Contract
Exhibit
10.51
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY
APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO
THIS
WARRANT OR THE SHARES OF COMMON STOCK UNDERLYING ITS EXERCISE UNDER SAID
ACT AND
ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO XFONE, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
Right
to
Purchase up to 157,500 Shares of Common Stock of
XFONE,
INC.
(subject
to adjustment as provided herein)
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No.
_________________
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Issue
Date: September 27, 2005
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XFONE,
INC., a corporation organized under the laws of the State of Nevada (the
“Company”), hereby certifies that, for value received, LAURUS MASTER FUND, LTD.,
or assigns (the “Holder”), is entitled, subject to the terms set forth below, to
purchase from the Company (as defined below) from and after the Issue Date
of
this Warrant and at any time or from time to time before 5:00 p.m., New York
time, through the close of business September 27, 2010 (the “Expiration Date”),
up to 157,500 fully paid and nonassessable shares of Common Stock (as
hereinafter defined), $0.001 par value per share, at the applicable Exercise
Price (as defined below) per share. The number of such shares of Common Stock
and the applicable Exercise Price per share are subject to adjustment as
provided herein. Reference is made to the Securities Purchase Agreement entered
into by the Company and Holder dated as of the date hereof (as the same may
be
amended, modified and/or supplemented from time to time), (the “Purchase
Agreement”). Capitalized terms used but not otherwise defined herein shall have
the meanings given them in the Purchase Agreement.
As
used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The
term
“Company” shall include XFONE, INC. and any corporation which shall succeed, or
assume the obligations of, XFONE, INC. hereunder.
(b) The
term
“Common Stock” includes (i) the Company’s Common Stock, par value $0.001 per
share; and (ii) any other securities into which or for which any of the
securities described in the preceding clause (i) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.
(c) The
term
“Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which
the
holder of the Warrant, pursuant to Section 3 and/or 4 hereof, at any time
shall
be entitled to receive, or shall have received, on the exercise of the Warrant,
in lieu of or in addition to Common Stock, or which at any time shall be
issuable or shall have been issued in exchange for or in replacement of Common
Stock or Other Securities pursuant to Section 4 or otherwise.
(i) The
“Exercise Price” applicable under this Warrant shall be $3.80.
1. Exercise
of Warrant.
1.1. Number
of Shares Issuable upon Exercise.
From
and after the issue date of this Warrant through and including the Expiration
Date, the Holder shall be entitled to receive, upon exercise of this Warrant
in
whole or in part, by (a) delivery of an original or fax copy of an exercise
notice in the form attached hereto as Exhibit A (the “Exercise Notice”), (b)
surrender of this Warrant, and (c) making payment to the Company as set forth
herein, shares of Common Stock of the Company, subject to adjustment pursuant
to
Section 4.
1.2. Company
Acknowledgment.
The
Company will, at the time of the exercise of this Warrant, upon the request
of
the Holder hereof acknowledge in writing its continuing obligation to afford
to
such holder any rights to which such holder shall continue to be entitled
after
such exercise in accordance with the provisions of this Warrant. If the Holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder any such
rights.
1.3. Trustee
for Warrant Holders.
In the
event that a bank or trust company shall have been appointed as trustee for
the
Holders of this Warrant pursuant to Subsection 3.2, such bank or trust company
shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company
or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this
Warrant .
2. Procedure
for Exercise.
2.1. Delivery
of Stock Certificates, Etc., on Exercise.
The
Company agrees that the shares of Common Stock purchased upon exercise of
this
Warrant shall be deemed to be issued to the Holder as the record owner of
such
shares as of the close of business on the date on which this Warrant shall
have
been surrendered and payment made for such shares in accordance herewith.
As
soon as practicable after the exercise of this Warrant in full or in part,
and
in any event within three (3) business days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will
cause
to be issued in the name of and delivered to the Holder, or as such Holder
(upon
payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates
for
the number of duly and validly issued, fully paid and nonassessable shares
of
Common Stock (or Other Securities) to which such Holder shall be entitled
on
such exercise.
2.2. Exercise.
(a) Payment
may be made by wire transfer to the Company in an amount equal to the applicable
aggregate Exercise Price, for the number of Common Shares specified in such
Exercise Notice (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Common Stock issuable to the
Holder
per the terms of this Warrant) and the Holder shall thereupon be entitled
to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.
3. Effect
of Reorganization, Etc.; Adjustment of Exercise Price.
3.1. Reorganization,
Consolidation, Merger, Etc.
In case
at any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person, or (c) transfer all
or
substantially all of its properties or assets to any other person under any
plan
or arrangement contemplating the dissolution of the Company, then, in each
such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder, on the
exercise hereof as provided in Section 1 at any time after the consummation
of
such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock
(or
Other Securities) issuable on such exercise prior to such consummation or
such
effective date, the stock and other securities and property (including cash)
to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had
so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.
3.2. Dissolution.
In the
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, concurrently
with
any distributions made to holders of its Common Stock, shall at its expense
deliver or cause to be delivered to the Holder the stock and other securities
and property (including cash, where applicable) receivable by the Holder
pursuant to Section 3.1, or, if the Holder shall so instruct the Company,
to a
bank or trust company specified by the Holder and having its principal office
in
New York, NY as trustee for the Holder (the “Trustee”).
3.3. Continuation
of Terms.
Upon
any reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable
to
the shares of stock and other securities and property receivable on the exercise
of this Warrant after the consummation of such reorganization, consolidation
or
merger or the effective date of dissolution following any such transfer,
as the
case may be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether
or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not continue in full
force
and effect after the consummation of the transactions described in this Section
3, then the Company’s securities and property (including cash, where applicable)
receivable by the Holder will be delivered to the Holder or the Trustee as
contemplated by Section 3.2.
4. Extraordinary
Events Regarding Common Stock.
(I) In
the event that the Company shall (a) issue additional shares of the Common
Stock
as a dividend or other distribution on outstanding Common Stock or any preferred
stock issued by the Company (b) subdivide its outstanding shares of Common
Stock, or (c) combine its outstanding shares of the Common Stock into
a
smaller number of shares of the Common Stock, then, in each such event, the
Exercise Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Exercise Price by a fraction, the numerator
of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product
so
obtained shall thereafter be the Exercise Price then in effect. The Exercise
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section 4. (II)
The
number of shares of Common Stock that the Holder shall thereafter, on the
exercise hereof as provided in Section 1, be entitled to receive shall be
adjusted to a number determined by multiplying the number of shares of Common
Stock that would otherwise (but for the provisions of this Section 4) be
issuable on such exercise by a fraction of which (a) the numerator is the
Exercise Price that would otherwise (but for the provisions of this Section
4)
be in effect, and (b) the denominator is the Exercise Price in effect on
the
date of such exercise (taking into account the provisions of this Section
4).
Notwithstanding the provisions of this Section 4(II), with effect upon the
irrevocable payment in full of the Obligations (as defined in the Master
Security Agreement) no further adjustment to the number of shares of Common
Stock required by this Section 4(II) shall be required.
5. Certificate
as to Adjustments.
In each
case of any adjustment or readjustment in the shares of Common Stock (or
Other
Securities) issuable on the exercise of this Warrant, the Company at its
expense
will promptly cause its Chief Financial Officer or other appropriate designee
to
compute such adjustment or readjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment
is
based, including a statement of (a) the consideration received or
receivable by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock (or Other Securities) outstanding or deemed
to
be outstanding, and (c) the Exercise Price and the number of shares of Common
Stock to be received upon exercise of this Warrant, in effect immediately
prior
to such adjustment or readjustment and as adjusted or readjusted as provided
in
this Warrant. The Company will forthwith mail a copy of each such certificate
to
the Holder of this Warrant and any Warrant Agent of the Company (appointed
pursuant to Section 11 hereof).
6. Reservation
of Stock, Etc., Issuable on Exercise of Warrant.
The
Company will at all times reserve and keep available, solely for issuance
and
delivery on the exercise of this Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this
Warrant.
7. Assignment;
Exchange of Warrant.
Subject
to compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a
“Transferor”) in whole or in part. On the surrender for exchange of this
Warrant, with the Transferor’s endorsement in the form of Exhibit B attached
hereto (the “Transferor Endorsement Form”) and subject to compliance with the
requirements set forth in the Transferor Endorsement Form, together with
evidence reasonably satisfactory to the Company demonstrating compliance
with
applicable securities laws, which shall include, without limitation, the
provision of a legal opinion from the Transferor’s counsel (at the Holder’s
expense) that such transfer is exempt from the registration requirements
of
applicable securities laws, the Company at its expense (but with payment
by the
Transferor of any applicable transfer taxes) will issue and deliver to or
on the
order of the Transferor thereof a new Warrant of like tenor, in the name
of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a “Transferee”), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or
faces
of the Warrant so surrendered by the Transferor.
8. Replacement
of Warrant.
On
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction of this Warrant, on delivery of an indemnity agreement
or
security reasonably satisfactory in form and amount to the Company or, in
the
case of any such mutilation, on surrender and cancellation of this Warrant,
the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
9. Registration
Rights.
The
Holder has been granted certain registration rights by the Company. These
registration rights are set forth in a Registration Rights Agreement entered
into by the Company and Holder dated as of the date hereof, as the same may
be
amended, modified and/or supplemented from time to time.
10. Maximum
Exercise.
Notwithstanding anything contained herein to the contrary, the Holder shall
not
be entitled to exercise this Warrant in connection with that number of shares
of
Common Stock which would exceed the difference between (i) 4.99% of the issued
and outstanding shares of Common Stock and (ii) the number of shares of Common
Stock beneficially owned by the Holder for the purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance
with
Section 13(d) of the Exchange Act, as amended, and Regulation 13d-3 thereunder.
The conversion limitation described in this Section 10 shall automatically
become null and void following notice to the Company upon the occurrence
and
during the continuance of an Event of Default under and as defined in the
Note
made by the Company to the Holder dated the date hereof (as amended, modified
or
supplemented from time to time, the “Note”), or upon 75 days prior notice to the
Company, except that at no time shall the number of shares of Common Stock
beneficially owned by the Holder exceed 19.99% of the outstanding shares
of
Common Stock. Notwithstanding anything contained herein to the contrary,
the
number of shares of Common Stock issuable by the Company and acquirable by
the
Holder at a price below $3.10 per share pursuant to the terms of this Warrant,
the Note, the Purchase Agreement (as defined in the Note), any Related Agreement
(as defined in the Purchase Agreement) or otherwise, shall not exceed an
aggregate of 1,377,533 shares of Common Stock (subject to appropriate adjustment
for stock splits, stock dividends, or other similar recapitalizations affecting
the Common Stock) (the “Maximum
Common Stock Issuance”),
unless the issuance of Common Stock hereunder in excess of the Maximum Common
Stock Issuance shall first be approved by the Company’s shareholders. If at any
point in time and from time to time the number of shares of Common Stock
issued
pursuant to the terms of this Warrant, the Note, the Purchase Agreement or
any
Related Agreement, together with the number of shares of Common Stock that
would
then be issuable by the Company to the Holder in the event of a conversion
or
exercise pursuant to the terms of this Warrant, the Note, the Purchase
Agreement, any Related Agreement or otherwise, would exceed the Maximum Common
Stock Issuance but for this Section 10, the Company shall promptly call a
shareholders meeting to solicit shareholder approval for the issuance of
the
shares of Common Stock hereunder in excess of the Maximum Common Stock Issuance.
Notwithstanding anything contained herein to the contrary, the Holder shall
not,
pursuant to any Exercise Notice, be entitled to exercise this Warrant on
an
Exercise Date for fewer than 3,000 shares of Common Stock.
11. Warrant
Agent.
The
Company may, by written notice to the each Holder of the Warrant, appoint
an
agent for the purpose of issuing Common Stock (or Other Securities) on the
exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant
to Section 7, and replacing this Warrant pursuant to Section 8, or any of
the
foregoing, and thereafter any such issuance, exchange or replacement, as
the
case may be, shall be made at such office by such agent.
12. Transfer
on the Company’s Books.
Until
this Warrant is transferred on the books of the Company, the Company may
treat
the registered Holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
13. Notices,
Etc.
All
notices and other communications from the Company to the Holder shall be
delivered by a nationally recognized overnight courier or mailed by first
class
registered or certified mail, postage prepaid, at such address as may have
been
furnished to the Company in writing by such Holder or, until any such Holder
furnishes to the Company an address, then to, and at the address of, the
last
Holder who has so furnished an address to the Company.
14. The
Holder has substantial experience in evaluating, lending and investing in
private placement transactions of securities in companies similar to the
Company
so that it is capable of evaluating the merits and risks of its investment
in
the Company and has the capacity to protect its own interests. The Holder
must
bear the economic risk of this transaction until the Common Stock issuable
upon
exercise of this Warrant are sold pursuant to: (i) an effective registration
statement under the 1933 Act; or (ii) an exemption from registration is
available with respect to such sale. The Holder represents that by reason
of
its, or of its management’s, business and financial experience, the Holder has
the capacity to evaluate the merits and risks of its investment in the Note,
the
Warrant and the securities deriving from this transaction, and to protect
its
own interests in connection with the transactions contemplated in the Securities
Purchase Agreement and any Related Agreement (as defined in the Securities
Purchase Agreement), and is experienced in evaluating and investing in private
placement transactions of securities of companies in a similar stage of
development. Further, Holder has not lent the monies involved and entered
into
this transaction as a result of any form of general advertising, including
advertisements, articles, notices, or other communications in any newspaper,
magazine, or similar media, or telecommunications in connection with the
transactions contemplated in the Securities Purchases Agreement or any Related
Agreement. The
Holder represents that it is an “accredited investor” within the meaning of
Regulation D under the 1933 Act.
15. Holder’s
Status.
The
Holder shall not, by virtue of its status as a Holder of the Warrant, be
entitled to any rights of a shareholder in the Company, either at law or
equity,
and the rights of the Holder are limited to those expressly set forth in
this
Warrant.
16. Voluntary
Adjustment by the Company. The Company may, at any time and at its sole
discretion, during the effective term of this Warrant, reduce the then current
Exercise Price to any amount below the then current Exercise Price, for such
period of time deemed appropriate by the Board of Directors of the Company
in
the exercise of their good faith business judgment.
17. Miscellaneous.
This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. THIS WARRANT
SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF STATE OF NEW
YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT CONCERNING
THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY IN THE
STATE
COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK;
PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS PROVISION AND
BRING
AN ACTION OUTSIDE THE STATE OF NEW YORK. The individuals executing this Warrant
on behalf of the Company agree to submit to the jurisdiction of such courts
and
waive trial by jury. The prevailing party shall be entitled to recover from
the
other party its reasonable attorneys’ fees and costs. In the event that any
provision of this Warrant is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to
the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid
or
unenforceable under any law shall not affect the validity or enforceability
of
any other provision of this Warrant. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of
the
terms hereof. The invalidity or unenforceability of any provision hereof
shall
in no way affect the validity or enforceability of any other provision hereof.
The Company acknowledges that legal counsel participated in the preparation
of
this Warrant and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Warrant to favor any party against the other
party.
[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
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XFONE,
INC.
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WITNESS:
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By:
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Name: Xxx
Xxxxxxxxx
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Title: President
& CEO
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Exhibit
A
FORM
OF SUBSCRIPTION
(To
Be
Signed Only On Exercise Of Warrant)
TO: XFONE,
INC.
Attention: Chief
Financial Officer
The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable
box):
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________
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________
shares of the Common Stock covered by such Warrant; or
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________
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the
maximum number of shares of Common Stock covered by such Warrant
pursuant
to the cashless exercise procedure set forth in Section
2.
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The
undersigned herewith makes payment of the full Exercise Price for such shares
at
the price per share provided for in such Warrant, which is $___________.
Such
payment takes the form of (check applicable box or boxes):
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________
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$__________
in lawful money of the United States; and/or
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________
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the
cancellation of such portion of the attached Warrant as is exercisable
for
a total of _______ shares of Common Stock (using a Fair Market
Value of
$_______ per share for purposes of this calculation);
and/or
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________
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the
cancellation of such number of shares of Common Stock as is necessary,
in
accordance with the formula set forth in Section 2.2, to exercise
this
Warrant with respect to the maximum number of shares of Common
Stock
purchasable pursuant to the cashless exercise procedure set forth
in
Section 2.
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The
undersigned requests that the certificates for such shares be issued in the
name
of, and delivered to ______________________________________________ whose
address is
___________________________________________________________________________.
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of
1933,
as amended (the “Securities Act”) or pursuant to an exemption from registration
under the Securities Act.
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Dated:
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(Signature
must conform to name of holder as specified on the face of the
Warrant)
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Address:
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Exhibit
B
FORM
OF TRANSFEROR ENDORSEMENT
(To
Be
Signed Only On Transfer Of Warrant)
For
value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of XFONE, INC.into which the within Warrant relates specified under
the
headings “Percentage Transferred” and “Number Transferred,” respectively,
opposite the name(s) of such person(s) and appoints each such person Attorney
to
transfer its respective right on the books of XFONE, INC.with full power
of
substitution in the premises.
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Transferees
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Address
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Percentage
Transferred
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Number
Transferred
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Dated:
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(Signature
must conform to name of holder as specified on the face of the
Warrant)
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Address:
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SIGNED
IN THE PRESENCE OF:
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(Name)
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ACCEPTED
AND AGREED:
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[TRANSFEREE]
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(Name)
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