SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as
permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to 240.14a-12
VOIP, INC.
(Name of the Registrant as specified in its charter)
_____________________________________________________
(Name of person(s) filing Proxy Statement,
if other than the Registrant)
Payment of filing fee (check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
(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 is calculated and state how
it was determined):
________________________________________________________
(4) Proposed maximum aggregate
value of transaction:
________________________________________________________
(5) Total fee paid:
________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the form or schedule and the date of its
filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
VOIP, INC.
12330 S.W. 53rd STREET, SUITE 712
FORT LAUDERDALE, FLORIDA 33330
Notice of Annual Meeting of Shareholders
to be held on March 7, 2006
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of VoIP, Inc., a Texas corporation (the "Company"),
will be held on March 7, 2006, at 10:00 a.m., Eastern Standard
Time, at the Sheraton Fort Lauderdale Hotel, 1825 Griffin Road,
Dania, Florida 33004, for the purpose of considering and voting
upon the following matters:
1. to elect seven directors to serve for the ensuing
year and until their successors are elected and qualified;
2. to approve the VoIP, Inc. 2006 Equity Incentive
Plan;
3. to amend and restate the Company's Articles of
Incorporation to authorize additional classes and shares of
capital stock; and
4. to transact such other business as may properly
come before the annual meeting and any adjournment or
adjournments of the meeting.
Our board of directors has no knowledge of any other
business to be transacted at the annual meeting.
Our board of directors has fixed the close of business
on February 9, 2006 as the record date for the determination of
shareholders entitled to notice of and to vote at the annual
meeting and at any adjournment or adjournments of the meeting.
Our stock transfer books will remain open.
A copy of our annual report to shareholders for the
fiscal year ended December 31, 2004, which contains consolidated
financial statements and other information of interest to
shareholders, accompanies this notice and the enclosed proxy
statement.
All shareholders are cordially invited to attend the
annual meeting.
By Order of the Board of Directors
David W. Sasnett,
Secretary
Ft. Lauderdale, Florida
February 13, 2006
Your vote is very important. Whether or not you plan to
attend the annual meeting, in order to ensure representation of
your shares, please promptly complete, date and sign the enclosed
proxy card and return it in the accompanying envelope or follow
the instructions provided for voting by phone or via the
Internet, if applicable. No postage need be affixed if the proxy
card is mailed in the United States.
VOIP, INC.
12330 S.W. 53rd Street, Suite 712
Ft. Lauderdale, Florida 33330
PROXY STATEMENT
For the Annual Meeting of Shareholders
to be Held on February 28, 2006
TABLE OF CONTENTS
INFORMATION ABOUT SOLICITATION AND VOTING 6
PROPOSAL ONE: ELECTION OF DIRECTORS 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT 17
MANAGEMENT 5
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 3
PROPOSAL TWO: PROPOSAL TO APPROVE THE COMPANY'S 2006 EQUITY
INCENTIVE PLAN 4
PROPOSAL THREE: PROPOSAL TO AMEND AND RESTATE THE COMPANY'S
ARTICLES OF INCORPORATION 1
INFORMATION ABOUT SOLICITATION AND VOTING
Solicitation
------------
This proxy statement is furnished in connection with
the solicitation of proxies by the board of directors of VoIP,
Inc. (the "Company") for use at the Annual Meeting of
Shareholders to be held on March 7, 2006 at 10:00 a.m., Eastern
Time, at The Sheraton Fort Lauderdale Hotel, 1825 Griffin Road,
Dania, Florida 33004 and at any adjournment or adjournments of
the annual meeting.
The notice of meeting, this proxy statement, the
enclosed proxy card and our annual report to shareholders for the
fiscal year ended December 31, 2004 are first being sent or given
to shareholders on or about February 13, 2006. Our annual report
to shareholders for the fiscal year ended December 31, 2004
includes a copy of our annual report on Form 10-KSB for the same
fiscal year, as updated through September 30, 2005 with our third
quarterly report on Form 10-QSB, both as filed with the
Securities and Exchange Commission (the "SEC"), including
financial statements and schedules, but excluding exhibits.
We will, upon written request of any stockholder who
has not otherwise received a copy of our annual report on Form 10-
KSB for the fiscal year ended December 31, 2004, furnish without
charge a copy of that annual report on Form 10-KSB, including
financial statements and financial statement schedules, but
excluding exhibits, as filed with the SEC. Please address your
request to VoIP, Inc., 12330 S.W. 53rd Street, Suite 712, Ft.
Lauderdale, Florida 33330, Attention: Osvaldo Pitters, Senior
Vice President of Finance. Exhibits will be provided upon written
request and payment of an appropriate processing fee.
Matters to be Considered at the Annual Meeting
----------------------------------------------
At the annual meeting and any adjournment or
adjournments of the annual meeting, our shareholders will be
asked to consider and vote upon the following matters:
1. to elect seven directors to serve for 2006 and
until their successors are elected and qualified;
2. to approve the VoIP, Inc. 2006 Equity Incentive
Plan;
3. to amend and restate the Company's Articles of
Incorporation to authorize additional classes and shares of
capital stock; and
4. to transact such other business as may properly
come before the annual meeting and any adjournment or
adjournments of the meeting.
Record Date
-----------
Our board of directors has fixed the close of business
on February 9, 2006 as the record date for the determination of
shareholders entitled to notice of and to vote at the annual
meeting.
Voting
------
On February 9, 2006, the record date for determination
of shareholders entitled to vote at the annual meeting, there
were outstanding and entitled to vote ___________shares of our
common stock. The holders of a majority of our capital stock
issued and outstanding and entitled to vote at the annual meeting
will constitute a quorum for the transaction of business at the
annual meeting. Capital stock represented in person or by proxy,
including abstentions and "broker non-votes" with respect to one
or more of the matters presented for shareholder approval will be
counted for purposes of determining whether a quorum exists at
the annual meeting. When we refer to broker non-votes, we mean
capital stock held in "street name" by brokers or nominees who
indicate on their proxies that they do not have discretionary
authority to vote the capital stock as to a particular matter.
The affirmative vote of the holders of our capital
stock representing a majority of the votes represented by capital
stock represented in person or by proxy and entitled to vote at
the annual meeting is required for the election of directors and
approval of Proposal Two to approve the 2006 Equity Incentive
Plan. Therefore, an abstention or withholding of a vote will not
be counted for purposes of determining whether the requisite vote
has been obtained to elect directors or approve Proposal Two.
Holders of shares abstaining from voting on Proposal
Three to amend the Articles of Incorporation will not be counted
as votes in favor of that matter, but will be counted as votes
cast on that matter. Accordingly, abstentions will have the
effect of votes against the adoption of Proposal Three.
Broker non-votes with respect to a particular matter
will not be counted as votes in favor of that matter and will
also not be counted as votes cast on that matter. Accordingly,
broker non-votes will have no effect on the matters specified in
the notice of meeting.
All proxies will be voted in accordance with the
instructions of the shareholder. If no choice is specified, the
proxies will be voted in favor of the matters set forth in the
notice of meeting accompanying this proxy statement. Any proxy
may be revoked by a shareholder at any time before its exercise
by delivering a written revocation to our corporate secretary, by
delivering a subsequently dated proxy or by voting in person at
the annual meeting. Attendance at the annual meeting will not
itself be deemed to revoke a proxy unless the shareholder gives
affirmative notice at the annual meeting that the shareholder
intends to revoke the proxy and vote in person.
-3-
Householding of Proxy Materials
-------------------------------
Some banks, brokers and other nominee record holders
may be participating in the practice of "householding" proxy
statements and annual reports. This means that only one copy of
this proxy statement or our annual report may have been sent to
multiple shareholders in your household. We will promptly deliver
a separate copy of either document to you if you call or write us
at the following address or phone number: VoIP, Inc., 12330 S.W.
53rd Street, Suite 712, Ft. Lauderdale, Florida 33330, phone:
(954) 434-2000, Attention: Osvaldo Pitters. If you want to
receive separate copies of our annual report and proxy statement
in the future, or if you are receiving multiple copies and would
like to receive only one copy for your household, you should
contact your bank, broker or other nominee record holder, or you
may contact us at the above address and phone number.
Shareholder Proposals for Annual Meeting and for the Annual
Meeting in 2007
-----------------------------------------------------------
Written notice of proposals of shareholders submitted
outside the processes of Rule 14a-8 under the Securities Exchange
Act of 1934, as amended, for consideration at our annual meeting
of shareholders in 2007 must be received by us within a
reasonable time before the Company begins to print and mail this
proxy statement in order to be considered timely for purposes of
Rule 14a-8 under the Exchange Act. The persons designated in our
proxy card will be granted discretionary authority with respect
to any stockholder proposal with respect to which we do not
receive timely notice. Stockholder proposals submitted pursuant
to Rule 14a-8 under the Exchange Act for inclusion in our proxy
materials for our annual meeting of shareholders in 2007 must be
received by our corporate secretary at our principal offices by
January 1, 2007.
Other Matters
-------------
Our board of directors knows of no other business which
will be presented for consideration at the annual meeting other
than those matters described above. However, if any other
business should come before the annual meeting, it is the
intention of the persons named in the enclosed proxy card to
vote, or otherwise act, in accordance with their best judgment on
such matters.
Costs of Solicitation
---------------------
We will bear the costs of soliciting proxies. In
addition to solicitations by mail, our directors, officers and
employees may, without additional remuneration, solicit proxies
by telephone, facsimile and personal interviews. We will
reimburse these persons for their reasonable expenses in
connection with any of these solicitations. In addition, we will
request brokerage houses, custodians, nominees and fiduciaries to
forward copies of the proxy materials to those persons for whom
they hold shares and request instructions for voting the proxies,
and we will reimburse brokerage houses and other persons for
their reasonable expenses in connection with this distribution.
-4-
PROPOSAL ONE:
ELECTION OF DIRECTORS
Our board of directors presently consists of one
director. After the annual meeting, we expect that our board of
directors will consist of seven directors elected annually for a
one year term. The persons named in the enclosed proxy will vote
to elect as directors Mr. B. Michael Adler, Senator George
Firestone, Mr. Stuart Kosh, Mr. Nicholas A. Iannuzzi, Jr.,
Mr. Thomas Reeves, Mr. Chris Rhoades and Mr. John N. Spencer,
Jr., unless the proxy is marked otherwise. The directors will be
elected at the upcoming annual meeting and will serve until the
annual meeting of shareholders to be held in fiscal year 2007 and
until their respective successors have been elected and
qualified. At each annual meeting of shareholders, directors are
elected for a full one year to succeed those whose terms are
expiring.
Each of the nominees has indicated his willingness to
serve, if elected. However, if any nominee should be unable to
serve, the persons acting under the proxy may vote the proxy for
a substitute nominee. Our board of directors has no reason to
believe that any nominee will be unable to serve if elected.
The Board of Directors
For each member of our board of directors, including
the nominees for election as director, there follows information
given by each concerning:
* each director's age;
* all positions or offices, including committee memberships,
held by each director;
* each director's length of service as a director of the
Company;
* each director's principal occupation and business experience
for at least the past five years; and
* the names of other public reporting companies of which the
director serves as a director.
Position and Offices Director
Name Age with the Company Since
------------------------- --- --------------------- -------------
B. Michael Adler 58 Chief Executive
Officer; Prospective
Director and Chairman
George Firestone 73 Director October 2005
Stuart Kosh 49 Prospective Director
Nicholas A. Iannuzzi, Jr, 40 Prospective Director
Thomas Reeves 57 Prospective Director
Chris Rhoades 40 Prospective Director
John N. Spencer, Jr. 65 Prospective Director
There are no family relationships among any of our
directors, nominees for director and executive officers.
-5-
Nominees for Election to the Board of Directors (Terms to expire
at Annual Meeting for the 2006 Fiscal Year)
----------------------------------------------------------------
B. MICHAEL ADLER, age 58, became our Chief Executive
Officer in October 2005. Mr. Adler is the founder of WQN, Inc.,
has been a member of its board of directors since its inception
in 1996, and served as its Chief Executive Officer from 1996 to
2001. Mr. Adler is the Chief Executive Officer of Eagle Venture
Capital, LLC, a Delaware limited liability company, formerly
known as WorldQuest Networks, LLC, and a former Director of
Intellicall, Inc., a publicly-traded manufacturer of pay phones
and call processing equipment (New York Stock Exchange symbol
"ICL"). Mr. Adler founded Intellicall in 1984 and served as
Chairman or Vice Chairman of the Board from its inception until
November 1993. From 1994 to July 1999, Mr. Adler was the
Chairman of the Board of The Payphone Company Limited, a company
that owns a wireless pay telephone network in Sri Lanka.
GEORGE FIRESTONE, age 73, was elected Florida's 20th
Secretary of State in 1978 and was re-elected for two additional
terms. Previously, he served as a member of the House of
Representatives and as a member of the Florida Senate. During
this legislative tenure, he was responsible for the passage of
laws permitting international banking and foreign trade zones.
Senator Firestone currently serves as the State of Florida's
"Special Envoy" to the Foreign Consular Corp of Florida. He has
a long history of valued legislative service, including serving
as a member of the Florida Cabinet, the State's Chief Elections
Officer, and Chief Cultural Officer. For the past five years
Senator Firestone has been the Chairman and CEO of Tecton
International, Inc., a financial and operations management
company specializing in the management and workout of non-
performing businesses and distressed real estate. Senator
Firestone is a vice president, general manager and stockholder of
Gray Security Service, which provides security investigations of
commercial and industrial matters. He serves on the board of
Eastern National Bank of Miami. His long public service support
includes serving as chairman of the City of Miami Economic
Advisory Board; member of the Dade County Personnel Advisory
Board; and receiver and trustee of the U.S. Bankruptcy Court.
Senator Firestone is a licensed real estate broker and developer,
and insurance broker specializing in the field of estate planning
and business insurance for individuals and corporations.
NICHOLAS A. IANNUZZI, JR., age 40, is a partner in the
law firm of Rothenberg, Estner, Orsi, Arone and Grumbach, LLP of
Wellesley, Massachusetts, where he has worked since 2002. From
1997 to 2002 Mr. Iannuzzi maintained his own law practice in
Boston, Massachusetts. Mr. Iannuzzi specializes in the areas of
corporate and contract law, civil litigation and real estate. He
serves as general counsel to numerous corporations and has
advised his clients on various business matters and transactions,
including major acquisitions and sales of businesses. Mr.
Iannuzzi is a graduate of Boston College and received his J.D.
from the Suffolk University Law School.
STUART KOSH, age 49, moved to Florida in 1978 to join
his father and brother at Kosh Ophthalmic, Inc., a wholesale
optical laboratory with annual sales of $15 million, where he
managed 100 employees. In 1998, the company was sold to Essilor
of America, and Mr. Kosh maintains his position as General
Manager. His leadership roles have included involvement with the
Big Brothers Big Sisters Program of Broward County as a mentor to
needy youth. For the past 15 years, Mr. Kosh has been involved
with the National Multiple Sclerosis Society. He has served on
its board and chairs its annual golf tournament fundraiser.
Presently he is serving on the Temple Dor Dorim Board of
Directors.
THOMAS REEVES, age 57, has a broad professional career
that began with Shaklee Corporation, initially as Contract
Manufacturing Manager and later as Director of Purchasing. In
1980 he accepted a Vice President position with Nutrition Pak
Corporation. From 1984 to 1992 Mr. Reeves was President of Torick
Inc. an electrical wire harness manufacturer. In 1992 he started
Transportation Safety Technologies where he was President and
Chief Executive Officer. From 2000 to present he has been
President of TRJB Inc. a holding company for various companies in
the hospitality industry. Mr. Reeves has been actively involved
in supporting the American Cancer Society and is a committee
member of the Cystic Fibrosis Foundation. He holds a BS in
Business Administration from California State University.
CHRIS RHOADES, age 40, has three years management
consulting experience and was employed for 11 years (from 1992 to
2003) by the investment banking firm of Merrill Lynch. Since
2004 he has been the Chief Executive Officer and owner of Rhoades
Building Products, Inc. Over the last three years Mr. Rhoades
has also focused on capital allocation and has invested in
several companies in the voice over internet protocol marketplace
and in commercial real estate developments. Mr. Rhoades was
involved in hundreds of debt and equity financings for both U.S.
and European companies while working at Merrill Lynch's New York
and San Francisco offices. He served in
-6-
a crucial advisory capacity to mutual and hedge funds, evaluating
on their behalf the strategy, fundamentals, valuation, and
capital structure of numerous companies. Mr. Rhoades analyzed
research specific to the telecom industry, and wrote research
analysis in the mid-90's specific to the growth of the mobile
telephone industry. In 2005 Mr. Rhoades was appointed by
the Governor of Maine to a task force established to research
economic stimulus ideas for the state. Mr. Rhoades is a graduate
of the University of California at Berkeley and went on to
receive his MBA from Northwestern University's Kellogg Graduate
School of Management.
JOHN N. SPENCER, JR., age 65, served a broad range of
clients for more than 38 years while at Ernst & Young. He began
his Ernst & Young ("E&Y") career in Boston in 1962 and worked in
E&Y's National office in New York assisting with the development
of professional policies and in resolving client matters
nationwide in the audit, accounting and SEC areas. Mr. Spencer
served as the Managing Partner of E&Y's Providence, Rhode Island
office before transferring to Atlanta in 1981. Most recently he
was the Market Segment Team Leader for E&Y's Life Sciences
industry practice in the Southeast. He retired from E &Y in
2000. Mr. Spencer has significant expertise in coordinating
services to publicly held companies, including involvement in
more than 200 registration statements and over 25 initial public
offerings. He provided audit and financial related services for
over 100 merger and acquisition transactions and has significant
experience with numerous boards of directors and audit
committees. Active in Georgia's technology community, he served
as president and a director of the Business and Technology
Alliance. He was a cofounder and is treasurer of the Atlanta
Venture Forum, an association of venture capital investors in the
Southeast, and he recently completed two years as the President
of the Georgia Biomedical Partnership. Mr. Spencer is a member
of the National Association of Corporate Directors, and he serves
as a member of the boards of directors of A C Therapeutics, Inc.;
GeneEx, Inc.; and OrthoHelix Surgical Designs, Inc. He also
serves on the board of directors of Firstwave Technologies, Inc.
(NASDAQ - FSTW) and is the Chair of its Audit Committee. In
addition, Mr. Spencer is a Director of BioFlorida and of the
Georgia Biomedical Partnership.
Board Recommendation
--------------------
The board of directors recommends that you vote "FOR"
the election of the nominees to the board of directors.
Board of Directors and Committee Meetings; Committees of the
Board
-------------------------------------------------------------
During the fiscal year ended December 31, 2004 and
through October 2005 Mr. Steven Ivester was the sole director of
the Company, consequently, formal board and committee meetings
were not held during that time. One formal meeting of the board
of directors was held in December 2005.
Because Mr. Ivester has been the only director of the
Company, he performed the functions of the audit committee.
Mr. Ivester was not an "audit committee financial expert," as
defined by the SEC. Upon election of the nominees for director,
the Company plans to establish an audit committee of independent
directors, and it is anticipated that Mr. Spencer will serve as
chair. Mr. Spencer is an "audit committee financial expert," as
defined by the SEC. The audit committee will operate pursuant to
a written charter, which is attached to this proxy statement as
Appendix A.
During the fiscal years ended December 31, 2004 and
2005, the Company did not have a standing compensation or
nominating committee. Upon election of the nominees for
director, the Company plans to establish a compensation committee
consisting of two or more independent directors. The
compensation committee will operate pursuant to a written
charter.
We do not presently have a policy with respect to
attendance by the directors at the annual meetings of
shareholders. All of the current year board of directors
nominees, as well as Mr. Ivester, have indicated their intent to
attend the shareholders meeting.
-7-
Procedures for Director Nominations
-----------------------------------
Neither our articles of incorporation nor our bylaws
contain any procedures whereby shareholders may recommend
nominees for director. We do not pay and do not anticipate
paying any fees to third parties for identifying or evaluating
candidates for director.
Communications with Directors
-----------------------------
Our board of directors does not provide a formal process by
which shareholders may send communications to the board, because
Mr. Ivester had been the only director. The Company does not at
this time anticipate instituting such a process. However,
shareholders may communicate with us or request information at
any time by contacting Investor Relations at (954) 434-2000.
Compensation of Directors
-------------------------
Mr. Ivester was not separately compensated for his service
as a director of our Company.
In connection with their service on our board of directors,
each director elected by the shareholders will receive 25,000
shares of our common stock and options to purchase 25,000 shares
of our common stock, with the ownership rights to these shares
and options vesting ratably on a monthly basis over one year.
Each director will also receive $500 for each board meeting or
board committee meeting attended.
Code of Ethics
--------------
At the Board of directors meeting following the Annual
Meeting, it is anticipated that we will adopt a Code of Business
Conduct and Ethics, within the meaning of Item 406(b) of
Regulation S-K, that applies to the Company's directors,
officers and employees, including, our principal executive
officer, principal financial officer and principal accounting
officer. Upon adoption, a complete copy of the proposed Code of
Ethics will be posted at our website at www.voipincorporated.com
under "Investor Relations." Any amendments to, or waivers of,
the Code of Ethics will be promptly disclosed on our website.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Beneficial Ownership
--------------------
The following table sets forth information as of
February 9, 2006, except as otherwise noted, with respect to the
beneficial ownership of our common stock:
* 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.
The number of shares beneficially owned by each
stockholder is determined under rules promulgated by the SEC. The
information is not necessarily indicative of beneficial ownership
for any other purpose. Under these rules, beneficial ownership
includes any shares as to which the individual has sole or shared
voting power or investment power and any shares as to which the
individual has the right to acquire beneficial ownership within
60 days, except as otherwise noted, through the exercise or
conversion of any stock option, warrant, preferred stock or other
right. The inclusion in the following table of those shares,
however, does not constitute an admission that the named
stockholder is a direct or indirect beneficial owner of those
shares. Unless otherwise indicated, to our
-8-
knowledge based upon information produced by the persons and
entities named in the table, each person or entity named in the
table has sole voting power and investment power, or shares
voting and/or investment power with his or her spouse, with
respect to all shares of capital stock listed as owned by that
person or entity.
The address for each of our officers and directors is
c/o VoIP, Inc., 12330 S.W. 53rd Street, Suite 712, Fort
Lauderdale, Florida 33330.
Shares of Common Stock Ownership of
Name of Beneficial Owner Beneficially Owned Common Stock (11)
---------------------------------- ---------------------- -----------------
YTMJ, LLC 5,950,615 8.9%
5600 PGA Boulevard, Suite 204
Palm Beach Gardens, FL 33412
WQN, Inc. (1) 10,239,100 15.8%
14911 Quorum Drive, Suite 140
Dallas, Texas 75240
Steven Ivester 6,025,000 9.0%
Shawn M. Lewis 5,446,231 8.2%
B. Michael Adler (2) 1,125,000 1.8%
Hal Bibee, Sr (3) 1,687,500 2.7%
David W. Sasnett (4) 450,000 *
Osvaldo Pitters (5) 350,000 *
George Firestone (6) 16,666 *
Nicholas A. Iannuzzi, Jr. 75,000 *
Stuart Kosh (7) 1,284,477 2.1%
Chris Rhoades (8) 1,042,500 1.7%
Thomas Reeves (9) 585,000 1.0%
John N. Spencer, Jr. -- --
All directors and executive officers
as a group (6 persons) (10) 9,075,397 12.94%
======================
* Less than one percent.
(1) Consists of 6,539,100 shares of Common Stock and 3,700,000
shares issuable upon conversion of a Convertible Promissory Note.
(2) Consists of (a) 500,000 shares of common stock; (b) currently
exercisable options to purchase 125,000 shares of common stock;
and (c) warrants to purchase 500,000 shares of common stock.
(3) Consists of (a) 375,000 shares of common stock; (b) currently
exercisable options to purchase 125,000 shares of common stock;
and (c) warrants to purchase 1,187,500 shares of common stock.
(4) Consists of currently exercisable options to purchase 75,000
shares of common stock, and warrants to purchase 375,000 shares
of common stock.
(5) Consists of currently exercisable options to purchase
250,000 shares of common stock and 100,000 shares owned by Mr.
Pitters' spouse.
(6) Consists of 8,333 shares of common stock and currently
exercisable options to purchase 8,333 shares of common stock.
(7) Consists of 778,227 shares of common stock and warrants to
purchase 506,250 shares of common stock.
(8) Consists of 730,000 shares of common stock and warrants to
purchase 312,500 shares of common stock.
(9) Consists of 438,500 shares of common stock and warrants to
purchase 146,500 shares of common stock
(10) Represents the combined beneficial ownership of the
executives and the Company's one director as of January 24,
2006 which consist of Messrs. Adler, Bibee, Lewis, Sasnett,
Pitters and Firestone.
(11) Based upon 61,078,000 shares of common stock issued and
outstanding as of January 24, 2006.
Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934
requires our directors, executive officers and holders of more
than 10% of our common stock to file with the SEC initial reports
of ownership and reports of changes in ownership of our common
stock and other equity securities. Officers, directors and
greater than 10% shareholders are required by the SEC regulations
to furnish us with copies of all Section 16(a) reports they file.
To our knowledge, based solely on a review of the copies of such
reports and written representations that no other reports were
required, we believe that all filing requirements applicable to
our officers, directors and greater than 10%
-9-
shareholders were satisfied during the fiscal years ended
December 31, 2004 and 2005. Several reports under Section 16(a)
were filed late by Steven Ivester, and Mr. Ivester noted in
reports filed by him that he had realized certain "short swing
profits," all of which have been repaid to the Company.
Independent Public Accountants
------------------------------
Berkovitz, Lago & Company, LLP served as our auditor and
audited our financial statements for our fiscal year ended
December 31, 2004. Representatives of Berkovitz, Lago & Company,
LLP will be present at the annual meeting and will have the
opportunity to make a statement if they desire and will be
available to respond to appropriate questions.
Independent Auditor's Fees and Other Matters
--------------------------------------------
Audit Fees. Berkovitz, Lago & Company, LLP provided
services to the Company during the year ended December 31, 2004
in the categories shown below. Tschopp, Whitcomb & Orr provided
services to the Company in these categories during the year ended
December 31, 2003.
Calendar Years
2004 2003
--------- ---------
Audit Fees (1) $ 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 Berkovitz, 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 Berkovitz, 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. This includes: employee benefit and
compensation plan audits; attestations by that are not
required by statute and consulting on financial
accounting/reporting standards.
(3) Tax fees - these are fees for professional services
performed by Berkovitz, Lago & Company, LLP and Tschopp,
Whitcomb & Orr with respect to tax compliance, tax advice
and tax planning. This includes 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 - these are fees for other permissible work
performed by Berkovitz, Lago & Company, LLP and Tschopp,
Whitcomb & Orr that does not meet the above category
descriptions.
MANAGEMENT
Executive Officers of the Registrant
------------------------------------
The following table sets forth information concerning our
executive officers and directors as of the periods set forth
below:
Name Age Position with Company Dates
-------------- --- ------------------------------ ----------------
B. Michael Adler 58 Chief Executive Officer and October 2005 to
Chairman; Prospective Director present
-10-
Name Age Position with Company Dates
----------------- ---- ------------------------------ ----------------
Hal H. Bibee, Sr. 53 President November 2005 to
present
Shawn M. Lewis 38 Chief Technology Officer May 2005 to
present
David W. Sasnett 49 Chief Financial Officer October 2005 to
present
Osvaldo Pitters 47 Senior Vice President May 2004 to
-Finance; Former Chief present
Financial Officer
George Firestone 73 Director November 2005 to
present
Steven Ivester 41 Former Chairman and Director; March 2004 to
Former Chief Executive present
Officer; Consultant
B. MICHAEL ADLER. Please see Mr. Adler's biography on
page 6.
HAL H. BIBEE, SR. is an entrepreneur and corporate financial
consultant. He is a Certified Public Accountant (inactive),
formerly with Ernst & Young. In 1984, he co-founded MetroTel,
which at that time was the largest private pay telephone company
in New York City, and served as its Chief Executive Officer
through 1985. Mr. Bibee was a founding shareholder of the First
Bank of East Tennessee and served on its Board of directors from
1988 to 1997. As an entrepreneur in the telecommunications
industry, Mr. Bibee has engineered, constructed and operated
cable television systems throughout the Southeast. As a board
member, stockholder and consultant for Mega Force Staffing
Services, Inc. from 1995-1997, Mr. Bibee was in charge of all
mergers and acquisitions and investment banking activities. In
1998, he founded FiberLink, LLC and in 2000 INTELLICAD, LLC,
firms that provide consulting, engineering and construction
services to the telecommunications industry. He is a General
Partner in ASETZ, a diversified real estate investment and
development company, and a General Partner in Parkway Properties,
a self storage development and operating company. From 2004 to
the present, he has served on the Board of Directors, and as the
Audit Committee Chairman, of WQN, Inc., a publicly-held telecom
company that offered voice over internet protocol services to
domestic and international markets until it sold the assets for
that business to our Company in October 2005.
SHAWN M. LEWIS. Shawn M. Lewis oversees all of our
technological and engineering activities. Mr. Lewis founded and
was the President and CEO of Caerus, Inc. and its three
subsidiaries, Volo Communications, Caerus Networks, Inc., and
Caerus Billing & Mediation, Inc. from 2001 to 2005. We acquired
Caerus, Inc. in May 2005 at which time Mr. Lewis became our Chief
Technology Officer. Prior to Caerus Mr. Lewis co-founded XCOM
Technologies, a competitive local exchange carrier, where he
served in an executive capacity and led the development of
patents for the first softswitch and SS7 Media Gateway. XCOM
Technologies was sold to Level 3 in 1998. His next venture, set-
top box vendor River Delta, was sold to Motorola. His most recent
venture, Caerus, Inc. empowers carriers and service providers to
begin selling advanced voice over internet protocol related
services. In 2004, Mr. Lewis plead guilty to a felony drug
possession offense and received probation.
DAVID W. SASNETT has more than 25 years of experience
in providing management, accounting and advisory services to a
wide variety of companies, both public and private. Immediately
prior to joining our Company, Mr. Sasnett was a consultant with
Corevision Strategies, LLC, a financial and management services
consulting firm. During 2004 Mr. Sasnett held the positions of
Vice President of Finance and Controller of Mastec, Inc., a
publicly-traded specialty contractor engaged in the design,
construction, installation, maintenance and upgrade of
infrastructures for companies and government entities operating
in the telecommunication, broadband, energy services, traffic
control and homeland security services industries. In 2003 Mr.
Sasnett founded, and continues to be the President of, Secure
Enterprises, LLC, a successful consumer product manufacturer and
distributor and in 2002 he was an Executive Vice President with
Platinum Products, Inc., a privately-held importer and
distributor of consumer products. Mr. Sasnett was employed
from 1994 to 2002 by Catalina Lighting, Inc., a global, publicly-
traded manufacturer and distributor of residential lighting and
other consumer products. From 1996 to 2002 he served as
Catalina's Chief Financial Officer. Mr. Sasnett's prior
experience also includes more than 12 years with the audit
department of the international accounting and consulting firm of
Deloitte & Touche, LLP.
-11-
OSVALDO PITTERS. Osvaldo Pitters has a successful track
record and progressive working experience managing finance,
administration, accounting and auditing functions in the U.S.,
England, U.K. and Latin America. Mr. Pitters worked 10 years
with PriceWaterhouseCoopers in the Audit Department in Latin
America and in England, UK. Mr. Pitters also worked seven years
with Pepsi Cola International in the Finance Area in several
countries within the Latin American region. He also worked for
two years as Deputy General Manager of Banco Republica in Lima,
Peru. Before joining us, from January 2003 to April 2004, Mr.
Pitters was the Controller of the Cima Telecom Group in Miami,
Florida. Osvaldo is a 1983 graduate of the Santiago University,
Chile and a 1985 post graduate of the Cambridge University, UK.
Mr. Pitters was our Chief Financial Officer until October 2005
and since that time has been our Senior Vice President of
Finance.
GEORGE FIRESTONE. Please see Senator Firestone's biography
on page 6.
STEVEN IVESTER. Mr. Ivester has been a successful
technology inventor and entrepreneur since 1982. In 1985 he
established a chain of automotive service centers, All State Auto
Centers (Founder & President) and sold the business in 1991. He
subsequently established, expanded and sold a chain of computer
stores known as 21st Century Computers. In 1997, Mr. Ivester
became President and Chief Executive Officer of Navigator, PC,
which invented a series of rugged waterproof military grade
navigational computer and display systems. From 2001 to 2004, he
consulted for Voice over IP companies and was responsible for the
specification and development of IP desktop telephone devices,
Multimedia Terminal Adaptors, and portable WiFi phones in
addition to sourcing, negotiation and quality assurance. In early
2004, Mr. Ivester founded VoIP, Inc. Mr. Ivester resigned as our
Chief Executive Officer in October 2005 and resigned from his
position on our board of directors in December 2005. He
presently serves as a consultant to the Company pursuant to a
three year consulting agreement that began in October 2005.
Executive Compensation
----------------------
The following table sets forth information with respect to
the compensation, for the last three fiscal years, of our Chief
Executive Officer and each person who served as an executive
officer of our Company for the last three fiscal years and whose
total annual salary and bonus exceeded $100,000. In accordance
with the rules of the SEC, the compensation set forth in the
table below does not, unless otherwise noted, include medical,
group life or other benefits that are available to all of our
salaried employees, and perquisites and other personal benefits,
securities or property that do not exceed the lesser of $50,000
or 10% of the total annual salary and bonuses for each of the
individuals shown in the table.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
----------------------------------- ------------------
Securities
Fiscal Underlying Options All Other
Name and Principal Position Year Salary($) Bonus($) (Shares)(#) Compensation($)
--------------------------------- -------- ----------- ---------- ------------------ ---------------
Steven Ivester (1) 2005 231,722 0 0 33,563
Former Chief Executive Officer 2004 125,000 0 0 2,475
2003 0 0 0 0
Bill Burbank (2) 2005 146,156 1,923 0 0
Former Chief Operating Officer 2004 2,116 0 0
2003 0 0 0 0
Osvaldo Pitters 2005 100,000 1,923 0 0
Former Chief Financial Officer; 2004 50,000 0 0 0
Senior Vice President of Finance 2003 0 0 0 0
-12-
Long-Term
Annual Compensation Compensation
----------------------------------- ------------------
Securities
Fiscal Underlying Options All Other
Name and Principal Position Year Salary($) Bonus($) (Shares)(#) Compensation($)
--------------------------------- -------- ----------- ---------- ------------------ ---------------
B. Michael Adler 2005 48,738 2,769 0 0
Chairman; Chief Executive Officer 2004 0 0 0 0
2003 0 0 0 0
_________________
(1) Mr. Ivester resigned his position as CEO in October 2005 and
his position as Director in December 2005. His 2005 salary
as reflected above includes $88,462 that is accrued but
unpaid as of January 24, 2005. The other compensation
consists of automobile allowance.
(2) Mr. Burbank resigned his position in January 2006.
STOCK OPTIONS
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options
Options at December 31, 2005 at December 31, 2005
----------------------------- --------------------------
Number of
Shares
Name Acquired on Value
Exercise Realized Exercisable Un-exercisable Exercisable Un-exercisable
----------------- ----------- -------- ------------- -------------- ----------- --------------
B. Michael Adler -- -- 125,000 375,000 -0- -0-
Bill Burbank -- -- 250,000 250,000 -0- -0-
Osvaldo Pitters -- -- 250,000 250,000 $52,500 $52,500
-13-
LONG TERM INCENTIVE PLANS
Estimated Future Payments under
Non-Stock Price-Based Plans
----------------------------------
Performance
Number of or Other
Shares, Period Until
Under or Maturation or Threshold Target Maximum
Name Other Rights Payout ($ or #) ($ or #) ($ or #)
-------------- ------------ ------------- --------- ---------- ------------
(None)
Employment, Change of Control and Severance Arrangements
--------------------------------------------------------
In connection with the acquisition of Caerus Inc., on
May 31, 2005, the Company entered into an employment agreement
with Mr. Lewis. The employment agreement is for a term of two
years (unless terminated earlier pursuant to the terms of the
employment agreement). Mr. Lewis will receive an annual salary of
$200,000 Mr. Lewis will be eligible to participate in the
Company's various benefit plans that are available to other
executive officers of the Company. In addition of the exchange of
Mr. Lewis' options, described above, Mr. Lewis received a $40,000
signing bonus in connection with the acquisition. Mr. Lewis will
be eligible to receive performance bonuses, in the form of
performance-based stock options under the Company's stock option
plan, according to as-yet-to-be-determined performance targets.
If the Company and Mr. Lewis do not establish the performance
targets within 90 days of the closing of the acquisition, the
Company will pay Mr. Lewis a $15,000 per quarter bonus until such
targets are determined. Mr. Lewis will be entitled to receive
severance payments if his employment is terminated in certain
circumstances. The employment agreement contains customary
confidentiality and non-competition covenants.
On October 18, 2005, we entered into an employment
agreement with Mr. Adler, who became our Chief Executive Officer.
This agreement is for a term of three years (unless terminated
earlier pursuant to its terms). Mr. Adler receives an annual
salary of $144,000. Upon execution of the agreement, Mr. Adler
was issued 500,000 shares of restricted common stock and warrants
to purchase 500,000 shares of common stock, at a price of $1.50
per share. In addition, Mr. Adler was granted non-qualified
stock options to purchase 500,000 shares of common stock at an
exercise price of $1.56. Mr. Adler will be entitled to receive
severance payments if his employment is terminated in certain
circumstances.
On October 18, 2005, we entered into an employment
agreement with Mr. Sasnett, who became our Chief Financial
Officer. This agreement is for a term of three years (unless
terminated earlier pursuant to its terms). Mr. Sasnett received a
salary of $10,416.66 per month through December 31, 2005, and
will receive a salary of $12,083.33 per month during the year
ending December 31, 2006, $13,750 per month during the year
ending December 31, 2007 and $15,416.67 per month during the year
ending December 31, 2008, provided the agreement is in effect.
Upon execution of the agreement, Mr. Sasnett was granted non-
qualified stock options to purchase 300,000 shares of common
stock, at an exercise price of $1.53 per share. Mr. Sasnett was
issued warrants to purchase 300,000 shares of common stock, at an
exercise price of $1.53 per share and will be granted additional
warrants to purchase an aggregate of 150,000 shares of common
stock, at a price of $1.53 per share, in six monthly increments
beginning in November 2005. Mr. Sasnett will be entitled to
receive severance payments if his employment is terminated in
certain circumstances.
-14-
On October 18, 2005, we entered into an employment
agreement with Mr. Burbank pursuant to which he served as our
Chief Operating Officer. This agreement was for a term of three
years (unless terminated earlier pursuant to its terms) and
provided for a salary of $12,500.00 per month through December
31, 2005, and $15,000.00 per month thereafter. Upon execution of
the agreement, Mr. Burbank was issued 500,000 shares of
restricted common stock and issued warrants purchase 500,000
shares of common stock at a purchase price of $1.50. Mr Burbank
resigned from the Company in January 2006.
On November 22, 2005, we entered into an employment
agreement with Mr. Bibee, who became our President. This
agreement is for a term of three years (unless terminated earlier
pursuant to its terms). Mr. Bibee received a salary of $13,750.00
per month through December 31, 2005 and receives an annual salary
of $180,000 thereafter. Upon execution of the agreement,
Mr. Bibee was granted non-qualified stock options to purchase
500,000 shares of common stock at an exercise price of $1.56 and
was issued warrants to purchase 1,000,000 shares of the Company's
common stock, at a price of $1.50 per share. Mr. Bibee will be
entitled to receive severance payments if his employment is
terminated in certain circumstances.
Steven Ivester resigned from his position as our Chief
Executive Officer on October 18, 2005 and on that date entered
into a three year consulting agreement with our Company. This
agreement provides for the payment of fees and a car allowance
totaling $230,000 annually. Mr. Ivester is entitled to receive a
lump sum payment of any amounts due on the unexpired term of this
agreement if the agreement is terminated under certain
circumstances.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was organized by Kevin Halter and members
of his family in 1998, when they purchased 1,000,000 shares at
its par value. Then in March 2004, the Company sold 12,500,000
shares of stock to Steven Ivester for par value ($12,500), plus
his agreement to contribute two operating companies. Such
companies were contributed in May 2004, effective April 15, 2004.
In October 2005, the Company purchased all of the
assets of WQN, Inc. Mr. Adler was the Chief Executive Officer of
WQN, Inc. and owns approximately 39% of WQN's outstanding common
stock. In connection with the transaction, the Company, through
an acquisition subsidiary purchased the assets for a purchase
price consisting of (1) a convertible promissory note, in the
principal amount of $3,700,000 (the "Note"), (2) 1,250,000 shares
of the Company's restricted common stock and (3) a warrant to
purchase 5,000,000 shares of common stock. The aggregate
outstanding principal amount of the Note, together with interest,
is convertible into either shares of preferred stock or shares of
common stock. The Note, in the principal amount of $3,700,000,
will accrue interest at the rate of 6% per annum. In addition,
the Company issued WQN, Inc. an additional 500,000 shares of
restricted common stock relating to the difference between the
amount of accounts receivable transferred in the transaction and
the accounts payable.
At December 31, 2004 the Company owed a shareholder
$560,000 under a note payable bearing interest at 3.75% and
maturing December 31, 2005. The Company owed Steven Ivester
$1,000,000 as of December 31, 2005 under a note payable bearing
interest at 3.75% and maturing December 31, 2005. The loan to
Mr. Ivester was repaid by the Company in January 2006.
The Company and Mr. Ivester entered into a consulting
agreement on October 18, 2005. Pursuant to the consulting
agreement, Mr. Ivester will provide general business strategy,
financing and product development advice. Mr. Ivester will
receive $200,000 per year for his services under the consulting
agreement, as well as a $2,500 per month vehicle allowance.
Mr. Ivester will be eligible to receive bonuses, as determined by
the Board of Directors. Mr. Ivester will be eligible for
participation in the Company's stock option plan, as determined
by the Board of Directors. Mr. Ivester is entitled to severance
payments under the consulting agreement if the consulting
agreement is terminated under certain circumstances.
Please see "Employment, Change of Control and Severance
Assignments" above for a discussion of arrangements with Messrs.
Burbank and Sasnett and the employment agreement with Mr. Adler.
-15-
Promoters
---------
On February 27, 2004, the Company issued and sold
12,500,000 shares of common stock to Steven Ivester in exchange
for cash of $12,500 and his agreement to contribute the
intellectual property rights and related assets of two start-up
companies formed to engage in the telecommunications industry.
The shares issued represented approximately 88% of the shares
outstanding after the exchange, as a result of which Mr. Ivester
became the controlling shareholder of the Company.
On May 25, 2004 (but effective for all purposes as of
April 15, 2004), the Company completed the acquisition of two
Florida-based subsidiaries, eGlobalphone, Inc. and VoIP
Solutions, Inc., both Florida Corporations.
On August 4, 2004, the Company issued warrants to
purchase 2,200,000 shares of common stock for an exercise price
of $1.00 per share to each of John Todd and Clive Raines.
Mr. Todd's warrants were exchanged for 750,000 shares in a net
cashless exercise in February 2005.
Messrs. Ivester, Todd and Raines may be considered to
be "promoters" of the Company.
PROPOSAL TWO
PROPOSAL TO APPROVE THE COMPANY'S
2006 EQUITY INCENTIVE PLAN
General
-------
On December 7, 2005, the board of directors approved,
subject to shareholder approval, the Company's 2006 Equity
Incentive Plan (the "2006 Plan"). The 2006 Plan provides that
key employees, consultants and non-employee directors of the
Company or an affiliate ("eligible participants") may be granted:
(1) options to acquire shares of the Company's common stock, (2)
shares of restricted common stock (3) stock appreciation rights,
(4) performance-based awards, (4) "Dividend Equivalents," and (5)
other stock-based awards (collectively, "Awards"). The 2006 Plan
will permit eligible participants to acquire a proprietary
interest in the growth and performance of the Company. The
purposes of the 2006 Plan are to (1) increase the incentive of
its participants to contribute to the Company's success and
prosperity, thus enhancing shareholder value; and (2) to provide
the Company with a proven means to attract and retain
exceptionally qualified individuals upon whom, in large measure,
the sustained progress, growth and profitability of the Company
depend.
The Company is seeking shareholder approval for the
future issuance of options under the 2006 Plan to allow its
participants to acquire up to 10,000,000 shares of the Company's
common stock.
The 2006 Plan is included in this Proxy Statement as
Appendix B, and reference is made to Appendix B for a full
description of the terms of the 2006 Plan.
Board Recommendation
--------------------
The board of directors recommends that you vote "FOR"
the proposal to approve the Company's 2006 Plan.
Description of the 2006 Plan
----------------------------
The following summary describes the principal
provisions of the 2006 Plan. The summary does not purport to be
complete and is qualified in its entirety by the full text of the
2006 Plan attached as Appendix B to this proxy statement.
The total number of shares of common stock that may be
subject to Awards under the 2006 Plan will not exceed 10 million
shares (subject to customary adjustments as provided in the 2006
Plan). Such number of shares is
-16-
subject to adjustment by the committee established to administer
the 2006 Plan (the "Committee") in the event of a
recapitalization, stock split, stock dividend or similar
corporate transaction. Such shares may be either authorized or
unissued shares or shares held in treasury.
The 2006 Plan is generally designed to meet the
requirements of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), in order to preserve the Company's
ability to take compensation expense deductions in connection
with the exercise of options granted and the vesting of
performance-based restricted stock under the 2006 Plan in certain
circumstances. Under Code Section 162(m), a publicly held
corporation is not permitted to take a federal income tax
deduction for compensation recognized by certain executive
officers in any year in excess of $1,000,000 unless such
compensation meets the shareholder approval and other
requirements of Code Section 162(m).
The 2006 Plan is administered by the Committee, which
must be comprised of not less than two individuals appointed by
the board of directors, each of whom is (1) to the extent
required by Rule 16b-3 and the Exchange Act, a "non-employee
director," and (2) to the extent required by Code Section 162(m),
an "outside director". We anticipate that two of the prospective
directors will constitute the Committee, which may make such
rules and regulations and establish such procedures for the
administration of the 2006 Plan as it deems advisable.
The Committee may grant Awards under the 2006 Plan to
eligible participants. The Company estimates that there are
currently approximately 90 employees and service providers who
are eligible participants. The Committee has the discretion, in
accordance with the provisions of the 2006 Plan, to determine the
terms of the Award, to whom an Award is granted and the number of
shares of stock subject to the Award, subject to a maximum grant
to an eligible participant in any year of 200,000 option shares
and 200,000 shares of restricted stock that are intended to be
"performance based" compensation under Code Section 162(m)
(subject to customary adjustments as provided in the 2006 Plan),
with any unused portion of the limitation available to be carried
forward.
Stock Options
-------------
An option granted under the 2006 Plan may be an
incentive stock option (an "ISO") or may be a non-qualified stock
option (a "Non-ISO"), as determined at the time of grant. In
certain circumstances, the grant of Non-ISOs, as opposed to ISOs,
can result in federal income tax advantages to the Company, as
described below.
The exercise price for options may not be less than the
fair market value of the stock on the date of the grant of the
options. The 2006 Plan provides that optionees may pay the
exercise price: (1) in cash, (2) by delivery to the Company of
shares of the Company's common stock owned by the participant,
(3) other securities, (4) other Awards, (5) other property, or
(6) any combination of the above, in each case on such other
terms and conditions as may be acceptable to the Committee (which
may include payment in installments or on a deferred basis).
An option granted under the 2006 Plan may not be
exercised later than the date specified by the Committee, which
will be a maximum of 10 years from the date of the grant.
Restricted Stock
----------------
The Committee may award "restricted" shares of the
Company's common stock and restricted stock units, which are
grants of common stock or Awards designated in shares of
restricted stock that are subject to risk of forfeiture or other
restrictions. Shares of restricted stock and restricted stock
units will 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.
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
-17-
the Company, waive in whole or in part any or all remaining
restrictions with respect to shares of restricted stock or
restricted stock units.
Stock Appreciation Rights
-------------------------
The Committee is authorized to grant eligible
participants stock appreciation rights. A stock appreciation
right gives the recipient a right to receive, upon exercise of
the stock appreciation right, the excess of (1) the fair market
value (as determined by the Committee) of one share of common
stock on the date of exercise or, if the Committee determines in
the case of any such right other than one related to any ISO, at
any time during a specified period before or after the date of
exercise over (2) the grant price of the right, as specified by
the Committee. The grant price, term, methods of exercise,
methods of settlement, and any other terms and conditions of any
stock appreciation right are 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.
Performance Awards
------------------
The Committee is authorized to grant eligible
participants performance awards. A performance award granted
under the 2006 Plan (1) may be denominated or payable in cash,
shares of common stock (including, without limitation, restricted
stock), other securities, other Awards, or other property and (2)
confer on the recipient rights valued as determined by the
Committee and payable to, or exercisable by, the recipient, in
whole or in part, upon the achievement of such performance goals
during such performance periods as the Committee shall establish.
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 will be based on any one, or combination of, earnings
per share, return on equity, return on assets, total shareholder
return, net operating income, cash flow, revenue, economic value
added, increase in the price of the Company's common stock, 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.
Dividend Equivalents
--------------------
The Committee is authorized to grant Awards under which
the recipients are entitled to receive payments equivalent to
dividends or interest with respect to a number of shares of
common stock determined by the Committee, and the Committee may
provide that such amounts (if any) shall be deemed to have been
reinvested in additional shares of common stock or otherwise
reinvested. Such Awards may have such terms and conditions as
the Committee determines.
Other Stock-Based Awards
------------------------
The Committee is also authorized to grant 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 of
common stock (including, without limitation, securities
convertible into shares of common stock), as are deemed by the
Committee to be consistent with the purposes of the 2006 Plan.
The Committee determines the terms and conditions of such Awards.
Miscellaneous
-------------
Awards granted under the 2006 Plan generally are not
transferable, except that the Committee may, in its sole
discretion and subject to certain limitations, permit the
transfer of Non-ISOs at the time of grant or thereafter for
estate planning purposes. No Awards may be granted under the
2006 Plan after December 7, 2015.
The number of Awards that may be granted under the 2006
Plan to executive officers is not determinable at this time.
-18-
Equity Compensation Plans Information
-------------------------------------
The following table sets forth the number of securities
to be issued upon exercise of outstanding options, warrants, and
rights; weighted-average exercise price of outstanding options,
warrants, and rights; and the number of securities remaining
available for future issuance as of December 31, 2005:
Number of Securities Number of
to be Issued Upon Weighted-Average Securities
Exercise of Exercise Price of Remaining
Outstanding Options, Outstanding Options, Available for
Warrants,And Rights Warrants, and Rights Future Issuance
-------------------- -------------------- ----------------
Equity compensation plans
approved by security holders:
3,897,000 $1.26 15,000
Equity compensation plans not
approved by security holders: 2,375,000 $1.51 -0-
PROPOSAL THREE
PROPOSAL TO AMEND AND RESTATE THE COMPANY'S
ARTICLES OF INCORPORATION
General
-------
On December 7, 2005, the Company's board of directors
unanimously approved and recommended for adoption by the
shareholders the Amended and Restated Articles of Incorporation
(the "Amended and Restated Articles"), the text of which is
attached to this proxy statement as Appendix C.
Background and Reasons for the Proposed Amended and Restated
Articles
------------------------------------------------------------
As of February 9, 2006, there were 100,000,000 shares
of common stock authorized, of which, ______ shares were issued
and outstanding, and the remainder of the authorized shares of
common stock were reserved for the exercise of stock options,
conversion of convertible debt securities and warrants to
purchase common stock. Therefore, the Company has no shares of
common stock available for future issuance as of the date of the
annual meeting.
The Amended and Restated Articles would provide for the
issuance of 250,000,000 shares of common stock and would
authorize 25,000,000 shares of preferred stock. The board of
directors would have the authority to issue classes or series of
preferred stock in the future having such designations, rights,
preferences and relative, participating, option or other special
rights of the shares of each such class or series, including such
things as voting rights, dividend rights, conversion rights,
redemption rights, and other restrictions and features.
A copy of the Amended and Restated Articles of
Incorporation of the Company are included as Appendix C to this
proxy statement, and reference is made to Appendix C for a full
description of the terms and provisions of the authorized
preferred stock.
The board of directors believes that the proposal to
increase the number of authorized shares of common stock and
permit the issuance of preferred stock is in the best interests
of the Company and its shareholders. If the proposed Amended and
Restated Articles are approved by the shareholders, the Company
would have additional shares available for issuance, and the
board of directors would have the flexibility to act in a timely
manner to take advantage of favorable market conditions and other
opportunities with respect to stock splits, stock dividends,
financings, acquisitions or other corporate business, subject to
the rules of any securities exchange on which the shares of
common stock are listed at the time or other applicable laws or
regulations as may be in effect from time to time. Such
availability of an increased number of authorized shares and the
ability to issue preferred stock will eliminate the delays and
expense involved in first conducting a special meeting of
shareholders in order to issue additional shares when needed.
-19-
There are no current plans to issue shares of any class
of common stock. Upon filing the Amended and Restated Articles
of Incorporation, the Company will also file a Certificate of
Designations, Rights and Preferences to create a Series A
Convertible Preferred Stock (the "Series A Preferred"). The
Series A Preferred will feature a 5% cumulative dividend, the
right to convert into common stock at the rate of $1.06 per
share, a liquidation preference in the event the Company is
dissolved, no voting right, and a right of the Company to redeem
after August 1,2008 if the common stock shall have closed above
$2.00 per share for 20 consecutive trading days. The Company will
issue approximately 380,000 shares of Series A Preferred having
an issue price of $3,800,000 to WQN, Inc. upon the automatic
conversion of a Convertible Promissory Note in the principal
amount of $3,700,000 plus accrued interest.
The Company will, from time to time, investigate
possible acquisitions and financings through the issuance of
additional equity securities , but it is not possible to state
whether an acquisition will materialize or, if so, whether the
issuance of additional common stock or a series of preferred
stock would be desirable or required.
The increase in shares authorized by the Amended and
Restated Charter could under some circumstances (1) enable
existing directors and officers of the Company to increase their
beneficial ownership of the Company in response to a takeover
attempt by another person by entering into transactions resulting
in the issuance of authorized shares by the Company to existing
directors and officers and/or (2) dilute the beneficial ownership
of the person making the takeover attempt by issuing shares to
another person who might assist the board of directors in
opposing the takeover if the board of directors determines that
the takeover is not in the best interests of the Company and its
shareholders. In addition, issuances of additional common stock
or preferred stock convertible into common stock would dilute the
ownership position of the Company's shareholders generally.
-20-
Our board of directors hopes that shareholders will
attend the annual meeting. Whether or not you plan to attend, you
are urged to complete, date and sign the enclosed proxy card and
return it in the accompanying envelope or follow the instructions
provided for voting by phone or via the Internet, if applicable.
Prompt response will greatly facilitate arrangements for the
meeting and your cooperation is appreciated. Shareholders who
attend the meeting may vote their shares personally even though
they have sent in their proxy cards or voted by phone or the
Internet.
By Order of the Board of Directors
David W. Sasnett, Secretary
February ___, 2006
-21-
APPENDIX A
VOIP, INC.
AUDIT COMMITTEE CHARTER
Audit Committee Structure, Composition and Processes
----------------------------------------------------
The Audit Committee is appointed by the Board of
Directors to assist the Board in fulfilling its oversight
responsibilities by reviewing (1) the integrity of the financial
statements of the Company, (2) the qualifications, independence
and performance of the Company's independent auditor and internal
auditing department, and (3) the compliance by the Company with
legal and regulatory requirements.
The Committee shall be comprised of at least two
directors (three after such time as the Company is no longer a
Small Business Issuer) appointed by the Board, each of whom shall
meet the independence and experience requirements of the American
Stock Exchange. At least one member of the Committee shall be a
financial expert as defined by the Securities and Exchange
Commission. Committee members shall not simultaneously serve on
the audit committees of more than two other public companies.
The Committee shall have the responsibilities described
in this Charter. This Charter has been adopted by the Board of
Directors. The Committee shall make regular reports to the Board
of Directors. The Audit Committee shall review and reassess the
adequacy of this Charter annually and recommend any proposed
changes to the Board for approval. The Committee shall meet at
least four times a year, or more frequently as the Committee
considers necessary. The Committee shall annually evaluate the
Committee's performance.
The Committee's function is one of oversight and it
recognizes that the Company's management is responsible for
preparing the Company's financial statements and that the
independent auditor are responsible for auditing those financial
statements. In carrying out its oversight responsibilities, the
Committee is not providing any expert or special assurance as to
the Company's financial statements. The Committee has the
authority to conduct investigations within the scope of its
responsibilities.
Independent Auditor Selection and Evaluation
--------------------------------------------
* The Committee shall have sole authority to appoint the
independent auditor (subject to stockholder approval). The
independent auditor shall report directly to the Committee.
The Committee shall be directly responsible for the
compensation and oversight of the work of the independent
auditor (including resolution of disagreements between
management and the independent auditor regarding financial
reporting).
* The Committee shall evaluate the performance of the lead
audit partner and of the independent auditor and, if
appropriate, replace the independent auditor.
Proxy Statement Report
----------------------
* The Committee shall review and discuss the annual audited
financial statements, including disclosures made in
management's discussion and analysis, with management and
the independent auditor.
* The Committee shall discuss with the independent auditor
certain matters regarding the conduct of the annual audit as
required by Statement on Auditing Standards No. 61, such as
significant audit adjustments and significant accounting
policies.
* The Committee shall receive periodic reports from the
independent auditor regarding the auditor's independence
(including the disclosures required by Independence
Standards Board Standard No. 1), discuss such reports with
the auditor, and take appropriate action to oversee the
independence of the auditor.
A-1
* The Committee shall determine whether to recommend to the
Board that the audited financial statements be included in
the Company's Annual Report on Form 10-K or 10-KSB for
filing with the Securities and Exchange Commission.
* The Committee shall prepare the report required by the rules
of the Securities and Exchange Commission to be included in
the Company's annual proxy statement.
Independent Auditor Oversight
-----------------------------
* The Committee shall meet with the independent auditor prior
to the annual audit to review the scope, planning and
staffing of the audit.
* The Committee shall review with the independent auditor any
significant problems or difficulties that the auditor may
have encountered in connection with the audit, and review
significant issues raised by the management letter provided
by the auditor and the Company's response to those issues.
* The Committee shall (1) ensure the rotation of the lead
audit partner and other audit partners as required by law,
and (2) establish policies for the Company's hiring of
employees or former employees of the independent auditor.
Internal Audit Oversight
------------------------
* The Committee shall provide oversight of the Company's
internal audit function, including reviewing reports on the
organizational structure, budget, plans and results of
internal audit activities and adequacy of the Company's
internal controls.
* The Committee shall review the appointment and replacement
of the senior internal auditing executive, and review
significant issues identified by the internal auditing
department.
Additional Audit Committee Action
---------------------------------
* The Committee shall pre-approve all auditing services and
permitted non-audit services to be performed by the
independent auditor. The Committee may form and delegate
authority to subcommittees consisting of one or more members
the authority to grant such pre-approvals. The Committee
shall consider whether the provision of permitted non-audit
services is compatible with maintaining the independent
auditor's independence.
* The Committee shall establish procedures for the receipt,
retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls
or auditing matters, and the confidential, anonymous
submission by employees of concerns regarding questionable
accounting or auditing matters.
* The Committee shall discuss with management the Company's
earnings press releases, including the use of any non-GAAP
information, as well as financial information and earnings
guidance provided to analysts and rating agencies. Such
discussion may be done generally (consisting of discussing
the types of information to be disclosed and the types of
presentations to be made).
* The Committee shall ensure that the independent auditor
reviews the Company's quarterly financial statements,
including management's discussion and analysis, prior to
filing with the Securities and Exchange Commission; the
Committee, or its Chairman, shall discuss such review with
the independent auditor and management prior to such filing
of the Company's Form 10-Q or 10-QSB.
* The Committee shall review disclosures made by the Company's
Chief Executive Officer and Chief Financial Officer during
their certification process for the Form 10-K or 10-KSB and
Form 10-Q or 10-QSB about any significant deficiencies in
the design or operation of internal controls or material
A-2
weaknesses therein and any fraud involving management or
other employees who have a significant role in the Company's
internal controls.
* The Committee shall, as it determines necessary to carry out
its duties, obtain advice and assistance from outside legal,
accounting, or other advisors. The Company shall provide
funding for such Committee actions and for compensation of
any external auditor engaged by the Committee and for
ordinary administrative expenses of the Committee.
Reports to the Audit Committee
------------------------------
* The Committee shall review reports from the independent
auditor on (1) all critical accounting policies and
practices to be used, (2) all alternative treatments of
financial information within generally accepted accounting
principles that have been discussed with management,
ramifications of the use of such alternative disclosures and
treatments, and the treatment preferred by the independent
auditor, and (3) other material written communications
between the independent auditor and management, such as any
management letter or schedule of unadjusted differences.
* The Committee shall review a report from the independent
auditor at least annually regarding (1) the independent
auditor's internal quality-control procedures, (2) any
material issues raised by the most recent internal quality-
control review, or peer review, of the firm, or any inquiry
or investigation by governmental or professional authorities
within the preceding five years respecting one or more
independent audits carried out by the firm, (3) any steps
taken by the independent auditor to deal with such issues,
and (4) all relationships between the independent auditor
and the Company.
* The Committee shall review reports from management and/or
the independent auditor with respect to (1) major issues
regarding accounting principles and financial statement
presentations, including any significant changes in the
Company's selection or application of accounting principles,
and (2) the effect of regulatory and accounting initiatives
on the financial statements of the Company.
* The Committee shall obtain reports from management, the
Company's internal auditing department, the Company's
independent auditor, and/or the Company's general counsel
with respect to (1) the Company's policies and procedures
regarding compliance with applicable laws and regulations,
(2) compliance with the Company's Code of Conduct and the
Company's Code of Ethics for Senior Corporate Officers, (3)
the Company's processes for assessing and controlling
significant financial risk exposures, and (4) the status of
significant legal matters.
* The Committee shall meet separately, periodically, with the
Chief Financial Officer and Controller, the senior internal
auditing executive and the independent auditor. The
Committee may request any member of management to attend a
meeting of the Committee.
A-3
APPENDIX B
VoIP, Inc. 2006 Equity Incentive Plan
1. PURPOSE
The purposes of this VoIP, Inc. 2006 Equity Incentive Plan (the
"Plan") are to encourage selected employees, outside directors
and consultants of VoIP, Inc. (together with any successor
thereto, the "Company") and its Affiliates (as defined below) to
acquire a proprietary interest in the growth and performance of
the Company, to generate an increased incentive to contribute to
the Company's future success and prosperity, thus enhancing the
value of the Company for the benefit of its shareholders, and to
enhance the ability of the Company and its Affiliates to attract
and retain exceptionally qualified individuals upon whom, in
large measure, the sustained progress, growth and profitability
of the Company depend.
2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings
set forth below:
(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, 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 fair market 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.
B-1
(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, $.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
Except as otherwise provided herein, the Plan shall be
administered by the Committee. Subject to the terms of the Plan
and applicable law, the Committee shall have full power and
authority to: (i) designate participants; (ii) determine the
type or types of Awards to be granted to each Participant under
the Plan; (iii) determine the number of Shares to be covered by
(or with respect to which payments, rights, or other matters are
to be calculated in connection with) Awards; (iv) determine the
terms and conditions of any award; (v) determine the time or
times when each Award shall become exercisable and the duration
of the exercise period; (vi) determine whether, to what extent,
and under what circumstances Awards may be settled in or
exercised for cash, Shares, other securities, other Awards, or
other property, or canceled, forfeited, or suspended, and the
method or methods by which Awards may be settled, exercised,
canceled, forfeited, or suspended; (vii) determine whether, to
what extent, and under what circumstances cash, shares, other
securities, other Awards, other property, and other amounts
payable with respect to an Award under the Plan shall be deferred
either automatically or at the election of the holder thereof or
of the Committee; (viii) interpret and administer the Plan and
any instrument or agreement relating to, or Award made under, the
Plan; (ix) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; and (x) make any other
determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Award shall be
within the sole discretion of the Committee, may be made at any
time, and
B-2
shall be final, conclusive, and binding upon all Persons,
including the Company, any Affiliate, any Participant, any holder
or beneficiary of any Award, any shareholder, and any employee,
director or consultant of the Company or of any Affiliate. In
the case of any Award that is intended to qualify as performance-
based compensation for purposes of Section 162(m) of the Code,
once the Award is made, the Committee shall not have discretion
to increase the amount of compensation payable under the Award
that would otherwise be due upon attainment of the performance
goal. Actions of the Committee may be taken either (i) by a
subcommittee, designated by the Committee, composed of two or
more members, or (ii) by the Committee but with one or more
members abstaining or recusing himself or herself from acting on
the matter, so long as two or more members remain to act on the
matter. Such action, authorized by such a subcommittee or by the
Committee upon the abstention or recusal of such members, shall
be the action of the Committee for purposes of the Plan.
4. SHARES AVAILABLE FOR AWARDS
(a) SHARES AVAILABLE. Subject to adjustment as provided in
Section 4(b):
(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
or by an award granted under a Predecessor Plan,
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,
B-3
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, further, however, that the number of Shares
subject to any award denominated in Shares shall always
be a whole number.
5. ELIGIBILITY
Any Employee, Outside Director or Consultant shall be
eligible to receive Awards under the Plan. Any Awards granted to
members of the Committee shall be approved by the Board of
Directors of the Company.
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, 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.
B-4
(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 in respect of
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, 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
the Committee shall determine.
(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.
B-5
(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 in respect of 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.
B-6
7. AMENDMENT AND TERMINATION
Except to the extent prohibited by applicable law and unless
otherwise expressly provided in an Award Agreement or in the
Plan:
(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 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 Director,
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 in respect of 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.
B-7
(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 of 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
Subject to the approval of the shareholders of the Company,
the Plan shall be effective December 7, 2005 (the "Effective
Date"); provided, however, that to the extent that Awards are
granted under the Plan before its approval by shareholders, the
Awards will be contingent on approval of the Plan by the
shareholders of the Company at an annual meeting, special
meeting, or by written consent, which meeting shall be held
within one year of the Effective Date.
10. TERM OF THE PLAN
No Award shall be granted under the Plan more than 10 years
after the Effective Date. However, unless otherwise expressly
provided in an applicable Award Agreement, any Award theretofore
granted may extend beyond such date, and the authority of the
Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award, or to waive any conditions or rights
under any such Award, and the authority of the Board of Directors
of the Company to amend the Plan, shall extend beyond such date.
B-8
11. TERMINATION OF PREDECESSOR PLANS
Upon the Effective Date, the Predecessor Plans shall
terminate and no further awards or grants may be made under such
Predecessor Plans.
B-9
APPENDIX C
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
VOIP, INC.
ARTICLE ONE
VoIP, Inc. (the "Corporation"), pursuant to the provisions
of Article 4.07 of the Texas Business Corporation Act, hereby
adopts these restated articles of incorporation which accurately
copy the original articles of incorporation and all amendments
thereto that are in effect to date and as further amended by such
restated articles of incorporation as hereinafter set forth and
which contain no other change in any provision thereof.
ARTICLE TWO
The Articles of Incorporation of the Corporation are amended
by the Amended and Restated Articles of incorporation in their
entirety as follows:
ARTICLE I
The name of this Corporation is VoIP, Inc.
ARTICLE II
The period of duration is perpetual.
ARTICLE III
PURPOSES
The purposes for which this Corporation is organized
are to conduct any type of business endeavor which is legal
pursuant to the laws of the State of Texas.
ARTICLE IV
SHARES
SECTION 1. The total number of shares of stock which
the Corporation shall have authority to issue is Two Hundred
Fifty Million (250,000,000) shares of common stock ("Common
Stock") and Twenty-Five Million (25,000,000) shares of preferred
stock ("Preferred Stock"). The par value of each of such shares
is $0.001.
SECTION 2. The Board of Directors of the Corporation is
hereby expressly authorized, by resolution or resolutions from
time to time adopted, to provide, out of the unissued shares of
Preferred Stock, for the issuance of the Preferred Stock in one
or more classes or series. Before any shares of any such class
or series are issued, the Board of Directors shall fix and state,
and hereby is expressly empowered to fix, by resolution or
resolutions, the designations, preferences, and relative,
participating, optional or other special rights of the shares of
each such series, and the qualifications, limitations or
restrictions thereon, including, but not limited to,
determination of any of the following:
(a) the designation of such class or series, the
number of shares to constitute such class or series and the
stated value thereof if different from the par value
thereof;
(b) whether the shares of such class or series shall
have voting rights, in addition to any voting rights
provided by law, and, if so, the terms of such voting
rights, which may be full, special or limited, and whether
the shares of such class or series shall be entitled to vote
as a separate class either alone or together with the shares
of one or more other classes or series of stock;
C-1
(c) the dividends, if any, payable on such class or
series, whether any such dividends shall be cumulative, and,
if so, from what dates, the conditions and dates upon which
such dividends shall be payable, the preference or relation
that such dividends shall bear to the dividends payable on
any shares of stock of any other class or any other series
of the same class;
(d) whether the shares of such class or series shall
be subject to redemption by the Corporation at its option or
at the option of the holders of such shares or upon the
happening of a specified event, and, if so, the times,
prices and other terms, conditions and manner of such
redemption;
(e) the preferences, if any, and the amount or amounts
payable upon shares of such series upon, and the rights of
the holders of such class or series in, the voluntary or
involuntary liquidation, dissolution or winding up, or upon
any distribution of the assets, of the Corporation;
(f) whether the shares of such class or series shall
be subject to the operation of a retirement or sinking fund
and, if so, the extent to and manner in which any such
retirement or sinking fund shall be applied to the purchase
or redemption of the shares of such class or series for
retirement or other corporate purposes and the terms and
provisions relative to the operation thereof;
(g) whether the shares of such class or series shall
be convertible into, or exchangeable for, at the option of
either the holder or the Corporation or upon the happening
of a specified event, shares of stock of any other class or
any other series of the same class or any other class or
classes of securities or property and, if so, the price or
prices or the rate or rates of conversion or exchange and
the method, if any, of adjusting the same, and any other
terms and conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be
effective while any shares of such class or series are
outstanding, upon the payment of dividends or the making of
other distributions on, and upon the purchase, redemption or
other acquisition by the Corporation of, the Common Stock or
shares of stock of any other class or any other series of
the same class;
(i) the conditions or restrictions, if any, upon the
creation of indebtedness of the Corporation or upon the
issue of any additional stock, including additional shares
of such series or of any other series of the same class or
of any other class; and
(j) any other powers, preferences and relative,
participating, optional and other special rights, and any
qualifications, limitations and restrictions thereof.
The powers, preferences and relative, participating,
optional and other special rights of each class or series of
Preferred Stock, and the qualifications, limitations and
restrictions thereof, if any, may differ from those of any and
all other classes or series at any time outstanding. All shares
of any one series of Preferred Stock shall be identical in all
respects with all other shares of such series, except that shares
of any one series issued at different times may differ as to the
dates from which dividends thereof shall be cumulative. The
Board of Directors may increase the number of shares of the
Preferred Stock designated for any existing class or series by a
resolution adding to such class or series authorized and unissued
shares of the Preferred Stock not designated for any other class
or series. The Board of Directors may decrease the number of
shares of Preferred Stock designated for any existing class or
series by a resolution subtracting from such class or series
unissued shares of the Preferred Stock designated for such class
or series, and the shares so subtracted shall become authorized,
unissued, and undesignated shares of the Preferred Stock.
ARTICLE V
MAJORITY VOTE
With respect to any action to be taken by the
shareholders of the Corporation under the Texas Business
Corporation Act or otherwise, the vote or occurrence of the
holders of a majority of the issued and outstanding shares of the
Corporation shall control.
C-2
ARTICLE VI
NO CUMULATIVE VOTING
Cumulative voting is expressly prohibited. At each
election of directors, every shareholder entitled to vote at such
election shall have the right to vote, in person or by proxy, the
number of shares owned by him for as many persons as there are
directors to be elected and for whose election he has a right to
vote; no shareholders shall be entitled to cumulate his votes by
giving one candidate as many votes as the number of such
directors multiplied by his shares shall equal, or by
distributing such votes on the same principal among any number of
such candidates.
ARTICLE VII
PRE-EMPTIVE RIGHTS
No holder of any stock of the Corporation shall be
entitled as a matter of right to purchase or subscribe for any
part of any stock of the Corporation authorized by these Articles
or of any additional stock of any class to be issued by reason of
any increase of the authorized stock of the Corporation or of any
bonds, certificates of indebtedness, debentures, warrants,
options or other securities convertible into any class or stock
of the Corporation, but any stock authorized by these Articles or
any such additional authorized issue of any stock or securities
convertible into any stock may be issued and disposed of by the
Board of Directors to such persons, firms, corporations or
associations for such consideration and upon such terms and in
such manner as the Board of Directors may decide in its
discretion without offering any thereof on the same terms or on
any terms to the shareholders then of record or to any class of
shareholders, provided only that such issuance may not be
inconsistent with any provision of law or with any of the
provisions of these Articles.
ARTICLE VIII
CERTAIN INSIDER TRANSACTIONS
Any contract or other transaction between the
Corporation and one or more of its directors, or between the
Corporation and any firm of which one or more of its directors
are members or employees, or in which they are interested, or
between the Corporation and any corporation or association of
which one or more of its directors are shareholders, members,
directors, officers or employees, or in which they are
interested, shall be valid for all purposes, notwithstanding the
presence of the director or directors at the meeting of the Board
of Directors of the Corporation that acts upon, or in reference
to, the contract or transaction, and notwithstanding his or their
participation in the action, if the facts of such interest shall
be disclosed or known to the Board of Directors and the Board of
Directors shall, nevertheless, authorize or ratify the contract
or transaction, the interested director or directors to be
counted in determining whether a quorum is present and to be
entitled to vote on such authorization of ratification. This
Article VIII shall not be construed to invalidate any contract or
other transaction that would otherwise be valid under the common
and statutory law applicable to it.
ARTICLE IX
INDEMNIFICATION
The Corporation shall indemnify any person, by reason
of the fact that he or she, his or her testator, or intestate, is
or was a director, officer, or employee of the Corporation, or of
any corporation or other entity, which he or she served in such
capacity at the request of the Corporation to the maximum extent
of Texas law.
ARTICLE X
INSURANCE
The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or who
is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or
domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other
enterprise, against any liability asserted against him and
incurred by him in any such capacity or arising out of his status
as such a person, whether or not the Corporation would have the
power to indemnify him against such liability by statute.
C-3
ARTICLE XI
LIMITATION ON LIABILITY
No person shall be liable to the Corporation for any
loss or damage suffered by it on account of any action taken or
omitted to be taken by him as a director, officer or employee of
the Corporation in good faith, if, in the exercise of ordinary
care, this person:
A. Relied upon financial statements of the
Corporation represented to be corrected by the President or the
officer of the Corporation having charge of its books of account,
or stated in a written report by an independent public or
certified public accountant or firm of such accountants fairly to
reflect the financial condition of the Corporation; or considered
the assets to be of their book value; or
B. Relied upon the written opinion of any attorney
hired by or representing the Corporation.
ARTICLE XII
BYLAWS
Except to the extent such power may be modified or
divested by action of the shareholders representing a majority of
the issued and outstanding shares of the Common Stock of the
Corporation taken at a regular or special meeting of the
shareholders, the power to adopt, alter, amend or repeal the
Bylaws of the Corporation shall be vested in the Board of
Directors.
ARTICLE XIII
REGISTERED OFFICE AND REGISTERED AGENT
The post office address of its initial registered
office and the name of its initial registered agent at such
address are:
Registered Office: 1717 Main Street, Suite 3700
Dallas, TX 75201
Registered Agent: Ronald Brown, Esq.
ARTICLE XIV
CONSENT OF SHAREHOLDERS
Any action which must be taken at any annual or special
meeting of shareholders, or any action which may be taken without
a meeting, without notice and without a vote, if a consent or
consents in writing, setting forth the action taken, is signed by
the holder or holders of shares having not less than the minimum
number of votes that would be necessary to take such action at a
meeting at which the holders of all shares are entitled to vote
on the action were present and voted.
IN WITNESS WHEREOF, the undersigned has executed these
Amended and Restated Articles of Incorporation on this ___ day of
___________________, 2006.
VOIP, INC.
By___________________________
B. Michael Adler, CEO
C-4
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD AS SOON AS POSSIBLE
ANNUAL MEETING OF SHAREHOLDERS
VOIP, INC.
March __, 2006
Please Detach and Mail in the Envelope Provided
Please mark your
A [ X] votes as in this
example
WITHHOLD
FOR AUTHORITY
the to vote for
nominee the nominee
listed listed below
below
FOR AGAINST ABSTAIN
1. PROPOSAL NO. 1-
ELECTION OF
DIRECTORS
Nominees:
B. Michael Adler [ ] [ ] 2.PROPOSAL NO. 2- [ ] [ ] [ ]
APPROVAL OF
THE VOIP,
INC. 2006
EQUITY
INCENTIVE
PLAN
Senator George [ ] [ ] 3.PROPOSAL NO. 3- [ ] [ ] [ ]
Firestone APPROVAL OF
THE AMENDED
AND RESTATED
ARTICLES OF
INCORPORATION
Stuart Kosh [ ] [ ]
The undersigned acknowledges receipt of (a)
Notice of Annual Meeting of Stockholders, (b)
the accompanying Proxy Statement, and (c) the
Company's 10-KSB for fiscal year ended
December 31, 2004.
Thomas Reeves [ ] [ ] THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS AND WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATIONS MADE ABOVE. YOU ARE
URGED TO COMPLETE, SIGN, DATE AND RETURN THIS
PROXY IN THE ENVELOPE PROVIDED, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU DECIDE TO ATTEND THE MEETING, YOU MAY, IF
SO DESIRED, REVOKE THE PROXY AND VOTE YOUR
SHARES IN PERSON.
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD AS
SOON AS POSSIBLE.
Nicholas A.
Iannuzzi, Jr. [ ] [ ]
Chris Rhoades [ ] [ ]
John N. Spencer, Jr. [ ] [ ]
PLEASE DETACH AND MAIL IN THE ENVELOPE
PROVIDED.
SIGNATURE 1:______________________ DATE____________, 2006 SIGNATURE 2:______________________ DATE____________, 2006
PROXY INSTRUCTIONS: Please sign exactly as the name or names appear on your stock certificate
(as indicated hereon). If the shares are issued in the name of two or more persons, all of them
must sign the proxy. A proxy executed by a corporation must be signed in its name by an
authorized officer. Executors, administrators, trustees and partners should indicate their
capacity when signing.
VOIP, INC.
ANNUAL MEETING OF SHAREHOLDERS
_________, __, 2006
The undersigned, having received the notice and accompanying
Proxy Statement for the Annual Meeting of Shareholders of VoIP,
Inc. (the "Company") to be held on _________, __, 2006 (the
"Annual Meeting"), hereby appoints Hal H. Bibee and David W.
Sasnett, and each of them, with full power of substitution, as
the undersigned's proxies and attorneys-in-fact to vote at the
Annual Meeting, or any adjournment thereof, all shares of voting
stock of the Company, which the undersigned may be entitled to
vote. The above proxies are hereby instructed to vote at the
Annual Meeting or any adjournment thereof, as shown below.
(Continued and to be signed on reverse side)