REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of March 10, 1997, is
among each of the several Purchasers whose names appear on the signature pages
hereof (referred to collectively as the "Purchasers" and individually as the
"Purchaser") and TEL-SAVE HOLDINGS, INC., a Delaware corporation ("Holdings").
Capitalized terms used herein without definition shall have the meanings
assigned in the Stock Purchase Agreement described in the second recital below.
W I T N E S S E T H:
WHEREAS, Xx. Xxxxxx Xxxxxxxx ("Xxxxxxxx") is the owner beneficially and
of record of 19,860,000 shares of common stock, par value $.01 per share (the
"Common Stock") of Holdings;
WHEREAS, Borislow desires to sell, and the Purchasers desire to
purchase, 3,911,000 shares of Common Stock (the "Firm Shares") subject to the
terms and conditions of the Stock Purchase Agreement, dated the date hereof,
among Borislow and the Purchasers (the "Stock Purchase Agreement") subject to
the terms and conditions set forth therein;
WHEREAS, Borislow and the Purchasers have, simultaneously herewith,
entered into an Escrow Agreement, dated the dated hereof (the "Escrow
Agreement"), which Escrow Agreement provides for the deposit by Borislow of
1,564,400 shares of Common Stock (the "Escrow Shares") with an Escrow Agent (as
defined therein), subject to the terms and conditions set forth therein and in
the Stock Purchase Agreement; and
WHEREAS, Holdings desires to grant to the Purchasers certain
registration rights in connection with the Firm Shares and the Escrow Shares
(referred to herein together as the "Shares").
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
1. Definitions
"Commission" means the Securities and Exchange Commission.
"Common Stock" means common stock, par value $.01 per share, of Hold-
ings.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Registrable Securities" means as of any date the Shares and any
securities issued or issuable with respect to any of such Shares (x) by way of
stock split, stock dividend or other distribution, (y) in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or (z) in any other way. Any Registrable Security will cease to
be a Registrable Security when (i) a Registration Statement covering such
Registrable Security has been declared effective by the Commission and such
Registrable Securities have been disposed of or purchased, as the case may be,
pursuant to such effective Registration Statement, (ii) it is sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met or it may be
sold pursuant to Rule 144(k) under the Securities Act or (iii) it has been
otherwise transferred, and Holdings has delivered a new certificate or other
evidence of ownership for it not bearing a legend and it may be resold without
subsequent registration under the Securities Act.
"Registration Statement" means any registration statement of Holdings,
including the prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, and all exhibits and all
material incorporated by reference in such Registration Statement, which relates
to Registrable Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Shareholder" shall have the meaning set forth in Section 3(a).
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"Shares" mean the Firm Shares and Escrow Shares.
"Underwriter" means a securities dealer that purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
2. Purchaser Understandings and Agreements
(a) Each of the Purchasers acknowledges and agrees that it has acquired
the Firm Shares, and will acquire the Escrow Shares, if any, in transactions not
involving a public offering and that such Shares are subject to certain
restrictions as to resale under the federal and state securities laws. Each of
the Purchasers agrees and understands that until satisfaction of the conditions
set forth in Section 2(c), stop transfer instructions will be given to the
transfer agent for the Shares and each certificate for Shares, and each
certificate delivered on transfer of or in substitution for any such
certificate, shall bear a legend in substantially the following form:
The shares represented by this certificate are subject to
restrictions imposed by the Securities Act of 1933, as amended, and
applicable state securities law. The shares may not be sold or
transferred in the absence of registration or an exemption therefrom
under the Securities Act of 1933 and any applicable state securities
laws.
(b) Each of the Purchasers agrees that it will not sell, pledge,
assign, transfer or otherwise dispose (collectively, "Transfer") of any of the
Shares unless the Transfer will be made pursuant to an exemption from the
registration requirements of the Securities Act or pursuant to an effective
registration statement under the Securities Act and pursuant to an exemption
from any applicable state securities laws or an effective registration or other
qualification under any applicable state securities laws. Exemptions from such
registration requirements are limited and Holdings understands that each of the
Purchasers has obtained advice from its own counsel as to the nature and
conditions of such exemptions. Holdings is under no obligation to register the
Shares except as provided in Section 3. Holdings shall not incur any liability
for any delay in recognizing any Transfer of Shares by any Shareholder if
Holdings reasonably believes that such
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transfer may have been or would be in violation of the provisions of this
Agreement.
3. Registration
(a) As soon as practicable after the date hereof, Holdings shall file,
at its sole election, either (A) a Registration Statement on Form S-3 to permit
resale of all of the Registrable Securities held by the Purchasers or (B) a
"shelf" Registration Statement on Form S-3 (or its then equivalent) with respect
to the resale of all of the Registrable Securities held by the Purchasers
pursuant to Rule 415 (or any similar provision that may be adopted by the
Commission) under the Securities Act; provided that Holdings, at its election,
may delay such filing or the effectiveness of the Registration Statement, but
not beyond the date of filing of its next quarterly or annual report with the
Commission under the Exchange Act, whichever is earlier, if the Board of
Directors of Holdings shall have determined in good faith that such filing or
effectiveness would be detrimental to Holdings' business interests. Holdings
shall give twenty (20) days notice to each of the Purchasers of such
registration. In its capacity as a holder of Registrable Securities that are to
be included in the Registration Statement, each of the Purchasers is sometimes
referred to as the "Selling Shareholder".
(b) Holdings agrees to use commercially reasonable efforts to have the
Registration Statement described in Section 3(a) declared effective as soon as
practicable after the date of filing thereof, but in any event, within sixty
(60) days, and to keep such Registration Statement effective for a period of not
less than two (2) years after effectiveness, except that such Date shall be
extended by one day for each day beyond thirty (30) days that the filing of the
Registration Statement is delayed pursuant to the provisions of Section 4(b).
(c) Nothing in this Section 3 shall require Holdings to file a
registration statement for an underwritten offering or to participate therein.
4. Registration
In connection with the Registration Statement filed pursuant to Section
3 hereof:
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(a) Holdings may require the Selling Shareholders to furnish to
Holdings such information regarding the distribution of such securities as
Holdings may from time to time reasonably request in writing as being necessary
or appropriate for completion of the Registration Statement and each Selling
Shareholder agrees to cooperate with Holdings in all reasonable respects in
connection with the preparation and filing of any Registration Statements
hereunder in which such Registrable Securities are included or expected to be
included.
(b) The Selling Shareholder agrees that, at any time when any
Registration Statement is effective, upon receipt of any written notice from
Holdings of the happening of any of the following events: (i) any request by the
Commission for amendments or supplements to the Registration Statement or the
Prospectus or for additional information, (ii) the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (iii) the receipt by Holdings of
any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (iv) the existence of any
fact (including, without limitation, any fact the disclosure of which at such
time the Board of Directors of Holdings shall have determined in good faith
would be detrimental to Holdings' business interests) that results in the
Registration Statement, the Prospectus or any document incorporated therein by
reference containing an untrue statement of material fact or omitting to state a
material fact required to be stated therein or necessary to make the statements
therein (in light of the circumstances under which they were made, in the case
of the Prospectus) not misleading (provided that Holdings may not exercise this
right for more than ninety (90) days in any twelve month period), the Selling
Shareholder will forthwith discontinue disposition of Registrable Securities
pursuant to the Registration Statement until such Selling Shareholder's receipt
of copies of a supplemented or amended Prospectus that does not contain an
untrue statement of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading, or until it is advised in writing by Holdings that the
use of the Prospectus may be resumed, and has received copies of any additional
or supplemental filings that are
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incorporated by reference in the Prospectus, and, if so directed by Holdings,
such Selling Shareholder will deliver to Holdings (at Holdings' expense) all
copies, other than permanent file copies then in such Selling Shareholder's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice.
(c) Holdings shall pay the costs and expenses of preparation and filing
of any Registration Statement filed in accordance with Section 3(a), including
the costs of printing and distributing the Registration Statement and any
preliminary and final Prospectus, the fees and disbursements of counsel to
Holdings (including fees and disbursements incurred for "blue sky" matters), the
costs and expenses of its accountants, any registration or other fees payable to
the Commission, any stock exchange, the National Association of Securities
Dealers, Inc., and underwriting or brokerage fees, discounts or commissions and
any transfer taxes. All other costs shall be paid by the Selling Shareholder,
including fees and disbursements of its counsel. In connection with any such
Registration Statement, the Selling Shareholder shall furnish Holdings with such
information as may be required for inclusion in the Registration Statement or
for submission to the Commission concerning the Selling Shareholder, the Shares
and any plan of distribution.
(d) (i) The Selling Shareholder shall indemnify and hold harmless
Holdings, its directors, its officers who sign the Registration Statement and
each person, if any, who controls Holdings within the meaning of Section 15 of
the Securities Act against any and all losses, claims, damages and liabilities
(including any investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit, proceeding or
asserted claim) insofar as such losses, claims, damages and liabilities arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendments thereto
or any Prospectus or preliminary prospectus forming a part thereof or any
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if and to the extent such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished by such Selling Shareholder
expressly for inclusion in such
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Registration Statement, Prospectus, preliminary prospectus, amendment or
supplement. In connection with an underwritten offering of the Shares, the
Underwriter will enter into an agreement under which such Underwriter will
indemnify Holdings to the extent that any untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished by such Underwriter specifically
for inclusion in the Registration Statement, Prospectus, preliminary prospectus,
amendment or supplement.
(ii) Holdings shall indemnify and hold harmless the Selling
Shareholder and any of its trustees directors, officers and partners and each
person, if any, who controls the Selling Shareholder within the meaning of
Section 15 of the Securities Act against any and all losses, claims, damages and
liabilities, joint or several (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit, proceeding or asserted claim) insofar as such losses, claims,
damages and liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement and any amendments thereto or any Prospectus or preliminary prospectus
forming a part thereof or any supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except any such untrue
statement or alleged untrue statement or omission or alleged omission that is
made in reliance upon and in conformity with information furnished by Selling
Shareholders in writing specifically for inclusion in such Registration
Statement, Prospectus, preliminary prospectus, amendment or supplement;
provided, that Holdings shall not be liable in any such case to or in respect of
the Selling Shareholder to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any preliminary
prospectus if (i) such Selling Shareholder failed to send or deliver a copy of
the Prospectus with or prior to the delivery of written confirmation of the sale
of Registrable Securities and (ii) the Prospectus would have completely
corrected such untrue statement or omission; and provided, further, that
Holdings shall not be liable in any such case to or in respect of the Selling
Shareholder to the extent that any such loss, claim, damage, liability or
expense arises out of or is
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based upon an untrue statement or alleged untrue statement or omission or
alleged omission in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is completely corrected in an amendment
or supplement to the Prospectus and if, having previously been furnished by or
on behalf of Holdings with copies of the Prospectus as so amended or
supplemented, such Selling Shareholder thereafter fails to deliver (if and to
the extent required by the Securities Act) such Prospectus as so amended or
supplemented, prior to or concurrently with the sale of a Registrable Security
to the person asserting such loss, claim, damage, liability or expense who
purchased such Registrable Security that is the subject thereof from such
Selling Shareholder. In connection with any underwritten offering of Registrable
Securities, Holdings will enter into an agreement under which Holdings will
agree to indemnify the Underwriters to the same extent as it indemnifies the
Selling Shareholder.
(iii) Any party that proposes to assert the right to be
indemnified under this Section 4(d) will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party under this Section
4(d), notify each such indemnifying party of the commencement of such action,
suit or proceeding, enclosing a copy of all papers served, but the omission so
to notify such indemnifying party or any such action, suit or proceeding shall
not relieve it from any liability that it may have to any indemnified party
otherwise than under this Section 4(d). In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, other than reasonable costs
of investigation subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnified party shall have the right to employ
its counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless
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(i) the employment of counsel by such indemnified party has been authorized by
the indemnifying parties, (ii) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the indemnifying
parties and the indemnified party in the conduct of the defense of such action
(in which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party) or (iii) the
indemnifying parties shall not in fact have employed counsel to assume the
defense of such action. An indemnifying party shall not be liable for any
settlement of any action or claim effected without its consent.
(e) Holdings' obligation to effect registration of Registrable
Securities hereunder shall include such qualification under applicable blue sky
or other state securities laws as may be necessary to enable the Selling
Shareholder to offer and sell the Registrable Securities.
(f) Holdings shall furnish as soon as available to each Selling
Shareholder covered by such registration statement such number of copies of (i)
preliminary and final versions of such registration statement and of each
amendment, post-effective amendment and supplement thereto (in each case
including exhibits), (ii) preliminary and final versions of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and (iii) such other documents relating to such registration statement, all as
each Selling Shareholder may reasonably request.
(g) Holdings shall prepare and file with the Commission such amendments
and supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities.
(h) Holdings shall use its best efforts to register or qualify such
Registrable Securities under such securities or blue sky laws of such
jurisdiction as the Purchasers shall reasonably request, and do any and all
other acts and things that may be necessary of advisable to enable each
Purchaser to consummate the disposition in such jurisdictions of its Registrable
Securities
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covered by such Registration Statement; provided, however, that Holdings shall
not be obligated to file any general consent to service of process or to qualify
as a foreign corporation or subject to taxation in any jurisdiction in which it
is not so qualified.
5. Reporting Requirements
(a) With a view to making available the benefits of certain rules and
regulations of the Commission that may at any time permit the sale of Shares to
the public without registration or a registration on SEC Form S-3, Holdings
agrees to use its best efforts to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(ii) file with the Commission in a timely manner all reports
and other documents required of Holdings under the Securities Act and the
Exchange Act; and
(iii) so long as any of the Purchasers own Registrable
Securities, to furnish to the Purchasers forthwith upon request (1) a written
statement by Holdings as to whether it complies with the reporting requirements
of said Rule 144, the Securities Act and the Exchange Act, or whether it
qualifies as a registrant whose securities may be resold pursuant to SEC Form
S-3, (2) a copy of the most recent annual or quarterly report of Holdings and
such other reports and documents so filed by Holdings, and (3) such other
information as may be reasonably requested in availing the Selling Shareholders
of any rule or regulation of the Commission that would permit the selling of the
Registrable Securities without registration.
6. Opinion of Counsel
Notwithstanding the other provisions of this Agreement, the condition
set forth in the first sentence of Section 2(b) as to each of the Purchasers
shall be deemed satisfied upon submission to Holdings of an opinion, in form and
substance satisfactory to Holdings and its counsel, of counsel reasonably
satisfactory to Holdings and its counsel to the effect that a proposed sale,
transfer or other disposition of the Shares held by such Purchaser may be made
without registration under
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the Act. Upon receipt of such an opinion, Holdings will issue a new certificate
without the foregoing legend in substitution for any such certificate bearing
such legend.
7. Notices
All notices or other communications under this Agreement shall be in
writing and shall be deemed to have been given on the date of delivery if
delivered by hand or on the fifth date after mailing it by certified mail,
postage prepaid, return receipt requested, or on the date of transmission if
delivered by facsimile transmission (which shall be followed by delivery of an
original copy), addressed as follows:
If to Holdings:
Tel-Save Holdings, Inc.
0000 Xxxxx 000
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
with a copy to:
Xxxxxxxx X. Lawn, IV, Esquire
General Counsel and Secretary
Tel-Save Holdings, Inc.
0000 Xxxxx 000
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
If to the Purchasers at their respective addresses as set
forth in the Stock Purchase Agreement.
Any of Holdings and the Purchasers may from time to time change the
address or facsimile number to which notices to it are to be mailed hereunder by
notice in accordance with the provisions of this Section 7.
8. Amendment
Except as otherwise provided herein, this Agreement 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.
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9. Severability
If for any reason any provision, paragraph or terms of this Agreement
is held to be invalid or unenforceable, all other valid provisions herein shall
remain in full force and effect and all terms, provisions and paragraphs of this
Agreement shall be deemed to be severable.
10. Governing Law
This Agreement shall be deemed to be a contract made under the laws of
the State of New York and for all purposes shall be governed by and construed in
accordance with the laws of said State.
11. Entire Agreement
This Agreement consists of all the terms and conditions contained
herein and all documents incorporated herein specifically by reference and
constitutes the complete and exclusive statement of the understandings between
the parties and supersedes all proposals and prior agreements (oral or written)
between the parties relating to the rights and obligations provided hereunder.
12. Construction
Section headings used herein are included herein for conveniences of
reference only and shall not affect the construction of this Agreement nor
constitute a part of this Agreement for any other purpose. The words "herein,"
"hereof," "hereby," "hereto," "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular article, section, paragraph,
subparagraph or other subdivision of this Agreement. Defined terms shall include
the plural and the singular as the context shall require.
13. Successors and Assigns
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, successors and assigns.
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14. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall constitute an original, but together shall be deemed to be one and
the same document.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
TEL-SAVE HOLDINGS, INC.
By:
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Name: Xxxxxx Xxxxxxxx
Title: Chairman & CEO
Purchaser
By:
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Name:
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Title:
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Purchaser
By:
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Name:
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Title:
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Purchaser
By:
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Name:
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Title:
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