Exhibit 10.1
WQN, INC.
00000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
October 5, 2005
VOIP, Inc.
00000 X.X. 00xx Xxxxxx
Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Re: Accounts
Ladies and Gentlemen:
This letter ("Letter Agreement") confirms our agreement with respect to
certain matters arising out of the Asset Purchase Agreement dated as of August
3, 2005 (the "Agreement"), by and among WQN, Inc., a Delaware corporation (the
"Seller"), VOIP, Inc., a Texas corporation (the "Parent"), and VOIP Acquisition
Company, a Delaware corporation (the "Buyer"). Capitalized terms defined in the
Agreement and not otherwise defined herein are used herein as so defined in the
Agreement.
Pursuant to Section 7.15 of the Agreement, the parties have agreed that
the Accounts Receivable of the Seller conveyed to the Buyer as part of the
Assets at Closing, net of the allowance for doubtful accounts (the "Assumed
Accounts Receivable"), shall equal or exceed the Seller's accounts payable and
accrued liabilities which are assumed by the Buyer hereunder as of the Closing
Date. None of such Assumed Accounts Receivable shall be more than sixty (60)
days past due. If any Assumed Accounts Receivable remain uncollected at the end
of the sixty (60) day period referred to below, (a) the Seller shall reimburse
the Buyer the amount of such Assumed Accounts Receivable, (b) such Assumed
Accounts Receivable will not be deemed part of the transferred Assets, and (c)
Seller shall retain the right to pursue collection thereof.
To the extent that such Assumed Accounts Receivable conveyed to the Buyer
are less than the Seller's accounts payable and accrued liabilities assumed by
the Buyer, the Seller shall pay to the Parent the difference in cash (the
"Excess Amount"). Seller shall pay to Buyer on the Closing Date, an amount
determined by subtracting the estimated Assumed Accounts Receivable amount, a
detail of which is set forth in Exhibit A attached hereto, from the estimated
accounts payable and accrued expenses amount, a detail of which is set forth in
Exhibit B attached hereto, by wire transfer in immediately available funds.
In order to determine the actual amount of Assumed Accounts Receivable and
accounts payable and accrued liabilities assumed at Closing, and to determine
the actual Excess Amount, the parties agree to the following procedure:
As promptly as practicable after the Closing Date (but in any event within
sixty (60) days after the Closing Date), the Seller shall prepare or cause to be
prepared a statement of the Assumed Accounts Receivable and a schedule of aging
thereof and a schedule of the accounts payable and accrued liabilities assumed
by the Buyer, as of immediately prior to the Closing (the "Closing Statement")
and submit the Closing Statement, along with appropriate documentation and work
papers in connection therewith, to the Buyer and Parent for review.
Notwithstanding anything contained herein, Seller shall be permitted to
update the Closing Statement until such time as the Closing Statement and Excess
Amount are deemed final.
The Parent and the Buyer will have a period of up to thirty (30) days
following the delivery of the Closing Statement to notify the Seller of any
disagreements with the Closing Statement. Failure to notify the Seller within
such 30-day period shall be deemed acceptance of the Closing Statement. In the
event the Parent or the Buyer timely notifies the Seller of any disagreement,
the parties agree that each of them will attempt in good faith to resolve such
disagreement. If, within thirty (30) days after delivery to the Seller of the
notification by the Parent or the Buyer of a disagreement, the parties are
unable to resolve such disagreement, the parties shall submit the determination
of such matters to an independent accountant of national standing reasonably
acceptable to the Seller and the Parent (the "Independent Auditor"), whose
decision shall be binding on the parties. The cost of the Independent Auditor
shall be paid by the party whose aggregate estimate of the disputed amount or
amounts, as the case may be, differs most greatly from the determination of the
Independent Auditor.
Upon receipt of the determination of any Excess Amount, payment shall be
made pursuant to Section 7.15 of the Agreement. Any cash payment to be made as a
result of adjustments made in accordance with Section 7.15 shall be paid within
five (5) business days of the determination of such adjustments by wire transfer
of immediately available funds. Any such payment shall be made to such account
or accounts as may be designated by the party entitled to such payment at least
two (2) business days prior to the date that such payment is to be made.
If the Seller is required to pay the Excess Amount, the Parent shall issue
to the Seller (not to the Buyer, as formerly set forth in the Agreement, which
error is hereby corrected) a number of shares of Parent Common Stock equal to
one share of Parent Common Stock for each dollar paid of the Excess Amount, up
to a maximum of 500,000 shares.
If the Seller is required to reimburse the Parent for Assumed Accounts
Receivable not collected within the sixty (60) day period specified, above, the
Parent shall issue to the Seller a number of shares of Parent Common Stock equal
to the amount of such reimbursement divided by two (2).
This Letter Agreement shall be governed by and construed in accordance
with the internal laws of the State of Texas without giving effect to its choice
of law provisions.
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This Letter Agreement may be executed in one or more counterparts, all of
which taken together shall constitute but one and the same instrument. This
Letter Agreement may be executed by facsimile transmission, which facsimile
signatures shall be considered original executed counterparts for purposes of
this paragraph, and each party to this Letter Agreement agrees that it will be
bound by its own facsimile signature and that it accepts the facsimile signature
of each other party to this Letter Agreement.
Please confirm that the foregoing correctly sets forth our agreement by
signing the enclosed copy of this letter and returning it, whereupon this letter
shall constitute a binding agreement as of the date first above written.
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Very truly yours,
WQN, INC.
By: /s/ B. Xxxxxxx Xxxxx
Name: B. Xxxxxxx Xxxxx
Title: CEO
Accepted and Agreed:
VOIP, INC.
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: President & CEO
VOIP ACQUISITION COMPANY
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: President & CEO
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