REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated May 10,
1999, is made and entered into by and among Communication Telesystems
International d.b.a. WorldxChange Communications, a California corporation (the
"COMPANY"), and Gold & Xxxxx Transfer S.A. ("GOLD").
RECITALS
WHEREAS, the Company and Gold are parties to that certain Stock
Purchase Agreement, dated May 10, 1999, (the "PURCHASE AGREEMENT"), which
provides for Gold's purchase from the Company of an aggregate of 2,727,270
shares of the Common Stock of the Company (with 909,090 of such shares (the
"INITIAL SHARES") to be purchased at the Initial Closing (as defined in the
Purchase Agreement), 909,090 of such shares (the "SECOND CLOSING SHARES") to be
purchased at the Second Closing (as defined in the Purchase Agreement) and
909,090 of such shares (the "THIRD CLOSING SHARES") to be purchased at the Third
Closing (as defined in the Purchase Agreement)); and
WHEREAS, in order to induce Gold to enter into the Purchase Agreement,
the Company has agreed to provide the registration rights set forth in this
Agreement with respect to the "REGISTRABLE SECURITIES" (as such term is defined
in Section 1).
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements herein contained, the parties, intending to be
legally bound, hereby agree as follows:
1. DEFINITIONS. FOR PURPOSES OF THIS AGREEMENT:
(a) the term "BONA FIDE PUBLIC OFFERING" means an underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 ACT"), covering the offer and
sale of Common Stock of the Company in which aggregate proceeds to the
Company and the selling shareholders exceed $25,000,000;
(b) the term "COMMON STOCK" means the Company's authorized
voting common stock, no par value, and any class of securities issued in
exchange for the Common Stock or into which the Common Stock is converted;
(c) the term "HOLDER" means Gold or any permitted transferee of
Registrable Securities pursuant to the Purchase Agreement in accordance
with Section 10 hereof;
(d) the term "INITIATING HOLDERS" means the Holders of 30% or
more of the Registrable Securities then outstanding;
(e) the term "ORIGINAL REGISTRATION RIGHTS AGREEMENT" means that
certain Registration Rights Agreement effective as of September 29, 1998 by
and among the Company, Gold and the other investors named therein.
(f) the terms "REGISTRABLE SECURITIES" means: (i) if acquired by
Gold pursuant to the Purchase Agreement, the Initial Shares (as may be
adjusted); (ii) if acquired by Gold pursuant to the Purchase Agreement, the
Second Closing Shares (as may be adjusted); (iii) if acquired by Gold
pursuant to the Purchase Agreement, the Third Closing Shares (as may be
adjusted) and (iv) any Common Stock of the Company issued as (or issuable
upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of such Initial Shares, Second Closing
Shares and/or Third Closing Shares;
(g) the term "REGISTRATION EXPENSES" means all expenses incurred
by the Company in complying with Sections 2 and 3 hereof, including,
without limitation, all registration and filing fees, printing expenses,
fees and disbursements of counsel for the Company, accountants' fees and
expenses and blue sky fees and expenses.
(h) the term "REGISTER," "REGISTERED" and "REGISTRATION" refer
to a registration effected by preparing and filing a registration statement
or similar document in compliance with the 1933 Act, and the declaration or
ordering of the effectiveness of such registration statement or document by
the Securities and Exchange Commission;
(i) the term "SELLING EXPENSES" means all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities,
the fees and disbursements of any counsel engaged by the Holders and any
other expenses incurred by the Holders in connection with the registration
and sale of the Registrable Securities;
(j) the number of shares of Registrable Securities "THEN
OUTSTANDING" shall be the number of shares of Common Stock outstanding
which are, and the number of shares of Common Stock which upon issuance of
then exercisable or convertible securities will be, Registrable Securities;
and
(k) the term "THIRD PARTY HOLDER" means (A) any person other
than a Holder with registration rights with respect to securities of the
Company and (B) Gold (or any permitted transferee of Gold) with respect to
securities of the Company as to which Gold (or any such transferee of Gold)
has registration rights pursuant to the Original Registration Rights
Agreement.
2. DEMAND REGISTRATION RIGHTS.
(a) If the Company shall receive, at any time during the
one-year period commencing three years after the date of this Agreement
(and in such additional years as may be required by Section 2(d)), a
written request from the
2
Initiating Holders with respect to the Registrable Securities that the
Company file a registration statement under the 1933 Act covering the
registration of Registrable Securities having an estimated aggregate
initial public offering price of not less than $5,000,000, provided that a
Bona Fide Public Offering has not been commenced by the Company, the
Company shall promptly give written notice of such request to all Holders
and shall use reasonable efforts to effect the registration under the 1933
Act of all such Registrable Securities which the Initiating Holders request
to be registered, together with all of the Registrable Securities of any
other Holder or Holders who so request by notice to the Company which is
given within 10 days after receipt of the notice from the Company described
above. Notwithstanding the foregoing, if the Company shall furnish to the
Initiating Holders a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors it would
be seriously detrimental to the Company for a registration statement to be
filed in the near future, then the Company's obligation to use its
reasonable efforts to file a registration statement shall be deferred for a
period not to exceed 90 days (provided, however, that the Company may make
only one such deferral with respect to each demand registration).
Securities of the Company to be sold by the Company or by a Third Party
Holder may be included in such registration statement, subject to the
provisions of Section 2(c) below.
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request
made pursuant to this Section 2 and the Company shall include such
information in the written notice referred to in Section 2(a). In such
event, the right of any Holder to include its Registrable Securities in
such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders, by the
underwriter, by the Company, and by such Holder) to the extent provided
herein.
(c) All Holders and Third Party Holders proposing to distribute
their securities through such underwriting (together with the Company as
provided in Section 4(e)) shall enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for such underwriting by the Company, or if no underwriter is
selected by the Company, by a majority in interest of the Initiating
Holders and reasonably acceptable to the Company. Notwithstanding any
other provisions of this Section 2, if the underwriter advises the
Initiating Holders in writing that marketing factors require a limitation
of the number of shares to be underwritten, the Initiating Holders shall so
advise all Holders of Registrable Securities, and the number of shares of
Registrable Securities that may be included in the registration and
underwriting by the Holders shall be allocated among all Holders thereof,
all Third Party Holders, and the Company, pro rata based on the number of
shares for which registration was requested. No Registrable Securities
excluded from the underwriting by reason of the marketing limitation shall
be included in such
3
registration. If any Holder of Registrable Securities disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the underwriter and, unless otherwise
provided, the Initiating Holders.
(d) The Company is obligated to effect only one demand
registration for the Holders pursuant to this Section 2; provided, however,
that if any Registrable Securities of a Holder requested to be registered
(regardless of whether a Holder withdraws such Registrable Securities
pursuant to Section 2(c) or Section 6) are excluded by the underwriter in a
demand registration pursuant to Section 2(c) or in a "piggyback"
registration pursuant to Section 6 (which excluded Registrable Securities
are referred to herein as the "EXCLUDED SECURITIES"), then the Company,
upon the demand of the Initiating Holders three or more years after the
date of this Agreement, shall be obligated to effect one additional demand
registration under this Section 2 each year with respect to the Excluded
Securities or such Holder, until such time as (i) such Holder may freely
(except as may be restricted by Rule 144 under the 0000 Xxx) sell all of
the Excluded Securities without registration under the 1933 Act within the
then following six months and (ii) the Excluded Securities are listed on a
securities exchange or qualified for trading on an over-the-counter system
selected by the Company.
(e) The demand registration rights provided by the Company to
any Holder pursuant to Section 2 of this Agreement shall immediately
terminate upon the closing of a Bona Fide Public Offering by the Company.
(f) A registration requested pursuant to this Section 2 shall
not be deemed to have been effected (a) unless a registration statement
with respect thereto has become effective or (b) if after it has become
effective, the effectiveness of such registration statement is terminated
or suspended by a stop order, injunction or other order of the Securities
and Exchange Commission ("SEC") or other governmental agency or court,
unless such order, injunction or other order is lifted or stayed within 30
days of the issuance of such stop order, injunction or other order. The
Company shall use its reasonable best efforts to keep such registration
statement effective for up to 60 days after such registration statement has
become effective.
3. PIGGY-BACK REGISTRATION RIGHTS. If at any time the Company
proposes to register (including for this purpose a registration effected by the
Company for shareholder other than the Holders) any of its securities under the
1933 Act in connection with the public offering of such securities solely for
cash (other than a registration form relating to: (a) a registration of a stock
option, stock purchase or compensation or incentive plan or of stock issued or
issuable pursuant to any such plan, or a dividend investment plan; (b) a
registration of securities proposed to be issued in exchange for securities or
assets of, or in connection with a merger or consolidation with, another
corporation; or (c) a registration of securities proposed to be issued in
exchange for other securities of the Company), the Company shall, each such
time, promptly give
4
each Holder written notice of such registration together with a list of the
jurisdictions in which the Company intends to attempt to qualify such securities
under applicable state securities laws. Upon the written request of any Holder
given within 30 days after receipt of such written notice from the Company in
accordance with Section 14, the Company shall (subject to the provisions of
Section 6 in the case of an underwritten offering) cause to be registered under
the 1933 Act all of the Registrable Securities that each such Holder has
requested to be registered; provided, however, in the event and to the extent
such a Holder may freely (except as may be restricted by Rule 144 under the 0000
Xxx) sell all of its Registrable Securities without registration under the 1933
Act and the person acquiring the securities does not acquire "restricted
securities" within the meaning of Rule 144, the Company may elect not to
register such Registrable Securities.
4. OBLIGATIONS OF THE COMPANY. Whenever required under this
Agreement to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective;
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the 1933 Act with respect to the disposition of all
securities covered by such registration statement;
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them;
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under the securities laws of such
jurisdictions as shall be necessary for the distribution of the securities
covered by the registration statement and such jurisdictions as the Holders
participating in the offering shall reasonably request, provided that the
Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service
of process in any such jurisdiction, and further provided that (anything in
this Agreement to the contrary notwithstanding with respect to the bearing
of expenses) if any jurisdiction in which the securities shall be qualified
shall require that expenses incurred in connection with the qualification
of the securities in that jurisdiction be borne by selling shareholders,
such expenses shall be payable by the selling Holders pro rata, to the
extent required by such jurisdiction;
5
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement with
commercially reasonable and customary terms generally satisfactory to the
managing underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such
an agreement; and
(f) Use its reasonable best efforts to cause all such
Registrable Securities to be listed on a securities exchange or to qualify
such Registrable Securities for trading on an over-the-counter system
selected by the Company;
(g) Provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement and thereafter maintain such a transfer agent and
registrar;
(h) In the event of any underwritten public offering, make
available for inspection, at reasonable times during normal business
hours, by any underwriter participating in such public offering and any
attorney, accountant or other agent retained by such underwriter, such
financial and other records, pertinent corporate documents and properties
of the Company as may be reasonably requested by such underwriter, and
cause the Company's officers, directors, employees and independent
accountants to supply such information as may be reasonably requested by
any such underwriter, attorney, accountant or agent in connection with
such public offering (provided, however, that such inspection and
supplying of records and documents shall be subject to the execution by
each requesting party of a confidentiality and non-disclosure agreement in
a form reasonably acceptable to the Company);
(i) Permit any Holder participating in such registration, which
Holder, in such Holder's reasonable judgement, might be deemed to be an
underwriter or controlling person of the Company, to participate in the
preparation of the registration statement in connection with such
registration and to propose the insertion therein of material which in the
reasonable judgment of such Holder and its counsel should be included;
(j) In connection with underwritten offerings, make available
appropriate management personnel for participation in the preparation and
drafting of such registration or comparable statement, for due diligence
meetings and for "road show" meetings;
(k) In the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending
or preventing the use of any related prospectus or suspending the
qualification of any Registrable Securities included in such registration
statement for sale in any jurisdiction, the Company will use its reasonable
best efforts promptly to obtain the withdrawal of such order, provided that
in the Company's opinion, in consultation with its counsel, there is a good
faith argument for the removal of such order;
6
(l) Obtain a cold comfort letter from the Company's independent
public accountants addressed to the selling Holders of Registrable
Securities in customary form and covering such matters of the type
customarily covered by cold comfort letters as the Holders of a majority of
the Registrable Securities being sold reasonably request; and
(m) Furnish, at the request of Holders of a majority of the
Registrable Securities participating in the registration, to each seller of
Registrable Securities a signed counterpart, addressed to such seller (and
underwriters, if any) of an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if such registration
includes an underwritten public offering, dated the date of the closing
under the underwriting agreement), reasonably satisfactory in form and
substance to such Holder covering substantially the same matters with
respect to such registration (and the prospectus included therein) as are
customarily covered in opinions of issuer's counsel to underwriters in
underwritten public offerings.
5. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities. In that connection, each selling Holder shall
be required to represent to the Company that all such information which is given
is both complete and accurate in all material respects.
6. UNDERWRITING REQUIREMENTS. The right of any Holder to "piggyback"
in an underwritten public offering of the Company's securities pursuant to
Section 3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
any other holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for underwriting by the Company. Notwithstanding any
other provision of Section 3 and this Section 6, if the underwriter determines
that marketing factors require a limitation of the number of shares to be
underwritten, and (a) if such registration is the first registered offering of
the Company's securities to the public, the underwriter may exclude some or all
of the Registrable Securities from such registration and underwriting, provided
that the Holders are allowed to participate in the offering in the same
proportion (based on the total number of securities requested to be registered)
as any other shareholder of the Company participating in the offering, and (b)
if such registration is other than the first registered offering of the
Company's securities to the public, the underwriter may exclude some or all
Registrable Securities from such registration and underwriting, provided that
all of the shares requested to be registered by shareholders other than Holders
and Third Party Holders shall first be excluded and thereafter, only to the
extent deemed necessary by the underwriter, shares requested to be registered by
Holders and Third Party Holders shall be reduced pro rata based on the number of
securities respectively requested by them to
7
be registered. Any reduction in the number of Registrable Securities included
in such registration shall be borne equally by the Holders and any Third Party
Holders as a group pro rata based on the number of shares for which registration
was requested. If any Holder disapproves of the terms of any such underwriting,
it may elect to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration. Third Party Holders
"piggybacking" on a demand registration demanded by the Initiating Holders under
Section 2 above shall be subject to the same conditions, requirements and
limitations that are applicable to a Holder under this Section 6 in the event of
an underwritten public offering.
7. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Agreement shall be borne by the Company, and all Selling Expenses shall be borne
by the Holders of the securities so registered pro rata on the basis of the
number of shares so registered.
8. DELAY OF REGISTRATION. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
9. INDEMNIFICATION. IF any Registrable Securities are included in a
registration statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the officers, directors and
partners of each Holder, any underwriter (as defined in the 0000 Xxx)
for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), against any losses,
claims, damages, or liabilities (joint or several) to which they or any
of them may become subject under the 1933 Act, the 1934 Act or any other
federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise from or are based upon
any of the following statements, omissions or violations (collectively a
"VIOLATION"): (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto; or (ii) 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; and the
Company will reimburse each such Holder, officer, director or partner,
underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 9 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim,
damage, liability or
8
action to the extent that it arises from or is based upon a violation which
occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any
such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any,
who controls the Company within the meaning of the 1933 Act, any
underwriter (within the meaning of the 0000 Xxx) for the Company, any
person who controls such underwriter, any other Holding selling securities
in such registration statement or any of its directors or officers or any
person who controls such Holder against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person or underwriter or other such Holder or
director, officer or controlling person may become subject, under the 1933
Act, the 1934 Act or any other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto)
arise from or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will
reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, controlling person, underwriter or controlling
person, other Holder, officer, director or controlling person in connection
with investigation or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 9 shall not apply to amounts paid in settlement of any such loss,
claim damage, liability or action if such settlement is effected without
the consent of the Holder (which consent shall not be unreasonably
withheld).
(c) In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in this
Section 9 is applicable but for any reason is held to be unavailable
from the Company or any Holder, the Company and the Holders
participating in the registration shall contribute to the aggregate
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 or proceeding or any claims
asserted) to which the Company and the participating Holders may be
subject in such proportion so that the participating Holders are
responsible for that portion of the foregoing amount represented by the
ratio of the proceeds received by the participating Holders in the
offering to the total proceeds received from the offering by the Company
and all selling shareholders (other than participating Holders) and the
Company shall be responsible for the portion represented by the ratio of
proceeds received by the Company to the total proceeds received by the
Company and all selling shareholders (other than participating Holders);
provided, however, that such portions shall be adjusted as may be just
and equitable to take into account the relative fault of the
participating Holders and the Company; provided further, however, that
no person guilty of fraudulent
9
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 9(c), each
person, if any, who controls the Company or any Holder within the meaning
of the 1933 Act, each officer of the Company who shall have signed the
registration statement and each director of the Company shall have the same
rights to contribution as the Company.
(d) No settlement shall be effected without the prior written
consent of the Holders participating in a registration unless (i) the
obligations of the Company for indemnification or contribution pursuant to
this Agreement survive and are not extinguished by reason of the settlement
and remain in full force and effect under applicable federal and state
laws, rules, regulations and orders or (ii) all claims and actions against
the participating Holders and each person who controls a participating
holder within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act are extinguished by the settlement and the indemnifying party
obtains a full release of all claims and actions against the participating
Holders and each such control person, which release shall be to the
reasonable satisfaction of the participating Holders.
(e) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section
9, notify the indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to notify
an indemnifying party within a reasonable time of the commencement of
any such action, to the extent prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 9, but the omission so to notify
the indemnifying party will not relieve it of any liability that it may
have to any indemnified party otherwise than under this Section 9.
(f) The obligations of the Company and the Holders under
this Section 9 shall survive through the completion of any offering of
Registrable Securities in a registration statement made under the terms
of this Agreement.
10. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of a Holder under
this Agreement may be assigned by a Holder only to a permitted transferee of
such securities pursuant to Section 6.3 of the Purchase Agreement, provided the
Company is, within a
10
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee and the securities with respect to which such
registration rights are being assigned; provided, however, that no such
assignment shall be effective if, immediately following the transfer, the
transferee is free to dispose of all of such securities without regard to any
restrictions imposed under the 1933 Act.
11. SUBSEQUENT REGISTRATION RIGHTS. The Company may grant
registration rights to parties other than the Holders; provided, however, that
in the event the Company shall grant any person registration rights
containing terms more favorable than the terms granted herein, the more
favorable terms shall automatically be deemed granted to the Holders and
incorporated herein by reference. Prior to the date of this Agreement, the
Company has not granted registration rights to any other person that are
still in effect and that are on terms more favorable than the terms granted
herein.
12. "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that it
shall not, to the extent requested by the Company and an underwriter of Common
Stock (or other securities) of the Company, sell or otherwise transfer or
dispose of any Registrable Securities in a market transaction during a period
deemed by the underwriter to be necessary or appropriate following the effective
date of a registration statement of the Company filed under the 1933 Act,
provided that Xxxxx X. Xxxxxx, Xxxxxxxx Xxxxxx and Xxxxxx X. Xxxxx are subject
to such an agreement for the same period. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to the
Registrable Securities of each Holder (and the share or securities of every
other person subject to the foregoing restriction) until the end of such period.
13. AMENDMENT AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained the written consent
of Holders of at least a majority of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to departure
from the provisions hereof with respect to a matter which relates exclusively
to the rights of Holders of Registrable Securities whose securities are being
sold pursuant to a registration statement and which does not directly or
indirectly affect the rights of other holders of Registrable Securities may
be given by the holders of a majority of the Registrable Securities being
sold; provided, however, that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions
of the immediately preceding sentence.
14. NOTICES. All notices, demands and requests required by this
Agreement shall be in writing and shall be deemed to have been given for all
purposes (a) upon personal delivery, (b) one business day after being sent,
when sent by professional overnight courier service from and to locations
within the continental United States, or (c) five days after posting when
sent by registered or certified mail (return receipt requested), addressed to
the Company or a Holder at his, her or its address on the signature pages
hereof. Any party hereto may from time to time by notice in writing served
upon the others as provided herein, designate a different mailing address or a
11
different person to which such notices or demands are thereafter to be
addressed or delivered.
15. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed to be an original, and when
executed, separately or together, shall constitute a single original instrument,
effective in the same manner as if the parties hereto had executed one and the
same instrument.
16. CAPTIONS. Captions are provided herein for convenience only and
they are not to serve as a basis for interpretation or construction of this
Agreement, nor as evidence of the intention of the parties hereto.
17. CROSS-REFERENCES. All cross-references in this Agreement,
unless specifically directed to another agreement or document, refer to
provisions within this Agreement.
18. GOVERNING LAW. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the internal laws, and not
the laws pertaining to conflicts or choice of laws, of the State of California
applicable to agreements made and to be performed wholly within the State of
California. In the event a judicial or other proceeding is necessary to resolve
any dispute hereunder, the sole forum for resolving disputes arising under or
relating to this Agreement shall be the Municipal and Superior Courts for the
County of San Diego, State of California, or the federal district court for the
district of California associated with such county and all related appellate
courts and the parties hereby consent to the jurisdiction of such courts, and
that venue shall be in such county.
19. SEVERABILITY. The provisions of this Agreement are severable.
The invalidity, in whole or in part, of any provision of this Agreement shall
not affect the validity or enforceability of any other of its provisions. If
one or more provisions hereof shall be declared invalid or unenforceable, the
remaining provisions shall remain in full force and effect and shall be
construed in the broadest possible manner to effectuate the purposes hereof.
The parties further agree to replace such void or unenforceable provisions of
this Agreement with valid and enforceable provisions which will achieve, to the
extent possible, the economic, business and other purposes of the void or
unenforceable provisions.
20. ENTIRE AGREEMENT. This Agreement contains the entire
understanding among the parties hereto with respect to the subject matter
hereof and supersedes all prior written and oral agreements, understandings,
commitments and practices between the parties, including all prior agreements
with respect to registration rights.
12
21. CONSIDERATION FOR APPROVALS OR WAIVERS. No consideration shall
be paid to any Holder to obtain such Holder's approval for or waiver of any
amendment of this Agreement or any matter requiring the approval or consent of
the Holders hereunder unless such consideration is also offered to all Holders,
pro rata based upon the number of Registrable Securities held by the Holders.
22. REMEDIES. Subject to Section 8 (Delay of Registration), each
Holder of Registrable Securities, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.
[BALANCE OF PAGE LEFT INTENTIONALLY BLANK]
13
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement with the intent and agreement that the same shall be effective
as of the day and year first above written.
THE COMPANY:
Communication Telesystems International
d.b.a. WorldxChange Communications,
a California corporation
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Title: CEO
-----------------------------
Address: 0000 Xxxxxx Xxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Legal Department
Fax: (000) 000-0000
GOLD:
GOLD & XXXXX TRANSFER S.A.,
a British Virgin Islands corporation
By: /s/ [ILLEGIBLE]
--------------------------------
Title: Power of Attorney in Fact
-----------------------------
Address:
---------------------------
14
