REGISTRATION RIGHTS AGREEMENT
Exhibit
10.52
This
Registration Rights Agreement (this “Agreement”) is made and entered into as of
September 27, 2005, by and between XFONE, INC., a Nevada corporation (the
“Company”), and Laurus Master Fund, Ltd. (the “Purchaser”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as
of the
date hereof, by and between the Purchaser and the Company (as amended, modified
or supplemented from time to time, the “Securities Purchase Agreement”) calling
for the issuance by the Company of a convertible term note in the aggregate
principal amount of US$2,000,000 and warrants, and pursuant to the Note and
the
Warrants referred to therein.
The
Company and the Purchaser hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined
in the
Securities Purchase Agreement shall have the meanings given such terms in
the
Securities Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
shares of the Company’s common stock, par value $0.001 per share.
“Effectiveness
Date”
means
(i) with respect to the initial Registration Statement required to be filed
hereunder, a date no later than one hundred and twenty (120) days following
the
date hereof and (ii) with respect to each additional Registration Statement
required to be filed hereunder, a date no later than forty five (45) days
following the applicable Filing Date.
“Effectiveness
Period”
has the
meaning set forth in Section 2(a).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and any successor
statute.
“Filing
Date”
means,
with respect to (i) the Registration Statement required to be filed hereunder
in
respect of the shares of Common Stock issuable upon conversion of the Note,
and
(ii) the shares of Common Stock issuable upon exercise of any Warrant, a
date no
later than forty five (45) days following the date hereof, Shares of Common
Stock issuable to the Holder as a result of adjustments to the Fixed Conversion
Price or
Exercise Price, as the case may be,
made
pursuant to the Note or the Warrant or otherwise, thirty (30) days after
the
occurrence such event or the date of the adjustment of the Fixed Conversion
Price or Exercise Price, as the case may be, provided however, that unless
the
shares of Common Stock issuable to the Holder as a result of adjustments
to the
Fixed Conversion Price or Exercise Price exceed an aggregate of 65,000 shares,
the Holder shall have “piggyback’ registration rights in respect of such shares
as set forth in Section 7(e) hereof .
“Holder”
or
“Holders”
means
the Purchaser or any of its affiliates or transferees to the extent any of
them
hold Registrable Securities, other than those purchasing Registrable Securities
in a market transaction.
“Indemnified
Party”
has the
meaning set forth in Section 5(c).
“Indemnifying
Party”
has the
meaning set forth in Section 5(c).
“Note”
has the
meaning set forth in the Securities Purchase Agreement.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus”
means
the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted
from a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), 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
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable
Securities”
means
the shares of Common Stock issued upon the conversion of the Note and issuable
upon exercise of the Warrants ;
provided however that Registrable Securities shall not include (1) any shares
of
Common Stock which have previously been registered or have been sold to the
public either pursuant to a registration statement or Rule 144, or (2) any
shares held by a Holder of Registrable Securities which would be permitted
to be
sold by such Holder under Rule 144(k) or within the volume limitations of
Rule
144 during any 90-day period, as applicable, or (3) any shares held by a
Holder
of Registrable Securities which have been sold in a private transaction in
which
the transferor's rights under this Agreement are not assigned.
“Registration
Statement”
means
each registration statement required to be filed hereunder, including the
Prospectus therein, amendments and supplements to such registration statement
or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect
as such
Rule.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect
as such
Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended, and any successor statute.
“Securities
Purchase Agreement”
has the
meaning given to such term in the Preamble hereto.
“Trading
Market”
means
any of the NASD Over The Counter Bulletin Board, NASDAQ SmallCap Market,
the
NASDAQ National Markets System, the American Stock Exchange or the New York
Stock Exchange.
“Warrants”
means
the Common Stock purchase warrants issued in connection with the Securities
Purchase Agreement, whether on the date hereof or thereafter.
2. Registration.
(a) On
or
prior to the Filing Date the Company shall prepare and file with the Commission
a Registration Statement covering the Registrable Securities for a selling
stockholder resale offering to be made on a continuous basis pursuant to
Rule
415. The Registration Statement shall be on Form SB-2 , or any other appropriate
form in accordance herewith so as to permit the public offering and resale
of
the Registrable Securities. The Company shall cause each Registration Statement
to become effective and remain effective as provided herein. The Company
shall
use its reasonable commercial efforts to cause each Registration Statement
to be
declared effective under the Securities Act as promptly as possible after
the
filing thereof, but in any event no later than the Effectiveness Date. The
Company shall use its reasonable commercial efforts to keep each Registration
Statement continuously effective under the Securities Act until the date
which
is the earlier date of when (i) all Registrable Securities have been sold
or
(ii) all Registrable Securities covered by such Registration Statement may
be
sold immediately without registration under the Securities Act and without
volume restrictions pursuant to Rule 144(k), as determined by the counsel
to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company’s transfer agent and the affected Holders (the
“Effectiveness Period”).
(b) If:
(i)
any Registration Statement is not filed on or prior to the applicable Filing
Date; (ii) a Registration Statement filed hereunder is not declared effective
by
the Commission by the applicable Effectiveness Date; (iii) after a Registration
Statement is filed with and declared effective by the Commission, a
Discontinuation Event (as hereafter defined) shall occur and be continuing,
or
such Registration Statement ceases to be effective (by suspension or otherwise)
as to all Registrable Securities to which it is required to relate at any
time
prior to the expiration of the Effectiveness Period (without being succeeded
immediately by an additional registration statement filed and declared
effective), for a period of time which shall exceed 30 days in the aggregate
per
year or more than 20 consecutive calendar days (defined as a period of 365
days
commencing on the date the Registration Statement is declared effective);
or
(iv) the Common Stock is not listed or quoted, or is suspended from trading
on
any Trading Market for a period of three (3) consecutive Trading Days (provided
the Company shall not have been able to cure such trading suspension within
30
days of the notice thereof or list the Common Stock on another Trading Market);
(any such failure or breach being referred to as an “Event,” and for purposes of
clause (i) or (ii) the date on which such Event occurs, or for purposes of
clause (iii) the date which such 30 day or 20 consecutive day period (as
the
case may be) is exceeded, or for purposes of clause (iv) the date on which
such
three (3) Trading Day period is exceeded, being referred to as “Event Date”),
then as partial relief for the damages to the Purchaser by reason of the
occurrence of any such Event (which remedy shall not be exclusive of any
other
remedies available at law or in equity), the Company shall pay to the Purchaser
for each day that an Event has occurred and is continuing, as liquidated
damages, and not as a penalty, an amount in cash equal to one-thirtieth
(1/30th)
of the
product of: (A) the then outstanding principal amount of the Note multiplied
by
(B)0.015. Notwithstanding the immediately foregoing, with effect after September
27, 2007 (other than with respect to any then outstanding and unpaid liquidated
damages and the occurrence of each Discontinuation Event), no additional
liquidated damages shall accrue to the account of the Company.
(c) Within
three business days of the Effectiveness Date, the Company shall cause its
counsel to issue a blanket opinion in the form attached hereto as Exhibit
A, to
the transfer agent stating that the shares are subject to an effective
registration statement and can be reissued free of restrictive legend upon
notice of a sale by the Purchaser and confirmation by the Purchaser that
it has
complied with the prospectus delivery requirements, provided that the Company
has not advised the transfer agent orally or in writing that the opinion
has
been withdrawn. Copies of the blanket opinion required by this Section 2(c)
shall be delivered to the Purchaser within the time frame set forth
above.
3. Registration
Procedures.
If and
whenever the Company is required by the provisions hereof to effect the
registration of any Registrable Securities under the Securities Act, the
Company
will, as expeditiously as possible:
(a) prepare
and file with the Commission a Registration Statement with respect to such
Registrable Securities, respond as promptly as possible to any comments received
from the Commission, and use its best efforts to cause the Registration
Statement to become and remain effective for the Effectiveness Period with
respect thereto;
(b) prepare
and file with the Commission such amendments and supplements to the Registration
Statement and the Prospectus used in connection therewith as may be necessary
to
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by such Registration Statement and
to keep
such Registration Statement effective until the expiration of the Effectiveness
Period applicable to such Registration Statement;
(c) furnish
to the Purchaser such number of copies of the Registration Statement and
the
Prospectus included therein (including each preliminary Prospectus) as the
Purchaser reasonably may request to facilitate the public sale or disposition
of
the Registrable Securities covered by the Registration Statement;
(d) use
its
commercially reasonable efforts to register or qualify the Purchaser’s
Registrable Securities covered by such Registration Statement under the
securities or “blue sky” laws of such jurisdictions within the United States as
the Purchaser may reasonably request, provided, however, that the Company
shall
not for any such purpose be required to qualify generally to transact business
as a foreign corporation in any jurisdiction where it is not so qualified
or to
consent to general service of process in any such jurisdiction;
(e) list
the
Registrable Securities covered by such Registration Statement with any
securities exchange on which the Common Stock of the Company is then
listed;
(f) immediately
notify the Purchaser at any time when a Prospectus relating thereto is required
to be delivered under the Securities Act, of the happening of any event of
which
the Company has knowledge as a result of which the Prospectus contained 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 in light of the
circumstances then existing; and
(g) make
available for inspection by the Purchaser and any attorney, accountant or
other
agent retained by the Purchaser, all publicly available, non-confidential
financial and other records, pertinent corporate documents and properties
of the
Company, and cause the Company’s officers, directors and employees to supply all
publicly available, non-confidential information reasonably requested by
the
attorney, accountant or agent of the Purchaser.
(h) The
Purchaser covenants and agrees that it will cooperate with the Company in
all
respects in connection with this Agreement, including timely supplying all
information reasonably requested by the Company (which shall include all
information regarding the Purchaser and proposed manner of sale of the
Registrable Securities required to be disclosed in any Registration Statement)
and executing and returning all documents reasonably requested in connection
with the registration and sale of the Registrable Securities and entering
into
and performing its obligations under the Securities Purchase Agreement and/or
the Related Agreements (including this Agreement), if the offering is an
underwritten offering, in usual and customary form, with the managing
underwriter or underwriters of such underwritten offering. Any delay
or
delays caused by the Purchaser, or by any other purchaser of securities of
the
Company having registration rights similar to those contained herein, by
failure
to cooperate as required hereunder shall not constitute a breach or default
of
the Company under the Securities Purchase Agreement or any Related Agreement
(including this Agreement).
(i)
With
respect to any sale of Registrable Securities pursuant to the Registration
Statement, the Purchaser hereby covenants with the Company (i) not to make
any
sale of the Registrable Securities without effectively causing the prospectus
delivery requirements under the Securities Act to be satisfied and (ii) to
notify the Company promptly upon disposition of all of the Registrable
Securities.
4. Registration
Expenses.
All
expenses relating to the Company’s compliance with Sections 2 and 3 hereof,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or “blue sky” laws, fees of
the NASD, transfer taxes, fees of transfer agents and registrars, fees of,
and
disbursements incurred by, one counsel for the Holders, are called “Registration
Expenses”. All selling commissions applicable to the sale of Registrable
Securities, including any fees and disbursements of any special counsel to
the
Holders beyond those included in Registration Expenses, are called “Selling
Expenses.” The Company shall only be responsible for all Registration
Expenses.
5. Indemnification.
(a) In
the
event of a registration of any Registrable Securities under the Securities
Act
pursuant to this Agreement, the Company will indemnify and hold harmless
the
Purchaser, and its officers, directors and each other person, if any, who
controls the Purchaser within the meaning of the Securities Act, against
any
losses, claims, damages or liabilities, joint or several, to which the
Purchaser, or such persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Securities were registered under the Securities
Act
pursuant to this Agreement, any preliminary Prospectus or final Prospectus
contained therein, or any amendment or supplement thereof, or arise out of
or
are based upon 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 will reimburse the Purchaser, and each such person for any
reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided,
however,
that
the Company will not be liable in any such case if and to the extent that
any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so
made in
conformity with information furnished by or on behalf of the Purchaser or
any
such person in writing specifically for use in any such document.
Notwithstanding the provisions of this paragraph, the Company shall not be
required to indemnify any person or entity in excess of the amount of the
Obligations (as defined in the Master Security Agreement).
(b) In
the
event of a registration of the Registrable Securities under the Securities
Act
pursuant to this Agreement, the Purchaser will indemnify and hold harmless
the
Company, and its officers, directors and each other person, if any, who controls
the Company within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or
such
persons may become subject under the Securities Act or otherwise, insofar
as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact which was furnished in writing by the Purchaser to the
Company expressly for use in (and such information is contained in) the
Registration Statement under which such Registrable Securities were registered
under the Securities Act pursuant to this Agreement, any preliminary Prospectus
or final Prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon 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 will reimburse the Company and each
such
person for any reasonable legal or other expenses incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action, provided,
however,
that
the Purchaser will be liable in any such case if and only to the extent that
any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so
made in
conformity with information furnished in writing to the Company by or on
behalf
of the Purchaser specifically for use in any such document. Notwithstanding
the
provisions of this paragraph, the Purchaser shall not be required to indemnify
any person or entity in excess of the amount of the aggregate net proceeds
received by the Purchaser in respect of Registrable Securities in connection
with any such registration under the Securities Act.
(c) Promptly
after receipt by a party entitled to claim indemnification hereunder (an
“Indemnified Party”) of notice of the commencement of any action, such
Indemnified Party shall, if a claim for indemnification in respect thereof
is to
be made against a party hereto obligated to indemnify such Indemnified Party
(an
“Indemnifying Party”), notify the Indemnifying Party in writing thereof, but the
omission so to notify the Indemnifying Party shall not relieve it from any
liability which it may have to such Indemnified Party other than under this
Section 5(c) and shall only relieve it from any liability which it may have
to
such Indemnified Party under this Section 5(c) if and to the extent the
Indemnifying Party is prejudiced by such omission. In case any such action
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 it shall wish, to assume and undertake
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 and undertake the defense thereof, the Indemnifying Party shall
not be
liable to such Indemnified Party under this Section 5(c) for any legal expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof; if the Indemnified Party retains its own counsel, then the Indemnified
Party shall pay all fees, costs and expenses of such counsel, provided,
however,
that,
if the defendants in any such action include both the Indemnified Party and
the
Indemnifying Party and the Indemnified Party shall have reasonably concluded
that there may be reasonable defenses available to it which are different
from
or additional to those available to the Indemnifying Party or if the interests
of the Indemnified Party reasonably may be deemed to conflict with the interests
of the Indemnifying Party, the Indemnified Party shall have the right to
select
one separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and
fees
of such separate counsel and other expenses related to such participation
to be
reimbursed by the Indemnifying Party as incurred.
(d) In
order
to provide for just and equitable contribution in the event of joint liability
under the Securities Act in any case in which either (i) the Purchaser, or
any
officer, director or controlling person of the Purchaser, makes a claim for
indemnification pursuant to this Section 5 but it is judicially determined
(by
the entry of a final judgment or decree by a court of competent jurisdiction
and
the expiration of time to appeal or the denial of the last right of appeal)
that
such indemnification may not be enforced in such case notwithstanding the
fact
that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of the
Purchaser or such officer, director or controlling person of the Purchaser
in
circumstances for which indemnification is provided under this Section 5;
then,
and in each such case, the Company and the Purchaser will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that the Purchaser
is
responsible only for the portion represented by the percentage that the public
offering price of its securities offered by the Registration Statement bears
to
the public offering price of all securities offered by such Registration
Statement, provided,
however,
that,
in any such case, (A) the Purchaser will not be required to contribute any
amount in excess of the public offering price of all such securities offered
by
it pursuant to such Registration Statement; and (B) no person or entity guilty
of fraudulent misrepresentation (within the meaning of Section 10(b) of the
Securities Act) will be entitled to contribution from any person or entity
who
was not guilty of such fraudulent misrepresentation.
6. Representations
and Warranties.
(a) The
Common Stock is registered pursuant to Section 12(b) of the Exchange Act
and,
except with respect to certain matters which the Company has disclosed to
the
Purchaser on Schedule 4.21 to the Securities Purchase Agreement, the Company
has
timely filed all reports, schedules, forms, statements and other documents
required to be filed by it under the Exchange Act. The Company has filed
(i) its
Annual Report on Form 10-K for its fiscal year ended December 31, 2004 and
(ii)
its Quarterly Report on Form 10-Q for the fiscal quarters ended March 31,
2005
and June 30, 2005 (collectively, the “SEC Reports”). Each SEC Report was, at the
time of its filing, in substantial compliance with the requirements of its
respective form and none of the SEC Reports, nor the financial statements
(and
the notes thereto) included in the SEC Reports, as of their respective filing
dates, contained any untrue statement of a material fact or omitted 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, not
misleading. The financial statements of the Company included in the SEC Reports
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or
other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
(“GAAP”) applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may
not
include footnotes or may be condensed) and fairly present in all material
respects the financial condition, the results of operations and the cash
flows
of the Company and its subsidiaries, on a consolidated basis, as of, and
for,
the periods presented in each such SEC Report.
(b) The
Common Stock is listed for trading on the American Stock Exchange and satisfies
all requirements for the continuation of such listing, and the Company shall
do
all things necessary for the continuation of such listing. The Company has
not
received any notice that its Common Stock will be delisted from the American
Stock Exchange (except for prior notices which have been fully remedied)
or that
the Common Stock does not meet all requirements for the continuation of such
listing.
(c) Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security
or
solicited any offers to buy any security under circumstances that would cause
the offering of the Securities pursuant to the Securities Purchase Agreement
to
be integrated with prior offerings by the Company for purposes of the Securities
Act which would prevent the Company from selling the Common Stock pursuant
to
Rule 506 under the Securities Act, or any applicable exchange-related
stockholder approval provisions, nor will the Company or any of its affiliates
or subsidiaries take any action or steps that would cause the offering of
the
Securities to be integrated with other offerings.
(d) The
Warrant, the Note and the shares of Common Stock which the Purchaser may
acquire
pursuant to the Warrant and the Note are all restricted securities under
the
Securities Act as of the date of this Agreement. The Company will not issue
any
stop transfer order or other order impeding the sale and delivery of any
of the
Registrable Securities at such time as the Registrable Securities are registered
for public sale or an exemption from registration is available, except as
required by federal or state securities laws.
(e) The
Company understands the nature of the Registrable Securities issuable upon
the
conversion of the Note and the exercise of the Warrant and recognizes that
the
issuance of such Registrable Securities may have a potential dilutive effect.
The Company specifically acknowledges that subject to applicable law, its
obligation to issue the Registrable Securities is binding upon the Company
and
enforceable regardless of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.
(f) Except
for agreements made in the ordinary course of business, there is no agreement
that has not been filed with the Commission as an exhibit to a registration
statement or to a form required to be filed by the Company under the Exchange
Act, the breach of which could reasonably be expected to have a material
and
adverse effect on the Company and its subsidiaries, or would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement in any material
respect.
(g) The
Company will at all times have authorized and reserved a sufficient number
of
shares of Common Stock for the full conversion of the Note and exercise of
the
Warrants.
7. Miscellaneous.
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their respective
obligations under this Agreement, each Holder or the Company, as the case
may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.
(b) No
Piggyback on Registrations.
Except
as and to the extent specified in Schedule 7(b) hereto, neither the Company
nor
any of its security holders (other than the Holders in such capacity pursuant
hereto) may include securities of the Company in any Registration Statement
other than the Registrable Securities, and the Company shall not after the
date
hereof enter into any agreement providing any such right for inclusion of
shares
in the Registration Statement to any of its security holders. Except as and
to
the extent specified in Schedule 7(b) hereto, the Company has not previously
entered into any agreement granting any registration rights with respect
to any
of its securities to any person or entity that have not been fully
satisfied.
(c) Compliance.
Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with
sales
of Registrable Securities pursuant to the Registration Statement.
(d) Discontinued
Disposition.
Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of a Discontinuation
Event (as defined below), such Holder will forthwith discontinue disposition
of
such Registrable Securities under the applicable Registration Statement until
such Holder’s receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement or until it is advised in writing (the “Advice”)
by the Company that the use of the applicable Prospectus may be resumed,
and, in
either case, has received copies of any additional or supplemental filings
that
are incorporated or deemed to be incorporated by reference in such Prospectus
or
Registration Statement. Notwithstanding paragraph 6(d) above, the Company
may
provide appropriate stop orders to enforce the provisions of this paragraph.
For
purposes of this Agreement, a “Discontinuation Event” shall mean (i) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on
such
Registration Statement (the Company shall provide true and complete copies
thereof and all written responses thereto to each of the Holders); (ii) any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to such Registration Statement or Prospectus
or
for additional information; (iii) the issuance by the Commission of any stop
order suspending the effectiveness of such Registration Statement covering
any
or all of the Registrable Securities or the initiation of any Proceedings
for
that purpose; (iv) the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of
any of
the Registrable Securities for sale in any jurisdiction, or the initiation
or
threatening of any Proceeding for such purpose; and/or (v) the occurrence
of any
event or passage of time that makes the financial statements included in
such
Registration Statement ineligible for inclusion therein or any statement
made in
such Registration Statement or Prospectus or any document incorporated or
deemed
to be incorporated therein by reference untrue in any material respect or
that
requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or Prospectus,
as
the case may be, it will not contain any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
(e) Piggy-Back
Registrations.
If at
any time during the Effectiveness Period there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under
the
Securities Act of any of its equity securities, other than on Form S-4 or
Form
S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall send to each Holder written notice of such determination and, if within
seven (7) business days after receipt of such notice, any such Holder shall
so
request in writing, the Company shall include in such registration statement
all
or any part of such Registrable Securities such Holder requests to be registered
to the extent the Company may do so without violating registration rights
of
others which exist as of the date of this Agreement, subject to customary
underwriter cutbacks applicable to all holders of registration rights and
subject to obtaining any required consent of any selling stockholder(s) to
such
inclusion under such registration statement.
(f) Amendments
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 same shall be in writing
and
signed by the Company and the Holders of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart
from
the provisions hereof with respect to a matter that relates exclusively to
the
rights of certain Holders and that does not directly or indirectly affect
the
rights of other Holders may be given by Holders of at least a majority of
the
Registrable Securities to which such waiver or consent relates; 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.
(g) Notices.
Any
notice or request hereunder may be given to the Company or the Purchaser
at the
respective addresses set forth below or as may hereafter be specified in
a
notice designated as a change of address under this Section 7(g). All notices
of
changes of address under this Section 7(g) shall be delivered to the other
party
hereto at least ten (10) business days in advance of the effective day of
such
change of address. Any notice or request hereunder shall be given by registered
or certified mail, return receipt requested, hand delivery, overnight mail,
Federal Express or other national overnight next day carrier (collectively,
“Courier”) or telecopy (confirmed by mail). Notices and requests shall be, in
the case of those by hand delivery, deemed to have been given when delivered
to
any party to whom it is addressed, in the case of those by mail or overnight
mail, deemed to have been given three (3) business days after the date when
deposited in the mail having
been sent by registered or certified mail, return receipt requested, postage
prepaid;
or with
the overnight mail carrier, in the case of a Courier, the next business day
following timely delivery of the package with the Courier, and, in the case
of a
telecopy, when
sent
by confirmed facsimile if sent during normal business hours of the recipient,
if
not, then on the second business day.
The
address for such notices and communications shall be as follows:
|
If
to the Company:
|
to
the address set forth in Section 11.8 of the Securities Purchase
Agreement
|
|
If
to a Purchaser:
|
To
the address set forth under such Purchaser name on the signature
pages
hereto.
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If
to any other Person who is
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|
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then
the registered Holder:
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To
the address of such Holder as it appears in the stock transfer
books of
the Company
|
or
such
other address as may be designated in writing hereafter in accordance with
this
Section 7(g) by such Person.
(h) Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Subject
to compliance with applicable securities laws,
each
Holder may assign their respective rights hereunder in the manner and to
the
persons and entities as permitted under the Note and the Securities Purchase
Agreement, but in no event shall any such right be assigned to a direct
competitor of the Company.
(i) Execution
and Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid
binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
(j) Governing
Law, Jurisdiction and Waiver of Jury Trial.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED
IN SUCH
STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. The Company hereby
consents and agrees that the state or federal courts located in the County
of
New York, State of New York shall have exclusion jurisdiction to hear and
determine any Proceeding between the Company, on the one hand, and the
Purchaser, on the other hand, pertaining to this Agreement or to any matter
arising out of or related to this Agreement; provided,
that
the Purchaser and the Company acknowledge that any appeals from those courts
may
have to be heard by a court located outside of the County of New York, State
of
New York, and further provided,
that
nothing in this Agreement shall be deemed or operate to preclude the Purchaser
from bringing a Proceeding in any other jurisdiction to collect the obligations,
to realize on the Collateral or any other security for the obligations, or
to
enforce a judgment or other court order in favor of the Purchaser. The Company
expressly submits and consents in advance to such jurisdiction in any Proceeding
commenced in any such court, and the Company hereby waives any objection
which
it may have based upon lack of personal jurisdiction, improper venue or
forum
non conveniens.
The
Company hereby waives personal service of the summons, complaint and other
process issued in any such Proceeding and agrees that service of such summons,
complaint and other process may be made by registered or certified mail
addressed to the Company at the address set forth in Section 7(g) and that
service so made shall be deemed completed upon the earlier of the Company’s
actual receipt thereof or three (3) days after deposit in the U.S. mails,
proper
postage prepaid. The parties hereto desire that their disputes be resolved
by a
judge applying such applicable laws. Therefore, to achieve the best combination
of the benefits of the judicial system and of arbitration, the parties hereto
waive all rights to trial by jury in any Proceeding brought to resolve any
dispute, whether arising in contract, tort, or otherwise between the Purchaser
and/or the Company arising out of, connected with, related or incidental
to the
relationship established between then in connection with this Agreement.
If
either party hereto shall commence a Proceeding to enforce any provisions
of
this Agreement, the Securities Purchase Agreement or any other Related
Agreement, then the prevailing party in such Proceeding shall be reimbursed
by
the other party for its reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such
Proceeding.
(k) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(l) Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth
herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts
to
find and employ an alternative means to achieve the same or substantially
the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of
the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(m) Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
[Balance
of page intentionally left blank;
signature
page follows]
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
|
XFONE,
INC.
|
LAURUS
MASTER FUND, LTD.
|
|
By:
|
By:
|
|
Name: Xxx
Xxxxxxxxx
|
Name:
|
|
Title: President
& CEO
|
Title:
|
|
Address
for Notices:
|
|
|
000
Xxxxx Xxxxxx, 00xx
Xxxxx
|
|
|
Xxx
Xxxx, XX 00000
|
|
|
Attention: Xxxxx
Grin
|
|
|
Facsimile: 000-000-0000
|
EXHIBIT
A
[__________
__, 200__]
[Continental
Stock Transfer
&
Trust Company
Two
Xxxxxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxxx Xxxxxxxxx]
Re: XFONE,
INC.. Registration Statement on Form [S-3]
Ladies
and Gentlemen:
As
counsel to XFONE, INC., a __________ corporation (the “Company”), we have been
requested to render our opinion to you in connection with the resale by the
individuals or entitles listed on Schedule A attached hereto (the “Selling
Stockholders”), of an aggregate of __________ shares (the “Shares”) of the
Company’s Common Stock.
A
Registration Statement on Form [S-3] under the Securities Act of 1933, as
amended (the “Act”), with respect to the resale of the Shares was declared
effective by the Securities and Exchange Commission on [date]. Enclosed is
the
Prospectus dated [date]. We understand that the Shares are to be offered
and
sold in the manner described in the Prospectus.
Based
upon the foregoing, upon request by the Selling Stockholders at any time
while
the registration statement remains effective, it is our opinion that the
Shares
have been registered for resale under the Act and new certificates evidencing
the Shares upon their transfer or re-registration by the Selling Stockholders
may be issued without restrictive legend. We will advise you if the registration
statement is not available or effective at any point in the future.
Very
truly yours,
[Company
counsel]
Schedule
A to Exhibit A
|
Selling
Stockholder
|
Shares
Being
Offered
|
SCHEDULE
7(b)
| · |
5,500,000
shares underlying the 5,500,000 options under The Company's 2004
SOP.
|
| · |
Up
to 125,000 shares plus up to 750,000 shares underlying 750,000 warrants
in
connection with the Finders Agreement and the Financial Consulting
Agreement between the Company and Oberon Securities, LLC (as each
may be
amended, modified, restated and/or supplemented from time to
time).
|
| · |
Up
to 125,000 shares underlying 125,000 warrants in connection with
the
Public Relations Agreement between the Company and Elite Financial
Communications Group, LLC.
|
| · |
Shares
underlying warrants valued in the aggregate amount of up to $50,000
in
connection with a Legal Services Agreement between the Company and
Xx.
Xxxxxxx Xxxxxxxxx.
|
| · |
3,150
shares issued to Xx. Xxxxx Xxxxxxxx.
|
| · |
Up
to 2,700,000 shares and/or warrants which will be issued and/or granted
in
connection with that certain Agreement and Plan of Merger by and
among the
Company, Xfone USA, Inc., I-55 Internet Services, Inc. and the Principals
(as defined therein) dated August 18, 2005, as may be amended, modified,
restated or supplemented from time to time (though no more than 2,700,000
shares and/or warrants may be issued and/or granted without prior
written
approval by Purchaser), and the acquisition of I-55 Internet Services,
including any issuance and/or grant of shares and/or warrants to
creditors
and/or debt holders of I-55 Internet Services and/or to MCG Capital
Corporation.
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| · |
Up
to 900,000 shares and/or warrants which may be issued and/or granted
in
connection with that certain Agreement and Plan of Merger by and
among the
Company, Xfone USA, Inc., I-55 Telecommunications, LLC and the Principal
(as defined therein) dated August 26, 2005, as may be amended, modified,
restated or supplemented from time to time (though no more than 900,000
shares and/or warrants may be issued and/or granted without prior
written
approval by Purchaser), and the acquisition of I-55 Telecommunications,
including any issuance and/or grant of shares and/or warrants to
creditors
and/or debt holders of I-55
Telecommunications.
|
| · |
Up
to 550,000 shares and/or warrants which will be issued and/or granted
to
the Purchaser in connection with the Purchaser's $1,500,000 incremental
funding.
|
| · |
Shares
and/or warrants which will be issued, issuable and/or granted by
the
Company in connection with additional financing transactions between
the
Company and investors other than the Purchaser, in an aggregate amount
not
to exceed $5,000,000, to be completed on or before March 1, 2006,
together
with any additional shares and/or warrants to be issued, issuable
and/or
granted to such investors as a result of an adjustment to the Fixed
Conversion Price (as defined in the
Note).
|
| · |
As
disclosed in the Exchange Act Filings and in the SEC
Reports.
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