County, Texas,
116th
Judicial
District, (the "Court"), whereby Cross Country asserted claims against VoIP
alleging that VoIP breached certain provisions of the Subscription Agreement
(the “Claims”);
WHEREAS,
on or about February 5, 2007, Cross Country filed Plaintiff’s First Amended
Original Petition alleging additional breaches of the Subscription Agreement
by
VoIP;
WHEREAS,
VoIP denies that it is liable for the relief sought in the Action, but
acknowledges that it does not have sufficient cash to satisfy the claims made
in
the Action;
WHEREAS,
VoIP currently only has the means to satisfy payment of bona fide claims through
the issuance to Cross Country of authorized shares, pursuant to Section 3(a)(10)
of the Securities Act of 1933; and
WHEREAS,
all of the parties are mutually desirous of settling this matter;
NOW,
THEREFORE, in consideration of the terms and conditions hereinafter set forth,
the sufficiency of which is hereby acknowledged, the parties do hereby agree
as
follows:
1. The
foregoing recitals are true and correct.
2. SETTLEMENT
SHARES.
As soon
as practicable following entry of an order by the Court in accordance with
Paragraph 4 herein, and subject to subparagraphs 2(a) and (b) below, VoIP shall
cause to be issued 12,500,000 free trading shares of VoIP common stock to Cross
Country (the "Settlement Shares"). The strike price of the 1,537,500 Class
D
Warrants and 687,500 Class D Warrants currently owned by Cross Country shall
be
changed to $0.18 (the “New Strike Price”) and Cross Country shall continue to
own such warrants at the New Strike Price.
| (a) |
Of
the 12,500,000 Settlement Shares, 6,250,000 such shares (the
“Volume
Limitation Shares”) are subject to the following restriction: During any
ninety (90) day period, Cross
Country may only sell an amount of the Volume Limitation Shares
in an
aggregate amount up to 1% of the outstanding common stock of
VoIP as shown
by the most recent report or statement published by VoIP. After
every sale
as contemplated herein, Cross Country will provide evidence of
such sale
through a confirming monthly statement or on another comparable
document;
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| (b) |
The
remaining 6,250,000 Settlement Shares (the “Remaining Settlement Shares”)
may be disposed of by Cross Country at such time or times thereafter,
and
in such manner, as it deems appropriate in its sole discretion;
provided,
however, that Cross Country shall provide VoIP with two (2) days
prior
notice of any such disposition.
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3. SECOND
CLOSING.
Any
rights to a Second Closing pursuant to paragraph 1(b) of the Subscription
Agreement shall be null and void.
4. FAIRNESS
HEARING.
Promptly upon execution hereof (but in any event within three (3) Business
Days
thereof), VoIP and Cross Country agree, pursuant to 15 U.S.C. §77(a)(10), to
submit the terms and conditions of this Agreement to the Court for a hearing
on
the fairness of such terms and conditions, for the issuance of an exemption
from
registration of the Settlement Shares and an Order approving the Agreement.
VoIP
avers it is a “reporting issuer” that files reports with the SEC under Section
13 of the Securities and Exchange Act of 1934 (the “Exchange Act”); VoIP avers
it is current in all its filing required under the Exchange Act; and Cross
Country avers it has access to, and has accessed all such filings. In connection
with such a Fairness Hearing, VoIP, the issuer of the securities, and Cross
Country, the proposed person to whom the securities are to be issued, agree
that
the value of the Settlement Shares utilized to satisfy the Claims is fair and
reasonable. This Agreement shall become binding upon the parties only upon
entry
of an order by the Court substantially in the form annexed hereto as Exhibit
A
(the “Order”); and in the event the Order is not so entered, this Agreement
shall be null and void.
5. NECESSARY
ACTION.
At all
times after the execution of this Agreement and entry of the Order by the Court,
each party hereto agrees to take or cause to be taken all such necessary action
including, without limitation, the execution and delivery of such further
instruments and documents, as may be reasonably requested by any party for
such
purposes or otherwise necessary to complete or perfect the transaction
contemplated hereby.
6. CONFIDENTIALITY
AGREEMENT.
At all
times prior to execution of this Agreement, the parties hereto agree to not
disclose to any other person any of the terms of said Agreement.
7. RELEASES.
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(a)
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Upon
delivery of the Settlement Shares to Cross Country and in consideration
of
the terms and conditions of this Agreement, and except for the obligations
and representations arising or made hereunder or a breach hereof,
Cross
Country hereby releases, acquits and forever discharges VoIP and
each,
every and all its current and past officers, directors, shareholders,
affiliated corporations, subsidiaries, agents, employees, representatives,
attorneys, predecessors, successors and assigns, of and from any
and all
claims, damages, causes of action, suits and costs, of whatever nature,
character or description, whether known or unknown, anticipated or
unanticipated, which Cross Country may now have or may hereafter
have or
claim to have against VoIP with respect to the Action. Nothing herein
shall be deemed to negate or affect Cross Country's right to enforce
the
terms and conditions of this
Agreement.
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2
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(b)
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Upon
delivery of the Settlement Shares to Cross Country and in consideration
of
the terms and conditions of this Agreement, and except for the obligations
and representations arising or made hereunder or a breach hereof,
VoIP
hereby releases, acquits and forever discharges Cross Country and
each,
every and all its current and past officers, limited partners, general
partners, directors, shareholders, affiliated corporations, subsidiaries,
agents, employees, representatives, attorneys, predecessors, successors
and assigns of and from any and all claims, damages, causes of action,
suits and costs, of whatever nature, character or description, whether
known or unknown, anticipated or unanticipated, which VoIP may now
have or
may hereafter have or claim to have against Cross Country with respect
to
the Action. Nothing herein shall be deemed to negate or affect VoIP’s
right to enforce the terms and conditions of this
Agreement.
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8. CONTINUING
JURISDICTION.
Simultaneously with the execution of this Agreement, the attorneys representing
the parties hereto will execute an Agreed Order of Dismissal substantially
in
the form annexed hereto as Exhibit B (the “Agreed Order of Dismissal”), which
shall be held by Cross Country's counsel and filed with the Court after VoIP’s
delivery of the Settlement Shares in accordance with paragraph 2 herein. In
order to enable the Court to grant specific enforcement and other equitable
relief in connection with this Agreement, (a) the parties consent to the
jurisdiction of the Court for purposes of enforcing this Agreement and (b)
each
party to this Agreement expressly waives any contention that there is an
adequate remedy at law or any like doctrine that might otherwise preclude
injunctive relief to enforce this Agreement.
9. CONTINUING
OBLIGATION.
Both
parties agree to use their best efforts to cooperate with the Court to cause
the
Order to be timely entered and agree that delays caused due to Court calendars
shall not constitute a valid reason to void this Agreement.
10.
INFORMATION.
VoIP
and Cross Country each represent that prior to the execution of this Agreement,
they have had the advice of counsel, they fully informed themselves of its
terms, contents, conditions and effects, and that no promise or representation
of any kind has been made to them except as expressly stated in this
Agreement.
11.
OWNERSHIP
AND AUTHORITY.
VoIP
and Cross Country represent and warrant that they have not sold, assigned,
transferred, conveyed or otherwise disposed of any or all of any claim, demand,
right or cause of action, relating to any matter which is covered by this
Agreement, that each is the sole owner of such claim, demand, right or cause
of
action, and each has the power and authority and has been duly authorized to
enter into and perform this Agreement and that this Agreement is a binding
obligation of each, enforceable in accordance with its terms.
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12. BINDING
NATURE.
This
Agreement shall be binding on all parties executing this Agreement and their
respective successors, assigns and heirs.
13. AUTHORITY
TO BIND.
Each
party to this Agreement represents and warrants that the execution, delivery
and
performance of this Agreement and the consummation of the transaction provided
in this Agreement have been duly authorized by all necessary action of the
respective entity and that the person executing this Agreement on its behalf
has
the full capacity to bind that entity. Each party further represents and
warrants that it has been represented by independent counsel of its choice
with
the negotiation and execution of this Agreement and that counsel has reviewed
this Agreement.
14. SIGNATURES.
This
Agreement may be signed in counterparts and the Agreement, together with its
counterpart signature pages, shall be deemed valid and binding on each party
when duly executed by all parties. Facsimile signatures shall be deemed valid
and binding for all purposes.
15. CHOICE
OF LAW, ETC.
Notwithstanding the place where this Agreement may be executed by either of
the
parties, or any other factor, all terms and provisions hereof shall be governed
by and construed in accordance with the laws of the State of Texas, applicable
to agreements made and to be fully performed in that State and without regard
to
principles of conflicts of law thereof.
16. INCONSISTENCY.
In the
event of any inconsistency between the terms of this Agreement and any other
document executed in connection herewith, the terms of this Agreement shall
control to the extent necessary to resolve such inconsistency.
17. ATTORNEYS’
FEES.
In any
proceeding involving or relating to the actual or alleged breach of any term
of
this Agreement, the prevailing party shall be entitled to an award of its
reasonable attorneys' fees and costs.
18. MODIFICATION.
This
Agreement may be amended, altered or modified only by a written agreement among
the parties.
19. NO
WAIVER.
Failure
of any party to insist upon compliance with any provision hereof shall not
constitute a waiver thereof, and no waiver of any provision of this Agreement
shall be effective unless it is in writing and signed by the party against
whom
it is asserted. Any waiver of any provision of this Agreement shall only be
applicable to the specific provision and instance to which it is related and
shall not be deemed to be a continuing or future waiver as to such provision
or
as to any other provision.
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IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first indicated above.
| VOIP, INC. | ||
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By:
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/s/
Xxxxxx Xxxxxx
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Xxxxxx
Xxxxxx
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Its:
Chief Accounting Officer
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| CROSS COUNTRY CAPITAL PARTNERS, L.P. | ||
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By:
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/s/
Xxxxxx Xxxxx
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Xxxxxx
Xxxxx
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Its:
General Partner
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