Exhibit 10.3
EXCHANGE AGREEMENT
This Exchange Agreement (this "Agreement") is entered into as of May 31,
2005, by and among YTMJ, LLC, a Delaware limited liability company ("YTMJ"),
Caerus, Inc., a Delaware corporation ("Caerus") and its wholly owned
subsidiaries, Volo Communications, Inc., a Delaware corporation ("Volo"), Caerus
Billing, Inc., a Delaware corporation ("Caerus Billing"), Caerus Networks, Inc.,
a Delaware corporation ("Caerus Networks"; Caerus, Volo, Caerus Billing and
Caerus Networks are hereinafter referred to collectively as the "Borrowers") and
VoIP, Inc., a Delaware corporation ("VoIP"). YTMJ, the Borrowers and VoIP are
referred to collectively herein as the "Parties."
WHEREAS, YTMJ is the holder of a) that certain Subordinated Promissory
Note, dated July 23, 2004, in the principal amount of one-million dollars
($1,000,000.00) ("Note 1") by and among YTMJ and the Borrowers, and b) that
certain Subordinated Promissory Note, dated October 1, 2004, in the principal
amount of eight-hundred and thirty thousand dollars ($830,000.00) by and among
YTMJ and the Borrowers ("Note 2"; Note 1 and Note 2 are collectively, the "YTMJ
Notes");
WHEREAS, YTMJ and the Borrowers have entered into that certain Security
Agreement (the "Security Agreement"), dated November 16, 2004, in order to
secure payment of the indebtedness of the Borrowers to YTMJ under the YTMJ
Notes; and
WHEREAS, Caerus and VoIP intend to enter into that certain Agreement and
Plan of Merger (the "Merger Agreement"), dated May 27, 2005, pursuant to which
Caerus will merge with a wholly owned subsidiary of VoIP and as a condition
thereto, the Parties desire to convert the YTMJ Notes into equity securities
issued by VoIP.
Now, therefore, in consideration of the representations and covenants
contained herein, the Parties agree as follows.
1. At the Effective Time (as defined in the Merger Agreement), YTMJ hereby
agrees to exchange the YTMJ Notes, including the principal amounts of the
YTMJ Notes and the accrued and unpaid interest thereon, in the aggregate
amount of $166,477.80 (the "Interest") into shares of the common stock,
par value $0.001 per share (the "VoIP Shares"). The YTMJ Notes shall be
converted into a number of VoIP shares equal to (i) the sum of (x) the
aggregate principal amounts of the YTMJ Notes plus (y) the Interest,
divided by (ii) $1.23 (the "YTMJ Note Shares,"). YTMJ acknowledges and
agrees that the YTMJ Note Shares will not be registered under the
Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"), will constitute
restricted securities within the meaning of the Securities Act and will
contain restrictive legends reciting prohibitions on the transfer of such
shares to the extent required by the Securities Act and applicable state
law.
2. As a condition to the receipt by YTMJ of the YTMJ Shares, YTMJ shall
deliver the original YTMJ Notes to Caerus for cancellation and shall have
no further rights to receive any amounts due thereunder.
3. Concurrently herewith, VoIP shall enter into a Registration Rights
Agreement with YTMJ, in the form attached hereto as Exhibit A.
4. VoIp hereby grants board observation rights to Xxxxxxx Xxxxx (the
"Observer"). The Obrserver shall be entitled to attend all meetings of the
Board of Directors of VoIP and receive the same information and materials
as the other members of the Board of Directors in connection with such
meetings; provided, however, that the Board of Directors of VoIP, in its
sole discretion, may exclude the Observer from all or part of any meeting
and redact such materials in order to preserve attorney client privilege,
confidential information or trade secrets. The Observer shall be required
to enter into a Confidentiality and Nondisclosure Agreement with VoIP.
5. YTMJ and the Borrowers hereby agree to terminate the Security Agreement
and YTMJ disclaims any and all rights to which it is entitled to
thereunder. YTMJ further agrees to make the necessary filings and to take
any and all actions necessary to terminate its UCC-1 Financing Statements,
and other documents, which perfect YTMJ's Security Interest (as defined in
the Security Agreement) under the Security Agreement.
6. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement may be executed by facsimile
signature.
7. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Florida without giving effect to any choice
or conflict of law provision or rule (whether of the State of Florida or
any other jurisdiction) that would cause the application of laws of any
jurisdictions other than those of the State of Florida.
[Signatures on the following page]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.
YTMJ, LLC
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
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Title: Manager
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VOIP, INC.
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
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Title: CEO
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Borrowers:
CAERUS, INC.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
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Title: President
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VOLO COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
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Title: President
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CAERUS BILLING, INC.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
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Title: President
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CAERUS NETWORKS, INC.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
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Title: President
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EXHIBIT A
