(1)
|
Title
of each class of securities to which transaction applies:
|
||
(2)
|
Aggregate
number of securities to which transaction applies:
|
||
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was determined):
|
||
|
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
||
|
|
(5)
|
Total
fee paid:
|
||
|
|
o
|
Fee
paid previously with preliminary materials.
|
||
|
|
(1)
|
Amount
Previously Paid:
|
||
|
|
(2)
|
Form,
Schedule or Registration Statement No.:
|
||
|
|
(3)
|
Filing
Party:
|
||
|
|
(4)
|
Date
Filed:
|
||
|
|
|
|
|
|
|
|
|
By
Order of the Board of Directors
|
|
|
|
|
|
|
|
|
|
|
|
Robert
V. Staats,
|
|
|
|
Secretary
|
SUMMARY
|
|
1
|
|
|
|
INFORMATION
ABOUT SOLICITATION AND VOTING
|
|
1
|
|
|
|
INFORMATION
ABOUT THE ANNUAL MEETING
|
|
1
|
|
|
|
PROPOSAL
NO. ONE: ELECTION OF DIRECTORS
|
|
5
|
|
|
|
CORPORATE
GOVERNANCE AND BOARD OF DIRECTORS' MATTERS
|
|
6
|
|
|
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
|
7
|
|
|
|
MANAGEMENT
|
|
9
|
|
|
|
EXECUTIVE
COMPENSATION
|
|
10
|
|
|
|
TRANSACTIONS
WITH RELATED PERSONS, PROMOTORS AND CERTAIN CONTROL
PERSONS
|
|
15
|
|
|
|
STOCK
PERFORMANCE GRAPH
|
|
16
|
|
|
|
PROPOSAL
NO. TWO: TO APPROVE THE COMPANY'S 2006 EQUITY INCENTIVE
PLAN
|
|
17
|
|
|
|
PROPOSAL
NO. THREE: TO APPROVE THE COMPANY'S AMENDED AND RESTATED
|
|
|
ARTICLES
OF INCORPORATION TO AUTHORIZE 25,000,000 SHARES OF PREFERRED
STOCK
|
|
20
|
|
|
|
PROPOSAL
NO. FOUR: TO APPROVE THE COMPANY'S AMENDED AND RESTATED
|
|
|
ARTICLES
OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
THAT THE COMPANY IS AUTHORIZED TO ISSUE TO 400,000,000 SHARES OF
COMMON STOCK
|
|
32
|
|
|
|
PROPOSAL
NO. FIVE: TO APPROVE THE SELECTION OF BERKOVITS,
|
|
|
LAGO
& COMPANY LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
2006
|
|
37
|
|
|
|
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
|
|
38
|
|
|
|
AVAILABLE
INFORMATION
|
|
38
|
·
|
“FOR”
the election of the four directors to serve for 2007 and until their
successors are elected and
qualified;
|
·
|
“FOR”
the approval of the Company's 2006 Equity Incentive
Plan;
|
·
|
“FOR”
the approval of the Amended and Restated Articles of Incorporation
of the
Company to authorize 25,000,000 shares of preferred stock (which
approval
does not extend to the approval of any issuances of shares of preferred
stock);
|
·
|
“FOR”
the approval of the Amended and Restated Articles of Incorporation
of the
Company to increase the number of shares of common stock that the
Company
is authorized to issue to 400,000,000 shares of common stock (which
approval does not extend to the approval of any issuances of shares
of
common or preferred stock); and
|
·
|
“FOR”
the approval of the selection of Berkovits, Lago & Company, LLP as the
Company's independent auditors for
2006.
|
·
|
The
election of Anthony Cataldo, Gary Post, Stuart Kosh, and Nicholas
A.
Iannuzzi, Jr to the board of directors for 2007 will require an
affirmative vote of the majority of the votes cast in person or by
proxy,
provided that a quorum is present at the annual meeting. Therefore,
an
abstention or withholding of a vote will not be counted for the purpose
of
determining whether the requisite vote has been obtained and will
have no effect on the outcome of the
vote.
|
·
|
The
adoption of the 2006 Equity Incentive Plan will require an affirmative
vote of the majority of the votes cast in person or by proxy, provided
that a quorum is present at the annual meeting. Therefore, an abstention
or withholding of a vote will not be counted for the purpose of
determining whether the requisite vote has been obtained and will
have no effect on the outcome of the
vote.
|
·
|
The
proposal to approve the selection of Berkovits, Lago & Company, LLP as
the Company's independent auditors for 2006 will require the majority
of
the votes cast in person or by proxy, provided that a quorum is present
at
the annual meeting. Therefore, an abstention or withholding of a
vote will
not be counted for the purpose of determining whether the requisite
vote has been obtained and will have no effect on the outcome of the
vote.
|
·
|
The
proposal to approve the Amended and Restated Articles of Incorporation
to
authorize 25,000,000 shares of preferred stock (which approval does
not
extend to the approval of any issuances of shares of preferred stock)
and
the proposal to approve the Amended and Restated Articles of Incorporation
to increase the number of authorized shares of the Company's common
stock
to 400,000,000 shares (which approval does not extend to the approval
of
any issuance of shares of common stock) require the affirmative vote
of at
least a majority of the Company's outstanding shares of Common
Stock. Therefore, any abstentions, “broker non-votes” (shares held by
brokers or nominees as to which they have no discretionary authority
to
vote on a particular matter and have received no instructions from
the
beneficial owners or persons entitled to vote thereon), or other
limited
proxies will have the effect of a vote against the proposals to approve
the Amended and Restated Articles of
Incorporation.
|
Name
|
|
Age
|
|
Position
with Company
|
|
Director
Since
|
|
|
|
|
|
|
|
Anthony
Cataldo
|
|
55
|
|
Chairman
and Chief Executive Officer
|
|
September
2006
|
|
|
|
|
|
|
|
Gary
Post
|
|
58
|
|
Director
|
|
May
2006
|
|
|
|
|
|
|
|
Stuart
Kosh
|
|
50
|
|
Director
|
|
January
2006
|
|
·
|
Each
person known by the Company to own beneficially more than five percent
of
our outstanding common stock;
|
|
·
|
Each
director and prospective director of the
Company;
|
|
·
|
The
Company's Chief Executive Officer and each person who serves as an
executive officer of the Company;
and
|
|
·
|
All
executive officers and directors of the Company as a
group.
|
Name
of Beneficial Owner
|
Shares
of Common Stock Beneficially Owned (1)
|
Ownership
of Common Stock (1,2)
|
|||||
WQN,
Inc. (3)
|
20,949,241
|
18.2
|
%
|
||||
14911
Quorum Drive, Suite 140
|
|||||||
Dallas,
Texas 75240
|
|||||||
Nicholas
Iannuzzi**
|
7,355
|
*
|
|||||
Stuart
Kosh (4)
|
2,009,727
|
2.0
|
%
|
||||
Shawn
Lewis (5)
|
7,035,857
|
6.9
|
%
|
||||
Gary
Post (6)
|
3,300,000
|
3.2
|
%
|
||||
Robert
Staats (7)
|
275,000
|
*
|
|||||
Anthony
Cataldo (5)
|
-
|
*
|
|
||||
All
directors and executive officers as a
|
12,620,584
|
11.9
|
%
|
||||
group
(5 persons) (8)
|
(1)
|
The
Company has issued 99,943,034 shares of common stock; and a total
of
100,000,000 shares are authorized. Additional assumed issuances of
common
stock resulting from the exercise of options and/or warrants and/or
the
conversion of debt are subject to the authorized
limit.
|
(2)
|
Based
upon 99,943,034 shares of common stock issued and outstanding as
of
February 5,
2007.
|
(3)
|
Consists
of 5,787,429 shares of common stock and 15,161,812 shares issuable
upon
conversion of a convertible promissory note. Conversion shares were
calculated by dividing (i) the sum of the note principal of $3,700,000
and
interest at 6% from 1/3/06 through 2/5/07 by (ii) the effective common
share conversion price of $0.26 per
share.
|
(4)
|
Consists
of (a) 1,347,227 shares of common stock; (b) currently exercisable
options
to purchase 156,250 shares of common stock; and (c) warrants to purchase
506,250 shares of common stock.
|
(5)
|
As
previously disclosed, on September 14, 2006, VoIP, Inc. (“the Company”)
entered into employment agreements with Anthony J. Cataldo, the
Company's
Chairman and Chief Executive Officer, and Shawn Lewis, the Company's
Chief
Operating and Technology Officer. These agreements provided for,
among other things, the award of 10,000,000 stock options each
to Messrs.
Cataldo and Lewis upon sufficient underlying shares of common stock
being
authorized and available. The options were to be exercisable to
purchase
10,000,000 shares of the Company's common stock each for Messrs.
Cataldo
and Lewis at an exercise price of $0.01 per share for a period
of five (5)
years. The options were to contain a cashless exercise provision
and cost
free piggyback registration rights with respect to the common stock
underlying the options. Messrs. Cataldo and Lewis were also to
receive
sufficient additional options under the same terms to assure that
they
have the right to exercise options to maintain a minimum of 5%
and 8%
beneficial ownership, respectively, of the Company's issued and
outstanding common stock.
A
number of the Company's current financing agreements contain “favored
nations” provisions that require convertible debt conversion prices and
stock warrant exercise prices to be repriced (reduced) in the event
that,
among other things, options are granted at exercise prices less
than the
Company's quoted common stock market price at grant date. However,
these favored nations repricing provisions are not triggered upon
issuing
employee stock grants. Accordingly, in lieu of the stock options to
be granted to Messrs. Cataldo and Lewis, the Board of Directors on
January 24, 2007 resolved to issue stock grants for 10,000,000
common shares each, subject to sufficient increased shares of common
stock
being authorized and available for issuance, which will require
shareholder approval. The stock grants are to have the same 5%
and 8%
anti-dilution provisions and piggyback registration rights as the
options
were to have.
Accordingly,
these shares are not included with the shares, if any, reported
as
beneficially owned herein.
|
(6)
|
Consists
of (a) 300,000 shares of common stock; and (b) warrants to purchase
3,000,000 shares of common stock.
|
(7)
|
Consists
of warrants to purchase 125,000 shares of common stock and currently
exercisable options to purchase 150,000 shares of common
stock.
|
(8)
|
Represents
the combined beneficial ownership as of
February 5,
2007, of the executive officers and the Company’s
three directors (a total of five
persons).
|
Name
|
|
Age
|
|
Position
with Company
|
|
Dates
|
|
|
|
|
|
|
|
Anthony
Cataldo
|
|
55
|
|
Chairman
and Chief Executive Officer
|
|
September
2006 to present
|
|
|
|
|
|
|
|
Shawn
M. Lewis
|
|
38
|
|
Chief
Operating Officer; Chief Technology Officer
|
|
May
2005 to present
|
|
|
|
|
|
|
|
Robert
V. Staats
|
|
52
|
|
Chief
Accounting Officer
|
|
May
2006 to present
|
· |
reward
performance that drives substantial increases in shareholder value,
as
evidenced through both future operating profits and increased market
price
of our common shares; and
|
· |
attract,
hire and retain well qualified executives given our competitive industry,
startup nature, and risk profile.
|
Name
and
|
Stock
|
Option
|
All
Other
|
|||||||||||||||||||
Principal
Position
|
Year
|
Salary
|
Bonus
|
Awards
|
Awards
(1)
|
Compensation
|
Total
|
|||||||||||||||
Anthony
Cataldo (2)
|
2006
|
$
|
83,333
|
$
|
23,750
|
$
|
-
|
$
|
-
|
$
|
6,000
|
$
|
113,083
|
|||||||||
Chairman
and Chief Executive Officer
|
||||||||||||||||||||||
(Principal
Executive Officer)
|
||||||||||||||||||||||
Shawn
M. Lewis (3)
|
2006
|
214,584
|
64,808
|
1,080,000
|
-
|
35,429
|
1,394,821
|
|||||||||||||||
Chief
Operating Officer;
|
||||||||||||||||||||||
Chief
Technology Officer
|
||||||||||||||||||||||
Robert
V. Staats (4)
|
2006
|
132,597
|
5,692
|
-
|
133,000
|
-
|
271,289
|
|||||||||||||||
Chief
Accounting Officer
|
||||||||||||||||||||||
(Principal
Financial Officer)
|
||||||||||||||||||||||
Gary
Post (5)
|
2006
|
72,668
|
-
|
300,000
|
930,000
|
241,672
|
1,544,340
|
|||||||||||||||
Former
President, Chief Executive
|
||||||||||||||||||||||
Officer
and Chairman (6)
|
||||||||||||||||||||||
Michael
Adler
|
2006
|
60,923
|
-
|
-
|
-
|
-
|
60,923
|
|||||||||||||||
Former
Chairman and Chief
|
||||||||||||||||||||||
Executive
Officer (7)
|
||||||||||||||||||||||
David
Sasnett
|
2006
|
54,375
|
-
|
-
|
-
|
-
|
54,375
|
|||||||||||||||
Former
Chief Financial Officer (8)
|
(1) |
Includes
awards of stock warrants where applicable. Values are computed
in
accordance with Statement of Financial Accounting Standards number
123R.
|
(2) |
Mr.
Cataldo's 2006 salary and bonus represent the contractual monthly
amounts
($20,833 and $5,000, respectively) earned since September 2006,
plus a
discretionary bonus of $3,750. All
Other Compensation represents Mr. Cataldo's monthly vehicle allowance
since September 2006. Mr. Cataldo's employment agreement is effective
through September 2009, and will thereafter automatically renew
for
successive one-year periods unless either party provides a 90-day
notice
of termination. See
Compensation Discussion and Analysis for a description of certain
stock
options and stock grants pertaining to Mr. Cataldo. Since those
stock
options were not granted, they are not reflected in the Summary
Compensation Table.
|
(3) |
Mr.
Lewis' 2006 salary and bonus represent his contractual monthly
amounts
($20,833 and $5,000, respectively, since September 2006) earned,
plus a
discretionary bonus of $4,808. On November 8, 2006, Mr. Lewis
was granted
options to purchase 3,000,000 common shares at $0.36 per share
(closing
market price at the grant date). On November 9, 2006, the Company
settled
Mr. Lewis' claims against the Company for alleged breaches of
his
employment agreement, and for nonregistration of the Company's
common
shares he holds pursuant to the Caerus merger agreement dated
May 31,
2005, for $1,080,000. Also on November 9, 2006, Mr. Lewis exercised
his
options to purchase 3,000,000 common shares, and the $1,080,000
proceeds
were credited toward the settlement of his claims. All Other
Compensation
represents Mr. Lewis' $1,500 monthly vehicle allowance since
July 2006,
plus discretionary expense reimbursement treated as compensation.
Mr.
Lewis' employment agreement is effective through September 2009.
See
Compensation Discussion and Analysis for a description of certain
stock
options and stock grants pertaining to Mr. Lewis. Since those
stock
options were not granted, they are not reflected in the Summary
Compensation Table.
|
(4) |
Mr.
Staats' 2006 salary ($11,667 per month at December 31, 2006,
increasing to
$12,917 in January 2007) represents his contractual monthly amounts
earned. His bonus amount was discretionary. Mr. Staats' employment
agreement also provides for the award of 100,000 options and
100,000
warrants, subject to approval by the Company's Board of Directors.
The
options and warrants will each be exercisable to purchase 100,000
shares
of the Company's common stock at $1.02 a share until May 2011,
and were
valued at a combined $133,000 in May 2006. Mr. Staats' employment
agreement is effective through May 2009, and will thereafter
automatically
renew for successive one-year periods unless terminated at least
90 days
prior to the expiration of each current existing twelve-month
period. Mr.
Staats may terminate his employment agreement upon 30 days' prior
notice.
|
(5) |
Mr.
Post's 2006 salary represents his contractual monthly amount
earned from
May to September 2006. Subject to approval by the Company's board
of
directors, Mr. Post's employment agreement provides for the issuance
of
300,000 common shares, then valued at $300,000. Mr. Post's employment
agreement also provided for the award of options and warrants
to purchase
a total of 3,000,000 shares of the Company's common stock at
$1.00 a share
until May 2011. On December 12, 2006 these options and warrants
were
converted to warrants to purchase 3,000,000 of the Company's
common shares
at $0.475 per share, exercisable until December 2016. These new
warrants
were valued at $930,000. Mr. Post's employment agreement also
provides for
certain post-employment compensation totaling approximately $241,672,
listed under All Other
Compensation.
|
(6) |
Mr.
Post resigned his position as President, Chief Executive Officer
and
Chairman in September, 2006.
|
(7) |
Mr.
Adler resigned his position as Chairman and Chief Executive Officer
in May
2006.
|
(8) |
Mr.
Sasnett resigned his position as Chief Financial Officer in May
2006.
|
Option
and Warrant Awards
|
|||||||||||||
Number
of Securities Underlying Unexercised Options and Warrants
|
Option
or Warrant Exercise Price
|
Option
or Warrant Expiration Date
|
|||||||||||
Exercisable
|
Unexercisable
|
||||||||||||
Name
and
|
|||||||||||||
Principal
Position
|
|||||||||||||
Anthony
Cataldo (1)
|
|
|
|
|
|||||||||
Chairman
and Chief Executive Officer
|
|
|
|
||||||||||
(Principal
Executive Officer)
|
|||||||||||||
Shawn
M. Lewis (2)
|
|
|
|
|
|
||||||||
Chief
Operating Officer;
|
|||||||||||||
Chief
Technology Officer
|
|||||||||||||
Robert
V. Staats
|
190,625
|
59,375(9
|
)
|
$
|
1.02
|
5/17/11
|
|||||||
Chief
Accounting Officer
|
62,500
|
38,500(9
|
)
|
$
|
1.12
|
6/3/10
|
|||||||
Gary
Post (3)
|
3,000,000
|
-
|
$
|
0.475
|
12/12/16
|
||||||||
Former
President, Chief Executive
|
|||||||||||||
Officer
and Chairman (6)
|
|||||||||||||
Michael
Adler (4)
|
500,000
|
-
|
$
|
1.56
|
10/18/10
|
||||||||
Former
Chairman and Chief
|
500,000
|
-
|
$
|
1.50
|
10/18/10
|
||||||||
Executive
Officer (7)
|
|||||||||||||
David
Sasnett
(5)
|
450,000
|
$
|
1.53
|
10/18/10
|
|||||||||
Former
Chief Financial Officer (8)
|
(1) |
See
Compensation Discussion and Analysis for a description of certain
stock
options and stock grants pertaining to Mr. Cataldo. Since those
stock
options were not granted, they are not reflected in the Outstanding
Equity
Awards at Fiscal Year-End
table.
|
(2) |
See
Compensation Discussion and Analysis for a description of certain
stock
options and stock grants pertaining to Mr. Lewis. Since those
stock
options were never granted, they are not reflected in the Outstanding
Equity Awards at Fiscal Year-End
table.
|
(3) |
Mr.
Post's employment agreement provided for the award of options and
warrants
to purchase a total of 3,000,000 shares of the Company's common
stock at
$1.00 a share until May 2011. On December 12, 2006 these options
and
warrants were converted to warrants to purchase 3,000,000 of the
Company's
common shares at $0.475 per share, exercisable until December
2016.
|
(4) |
Mr.
Adler's options and warrants were issued in 2005 in conjunction
with his
employment agreement.
|
(5) |
Mr.
Sasnett's's warrants were issued in 2005 in conjunction with his
employment agreement.
|
(6) |
Mr.
Post resigned his position as President, Chief Executive Officer
and
Chairman in September, 2006.
|
(7) |
Mr.
Adler resigned his position as Chairman and Chief Executive Officer
in
May, 2006.
|
(8) |
Mr.
Sasnett resigned his position as Chief Financial Officer in May,
2006.
|
(9) |
Mr.
Staats' remaining 59,375 and 38,500 options vest ratably until
May 2009
and June 2008, respectively.
|
Option
Awards (1)
|
Stock
Awards
|
||||||||||||
Number
of Shares Acquired on Exercise
|
Value
Realized on Exercise
|
Number
of Shares Acquired on Vesting
|
Value
Realized on Vesting
|
||||||||||
Name
and
|
|||||||||||||
Principal
Position
|
|||||||||||||
Anthony
Cataldo
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||||
Chairman
and Chief Executive Officer
|
|||||||||||||
(Principal
Executive Officer)
|
|||||||||||||
Shawn
M. Lewis (2)
|
3,000,000
|
$
|
-
|
-
|
$
|
-
|
|||||||
Chief
Operating Officer;
|
|||||||||||||
Chief
Technology Officer
|
|||||||||||||
Robert
V. Staats
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||||
Chief
Accounting Officer
|
|||||||||||||
Gary
Post (3)
|
-
|
$
|
-
|
300,000
|
$
|
300,000
|
|||||||
Former
President, Chief Executive
|
|||||||||||||
Officer
and Chairman (4)
|
|||||||||||||
Michael
Adler
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||||
Former
Chairman and Chief
|
|||||||||||||
Executive
Officer (5)
|
|||||||||||||
David
Sasnett
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||||
Former
Chief Financial Officer (6)
|
(1)
|
Includes
awards of stock warrants, where applicable. Values are computed
in
accordance with Statement of Financial Accounting Standards No.
123R.
|
||||||||
(2)
|
On
November 8, 2006, Mr. Lewis was granted options to purchase 3,000,000
common shares at $0.36 per share (closing market price at the grant
date).
On November 9, 2006, the Company settled Mr. Lewis' claims against
the
Company for alleged breaches of his employment agreement, and for
nonregistration of the Company's common shares he holds pursuant
to the
Caerus merger agreement dated May 31, 2005, for $1,080,000. Also
on
November 9, 2006, Mr. Lewis exercised his options to purchase 3,000,000
common shares, and the $1,080,000 proceeds were credited toward
the
settlement of his claims.
|
||||||||
(3)
|
Subject
to approval by the Company's board of directors, Mr. Post's employment
agreement provides for the issuance of 300,000 common shares, then
valued
at $300,000.
|
||||||||
(4)
|
Mr.
Post resigned his position as President, Chief Executive Officer
and
Chairman in September, 2006.
|
||||||||
(5)
|
Mr.
Adler resigned his position as Chairman and Chief Executive Officer
in
May, 2006.
|
||||||||
(6)
|
Mr.
Sasnett resigned his position as Chief Financial Officer in May,
2006.
|
Director
Compensation
|
||||
Stock
Awards
|
||||
Name
of Director
|
||||
Anthony
Cataldo
|
$
|
-
|
||
Gary
Post (1)
|
$
|
105,000
|
||
Stuart
Kosh (1)
|
$
|
105,000
|
(1)
|
On
December 12, 2006 non-employee directors were each awarded 300,000
of the
Company's common shares, subject to sufficient authorized shares
being
approved by shareholders, as annual board member compensation.
The fair
value of the stock awards was based on the Company's closing common
stock
price of $0.35 per share on the grant
date.
|
Name
and Position/Group
|
|
Dollar
Value ($)
|
|
Number
of Units
|
|
|
|
|
|
Anthony
Cataldo
|
|
(1)
(2)
|
|
(1)
(2)
|
|
|
|
|
|
Shawn
M. Lewis
Chief
Technology Officer, Chief Operating Officer
|
|
(1)
(2)
|
|
(1)
(2)
|
|
|
|
|
|
Robert
Staats
Chief
Accounting Officer
|
|
(1)
(2)
|
|
(1)
(2)
|
(1)
|
The
granting of Awards is discretionary, and we cannot now determine
the
number or type of Awards we will grant in the future to our executive
officers. We expect that from time to time, in our discretion, we
will
grant Awards to our executive officers under the 2006 Plan under
such
terms consistent with the plan as we deem appropriate at the time
of those
grants.
|
(2)
|
All
of these options will be granted with an exercise price equal to
the fair
market value of our common stock on the date of
grant.
|
· |
Unlimited
local, long distance and international calling to 50 countries, for
a low
monthly fee;
|
· |
The
ability to use a mobile phone to access WQN, Inc.'s network for high
quality unlimited international
calls;
|
· |
Free
in-network calling;
|
· |
Free
features including Caller-ID, Call-Waiting, Call-Forwarding, 3-Way
Calling, Voice Mail, and more; and
|
· |
A
total calling solution enabling travelers to make and receive phone
calls
from anywhere in the world using a personal computer and high-speed
Internet access, including Wi-Fi
hotspots.
|
· |
Pinless
dialing;
|
· |
Can
be used from registered home, office and mobile
phones;
|
· |
Access
to personal on-line account management tools which enables customers
to
view their call history and purchase information 24 hours a
day;
|
· |
Recharge
their accounts on-line or through our Interactive VoiceResponse System
(IVR);
|
· |
Update,
modify and change their account information including credit card
details;
and
|
· |
Communicate
with customer service representatives by email, live chat or by calling
a
customer service number.
|
· |
No
monthly fees or contracts;
|
· |
International
call forwarding;
|
· |
The
ability to recharge the number on-line at any time;
and
|
· |
Access
to personal on-line account management tools which enables customers
to
view account balance and call history 24 hours a
day.
|
Website
Address
|
|
Website
Description
|
www.wqn.com
|
|
EasyTalk
service and Corporate website
|
www.rocketVOIP.com
|
|
RocketVOIP
service
|
www.my800online.com
|
|
Personal
800 service
|
www.valucomonline.com
|
|
High-end
Indian consumers
|
www.valumaxonline.com
|
|
Indian
market
|
www.card2asia.com
|
|
Indian
market
|
www.supertel.com
|
|
Iranian
market (1)
|
www.metrotelcom.net
|
|
Iranian
market (1)
|
www.wqnwireless.com
|
|
Prepaid
wireless plans
|
www.rocketmobile.net
|
|
International
calling for mobile phone users
|
Years
Ended December 31,
|
Nine
Months Ended September
30,
|
|||||||||||||||||||||
2001
(2)
|
2002
(2)
|
2003
(2)
|
2004
(2)
|
2005
(2)
|
2005
|
2006
|
||||||||||||||||
Revenues
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,020,285
|
$
|
13,878,097
|
$
|
4,337,717
|
$
|
25,220,303
|
||||||||
Gross
profit (loss)
|
-
|
-
|
-
|
265,687
|
(1,196,624
|
)
|
(299,652
|
)
|
136,121
|
|||||||||||||
Operating
expenses
|
-
|
-
|
-
|
5,573,575
|
21,159,717
|
13,297,337
|
25,215,592
|
|||||||||||||||
Loss
from continuing
operations
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(5,307,888
|
)
|
$
|
(23,788,646
|
)
|
$
|
(13,617,347
|
)
|
$
|
(30,343,179
|
)
|
||||
Net
loss
|
$
|
(61,634
|
)
|
$
|
(61,926
|
)
|
$
|
(352,968
|
)
|
$
|
(5,862,120
|
)
|
$
|
(28,313,333
|
)
|
$
|
(13,833,503
|
)
|
$
|
(31,311,440
|
)
|
|
Net
loss per share:
|
||||||||||||||||||||||
Loss
from continuing
operations
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(0.36
|
)
|
$
|
(0.57
|
)
|
$
|
(0.38
|
)
|
$
|
(0.43
|
)
|
||||
Net
loss
|
$
|
(0.04
|
)
|
$
|
(0.04
|
)
|
$
|
(0.20
|
)
|
$
|
(0.40
|
)
|
$
|
(0.67
|
)
|
$
|
(0.39
|
)
|
$
|
(0.45
|
)
|
|
Summary
cash flow data:
|
||||||||||||||||||||||
Net
cash used in operating
activities
|
$
|
-
|
$
|
-
|
$
|
(78,706
|
)
|
$
|
(3,330,574
|
)
|
$
|
(17,301,611
|
)
|
$
|
(8,642,847
|
)
|
$
|
(10,998,391
|
)
|
|||
Net
cash provided by
(used in) investing
activities
|
52,902
|
73,849
|
82,196
|
479,594
|
(4,395,997
|
)
|
(737,585
|
)
|
(104,724
|
)
|
||||||||||||
Net
cash provided by financing
activities
|
-
|
-
|
-
|
3,988,618
|
23,785,216
|
11,478,168
|
8,425,119
|
|||||||||||||||
Balance
sheet data (at
period end) cash
|
1,656
|
9
|
3,499
|
1,141,137
|
3,228,745
|
3,238,873
|
550,749
|
|||||||||||||||
Property
and equipment
|
-
|
-
|
-
|
389,528
|
10,141,872
|
8,309,161
|
7,090,973
|
|||||||||||||||
Goodwill
and other intangible
assets
|
-
|
-
|
-
|
1,713,301
|
38,404,271
|
29,996,814
|
35,894,985
|
|||||||||||||||
Total
assets
|
532,897
|
530,230
|
259,459
|
8,672,548
|
56,244,161
|
43,118,352
|
44,974,923
|
|||||||||||||||
Long
term obligations
|
-
|
-
|
-
|
-
|
245,248
|
776,565
|
236,974
|
|||||||||||||||
Total
liabilities
|
9,711
|
68,970
|
151,167
|
1,027,727
|
27,018,241
|
19,683,913
|
36,902,188
|
|||||||||||||||
Total
shareholders' equity
|
523,186
|
461,260
|
108,292
|
7,644,821
|
29,225,920
|
23,434,439
|
8,072,735
|
|||||||||||||||
Book
value per share
|
$
|
0.34
|
$
|
0.30
|
$
|
0.06
|
$
|
0.32
|
$
|
0.48
|
$
|
0.50
|
$
|
0.11
|
||||||||
Cash
dividends per share (1)
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
(1) |
No
cash dividends have been paid or
declared.
|
(2) |
Operations
relating to Millennia Tea Masters and DTNet Technologies were discontinued
in 2004 and 2006, respectively. Operating results prior to these
events
were reclassified as discontinued
operations
|
Nine
Months Ended
|
||||||||||||||||||||||
Years
Ended December 31,
|
September
30,
|
|||||||||||||||||||||
2001
(2)
|
2002
(2)
|
2003
(2)
|
2004
(2)
|
2005
(2)
|
2005
|
2006
|
||||||||||||||||
Revenues
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,020,285
|
$
|
13,878,097
|
$
|
4,337,717
|
$
|
25,220,303
|
||||||||
Gross
profit (loss)
|
-
|
-
|
-
|
265,687
|
(1,196,624
|
)
|
(299,652
|
)
|
136,121
|
|||||||||||||
Operating
expenses
|
-
|
-
|
-
|
5,573,575
|
21,159,717
|
13,297,337
|
25,215,592
|
|||||||||||||||
Loss
from continuing
operations
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(5,307,888
|
)
|
$
|
(23,788,646
|
)
|
$
|
(13,617,347
|
)
|
$
|
(30,343,179
|
)
|
||||
Net
loss
|
$
|
(61,634
|
)
|
$
|
(61,926
|
)
|
$
|
(352,968
|
)
|
$
|
(5,862,120
|
)
|
$
|
(28,313,333
|
)
|
$
|
(13,833,503
|
)
|
$
|
(31,311,440
|
)
|
|
Net
loss per share:
|
||||||||||||||||||||||
Loss
from continuing
operations
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(0.36
|
)
|
$
|
(0.57
|
)
|
$
|
(0.38
|
)
|
$
|
(0.43
|
)
|
||||
Net
loss
|
$
|
(0.04
|
)
|
$
|
(0.04
|
)
|
$
|
(0.20
|
)
|
$
|
(0.40
|
)
|
$
|
(0.67
|
)
|
$
|
(0.39
|
)
|
$
|
(0.45
|
)
|
|
Summary
cash flow data:
|
||||||||||||||||||||||
Net
cash used in operating
activities
|
$
|
-
|
$
|
-
|
$
|
(78,706
|
)
|
$
|
(3,330,574
|
)
|
$
|
(17,301,611
|
)
|
$
|
(8,642,847
|
)
|
$
|
(10,998,391
|
)
|
|||
Net
cash provided by (used
in) investing activities
|
52,902
|
73,849
|
82,196
|
479,594
|
(4,395,997
|
)
|
(737,585
|
)
|
(104,724
|
)
|
||||||||||||
Net
cash provided by financing
activities
|
-
|
-
|
-
|
3,988,618
|
23,785,216
|
11,478,168
|
8,425,119
|
|||||||||||||||
Balance
Sheet Data (at
period end)
|
||||||||||||||||||||||
Cash
|
1,656
|
9
|
3,499
|
1,141,137
|
3,228,745
|
3,238,873
|
550,749
|
|||||||||||||||
Property
and equipment
|
-
|
-
|
-
|
389,528
|
10,141,872
|
8,309,161
|
7,090,973
|
|||||||||||||||
Goodwill
and other intangible
assets
|
-
|
-
|
-
|
1,713,301
|
38,404,271
|
29,996,814
|
35,894,985
|
|||||||||||||||
Total
assets
|
532,897
|
530,230
|
259,459
|
8,672,548
|
56,244,161
|
43,118,352
|
44,974,923
|
|||||||||||||||
Long
term obligations
|
-
|
-
|
-
|
-
|
245,248
|
776,565
|
236,974
|
|||||||||||||||
Total
liabilities
|
9,711
|
68,970
|
151,167
|
1,027,727
|
27,018,241
|
19,683,913
|
36,902,188
|
|||||||||||||||
Total
shareholders' equity
|
523,186
|
461,260
|
108,292
|
7,644,821
|
29,225,920
|
23,434,439
|
8,072,735
|
|||||||||||||||
Book
value per share
|
$
|
0.34
|
$
|
0.30
|
$
|
0.06
|
$
|
0.32
|
$
|
0.48
|
$
|
0.50
|
$
|
0.11
|
||||||||
Cash
dividends per share (1)
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
(1) |
No
cash dividends have been paid or
declared.
|
(2) |
Operations
relating to Millennia Tea Masters and DTNet Technologies were discontinued
in 2004 and 2006, respectively. Operating results prior to these
events
were reclassified as discontinued
operations
|
Quarter
Ended
|
||||||||||||||||||||||||||||||||||
Mar
31,
|
Jun
30,
|
Sep
30,
|
Dec
31,
|
Mar
31,
|
Jun
30,
|
Sep
30,
|
Dec
31,
|
Mar
31,
|
Jun
30,
|
Sep
30,
|
||||||||||||||||||||||||
2004
|
2004
|
2004
|
2004
|
2005
|
2005
|
2005
|
2005
|
2006
|
2006
|
2006
|
||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||||
Revenues
|
$
|
-
|
$
|
39,945
|
$
|
333,309
|
$
|
647,031
|
$
|
1,006,111
|
$
|
1,589,857
|
$
|
1,776,155
|
$
|
9,505,974
|
$
|
9,994,548
|
$
|
9,003,742
|
$
|
6,222,013
|
||||||||||||
Gross
profit (loss)
|
-
|
11,379
|
(24,615
|
)
|
278,924
|
8,222
|
528,602
|
(922,381
|
)
|
(811,067
|
)
|
(619,033
|
)
|
230,145
|
525,009
|
|||||||||||||||||||
Income
(loss) from continuing operations
|
(22,324
|
)
|
(417,024
|
)
|
(5,499,670
|
)
|
631,130
|
(1,559,518
|
)
|
(3,482,529
|
)
|
(8,833,168
|
)
|
(9,913,430
|
)
|
(13,808,215
|
)
|
(5,169,917
|
)
|
(12,312,707
|
)
|
|||||||||||||
Net
income (loss)
|
(22,324
|
)
|
(408,658
|
)
|
(5,647,736
|
)
|
216,598
|
(1,555,398
|
)
|
(3,536,104
|
)
|
(8,742,001
|
)
|
(14,479,830
|
)
|
(14,754,694
|
)
|
(5,191,699
|
)
|
(12,312,707
|
)
|
|||||||||||||
Per
share:
|
||||||||||||||||||||||||||||||||||
Net
loss from continuing operations
|
$
|
(0.01
|
)
|
$
|
(0.03
|
)
|
$
|
(0.28
|
)
|
$
|
(0.01
|
)
|
$
|
(0.06
|
)
|
$
|
(0.12
|
)
|
$
|
(0.18
|
)
|
$
|
(0.67
|
)
|
$
|
(0.20
|
)
|
$
|
(0.07
|
)
|
$
|
(0.17
|
)
|
|
Net
loss
|
$
|
(0.01
|
)
|
$
|
(0.03
|
)
|
$
|
(0.29
|
)
|
$
|
0.02
|
$
|
(0.06
|
)
|
$
|
(0.12
|
)
|
$
|
(0.18
|
)
|
$
|
(0.67
|
)
|
$
|
(0.22
|
)
|
$
|
(0.07
|
)
|
$
|
(0.17
|
)
|
(1) |
These
quarterly results reflect the merger in May 2005 of Caerus and the
acquisition in October 2005 of the VoIP-related assets of
WQN.
|
(2) |
The
results for the quarter ended September 30, 2004 include expenses
of $4.9
million related to the issuance of stock
warrants.
|
(3) |
Operations
relating to Millennia Tea Masters and DTNet Technologies were discontinued
in 2004 and 2006, respectively. Operating results prior to these
events
were reclassified as discontinued
operations.
|
· |
substantially
enhanced our international VOIP
business;
|
· |
the
Acquisition provided us with an additional 60,000 retail customers
using
various VOIP services that could be integrated onto our VoiceOne
network;
|
· |
the
average margin at the time on the $30 million in revenue from WQN
was 3%,
primarily because of outsourced network cost and the lack of network
ownership, and by moving that traffic to our Voice One(R) proprietary
technology network, we anticipated increasing our
margins.
|
· |
the
customer service personnel that we acquired enable us to provide
additional services to our service
providers.
|
·
|
The
amount due and owing under the Notes shall be reset to the principal
amount due under the Notes in the amount of $8,318,284, together
with
interest due under the Notes in the amount of $207,957.09, and liquidated
damages provided in the Notes in the amount of $374,322.77, for a
total
amount of $9,781,719.
|
·
|
The
plaintiffs agreed to surrender $4,940,000 of the Notes Claims, on
a pro
rata basis, to the Company in exchange for 19,000,000 shares of the
Company’s common stock, par value $0.001 per share, through the issuance
of freely trading securities issued pursuant to Section 3(a)(10)
of the
Act.
|
·
|
Four
of the plaintiffs agreed to surrender their Warrant Claims to the
Company
in exchange for 2,500,000 shares of the Company’s common stock, par value
$0.001 per share, through the issuance of freely trading securities
issued
pursuant to Section 3(a)(10) of the
Act.
|
·
|
The
plaintiffs agreed to retain the balance of their Notes Claims and
the
Company agreed to reset the conversion rate for the remaining balance
under the Notes to $0.26 per share, which shall retain all rights.
|
·
|
The
Company agreed to reduce the exercise price of the un-exercised warrants
purchased by the plaintiffs in connection with the Notes to
$0.475.
|
·
|
The
Company agreed to amend its Certificate of Incorporation and take
all
steps necessary, including obtaining shareholder approval, to authorize
at
least an additional 18,621,997 shares of common stock, as well as
sufficient shares to cover the un-exercised warrants issued to the
plaintiffs under the Notes and hold such shares in reserve for the
plaintiffs’ benefit in connection with the balance by the Investors herein
on or before November 30, 2006.
|
·
|
The
plaintiffs agreed that none of the plaintiffs shall sell more than
its
pro-rata allocation of thirty percent (30%) of the daily trading
volume in
the Company’s common stock, provided however, any Investor may cumulate
the daily trading volume in any given calendar week to compute their
leak-out amount; provided further, that the aforementioned cumulative
trading volume resets every Monday. This Investors’ Leak-Out provision
does not apply to any sale of the Company’s common stock at a price above
$0.75 per share.
|
·
|
With
respect to the balance of the claims retained by the plaintiffs under
the
Notes, the plaintiffs retained all rights granted to them in Notes
that
were not specifically waived in settlement agreement.
|
·
|
The
Company and the plaintiffs agreed to execute a mutual release upon
the
plaintiffs’ receipt of the shares issued pursuant to Section
3(a)(10).
|
·
|
The
amount due and owing under the Notes shall be reset to the principal
amount due under the Notes in the amount of $911,781, together with
interest due under the Notes in the amount of $34,192 and liquidated
damages provided in the Notes in the amount of $41,030, for a total
amount
of $987,003.
|
·
|
The
plaintiffs agreed to surrender $498,460 of the Notes Claims, on
a pro rata
basis, to the Company in exchange for 1,917,153 shares of the Company’s
common stock, par value $0.001 per share, through the issuance
of freely
trading securities issued pursuant to Section 3(a)(10) of the
Act.
|
·
|
The
plaintiffs agreed to retain the balance of their Notes Claims, and
the
Company agreed to reset the conversion rate for the remaining balance
under the Notes to $0.26 per share, which shall retain all
rights.
|
·
|
The
Company agreed to amend its Certificate of Incorporation and take
all
steps necessary, including obtaining shareholder approval, to authorize
at
least an additional 1,879,011 shares of common stock and hold such
shares
in reserve for plaintiffs’ benefit in connection with the balance of
the Notes retained by plaintiffs herein on or before November 30,
2006.
|
·
|
The
plaintiffs agreed that none of the plaintiffs shall sell more
than their
pro-rata allocation of thirty percent (30%) of the daily trading
volume in
the Company’s common stock, provided however, any Investor may cumulate
the daily trading volume in any given calendar week to compute
their
leak-out amount; provided further, that the aforementioned
cumulative
trading volume resets every Monday. This Leak-Out provision
does not apply
to any sale of the Company’s common stock at a price above $0.75 per
share.
|
·
|
With
respect to the balance of the claims retained by the plaintiffs
under the
Notes, the plaintiffs retained all rights granted to them
in Notes that
were not specifically waived in the Settlement
Agreement.
|
·
|
The
Company and the plaintiffs agreed to execute a mutual release
upon the
Investors’ receipt of the shares issued pursuant to Section
3(a)(10).
|
|
Additional
Common Stock Issuable
Upon
Conversion/Exercise 1
|
Additional
Reservation
Requirements 2
|
Current
Obligations
|
Minimim
Total
Additional
|
||||||||||||||||||||||||
Convertible
|
Convertible
|
To
Issue
|
Authorized
|
|||||||||||||||||||||||||
Notes
|
Warrants
|
Options
|
Subtotal
|
Notes
|
Options
|
Subotal
|
Shares
3
|
Shares
Required
|
||||||||||||||||||||
May
2005 private placement
|
-
|
2,207,751
|
-
|
2,207,751
|
-
|
-
|
-
|
1,218,500
|
3,426,251
|
|||||||||||||||||||
July
and October 2005 convertible notes
|
||||||||||||||||||||||||||||
and
warrants
|
1,879,012
|
3,713,542
|
-
|
5,592,554
|
7,523,152
|
-
|
7,523,152
|
5,644,140
|
18,759,846
|
|||||||||||||||||||
January
and February 2006 convertible
|
||||||||||||||||||||||||||||
notes
and warrants
|
32,127,311
|
9,074,104
|
-
|
41,201,415
|
6,425,462
|
-
|
6,425,462
|
-
|
47,626,877
|
|||||||||||||||||||
November
2005 financing agreement
|
-
|
2,225,000
|
-
|
2,225,000
|
-
|
-
|
-
|
-
|
2,225,000
|
|||||||||||||||||||
WQN,
Inc.
|
15,161,812
|
-
|
-
|
15,161,812
|
-
|
-
|
-
|
-
|
15,161,812
|
|||||||||||||||||||
October
2006 convertible notes
|
||||||||||||||||||||||||||||
and
warrants
|
10,378,125
|
10,378,125
|
-
|
20,756,250
|
10,378,125
|
-
|
10,378,125
|
-
|
31,134,375
|
|||||||||||||||||||
January
2007 convertible note
|
7,375,311
|
- | - |
7,375,311
|
- | - | - | - |
7,375,311
|
|||||||||||||||||||
Nov/Dec
2006 & Jan 2007 Bridge Notes
|
-
|
2,411,316
|
-
|
2,411,316
|
-
|
-
|
-
|
-
|
2,411,316
|
|||||||||||||||||||
2004
Stock Option Plan
|
-
|
-
|
-
|
-
|
-
|
4,000,000
|
4,000,000
|
-
|
4,000,000
|
|||||||||||||||||||
2006
Stock Option Plan 4
|
-
|
-
|
-
|
-
|
-
|
10,000,000
|
10,000,000
|
-
|
10,000,000
|
|||||||||||||||||||
Securities
owned by consulting and
|
||||||||||||||||||||||||||||
other
professional firms
|
-
|
4,349,328
|
305,646
|
4,654,974
|
-
|
-
|
-
|
2,170,000
|
6,824,974
|
|||||||||||||||||||
Current
and former officer and employee
|
||||||||||||||||||||||||||||
securities
|
-
|
6,200,000
|
21,562,500
|
27,762,500
|
-
|
-
|
-
|
3,435,218
|
31,197,718
|
|||||||||||||||||||
Securities
owned by or owed to
|
||||||||||||||||||||||||||||
shareholders
|
-
|
3,392,385
|
-
|
3,392,385
|
-
|
-
|
-
|
228,295
|
3,620,680
|
|||||||||||||||||||
Totals
|
66,921,571
|
43,951,551
|
21,868,146
|
132,741,268
|
24,326,739
|
14,000,000
|
38,326,739
|
12,696,153
|
183,764,160
|
1
|
These
columns represent common shares issuable upon the hypothetical
conversion
of outstanding convertible debt, and the exercise of all outstanding
warrants and options.
|
2
|
These
columns represent contractual requirements to reserve specified
or
computed numbers of common shares from our authorized capital,
in addition
to the conversion/exercise amounts referred to in footnote
1.
|
3
|
These
are common shares that are contractually owing to various individuals
or
firms, and are expected to be issued as soon as our authorized
shares are
increased.
|
4
|
The
2006 Stock Option Plan is pending shareholder
approval.
|
|
Calendar
Years
|
|||||||||
|
2005
|
2004
|
2003
|
|||||||
Audit
Fees(1)
|
$
|
120,234
|
$
|
72,620
|
$
|
12,000
|
||||
Audit-Related
Fees(2)
|
-
|
-
|
-
|
|||||||
Tax
Fees(3)
|
-
|
-
|
-
|
|||||||
All
Other Fees(4)
|
-
|
-
|
-
|
(1)
|
Audit
fees
-
These are fees for professional services performed by Berkovits,
Lago & Company, LLP and Tschopp, Whitcomb & Orr for the
audit of the Company's annual financial statements and review of
financial
statements included in the Company's 10-Q filings, and services
that are
normally provided in connection with statutory regulatory filings
or
engagements.
|
(2)
|
Audit-related
fees
-
These are fees for assurance and related services performed by
Berkovits,
Lago & Company, LLP and Tschopp, Whitcomb & Orr that are
reasonably related to the performance of the audit or review of
the
Company's financial statements. These include employee benefit
and
compensation plan audits, attestations that are not required by
statute,
and consulting on financial accounting/reporting
standards.
|
(3)
|
Tax
fees
-
These are fees for professional services performed by Berkovits,
Lago & Company, LLP and Tschopp, Whitcomb & Orr with
respect to tax compliance, tax advice and tax planning. These include
preparation of original and amended tax returns for the Company
and its
consolidated subsidiaries, refund claims, payment planning, tax
audit
assistance, and tax work stemming from “audit-related”
items.
|
|
|
|
|
(4)
|
All
other fees
-
Services that do not meet the above three category descriptions
are not
permissible work performed for the Company by Berkovits, Lago &
Company, LLP and Tschopp, Whitcomb &
Orr.
|
|
|
|
|
|
|
|
By
Order of the Board of Directors
|
|
|
|
|
|
|
|
Robert
V. Staats,
Secretary
|
|
|
|
|
1.
|
PURPOSE
|
2.
|
DEFINITIONS
|
|
(a)
|
“Affiliate”
shall mean (i) any entity that, directly or through one or more
intermediaries, is controlled by the Company; and (ii) any entity
in which
the Company has a significant equity interest, as determined by
the
Committee.
|
|
(b)
|
“Award”
shall mean any Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Performance Award, Dividend Equivalent,
or Other
Stock-Based Award granted under the
Plan.
|
|
(c)
|
“Award
Agreement” shall mean any written agreement, contract, or other instrument
or document evidencing any Award granted under the
Plan.
|
|
(d)
|
“Code”
shall mean the Internal Revenue Code of 1986, as amended from time
to
time.
|
|
(e)
|
“Consultant”
shall mean a consultant or adviser who provides bona fide services
to the
Company or an Affiliate as an independent contractor. Service as
a
consultant shall be considered employment for all purposes of the
Plan,
except for purposes of satisfying the requirements of Incentive
Stock
Options.
|
|
(f)
|
“Committee”
shall mean a committee of the Board of Directors of the Company,
acting in
accordance with the provisions of Section 3 of the Plan, designated
by the
Board to administer the Plan and composed of not less than two
directors,
each of whom is not an employee of the Company or an Affiliate
and meets
the “Non-Employee Director” eligibility requirements imposed by Rule 16b-3
(or its successor) under the Securities Exchange Act of 1934, as
amended,
and each of whom is an outside director for purposes of Section
162(m) of
the Code.
|
|
(g)
|
“Dividend
Equivalent” shall mean any right granted under Section 6(e) of the
Plan.
|
|
(h)
|
“Employee”
shall mean any employee of the Company or of any
Affiliate.
|
|
(i)
|
“Fair
Market Value” shall mean, with respect to any property (including, without
limitation, any Shares or other Securities), the value of such
property
determined by such methods or procedures as shall be established
from time
to time by the Committee.
|
|
(j)
|
“Incentive
Stock Option” shall mean an option granted under Section 6(a) of the Plan
that is intended to meet the requirements of Section 422 of the
Code, or
any successor provision thereto.
|
|
(k)
|
“Non-Qualified
Stock Option” shall mean an option granted under Section 6(a) of the
Plan that is not intended to be an Incentive Stock
Option.
|
|
(l)
|
“Option”
shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
|
|
(m)
|
“Other
Stock-Based Award” shall mean any right granted under Section 6(f) of
the Plan.
|
|
(n)
|
“Outside
Director” shall mean a member of the Board of Directors of the Company
or
any Affiliate who is not an Employee. Service as an Outside Director
shall
be considered employment for all purposes of the Plan, except
for purposes
of satisfying the requirements of Incentive Stock
Options.
|
|
(o)
|
“Participant”
shall mean an Employee, Outside Director or Consultant who receives
an
Award under the Plan.
|
|
(p)
|
“Performance
Award” shall mean any right granted under Section 6(d) of the
Plan.
|
|
(q)
|
“Person”
shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, or government
or
political subdivision thereof.
|
|
(r)
|
“Predecessor
Plan” shall mean the Company's 2005 Stock Option
Plan.
|
|
(s)
|
“Released
Securities” shall mean shares of Restricted Stock as to which all
restrictions imposed by the committee have expired, lapsed, or
been
waived.
|
|
(t)
|
“Restricted
Stock” shall mean any Share granted under Section 6(c) of the
Plan.
|
|
(u)
|
“Restricted
Stock Unit” shall mean any right granted under Section 6(c) of the Plan
that is denominated in Shares.
|
|
(v)
|
“Shares”
shall mean the shares of common stock of the Company, $0.001
par value,
and such other securities or property as may become the subject
of Awards,
or become subject to Awards, pursuant to an adjustment made under
Section
4(b) of the Plan.
|
|
(w)
|
“Stock
Appreciation Right” shall mean any right granted under Section 6(b) of the
Plan.
|
3.
|
ADMINISTRATION
|
4.
|
SHARES
AVAILABLE FOR AWARDS
|
|
(a)
|
SHARES
AVAILABLE. Subject to adjustment as provided in Section 4(b) of the
Plan:
|
|
(i)
|
CALCULATION
OF NUMBER OF SHARES AVAILABLE. The number of Shares available for
granting
Awards under the Plan shall be 10,000,000, of which 5,000,000 shall
become
available immediately and the next 5,000,000 shall be made available
upon
determination by the Board of Directors. Further, if, after the effective
date of the Plan, any Shares covered by an Award granted under the
Plan
(“Award”) or by an award granted under a Predecessor Plan (“award”), or to
which such an Award or award relates, are forfeited, or if an Award
or
award otherwise terminates without the delivery of Shares or of other
consideration, then the Shares covered by such Award or award, or
to which
such Award or award relates, or the number of Shares otherwise counted
against the aggregate number of Shares available under the Plan with
respect to such Award or award, to the extent of any such forfeiture
or
termination, shall again be, or shall become, available for granting
Awards under the Plan.
|
(ii) |
ACCOUNTING
FOR AWARDS. For purposes of this Section
4:
|
|
(A)
|
If
an Award (other than a Dividend Equivalent) is denominated in Shares,
the
number of Shares covered by such Award, or to which such Award relates,
shall be counted on the date of grant of such Award against the aggregate
number of Shares available for granting Awards under the Plan;
and
|
|
(B)
|
Dividend
Equivalents and Awards not denominated in Shares shall not be counted
against the aggregate number of Shares available for granting Awards
under
the Plan.
|
|
(iii)
|
SOURCES
OF SHARES DELIVERABLE UNDER AWARDS. Any shares delivered pursuant
to an
Award may consist, in whole or in part, of authorized and unissued
Shares
or of Treasury Shares.
|
|
(b)
|
ADJUSTMENTS.
In the event that the Committee shall determine that any dividend
or other
distribution (whether in the form of cash, Shares, other securities,
or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
purchase, or exchange of Shares or other securities of the Company,
issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction
or event
affects the Shares such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of
the
benefits or potential benefits intended to be made available under
the
Plan, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and type of Shares (or other
securities or property) which thereafter may be made the subject
of
Awards; (ii) the number and type of Shares (or other securities or
property) subject to outstanding Awards; (iii) the number and type
of
Shares (or other securities or property) specified as the annual
per-participant limitation under Section 6(g)(vi); and (iv) the grant,
purchase, or exercise price with respect to any Award; or, if deemed
appropriate, make provision for a cash payment to the holder of an
outstanding Award; provided, however, in each case, that with respect
to
Awards of Incentive Stock Options no such adjustment shall be authorized
to the extent that such authority would cause the Plan to violate
Section
422(b)(1) of the Code or any successor provision thereto; and provided
that the number of Shares subject to any Award denominated in Shares
shall
always be a whole number.
|
5.
|
ELIGIBILITY
|
6.
|
AWARDS
|
|
(a)
|
OPTIONS.
The Committee is hereby authorized to grant Options with the following
terms and conditions, and with such additional terms and conditions,
in
either case not inconsistent with the provisions of the Plan, as
the
Committee shall determine:
|
|
(i)
|
EXERCISE
PRICE. The exercise price per Share of each Option shall be determined
by
the Committee; provided, however, that such exercise price per Share
under
any Incentive Stock Option shall not be less than 100% (110% in the
case
of a “10-percent shareholder” as such term is used in Section 422(c)(5) of
the Code) of the Fair Market Value of a Share on the date of grant
of such
Incentive Stock Option.
|
|
(ii)
|
OPTION
TERM. The term of each Option shall be fixed by the Committee, provided
that no Incentive Stock Option shall have a term greater than 10
years [5
years in the case of a “10-percent shareholder” as such term is used in
Section 422(c)(5) of the Code].
|
|
(iii)
|
TIME
AND METHOD OF EXERCISE. The Committee shall determine the time or
times at
which an Option may be exercised in whole or in part, and the method
or
methods by which cash or property, or any combination thereof, having
a
Fair Market Value on the exercise date equal to the relevant exercise
price, in which payment of the exercise price with respect thereto
may be
made or deemed to have been made.
|
|
(iv)
|
INCENTIVE
STOCK OPTIONS. The terms of any Incentive Stock Option granted under
the
Plan shall comply in all respects with the provisions of Section
422 of
the Code, or any successor provision thereto, and any regulations
promulgated thereunder.
|
|
(b)
|
STOCK
APPRECIATION RIGHTS. The Committee is hereby authorized to grant
Stock
Appreciation Rights. A Stock Appreciation Right granted under the
Plan
shall confer on the holder thereof a right to receive, upon exercise
thereof, the excess of (i) the Fair Market Value of one Share on
the date
of exercise or, if the Committee shall so determine in the case of
any
such right other than one related to any Incentive Stock Option,
at any
time during a specified period before or after the date of exercise
over
(ii) the grant price of the right as specified by the Committee.
Subject
to the terms of the Plan, the grant price, term, methods of exercise,
methods of settlement, and any other terms and conditions of any
Stock
Appreciation Right shall be as determined by the Committee. The Committee
may impose such conditions or restrictions on the exercise of any
Stock
Appreciation Right as it may deem
appropriate.
|
|
(c)
|
RESTRICTED
STOCK AND RESTRICTED STOCK
UNITS.
|
|
(i)
|
ISSUANCE.
The Committee is hereby authorized to grant Awards of Restricted
Stock and
Restricted Stock Units.
|
|
(ii)
|
RESTRICTIONS.
Shares of Restricted Stock and Restricted Stock Units shall be subject
to
such restrictions as the Committee may impose (including, without
limitation, any limitation on the right to receive any dividend or
other
right or property), which restrictions may lapse separately or in
combination at such time or times, in such installments or otherwise,
as
the Committee may deem appropriate.
|
|
(iii)
|
REGISTRATION.
Any Restricted Stock granted under the Plan may be evidenced in such
manner as the Committee may deem appropriate, including, without
limitation, book-entry registration or issuance of a stock certificate
or
certificates. In the event any stock certificate is issued with respect
to
Shares of Restricted Stock granted under the Plan, such certificate
shall
be registered in the name of the Participant and shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable
to
such Restricted Stock.
|
|
(iv)
|
FORFEITURE.
Except as otherwise determined by the Committee, upon termination
of
employment (as determined under criteria established by the Committee)
for
any reason during the applicable restriction period, all Shares of
Restricted Stock and all Restricted Stock Units still, in either
case,
subject to restriction shall be forfeited and reacquired by the Company;
provided, however, that the Committee may, when it finds that a waiver
would be in the best interests of the Company, waive in whole or
in part
any or all remaining restrictions with respect to Shares of Restricted
Stock or Restricted Stock Units. Unrestricted Shares, evidenced in
such
manner as the Committee shall deem appropriate, shall be delivered
to the
Participant promptly after such Restricted Stock shall become Released
Securities.
|
|
(d)
|
PERFORMANCE
AWARDS. The Committee is hereby authorized to grant Performance Awards.
Subject to the terms of the Plan, a Performance Award granted under
the
Plan (i) may be denominated or payable in cash, Shares (including,
without
limitation, Restricted Stock), other securities, other Awards, or
other
property; and (ii) shall confer on the holder thereof rights valued
as
determined by the Committee and payable to, or exercisable by, the
holder
of the Performance Award, in whole or in part, upon the achievement
of
such performance goals during such performance periods as the Committee
shall establish. Subject to the terms of the Plan and any applicable
Award
Agreement, the performance goals to be achieved during any performance
period, the length of any performance period, the amount of any
Performance Award granted, and the amount of any payment or transfer
to be
made pursuant to any Performance Award shall be determined by the
Committee. The goals established by the Committee shall be based
on any
one, or combination of the following: earnings per share, return
on
equity, return on assets, total shareholder return, net operating
income,
cash flow, revenue, economic value added, increase in Share price
or cash
flow return on investment, or any other measure the Committee deems
appropriate. Partial achievement of the goal(s) may result in a payment
or
vesting corresponding to the degree of
achievement.
|
|
(e)
|
DIVIDEND
EQUIVALENTS. The Committee is hereby authorized to grant Awards under
which the holders thereof shall be entitled to receive payments equivalent
to dividends or interest with respect to a number of Shares determined
by
the Committee, and the Committee may provide that such amounts (if
any)
shall be deemed to have been reinvested in additional Shares or otherwise
reinvested. Subject to the terms of the Plan, such Awards may have
such
terms and conditions as determined by the
Committee.
|
|
(f)
|
OTHER
STOCK-BASED AWARDS. The Committee is hereby authorized to grant such
other
Awards that are denominated or payable in, valued in whole or in
part by
reference to, or otherwise based on or related to, Shares (including,
without limitation, securities convertible into Shares), as are deemed
by
the Committee to be consistent with the purposes of the Plan; provided,
however, that such grants must comply with applicable law. Subject
to the
terms of the Plan, the Committee shall determine the terms and conditions
of such Awards.
|
|
(g)
|
GENERAL.
|
|
(i)
|
NO
CASH CONSIDERATION FOR AWARDS. Awards shall be granted for no cash
consideration or for such minimal cash consideration as may be required
by
applicable law.
|
|
(ii)
|
AWARDS
MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, in the discretion
of
the Committee, be granted either alone or in addition to, in tandem
with,
or in substitution for any other Award or any award granted under
any
other plan of the Company or any Affiliate. Awards granted in addition
to
or in tandem with other Awards, or in addition to or in tandem with
awards
granted under any other plan of the Company or any Affiliate, may
be
granted either at the same time or at a different time from the grant
of
such other Awards or awards.
|
|
(iii)
|
FORMS
OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan and of
any
applicable Award Agreement, payments or transfers to be made by the
Company or an Affiliate upon the grant, exercise, or payment of an
Award
may be made in such form or forms as the Committee shall determine,
including, without limitation, cash, Shares, other securities, other
Awards, or other property, or any combination thereof, and may be
made in
a single payment or transfer, in installments, or on a deferred basis,
in
each case in accordance with rules and procedures established by
the
Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents with respect to installment or deferred
payments.
|
|
(iv)
|
LIMITS
ON TRANSFER OF AWARDS. No Award (other than Released Securities)
and no
right under any such Award shall be assignable, alienable, saleable,
or
transferable by a Participant otherwise than by Will or by the laws
of
descent and distribution; provided, however, that, if so determined
by the
Committee, a Participant may, in the manner established by the Committee,
a) designate a beneficiary or beneficiaries to exercise the rights of
the Participant, and to receive any property distributable, with
respect
to any Award upon the death of the Participant; or b) transfer any
Award
other than an Incentive Stock Option for bona fide estate planning
purposes. Each Award, and each right under any Award, shall be
exercisable, during the Participant's lifetime, only by the Participant,
a
permitted transferee or, if permissible under applicable law, by
the
Participant's guardian or legal representative. No Award (other than
Released Securities), and no right under any such Award, may be pledged,
alienated, attached, or otherwise encumbered, and any purported pledge,
alienation, attachment, or encumbrance thereof shall be void and
unenforceable against the Company or any
Affiliate.
|
|
(v)
|
TERM
OF AWARDS. The term of each Award shall be for such period as may
be
determined by the Committee; provided, however, that in no event
shall the
term of any Incentive Stock Option exceed a period of ten years from
the
date of its grant.
|
|
(vi)
|
SHARE
CERTIFICATES. All certificates for Shares or other securities delivered
under the Plan pursuant to any Award or the exercise thereof shall
be
subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules, regulations,
and
other requirements of the Securities and Exchange Commission, any
stock
exchange upon which such Shares or other securities are then listed,
and
any applicable federal or state securities laws; and the Committee
may
cause a legend or legends to be put on any such certificates to make
appropriate reference to such
restrictions.
|
7.
|
AMENDMENT
AND TERMINATION
|
|
(a)
|
AMENDMENTS
TO THE PLAN. The Board of Directors of the Company may amend, alter,
suspend, discontinue, or terminate the Plan, including, without
limitation, any amendment, alteration, suspension, discontinuation,
or
termination that would impair the rights of any Participant, or any
other
holder or beneficiary of any Award theretofore granted, without the
consent of any share owner, Participant, other holder or beneficiary
of an
Award, or other Person.
|
|
(b)
|
AMENDMENTS
TO AWARDS. The Committee may waive any conditions or rights under,
amend
any terms of, or amend, alter, suspend, discontinue, or terminate,
any
Awards theretofore granted, prospectively or retroactively, without
the
consent of any Participant, other holder or beneficiary of an
Award.
|
|
(c)
|
ADJUSTMENTS
OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR NONRECURRING
EVENTS.
Except as provided in the following sentence, the Committee shall
be
authorized to make adjustments in the terms and conditions of, and
the
criteria included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, the events described in Section
4(b) hereof) affecting the Company, any Affiliate, or the financial
statements of the Company or any Affiliate, or in recognition of
changes
in applicable laws, regulations, or accounting principles, whenever
the
Committee determines that such adjustments are appropriate in order
to
prevent dilution or enlargement of the benefits or potential benefits
to
be made available under the Plan. In the case of any Award that is
intended to qualify as performance-based compensation for purposes
of
Section 162(m) of the Code, the Committee shall not have authority
to
adjust the Award in any manner that would cause the Award to fail
to meet
the requirements of Section 162(m).
|
|
(d)
|
CORRECTION
OF DEFECTS, OMISSIONS, AND INCONSISTENCIES. The Committee may correct
any
defect, supply any omission, or reconcile any inconsistency in the
Plan or
any Award in the manner and to the extent it shall deem desirable
to carry
the Plan into effect.
|
8. |
GENERAL
PROVISIONS
|
|
(a)
|
NO
RIGHTS TO AWARDS. No Employee, Participant or other Person shall
have any
claim to be granted any Award under the Plan, and there is no obligation
for uniformity of treatment of Employees, Outside Directors, Consultants,
other holders or beneficiaries of Awards under the Plan. The terms
and
conditions of Awards need not be the same with respect to each
recipient.
|
|
(b)
|
DELEGATION.
The Committee may delegate to one or more officers or managers of
the
Company or any Affiliate, or a committee of such officers or managers,
the
authority, subject to such terms and limitations as the Committee
shall
determine, to grant Awards to, or to cancel, modify, waive rights
with
respect to, alter, discontinue, suspend, or terminate Awards held
by,
Employees, Consultants, or other holders or beneficiaries of Awards
under
the Plan who are not officers or directors of the Company for purposes
of
Section 16 of the Securities Exchange Act of 1934, as amended, and
who
also are not “covered employees” for purposes of Section 162(m) of the
Code.
|
|
(c)
|
WITHHOLDING.
The Company or any Affiliate shall be authorized to withhold from
any
Award granted or any payment due or transfer made under any Award
or under
the Plan the amount (in cash, Shares, other securities, other Awards,
or
other property) of withholding taxes due with respect to an Award,
its
exercise, or any payment or transfer under such Award or under the
Plan
and to take such other action as may be necessary in the opinion
of the
Company or Affiliate to satisfy all obligations for the payment of
such
taxes.
|
|
(d)
|
NO
LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the
Plan
shall prevent the Company or any Affiliate from adopting or continuing
in
effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only
in
specific cases.
|
|
(e)
|
NO
RIGHT TO EMPLOYMENT. The grant of an Award shall not be construed
as
giving a Participant the right to remain an Employee, director or
Consultant of the Company or any Affiliate. Further, the Company
or an
Affiliate may at any time terminate the service of any Employee,
director
or Consultant, free from any liability, or any claim under the Plan,
unless otherwise expressly provided in the Plan or in any Award
Agreement.
|
|
(f)
|
GOVERNING
LAW. The validity, construction, and effect of the Plan and any rules
and
regulations relating to the Plan shall be determined in accordance
with
the laws of the State of Texas and applicable federal
law.
|
|
(g)
|
SEVERABILITY.
If any provision of the Plan or any Award is or becomes or is deemed
to be
invalid, illegal, or unenforceable in any jurisdiction, or as to
any
Person or Award, or would disqualify the Plan or any Award under
any law
deemed applicable by the Committee, such provision shall be construed
or
deemed amended to conform to applicable laws, or if it cannot be
so
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award,
such
provision shall be stricken as to such jurisdiction, Person, or Award,
and
the remainder of the Plan and any such Award shall remain in full
force
and effect.
|
|
(h)
|
NO
TRUST OR FUND CREATED. Neither the Plan nor any Award shall create
or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant
or any
other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award,
such
right shall be no greater than the right of any unsecured general
creditor
of the Company or any Affiliate.
|
|
(i)
|
NO
FRACTIONAL SHARES. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Share, or whether such fractional
Shares or any rights thereto shall be canceled, terminated, or otherwise
eliminated.
|
|
(j)
|
HEADINGS.
Headings are given to the sections and subsections of the Plan solely
as a
convenience to facilitate reference. Such headings shall not be deemed
in
any way material or relevant to the construction or interpretation
of the
Plan or any provision thereof.
|
9.
|
EFFECTIVE
DATE OF THE PLAN
|
10.
|
TERM
OF THE PLAN
|
11.
|
TERMINATION
OF PREDECESSOR PLANS
|
Registered
Office:
|
__________________
__________________
|
|
Registered
Agent:
|
__________________
|
|
|
|
|
VOIP,
INC.
|
|
|
|
|
|
By:
|
|
|
Anthony
Cataldo, CEO
|
|
|
|
|
PAGE
|
|||
ARTICLE
I. DEFINITIONS
|
|
|||
|
1.1
|
Certain
Definitions
|
C-4
|
|
|
1.2
|
Other
Definitional Provisions
|
C-8
|
|
|
|
|
|
|
ARTICLE
II. PURCHASE AND SALE
|
|
|||
|
2.1
|
Purchase
|
C-8
|
|
|
2.2
|
Transfer
of Assets
|
C-8
|
|
|
2.3
|
Excluded
Liabilities
|
C-8
|
|
|
2.4
|
Purchase
Price
|
C-9
|
|
|
2.5
|
Allocation
of Purchase Price
|
C-9
|
|
|
|
|
|
|
ARTICLE
III. CLOSING
|
C-10
|
|||
|
3.1
|
Closing
|
C-10
|
|
|
3.2
|
Closing
Deliveries
|
C-10
|
|
|
|
|
|
|
ARTICLE
IV. REPRESENTATIONS AND WARRANTIES OF SELLER
|
C-10
|
|||
|
4.1
|
Organization;
Capitalization
|
C-10
|
|
|
4.2
|
Authorization
|
C-11
|
|
|
4.3
|
No
Conflict or Violation; Default
|
C-11
|
|
|
4.4
|
Consents
|
C-11
|
|
|
4.5
|
Licenses
and Permits; Compliance with Laws
|
C-11
|
|
|
4.6
|
Assets
|
C-11
|
|
|
4.7
|
Solvency;
Fair Value
|
C-11
|
|
|
4.8
|
Litigation
|
C-11
|
|
|
4.9
|
SEC
Reports
|
C-12
|
|
|
4.10
|
Absence
of Certain Changes
|
C-12
|
|
|
4.11
|
Tax
Matters
|
C-12
|
|
|
4.12
|
Employee
Matters
|
C-12
|
|
|
4.13
|
Intellectual
Property
|
C-13
|
|
|
4.14
|
Investment
Purpose
|
C-13
|
|
|
4.15
|
Real
Property
|
C-13
|
|
|
4.16
|
Brokers
|
C-13
|
|
|
4.17
|
OFAC
Compliance
|
C-13
|
|
|
|
|
|
|
ARTICLE
V. REPRESENTATIONS AND WARRANTIES OF BUYER
|
C-14
|
|||
|
5.1
|
Organization
|
C-14
|
|
|
5.2
|
Authorization
|
C-14
|
|
|
5.3
|
No
Conflict or Violation; Default
|
C-14
|
|
|
5.4
|
Consents
|
C-14
|
|
|
5.5
|
SEC
Documents
|
C-14
|
|
|
|
|
|
|
ARTICLE
VI. COVENANTS RELATING TO COMPANY CONDUCT OF BUSINESS
|
C-15
|
|||
|
6.1
|
Seller
Conduct of Business Pending the Closing
|
C-15
|
|
|
6.2
|
No
Solicitation by Seller
|
C-16
|
ARTICLE
VII. ADDITIONAL AGREEMENTS
|
C-17
|
|||
|
7.1
|
Stockholder
Meeting
|
C-17
|
|
|
7.2
|
Preparation
of the Proxy Statement
|
C-17
|
|
|
7.3
|
Access
to Information; Meetings with Company Officers
|
C-17
|
|
|
7.4
|
Certain
Payments, Fees and Expenses
|
C-17
|
|
|
7.5
|
Reasonable
Best Efforts
|
C-18
|
|
|
7.6
|
Public
Announcements
|
C-18
|
|
|
7.7
|
Notification
of Certain Matters
|
C-18
|
|
|
7.8
|
Transition
|
C-18
|
|
|
7.9
|
Covenant
Not to Compete
|
C-18
|
|
|
7.10
|
Registration
Rights
|
C-19
|
|
|
7.11
|
Employees
and Employee Benefits
|
C-20
|
|
|
7.12
|
Retention
Records and Access
|
C-20
|
|
|
|
|
|
|
ARTICLE
VIII. CONDITIONS PRECEDENT TO CLOSING
|
C-21
|
|||
|
8.1
|
Conditions
to Closing
|
C-21
|
|
|
8.2
|
Conditions
to Obligations of Seller
|
C-21
|
|
|
8.3
|
Conditions
to Obligations of Parent and Buyer
|
C-22
|
|
|
|
|
|
|
ARTICLE
IX. TERMINATION, AMENDMENT AND WAIVER
|
C-23
|
|||
|
9.1
|
Termination
|
C-23
|
|
|
9.2
|
Effect
of Termination
|
C-23
|
|
|
9.3
|
Amendment
|
C-23
|
|
|
9.4
|
Waiver
|
C-23
|
|
|
|
|
|
|
ARTICLE
X. INDEMNIFICATION
|
C-24
|
|||
|
10.1
|
Indemnification
by Seller
|
C-24
|
|
|
10.2
|
Indemnification
by Buyer
|
C-24
|
|
|
10.3
|
Survival
of Representations, Warranties and Covenants
|
C-24
|
|
|
10.4
|
Notice
and Opportunity to Defend
|
C-24
|
|
|
10.5
|
Remedies
Exclusive
|
C-25
|
|
|
10.6
|
Right
of Setoff
|
C-25
|
|
|
10.7
|
Settlement
of Disputes
|
C-25
|
|
|
|
|
|
|
ARTICLE
XI. MISCELLANEOUS
|
C-26
|
|||
|
11.1
|
Expenses
|
C-26
|
|
|
11.2
|
Notices
|
C-26
|
|
|
11.3
|
Counterparts
|
C-26
|
|
|
11.4
|
Entire
Agreement
|
C-26
|
|
|
11.5
|
Headings
|
C-26
|
|
|
11.6
|
Assignment
|
C-27
|
|
|
11.7
|
Governing
Law; Jurisdiction
|
C-27
|
|
|
11.8
|
No
Third-Party Rights
|
C-27
|
|
|
11.9
|
Non-Waiver
|
C-27
|
|
|
11.10
|
Severability
|
C-27
|
|
|
11.11
|
Incorporation
of Exhibits and Schedules
|
C-27
|
|
|
|
|
WQN,
INC.
|
|
|
|
|
|
By:
|
/s/
B. Michael Adler
|
|
Name:
|
B.
Michael Adler
|
|
Title:
|
CEO
|
|
|
|
|
VOIP,
INC.
|
|
|
|
|
|
By:
|
/s/
Steven Ivester
|
|
Name:
|
Steven
Ivester
|
|
Title:
|
Chief
Executive Officer
|
|
|
|
|
VOIP
ACQUISITION COMPANY
|
|
|
|
|
|
By:
|
/s/
Steven Ivester
|
|
Name:
|
Steven
Ivester
|
|
Title:
|
Chief
Executive Officer
|
Registered
Office:
|
__________________
__________________
|
Registered
Agent:
|
__________________
|
|
|
|
|
VoIP,
INC.
|
|
|
|
|
|
By:
|
|
|
Anthony
Cataldo, CEO
|
|
|
|
o
|
For
All Nominees
|
|
o
|
Withhold
Authority Only For
Those
Nominees Whose
Name(s)
I Have Crossed
Out
Below
|
|
o
|
Withhold
Authority For All Nominees
|
Anthony
Cataldo
|
Gary
Post
|
Stuart
Kosh
|
Nicholas
A. Iannuzzi
|