Exhibit 10.5
CONSENT AND WAIVER AGREEMENT
THIS CONSENT AND WAIVER AGREEMENT (this "Agreement"), dated as of May 31,
2005, is by and among CAERUS, INC. ("Caerus"), VOLO COMMUNICATIONS,
INC.("Volo"), CAERUS NETWORKS, INC., CAERUS BILLING, INC. and the subsidiaries
of Volo that are signatories hereto (collectively, "Borrowers"), and CEDAR
BOULEVARD LEASE FUNDING, LLC (the "Lender").
WHEREAS, the Borrowers and the Lender are parties to that certain
Subordinated Loan and Security Agreement, dated as of June 1, 2004 (as amended,
the "Credit Agreement"), pursuant to which the Borrowers established a credit
facility with the Lender;
WHEREAS, in connection with the Credit Agreement, the Borrowers issued to
Lender a Secured Subordinate Promissory Note in the principal amount of
$7,000,000 (the "Note");
WHEREAS, the Borrowers are in default under the Credit Agreement and the
Note;
WHEREAS, the Borrowers intend to enter into a merger (the "Merger") with
Volo Acquisition Corp., a wholly-owned subsidiary of VoIP, Inc. ("VoIP"); and
WHEREAS, it is a condition to the completion of the Merger that the Lender
consent to certain matters and waives certain rights and defaults.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties to this Agreement
hereby agree as follows:
1. Amendments to Credit Agreement. The Credit is hereby amended as
follows:
(a) The definition of "Loan Documents" in Section 1.01 of the Credit is
amended to include that certain Guaranty and that certain Security Agreement,
each dated as of May 31, 2005 by VoIP, Inc., eGlobalphone, VoIP Solutions, Inc.,
DTNet Technologies and VoIP Americas and Lender.
(b) A new Section 9.01(o) is hereby added as follows:
"(o) A default shall exist under any other agreement with Lender or
any of Lender's affiliates."
(c) Sections 2.01 (f), 2.03 (d) and 6.01 (j) are hereby deleted.
(d) The Note and Section 2.01(e) is hereby amended such that the payment
due on June 1, 2005 shall equal the accrued but unpaid interest through May 31,
2005, in the amount of $53,446.
(e) The Note and Section 2.01(e) is hereby amended such that the payment
due on July 1, 2005 and each subsequent payment until the Maturity Date shall
equal either:
(i) If between now and July 1, 2005, VoIP has consummated any debt or
equity financing of $4,000,000 or more in aggregate:
A. commencing with the payment due on July 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 deferred principal in the
amount of $180,729.36 resulting from the interest only period
in June 2005 also being payable at the Maturity Date, together
with any accrued but unpaid interest on such principal.
(ii) If between now and July 1, 2005, VoIP has not consummated any debt
or equity financing of $4,000,000 or more in aggregate:
A. the payment due on July 1, 2005 shall equal the accrued but
unpaid interest through June 30, 2005, in the amount of
$53,446, and
B. commencing with the payment due on August 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 deferred principal in the
amount of $361,458.72 resulting from the interest only periods
in June and July 2005 also being payable at the Maturity Date,
together with any accrued but unpaid interest on such
principal.
(f) In addition to any other rights that Lender may have to purchase capital
stock of VoIP or any Borrower, as additional consideration for Lender's
consent to the Merger and Lender's agreement to amend the Loan Agreement
as provided herein, Lender shall have the right to purchase from VoIP, at
the exercise price per share equal to $1.18 (as adjusted pursuant to the
terms of the Warrant to be issued by VoIP evidencing such right):
(i) 100,000 shares of VoIP common stock; VoIP shall promptly, and in no
event more than ten (10) days after the date hereof, deliver to
Lender a Warrant duly executed by VoIP evidencing such rights on
substantially the same terms as set forth in those certain Warrant
Agreements between Lender and Caerus;
(ii) If between now and July 1, 2005, VoIP has not consummated any debt
or equity financing of $4,000,000 or more in aggregate, an
additional 100,000 shares of VoIP common stock; VoIP shall promptly,
and in no event more than ten (10) days after the date hereof,
deliver to Lender a Warrant duly executed by VoIP evidencing such
rights, condition on the occurrence of said debt or equity financing
and on substantially the same terms as set forth in those certain
Warrant Agreements between Lender and Caerus.
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2. Conditions Precedent. This Agreement shall not be effective unless and
until each of the following conditions precedent are either satisfied or waived
in writing by Lender (the "Closing Date"):
(a) The Merger shall be consummated substantially on the terms set
forth in that certain Agreement and Plan of Merger, between VoIP and Caerus,
dated as of May 31, 2005.
(b) VoIP and its subsidiaries shall enter into and deliver a
Guaranty Agreement (the "Guaranty Agreement"), in form acceptable to Lender in
its sole and absolute discretion, guarantying payment and performance of all of
the Borrowers' obligations under the Credit Agreement and each of the other Loan
Agreements (as defined in the Credit Agreement).
(c) VoIP and its subsidiaries shall enter into and deliver a
Security Agreement (the "Security Agreement"), in form acceptable to Lender in
its sole and absolute discretion, granting to Lender a security interest in all
of its personal property as security for VoIP's obligations under the Guaranty
Agreement. Lender shall subordinate its Liens in the personal property of VoIP
and its subsidiaries, other than the Borrowers, to the Liens in favor of any
future Senior Creditor to the extent such Liens secure Senior Debt . For
purposes of this Agreement (i) "Senior Creditor" shall mean a bank, insurance
company, pension fund, or accredited investor, or a syndicate of such
institutional lenders that provides Senior Debt financing to VoIP and its
subsidiaries; provided, that Senior Creditor shall not include any officer,
director, or insider of VoIP or any of its subsidiaries, or any affiliate of the
foregoing Persons except upon the express written consent of Lender, (ii)
"Senior Debt" shall mean any and all indebtedness and obligations for borrowed
money (including principal, premium (if any), interest, fees, charges, expenses,
costs, professional fees and expenses, and reimbursement obligations) at any
time owing by VoIP to Senior Creditor under the Senior Loan Documents, including
such amounts as may accrue or be incurred before or after default or workout or
the commencement of any liquidation, dissolution, bankruptcy, receivership or
reorganization by or against Borrower; provided, that Senior Debt shall not
include debt exceeding five million and No/100 Dollars ($5,000,000.00)
outstanding at any one time, and (iii) "Senior Loan Documents" means a loan
agreement between Borrower and Senior Creditor and any other agreement, security
agreement, document, promissory note, UCC financing statement, or instrument
executed by Borrower in favor of Senior Creditor pursuant to or in connection
with the Senior Debt, as the same may from time to time be amended, modified,
supplemented, extended, renewed, restated or replaced.
(d) VoIP and its subsidiaries shall execute, or cause to be
executed, and deliver to Lender any and all instruments or documents necessary
or desirable to give effect to the Guaranty Agreement and the Security Agreement
or to perfect Lender's security interest in any collateral under the Security
Agreement, including specifically all financing statements, control agreements,
motor vehicle titles with Lender's lien noted thereon, landlord waivers,
mortgagee waivers and subordination agreements and the delivery to Lender of
stock certificates evidencing any securities owned by VoIP.
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(e) The Closing Date shall occur on or before June 3, 2005.
3. Consent and Waiver of Rights. The Lender hereby (a) consents to the
Merger and waives Section 7.01(f) of the Credit Agreement in connection with the
Merger; and (b) waives the existing Events of Default under the Credit Agreement
identified on Exhibit A hereto (the "Existing Defaults"). Lender acknowledges
that, other than the Existing Defaults, it is not aware of the existence of any
other Default or Event of Default existing as of the date hereof.
4. No Further Waiver. Other than with respect to the Existing Defaults,
Lender has not waived and is not by this Agreement waiving, any Events of
Default which may exist or be continuing as of the date hereof or any Events of
Default which may occur after the date hereof (whether the same or similar to
the Existing Defaults or otherwise). Other than with respect to Existing
Defaults, Lender reserves the right, in its discretion, to exercise any or all
of its rights and remedies under the Credit Agreement or any of the other Loan
Documents (as defined in the Credit Agreement) as a result of any Events of
Default that may be continuing as of the date hereof or any Event of Default
that may occur after the date hereof, and Lender has not waived any of such
rights or remedies, and nothing in this Agreement, and no delay on its part in
exercising any such rights or remedies, should be construed as a waiver of any
such rights or remedies.
5. Lender's Subordination Rights. To the extent that the Lender has rights
senior to the holders of any other indebtedness of the Borrowers, whether by
contract, at law or in equity, the Lender hereby covenants and agrees that,
notwithstanding the repayment in full of all or a part of the Note, it will not
release or transfer its right to maintain seniority over any such other
indebtedness.
6. Notices. All notices and communications to be given or otherwise made
to any party to this Agreement shall be deemed to be sufficient if contained in
a written instrument delivered in person or by telecopier or duly sent by first
class registered or certified mail, return receipt requested, postage prepaid,
or by overnight courier, addressed to such party at the address set forth below:
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(a) if to the Borrowers, to:
Caerus, Inc.
000 Xxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxx Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxx
with a copy to:
Pillsbury Winthrop
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
and,
Xxxxxxx Xxxxx, LLP
Attn: Xxxxxx X. Xxxxx
0000 Xxxx Xx., Xxxxx 0000
Xxxxxx, XX 00000
(b) if to the Lender, to:
Cedar Boulevard Lease Funding, LLC
00 Xxxxx Xxxx Xxxxxx, Xxxxx 0
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxx
(c) with a copy to:
Winston & Xxxxxx LLP
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx
or to such other address as the party to whom notice is to be given may have
furnished to the other parties hereto in writing in accordance herewith.
7. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and the respective successors and permitted
assigns of the parties hereto.
8. Entire Agreement. This Agreement and the other writings referred to
herein contain the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous arrangements
or understandings with respect thereto.
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9. Further Assurances. The Lender agrees to execute and deliver such
additional documents as may be reasonably requested by the Borrowers to effect
or more fully reflect the transactions contemplated by this Agreement.
10. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
11. Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to contracts made
and to be performed wholly therein (without reference to any principles of
conflicts of laws).
13. Warrants. Upon the Closing of the Merger, the Lender's warrants to
acquire $2,026,675 of Caerus' preferred stock shall be deemed to be exercised
for a net of 734,862 shares of Series A Preferred Stock, which will be exchanged
for 764,991 shares of the unregistered common stock of VoIP, and such shares
will not be subject to the Escrow Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have entered into this Agreement to be
effective as of the date first above written.
LENDER:
CEDAR BOULEVARD LEASE FUNDING LLC,
a Delaware limited liability company
By: /s/ Xxxxxxxxxxx Xxxxxxxx
-----------------------------
Name: Xxxxxxxxxxx Xxxxxxxx
--------------------------
Title: Chief Credit Officer
-------------------------
BORROWERS:
CAERUS, INC., VOLO COMMUNICATIONS, INC.,
a Delaware corporation a Delaware corporation
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.,
a Delaware corporation a Delaware corporation
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.,
a Delaware corporation a Delaware corporation
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
-------------------------------------------------- ------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
Signature Page 1 of 4
VOLO COMMUNICATIONS OF COLORADO, INC., a Delaware corporation VOLO COMMUNICATIONS OF CONNECTICUT, INC., a Delaware
corporation
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., a Delaware corporation VOLO COMMUNICATIONS OF FLORIDA, INC., d/b/a Volo
Communications Group of Florida, Inc., a Delaware
corporation
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., a Delaware corporation VOLO COMMUNICATIONS OF IDAHO, INC., a Delaware
corporation
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., a Delaware corporation VOLO COMMUNICATIONS OF INDIANA, INC., a Delaware
corporation
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., a Delaware corporation VOLO COMMUNICATIONS OF MASSACHUSETTS, INC., a Delaware
corporation
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
-------------------------------------------------- ------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
Signature Page 2 of 4
VOLO COMMUNICATIONS OF MICHIGAN, INC., a Delaware corporation VOLO COMMUNICATIONS OF NEVADA, INC., a Delaware
corporation
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, INC., a Delaware VOLO COMMUNICATIONS OF NEW JERSEY, INC., a Delaware
corporation corporation
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., a Delaware corporation VOLO COMMUNICATIONS OF NORTH CAROLINA, INC., a Delaware
corporation
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., a Delaware corporation VOLO COMMUNICATIONS OF PENNSYLVANIA, INC., a Delaware
corporation
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, INC., a Delaware VOLO COMMUNICATIONS OF TEXAS, INC., a Delaware
corporation corporation
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
-------------------------------------------------- ------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
Signature Page 3 of 4
VOLO COMMUNICATIONS OF VERMONT, INC., a Delaware corporation VOLO COMMUNICATIONS OF VIRGINIA, INC., a Delaware
corporation
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 WASHINGTON, INC., a Delaware corporation VOLO COMMUNICATIONS OF WISCONSIN, INC., a Delaware
corporation
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 SOUTH CAROLINA, INC., a Delaware
corporation
By: /s/ Xxxxx X. Xxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
Signature Page 4 of 4
ACKNOWLEDGEMENT AND AGREEMENT
VOIP, INC. a Texas corporation ("VoIP"), EGLOBALPHONE, INC. a Florida
corporation, VOIP SOLUTIONS, INC., a Florida corporation, DTNET TECHNOLOGIES,
INC. a Florida corporation, and VOIP AMERICAS, INC. a Florida corporation, each
acknowledge and consent to the each of the terms of this Agreement and VoIP also
agrees to be bound by and to deliver the warrants pursuant to Section 1(g)
hereof.
VOIP, INC. a Texas corporation EGLOBALPHONE, INC. a Florida corporation
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx Name: Xxxxxx Xxxxxxx
Title: Chief Executive Officer Title: Chief Executive Officer
VOIP SOLUTIONS, INC., a Florida corporation DTNET TECHNOLOGIES, INC. a Florida corporation
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
----------------------------------------- ------------------------
Name: Xxxxxx Xxxxxxx Name: Xxxxxx Xxxxxxx
--------------------------------------- ----------------------
Title: Chief Executive Officer Title: Chief Executive Officer
-------------------------------------- ------------------------
VOIP AMERICAS, INC. a Florida corporation
By: /s/ Xxxxxx Xxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxx
------------------------
Title: Chief Executive Officer
------------------------
Signature Page 5 of 5
EXHIBIT A
TO WAIVER AND CONSENT AGREEMENT
1. Borrowers' failure to deliver audited financial statements for fiscal year
2004 by March 31, 2005 in violation of Section 4.01(a) of the Credit Agreement.
2. Borrowers' failure to deliver Monthly Compliance Certificates, signed by CEO
and CFO for all months up to and including May, 2005 in violation of Section
6.01(j) of the Credit Agreement.
3. Borrowers' failure to deliver the first or second quarter 2004 reviewed
financial statements in violation Section 6.01(o) of the Credit Agreement.
4. Borrowers have not filed 2003 federal and state income tax returns, nor any
county property tax returns in violation of 6.01(a).
5. Borrowers distributed $140,682 between June 1, 2004 and March 31, 2005 to
Xxxxx Xxxxx in violation Sections 7.01(e) and 7.01(g) of the Credit Agreement.
6. Borrowers' Cash Balance (as defined in the Credit Agreement) is less than
$250,000 in violation of Section 7.01(l) of the Credit Agreement.
7. Borrowers failed to provide Lender with 5-day notice of each of the foregoing
Events of Default in violation of Section 4.01(b)
