xfone8k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of
Report (Date of earliest event reported): August 22, 2007 (August 22,
2007)
XFONE,
INC.
(Exact
name of registrant as specified in its charter)
Nevada
(State
or
other jurisdiction of incorporation or organization)
Commission
File No. 001-32521
11-3618510
(I.R.S.
Employer Identification Number)
2506
Lakeland Drive, Suite 100
Flowood,
MS 39232
(Address
of principal executive offices) (Zip Code)
601-983-3800
(Registrant’s
telephone number, including area code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
1.01 Entry
Into a Material Definitive Agreement
Stock
Purchase Agreement
On
August
22, 2007, Xfone, Inc. (“Xfone” or the “Company”) entered into a Stock Purchase
Agreement (the “Agreement”) with NTS Communications, Inc. (“NTS”), a provider of
integrated voice, data and video solutions headquartered in Lubbock, Texas,
and
the owners of 85.5829% of the equity interests in NTS, to acquire
NTS. The aggregate purchase price is $42,000,000 (excluding
acquisition related costs), plus (or less) (i) the difference between NTS’
estimated working capital and the working capital target for NTS as set forth
in
the Agreement, and (ii) the difference between amounts allocated by NTS for
its
fiber optic network build-out project anticipated in Texas and any indebtedness
incurred by NTS in connection with this project, each of which is subject to
Xfone’s advance written approval. The aggregate purchase price will
be allocated to the NTS shareholders in accordance with each shareholder’s
allocable share.
The
Agreement also provides that the Company may offer to the sellers within 20
business days after the date of the Agreement the opportunity to reinvest all
or
part of their allocable sale price in shares of the Company’s common stock,
$0.001 par value per each (the “Xfone Common Stock”), provided that the maximum
number of shares of Xfone Common Stock to be reinvested by all sellers in the
aggregate does not exceed 30% of the total purchase price. The number
of shares of Xfone Common Stock to be delivered to each seller under this
provision will be determined by dividing the portion of the seller’s allocable
sale price that the seller elects to receive in shares of Xfone Common Stock
by
95% (or such lesser percentage as the Company provides when offering the
reinvestment opportunity to the sellers) of the average closing price of the
Company’s common stock on the American Stock Exchange for the ten consecutive
trading days preceding the trading day immediately prior to the closing
date.
As
a
condition to Xfone’s obligations to consummate the acquisition, NTS shareholders
holding at least 95% of the equity interest in NTS entitled to vote for election
of directors to NTS’ board of directors must participate and be parties to the
Agreement by the closing date. The Agreement provides that the
closing must occur not later than January 15, 2008 (the “Expiration Date”),
unless the Expiration Date is extended or changed by the parties in accordance
with the terms of, and under the circumstances described in, the
Agreement.
The
Agreement also provides for payment of certain liquidated damages, in the event
that the Agreement is terminated under specific circumstances.
Xfone
expects to finance the acquisition of NTS primarily with debt financing, and
is
currently in discussions with potential lenders to close a financing in
conjunction with the consummation of the acquisition.
Completion
of the acquisition is subject to certain conditions, including receipt of
regulatory approvals where relevant.
New
York
City based Oberon Securities, LLC, a registered broker-dealer, acted as
financial advisor to the Company in conjunction with the
transaction.
A
copy of
the Agreement is attached hereto as Exhibit 10.106 and is incorporated herein
by
reference.
Related
Agreements
In
connection with the consummation of the acquisition, it is anticipated that
the
parties will enter into additional related agreements, including a Release,
an
Escrow Agreement, an Amendment to Lease Agreement and a Noncompetition,
Nondisclosure and Nonsolicitation Agreement, forms of which are included within
Exhibit 10.106 attached hereto.
In
addition, in connection with the transaction, the Company had entered into
a
Letter of Joint Venture dated June 15, 2007 with NTS Holdings, Inc. (“NTS
Holdings”), an entity owned by Barbara Andrews (a/k/a Barbara Baldwin), who
currently serves as NTS’ President and CEO, Jerry Hoover, who currently serves
as NTS’ Executive Vice President – Chief Financial Officer, and Brad
Worthington, who currently serves as NTS’ Executive Vice President – Chief
Operating Officer. The Letter of Joint Venture is attached hereto as
Exhibit 10.107 and is incorporated herein by reference. Pursuant to
its terms, upon consummation of the acquisition, the Letter of Joint Venture
will terminate, and it is anticipated that the Company will enter into a Free
Cash Flow Participation Agreement with NTS Holdings, and that NTS will enter
into Employment Agreements with each of Ms. Baldwin, Mr. Hoover and Mr.
Worthington.
Forms
of
the Free Cash Flow Participation Agreement and the Employment Agreements, which
have been agreed upon by the parties, are attached hereto as Exhibits 10.107.1,
10.107.2, 10.107.3 and 10.107.4, respectively, and are incorporated herein
by
reference.
The
foregoing summary of the agreements and transactions described above is
qualified in its entirety by reference to the definitive transaction documents,
copies of which are attached as exhibits to this Current Report on Form
8-K.
Item
9.01 Financial
Statements and Exhibits
|
Exhibit
No.
|
Description
|
|
10.106
|
|
|
10.107
|
|
|
10.107.1
|
|
|
10.107.2
|
|
|
10.107.3
|
|
|
10.107.4
|
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
Date: August
22, 2007
|
Xfone,
Inc.
|
| |
By:
|
/s/
Guy Nissenson
|
| |
|
Guy
Nissenson
President,
Chief Executive Officer and
Director
|
INDEX
TO EXHIBITS
|
Exhibit
No.
|
Description
|
|
10.106
|
|
|
10.107
|
|
|
10.107.1
|
|
|
10.107.2
|
|
|
10.107.3
|
|
|
10.107.4
|
|