REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of ___________, 2006, by and among I2 TELECOM INTERNATIONAL,
INC., a Washington corporation (the "Company"), and each of the Persons listed
on the signature pages hereto (each a "Holder" and, collectively, the
"Holders").
IN CONSIDERATION of the mutual promises and covenants set forth herein,
and intending to be legally bound, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed to such terms in each Warrant Agreement dated
as of even date hereof, by and among the Company and the Holder party thereto
(the "Warrant Agreements"). As used in this Agreement, the following terms shall
have the meanings set forth below:
(a) "1933 Act" shall mean the Securities Act of 1933, as amended
(b) "1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
(c) "Common Stock" shall mean the Company's common stock, no par value per
share.
(d) "Holder" shall mean any person who holds Registrable Securities and any
holder of Registrable Securities to whom the rights conferred by this Agreement
have been transferred in compliance with Section 7 of the applicable Warrant
Agreement.
(e) "Other Shareholders" shall mean persons who, by virtue of agreements with
the Company other than this Agreement, are entitled to include their securities
in certain registrations hereunder.
(f) "Registrable Securities" shall mean, as of the date in question: (i) all of
the Warrant Shares, (ii) any securities issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event with respect
to the foregoing and (iii) any additional shares of Common Stock issuable as a
result of any anti-dilution adjustment to the Warrants; provided, however, that
a Registrable Security ceases to be a Registrable Security when (A) it is
registered under the 1933 Act; (B) it is sold or transferred in accordance with
the requirements of Rule 144 (or similar provisions then in effect) promulgated
by the SEC under the 1933 Act ("Rule 144"); or (C) it is eligible to be sold or
transferred under Rule 144.
(g) The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the 1933 Act and applicable rules and regulations thereunder and
the declaration or ordering of the effectiveness of such registration statement.
(h) "Registration Expenses" shall mean all expenses incurred in effecting any
registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
and expenses of any regular or special audits incident to or required by any
such registration, but shall not include: (i) Selling Expenses; (ii) the
compensation of regular employees of the Company, which shall be paid in any
event by the Company; and (iii) blue sky fees and expenses incurred in
connection with the registration or qualification of any Registrable Securities
in any state, province or other jurisdiction in a registration pursuant to
Section 2 hereof to the extent that the Company shall otherwise be making no
offers or sales in such state, province or other jurisdiction in connection with
such registration.
(i) "Rule 145" shall mean Rule 145 as promulgated by the SEC under the 1933 Act,
as such Rule may be amended from time to time, or any similar successor rule
that may be promulgated by the SEC.
(j) "SEC" shall mean the Securities and Exchange Commission.
(k) "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of Registrable
Securities.
2. Registration.
(a) Right to Piggyback. If at any time prior to six months from the
date hereof the Company shall determine to register any shares of Common Stock
for its own account or the account of any other Person, other than a
registration relating solely to employee benefit plans, or a registration
relating solely to a Rule 145 transaction, or a registration on any registration
form that does not permit secondary sales, then the Company will:
(i) promptly give to each Holder written notice thereof, which
notice briefly describes the Holders' rights under this Section 2 (including
notice deadlines);
(ii) use its best efforts to include in such registration (and
any related filing or qualification under applicable blue sky laws), except as
set forth in Section 2(b) below, and in any underwriting involved therein, all
the Registrable Securities specified in a written request or requests, made by
any Holder and received by the Company within twenty (20) days after the written
notice from the Company described in clause (i) above is mailed or delivered by
the Company, provided that such Holders shall have requested for inclusion in
such registration at least ten percent (10%) of the aggregate number of the
Registrable Securities which have been issued to the Holders prior to the date
of such written request. Such written request may specify all or a part of a
Holder's Registrable Securities; and
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(iii) keep such registration effective for a period of one
hundred twenty (120) days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs.
(b) Underwriting. If the registration of which the Company gives
written notice pursuant to Section 2(a)(i) is for a registered public offering
involving an underwriting, the Company shall so advise the Holders as a part of
the written notice given pursuant to Section 2(a)(i). In such event, the right
of any Holder to registration pursuant to Section 2(a) 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 the other holders of
securities of the Company with registration rights to participate therein
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company. Notwithstanding any other
provision of this Section 2, if the representative of the underwriters advises
the Company in writing that marketing factors require a limitation on the number
of shares to be underwritten, then the representative may (subject to the
limitations set forth below) exclude all Registrable Securities from, or limit
the number of Registrable Securities to be included in, the registration and
underwriting. The Company shall so advise all Holders of securities requesting
registration, and the number of shares of securities that are entitled to be
included in the registration and underwriting shall be allocated first to the
Company for securities being sold for its own account and thereafter as set
forth in Section 9. If any person does not agree to the terms of any such
underwriting, then such person shall be excluded therefrom by written notice
from the Company or the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration. If shares are so withdrawn from the registration and if the
number of shares of Registrable Securities to be included in such registration
was previously reduced as a result of marketing factors, then the Company shall
then offer to all persons who have retained the right to include securities in
the registration the right to include additional securities in the registration
in an aggregate amount equal to the number of shares so withdrawn, with such
shares to be allocated among the persons requesting additional inclusion in
accordance with Section 9.
(c) Right to Demand Registration. Upon written request by Holders of at
least a majority of the Registrable Securities delivered to the Company at any
time after one hundred eighty (180) days after the date hereof, which request
demands that the Company prepare and file a registration under the Securities
Act covering the resale of all or part of the Registrable Securities, the
Company shall use its best efforts to prepare and file a registration statement
under the Securities Act covering the resale of such Registrable Securities that
the Company has been so requested to register pursuant to this Section 2(c)
within forty-five (45) days after receipt of such request; provided, however,
that the Company shall not be obligated to file more than one (1) registration
pursuant to this Section 2(c); and provided, further, that the Company may delay
the filing of such registration during the 90-day period immediately following
the commencement of any underwritten public offering of the
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Company's equity securities. The Company may include in a registration filed
pursuant to this Section 2(c) other securities of the Company for sale, for the
Company's account or for the account of any other Person. The Company will keep
such registration filed pursuant to this Section 2(c) effective for a period of
one hundred twenty (120) days or until the Holder or Holders have completed the
distribution described in such registration statement relating thereto,
whichever first occurs.
3. Expenses of Registration. All Registration Expenses incurred in connection
with any registration, qualification or compliance pursuant to Section 2 hereof
shall be borne by the Company. All Selling Expenses relating to securities so
registered shall be borne by the Holders of such securities pro rata on the
basis of the number of shares of securities so registered on their behalf.
4. Registration Procedures. In the case of each registration effected by the
Company pursuant to Section 2 hereof, the Company will keep each Holder advised
in writing as to the initiation of each registration and as to the completion
thereof. At its expense, the Company will use its best efforts to:
(a) 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;
(b) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as a Holder
from time to time may reasonably request;
(c) notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or incomplete in the light of the circumstances then
existing, and at the request of any such Holder, prepare and furnish to such
Holder a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing; provided, however,
the Company shall not be obligated to prepare and furnish any such prospectus
supplements or amendments relating to any material nonpublic information at any
such time as the Board of Directors of the Company has determined in good faith
that, for good business reasons, the disclosure of such material nonpublic
information at that time is contrary to the best interests of the Company in the
circumstances and is not otherwise required under applicable law (including
applicable securities laws);
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(d) cause all such Registrable Securities registered pursuant hereunder
to be listed on each securities exchange and/or included in any national
quotation system on which similar securities issued by the Company are then
listed or included;
(e) provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such registration; and
(f) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC.
5. Indemnification.
(a) The Company will indemnify each Holder, each of such Holder's
officers, directors, partners, legal counsel and accountants and each person
controlling such Holder within the meaning of Section 15 of the 1933 Act, as
applicable, with respect to which registration, qualification, or compliance has
been effected pursuant to Section 2, and each underwriter, if any, and each
person who controls within the meaning of Section 15 of the 1933 Act any
underwriter, against all expenses, claims, losses, damages, and liabilities (or
actions, proceedings, or settlements in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular, or other document (including any
related registration statement, notification, or the like) incident to any such
registration, qualification, or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the 1933 Act or any rule or regulation thereunder applicable to the
Company or relating to action or inaction required of the Company in connection
with any such registration, qualification, or compliance, and will reimburse
each such Holder, each of its officers, directors, partners, legal counsel and
accountants and each person controlling such Holder, each such underwriter, and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating and defending or
settling any such claim, loss, damage, liability, or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability, or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
such Holder or underwriter and stated to be specifically for use therein. It is
agreed that the indemnity agreement contained in this Section 5(a) 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).
(b) Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification, or
compliance is being effected, indemnify the Company, each of its directors,
officers, partners, legal counsel and accountants and each underwriter, if any,
of the Company's securities covered by such a
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registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the 1933 Act, each other such Holder and
Other Shareholder, and each of their officers, directors, and partners, and each
person controlling such Holder or Other Shareholder, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular, or
other document, or any 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 will reimburse the Company and such Holders, Other
Shareholders, directors, officers, partners, legal counsel, and accountants,
persons, underwriters, or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability, or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein; provided, however, (i) that the
obligations of such Holder hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liabilities (or actions in
respect thereof) if such settlement is effected without the consent of such
Holder (which consent shall not be unreasonably withheld) and (ii) that in no
event shall any indemnity under this Section 5(b) exceed the gross proceeds from
the offering received by such Holder.
(c) Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 5, to the extent such
failure is not prejudicial. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
of a release to such Indemnified Party from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 5 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or
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payable by such Indemnified Party as a result of such loss, liability, claim,
damage, or expense in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and of the Indemnified Party on
the other in connection with the conduct, statements or omissions that resulted
in such loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into by the Indemnifying Party and the Indemnified Party in connection with the
underwritten public offering are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall control.
6. Information by Holder. Each Holder of Registrable Securities shall furnish to
the Company such information regarding such Holder and the distribution proposed
by such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification, or
compliance referred to in this Section 6.
7. Rule 144 Reporting. With a view to making available the benefits of certain
rules and regulations of the SEC that may permit the sale of the Restricted
Securities to the public without registration, the Company agrees to use its
best efforts to:
(a) make and keep adequate public information regarding the Company
available as those terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act; and
(c) so long as a Holder owns any Restricted Securities, furnish to the
Holder forthwith upon written request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 and of the 1933 Act
and the 1934 Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed as a Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing a Holder to sell any such securities without registration.
8. Notice to Discontinue; Notice by Holders.
(a) Notice to Discontinue. Each Holder agrees that, upon receipt of any
notice from the Company of any event of the kind described in Section 4(c), the
Holder will discontinue disposition of Registrable Securities until the Holder
receives copies of the
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supplemented or amended prospectus contemplated by Section 4(c). In addition, if
the Company requests, the Holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in the Holder's
possession, of the prospectus covering the Registrable Securities current at the
time of receipt of such notice. If the Company gives any such notice, then the
time period mentioned in Section 2(a)(iii) shall be extended by the number of
days elapsing between the date of notice and the date that each Holder who has
included Registrable Securities in such registration receives the copies of the
supplemented or amended prospectus contemplated in Section 4(c).
(b) Notice by Holders. Whenever the Holders have requested that any
Registrable Securities be registered pursuant to this Agreement, those Holders
shall notify the Company, at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, of the happening of any event,
which as to any Holder is: (i) to its respective knowledge; (ii) solely within
its respective knowledge; and (iii) solely as to matters concerning that Holder,
as a result of which the prospectus included in the registration statement, then
in effect, contains an untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein, in light of the
circumstances then existing, not misleading.
9. Allocation of Registration Opportunities. In any circumstance in which all of
the Registrable Securities and other shares of the Company with registration
rights (the "Other Shares") requested to be included in a registration
contemplated by Section 2(a) cannot be so included as a result of limitations of
the aggregate number of shares of Registrable Securities and Other Shares that
may be so included, the number of shares of Registrable Securities and Other
Shares that may be so included shall be allocated among the Holders and Other
Shareholders requesting inclusion of shares pro rata on the basis of the number
of shares of Registrable Securities and Other Shares held by such Holders and
Other Shareholders; provided, however, that such allocation shall not operate to
reduce the aggregate number of Registrable Securities and Other Shares to be
included in such registration, if any Holder or Other Shareholder does not
request inclusion of the maximum number of shares of Registrable Securities and
Other Shares allocated to such Holder or Other Shareholder pursuant to the
above-described procedure, then the remaining portion of such allocation shall
be reallocated among those requesting Holders and Other Shareholders whose
allocations did not satisfy their requests pro rata on the basis of the number
of shares of Registrable Securities and Other Shares which would be held by such
Holders and Other Shareholders, assuming conversion, and this procedure shall be
repeated until all of the shares of Registrable Securities and Other Shares
which may be included in the registration on behalf of the Holders and Other
Shareholders have been so allocated.
10. Miscellaneous.
(a) Delay of Registration. No Holder shall have any right to take any action to
restrain, enjoin, or otherwise delay any registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Agreement.
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(b) Successors and Assigns. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
(c) Entire Agreement; Amendment; Waiver. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject hereof. Neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated, except by a written instrument signed by the
Company and the Holders of at least fifty-one percent (51%) of the Registrable
Securities and any such amendment, waiver, discharge or termination shall be
binding on all the Holders, but in no event shall the obligation of any Holder
hereunder be materially increased, except upon the written consent of such
Holder.
(d) Notices, etc. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by United States first-class
mail, postage prepaid, or delivered personally by hand or nationally recognized
courier addressed: (i) if to a Holder, as indicated in the stock records of the
Company or at such other address as such Holder shall have furnished to the
Company in writing, or (ii) if to the Company, at 0000 Xxxxxxxxx Xxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxx 00000, Attn: Chief Financial Officer, or at such other
address as the Company shall have furnished to each Holder in writing, together
with a copy to Xxxxxx & Xxxxxx LLP, 2700 International Tower, 000 Xxxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000, Attn: Xxxxxx X. Hussle, Esq. All such notices
and other written communications shall be effective on the date of mailing or
delivery.
(e) Delays or Omissions. No delay or omission to exercise any right, power or
remedy accruing to any Holder, upon any breach or default of the Company under
this Agreement shall impair any such right, power or remedy of such Holder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default therefore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
Holder of any breach or default under this Agreement or any waiver on the part
of any Holder of any provisions or conditions of this Agreement must be made in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any Holder, shall be cumulative and not alternative.
(f) Rights; Severability. Unless otherwise expressly provided herein, a Holder's
rights hereunder are several rights, not rights jointly held with any of the
other Holders. In case any provision of the Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
(g) Information Confidential. Each Holder acknowledges that the information
received by them pursuant hereto may be confidential and for its use only, and
it will not use
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such confidential information in violation of the 1934 Act or reproduce,
disclose or disseminate such information to any other person (other than its
employees or agents having a need to know the contents of such information, and
its attorneys), except in connection with the exercise of rights under this
Agreement, unless the Company has made such information available to the public
generally or such Holder is required to disclose such information by a
governmental body.
(h) Titles and Subtitles. The titles of the paragraphs and subparagraphs of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
(i) Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) in any number of counterparts, and by the different
parties hereto in separate counterparts, each of which when executed and
delivered shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
(j) Governing Law; Jurisdiction. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Georgia without reference to Georgia's choice of law rules and each of the
parties hereto hereby consents to personal jurisdiction in any federal or state
court in the State of Georgia.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
i2 TELECOM INTERNATIONAL, INC.
By:__________________________________________
Name:
Title:
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
Name of Holder: __________________________
Signature of Authorized Signatory of Holder: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
[SIGNATURE PAGES CONTINUE]
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