EXHIBIT 10.11
FAX INTERNATIONAL, INC.
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
Dated as of April 10, 1995
TABLE OF CONTENTS
1. Definitions..................................... 2
2. Demand Registration............................. 4
(a) Demand for Registration................. 4
(b) Underwriting............................ 5
3. Company Registration............................ 7
(a) General................................. 7
(b) Underwriting............................ 7
4. Registration on Form S-3........................ 8
5. Expenses of Registration........................ 9
6. Obligations of the Company...................... 10
7. Indemnification................................. 11
8. Information by Persons Registering Securities... 14
9. Transfer of Registration Rights................. 14
10. Delay of Registration........................... 15
11. Limitations on Subsequent Registration Rights... 15
12. Rule 144 Reporting.............................. 15
13. "Market Stand-Off" Agreement.................... 15
14. Termination of Registration Rights.............. 16
15. Miscellaneous................................... 16
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FAX INTERNATIONAL, INC.
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
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The parties to this agreement, dated as of April 10, 1995, are (i) Fax
International, Inc., a Delaware corporation (the "Company"), with its principal
office at 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000, (ii) the
undersigned Current Investors, each of whom is a party to the Registration
Rights Agreement dated as of December 31, 1992 by and among the Company and
certain investors named therein (the "Rights Agreement), and (ii) each of the
undersigned New Investors. The Current Investors and the New Investors are
collectively referred to below as the "Investors".
1. The Company and each of the undersigned Current Investors are
parties to the Rights Agreement.
2. The Rights Agreement grants the Current Investors named therein
certain registration rights with respect to the Company's Common Stock, par
value $0.01 per share (the "Common Stock"), issuable upon conversion of shares
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of the Company's outstanding convertible preferred stock.
3. The Company and the New Investors have agreed to enter into (as
applicable in each case) (a) a Series G Convertible Preferred Stock Purchase
Agreement dated as of the date hereof pursuant to which such New Investors will
purchase and the Company will issue to the New Investors its Series G
Convertible Preferred Stock, par value $1.00 per share (the "Series G
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Convertible Preferred Stock"), and/or (b) a Revolving Credit Agreement dated as
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of the date hereof pursuant to which such New Investors may elect to convert
certain debt obligations of the Company into Series H Convertible Preferred
Stock, par value $1.00 per share (the "Series H Convertible Preferred Stock"),
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of the Company.
4. The Company wishes to provide the New Investors with rights
corresponding generally to the rights of the Current Investors now parties to
the Rights Agreement, as set forth more specifically below.
5. In order to induce the New Investors to enter into the Series G
Convertible Preferred Stock Purchase Agreement and the Revolving Credit
Agreement referred to above, the undersigned Current Investors desire to permit
the New Investors to participate generally in the rights granted to the Current
Investors under the Rights Agreement. In addition, and more specifically, the
Company, the Current Investors, and the New Investors all desire (a) to amend
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the Rights Agreement to reflect certain changes in the Current Investors' (and
the New Investors) registration rights set forth therein, and (b) to restate
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the Rights Agreement, as amended hereby.
6. The Rights Agreement may be amended with the written consent of the
Company and of the Current Investors collectively holding not less than
sixty-six and two-thirds percent (66-2/3%) of the Registrable Securities (as
defined in Section I of the Rights Agreement); the undersigned Current
Investors collectively hold not less than sixty-six and two-thirds percent
(66-2/3%) of such Registrable Securities.
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The parties accordingly agree as follows:
1. Definitions. As used herein:
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(a) "Affiliate" means, as to any person or entity, any other person or
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entity directly or indirectly controlling or controlled by or under direct or
indirect common control with such person (but, as to any Holder, excluding the
Company).
(b) "Group 1 Initiating Holders" means any Holder or Holders of not
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less than fifty-five percent (55%) of the Group 1 Registrable Securities
(measured on a fully exercised and converted basis) not registered at the time
of any request for registration pursuant to Section 2 of this agreement;
provided, that if any one Holder and its Affiliates collectively own at least
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fifty-five percent (55%) of the Group 2 Registrable Securities (measured on a
fully exercised and converted basis), then solely for purposes of determining
whether such fifty-five percent (55%) of the Group 1 Registrable Securities
threshold has been reached, such Holder (and its Affiliates) and such Holder's
(and its Affiliates') Group 1 Registrable Securities shall not be taken into
account.
(c) "Group 1 Registrable Securities" means (A) shares of Common Stock
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issued or issuable upon conversion of the Preferred Stock (other than Series G
Convertible Preferred Stock and Series H Convertible Preferred Stock); (B)
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shares of Common Stock purchased (or issued or issuable upon the conversion or
exercise of any warrant, right, or other security that is purchased) pursuant
to any right of first refusal or preemptive right held by the Investors in
respect of their Preferred Stock (other than Series G Convertible Preferred
Stock and Series H Convertible Preferred Stock); and (C) shares of Common Stock
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issued as (or issuable upon the conversion or exercise of any warrant, right,
or other security that is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, any of the securities
referred to in clauses (A) or (B) above; provided, however, that shares of
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Common Stock shall cease to be Group 1 Registrable Securities if the rights of
the Holder thereof to cause the Company to register such securities under this
agreement shall terminate as provided in Section 14.
(d) "Group 2 Initiating Holders" means any Holder or Holders of not
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less than fifty-five percent (55%) of the Group 2 Registrable Securities
(measured on a fully exercised and converted basis) not registered at the time
of any request for registration pursuant to Section 2 of this agreement.
(e) "Group 2 Registrable Securities" means (A) shares of Common Stock
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issued or issuable upon conversion of the Series G Convertible Preferred Stock
or Series H Convertible Preferred Stock; (B) shares of Common Stock purchased
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(or issued or issuable upon the conversion or exercise of any warrant, right,
or other security that is purchased) pursuant to any right of first refusal or
preemptive right held by the Investors in respect of their Series G Convertible
Preferred Stock or Series H Convertible Preferred Stock; (C) shares of Common
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Stock issued as (or issuable upon the conversion or exercise of any warrant,
right, or other security that is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, any of the securities
referred to in clauses (A) or (B) above; and (D) shares
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of Common Stock purchased by or issued or issuable to Singapore
Telecommunications Limited ("ST") or any of its Affiliates, including without
--
limitation any shares of Common Stock issued or issuable upon conversion of
loans made under the Credit Agreement between the Company and an affiliate of ST
dated as of April 10, 1995; provided, however, that shares of Common Stock shall
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cease to be Group 2 Registrable Securities if the rights of the Holder thereof
to cause the Company to register such securities under this agreement shall
terminate as provided in Section 14.
(f) Subject to the provisions of Section 9, "Holders" any persons and
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entities holding outstanding shares of Registrable Securities that have not
been sold to the public.
(g) "Initiating Holders" means the Group 1 Initiating Holders or the
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Group 2 Initiating Holders, as applicable in any case.
(h) "1933 Act" means the Securities Act of 1933, as amended and in
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effect from time to time, and any successor statute.
(i) "Preferred Stock" means the Company's Series A Convertible Preferred
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Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred
Stock, Series D Convertible Preferred Stock, Series E Convertible Preferred
Stock, Series F Convertible Preferred Stock, Series G Convertible Preferred
Stock, and Series H Convertible Preferred Stock.
(j) "Register," "registered," and "registration" refer to a registration
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effected by filing with the SEC a registration statement (the "Registration
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Statement") in compliance with the 1933 Act and the declaration or ordering by
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the SEC of the effectiveness of such Registration Statement.
(k) "Registrable Securities" means the Group 1 Registrable Securities and
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the Group 2 Registrable Securities. In the event of any recapitalization by
the Company, whether by stock split, reverse stock split, stock dividend or the
like, the number of shares and the price per share of Registrable Securities
(including as well for this purpose both Group 1 Registrable Securities and
Group 2 Registrable Securities) used throughout this agreement for various
purposes (including without limitation for purposes of Section 2(a)(ii)(E))
shall be proportionately increased or decreased as appropriate.
(l) "SEC" means the Securities and Exchange Commission or any successor
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agency.
(m) Notwithstanding anything otherwise provided herein, it is hereby
agreed and understood that the Company may, at any time and from time to time
after the date hereof, authorize and issue shares of convertible preferred
stock in one or more classes or series, including classes or series not in
existence on the date hereof ("Additional Shares of Preferred Stock"). In any
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such event, if such authorization and issuance is duly approved by a vote of
not less than seventy-five percent (75%) of the Company's Board of Directors,
as then constituted:
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(i) such series and/or class of Additional Shares of Preferred Stock
shall be, and shall be included within the definition of, "Preferred Stock" for
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all purposes of this agreement (and accordingly, for example, shares of Common
Stock issued or issuable upon conversion of the Additional Shares of Preferred
Stock shall be, and shall be included within the definition of, "Group 1
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Registrable Securities" hereunder except to the extent such shares would be
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included within the definition of "Group 2 Registrable Securities" as set forth
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above); and
(ii) each purchaser of Additional Shares of Preferred Stock shall be
treated as, and included within the definition of, an "Investor" for all
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purposes of this agreement, shall have all of the rights and privileges granted
by this agreement to an Investor, and shall be subject to all of the
liabilities and obligations of an Investor hereunder, upon his, her, or its
execution of a counterpart of this agreement and his, her, or its written
agreement to be bound by all of the terms and conditions hereof.
2. Demand Registration.
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(a) Demand for Registration. If the Company shall receive from either
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the Group 1 Initiating Holders or the Group 2 Initiating Holders a written
demand that the Company effect a registration under the 1933 Act of all or part
of the Registrable Securities (other than a registration on Form S-3 or any
related form of registration statement, such a request being provided for under
Section 4 hereof), the Company will:
(i) promptly (but in any event within ten (10) days) give written notice
of the proposed registration to all other Holders; and
(ii) use its best efforts (limited to the extent provided herein) to
effect such registration as soon as practicable as may be so demanded and as
will permit or facilitate the sale and distribution of all or such portion of
such Initiating Holders' Registrable Securities as are specified in such
demand, together with all or such portion of the Registrable Securities of any
Holder or Holders joining in such demand as are specified in a written demand
received by the Company within thirty (30) days after such written notice is
given; provided, however, that the only securities that the Company shall be
required to register pursuant hereto shall be shares of Common Stock; and
provided, further, that the Company shall not be obligated to take any action
to effect any such registration pursuant to this Section 2:
(A) Prior to December 31, 1997;
(B) When the Company is in the process of registering Registrable
Securities pursuant to any demand made under this Section 2;
(C) In the case of a demand by the Group 1 Initiating Holders, after the
Company has effected a registration pursuant to this Section 2 pursuant to a
prior demand by the Group 1 Initiating Holders where such registration has been
declared or ordered effective and the securities offered thereby have been
sold; provided, however, that if the prior demand was for the registration of
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the initial public offering of the Company's Common Stock and the Holders of
Group 1 Registrable Securities were unable to include in such registration all
the
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Registrable Securities requested in their written demands as a result, in
whole or in part, of pro rata allocation with Holders of Group 2 Registrable
Securities as provided in Section 2(b), such prior demand shall not count as a
prior demand for purposes of this clause (C);
(D) In the case of a demand by the Group 2 Initiating Holders, after the
Company has effected a registration pursuant to this Section 2 pursuant to two
(2) prior demands by the Group 2 Initiating Holders where such registration has
been declared or ordered effective and the securities offered thereby have been
sold; provided, however, that if the prior demand was for the registration of
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the initial public offering of the Company's Common stock and the Holders of
Group 2 Registrable Securities were unable to include in such registration all
the Registrable Securities requested in their written demands as a result, in
whole or in part, of pro rata allocation with Holders of Group 1 Registrable
Securities as provided in Section 2(b), such prior demand shall not count as a
prior demand for purposes of this clause (C);
(E) If the Registrable Securities requested to be registered have an
expected public offering price of less than Seven Dollars and Fifty Cents
($7.50) per share of Common Stock;
(F) Within one hundred eighty (180) days immediately following the
effective date of any registration statement pertaining to an underwritten
public offering of Common Stock of the Company for its own account (other than
a registration on Form S-4 relating solely to a transaction or transactions
described in SEC Rule 145, or a registration relating solely to employee
benefit plans), or within one hundred eighty (180) days immediately following
the effective date of any registration statement pertaining to an underwritten
public offering of Common Stock of the Company pursuant to this Section 2;
(G) If the Company shall furnish to such Holders a certificate signed by
the President of the Company, stating that in the good faith judgment of the
Board of Directors of the Company it would be seriously detrimental to the
Company and its shareholders for such Registration Statement to be filed at the
date filing would be required, in which case the Company shall have an
additional period of not more than ninety (90) days within which to file such
Registration Statement; provided, however, that the Company shall not use this
right more than once as to each of the Holders of Group 1 Registrable
Securities and the Holders of Group 2 Registrable Securities; or
(H) If more than fifty percent (50%) of the Registrable Securities
requested to be registered by Initiating Holders' group (i.e., Group 1 or Group
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2) are withdrawn from such registration.
Subject to the foregoing clauses (A) through (H), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Initiating Holders.
(b) Underwriting. If the Initiating Holders intend to distribute the
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Registrable Securities covered by their demand by means of an underwriting,
they shall so advise the Company as part of their demand made pursuant to this
Section 2; and the Company shall
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include such information in the written notice referred to in Section 2(a)(i)
above. In such event, the right of any Holder to registration pursuant to this
Section 2 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 and such Holder) to the extent provided herein. A Holder may
elect to include in such underwriting or any part of the Registrable Securities
the Holder holds.
The Company shall, together with all Holders proposing to distribute
their securities through such underwriting, enter into an underwriting agreement
in customary form (i) with the underwriter or underwriters, if any, that have
served as underwriter or underwriters for the most recent sale of registered
securities of the Company for its own account, or (ii), if there has been no
such prior sale or the terms of such underwriting agreement are not acceptable
to a majority of the Initiating Holders (in their sole discretion), then with
the underwriter or underwriters selected by a majority in interest of the
Initiating Holders and reasonably satisfactory to the Company. Notwithstanding
any other provision of this Section 2, if the underwriter advises the Company in
writing (and if the underwriter or the Company advise in writing the Holders of
Registrable Securities that have demanded registration) that marketing factors
(including, without limitation, an adverse effect on the per share offering
price) require a limitation of the number of shares to be underwritten, then the
number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated:
(I) in the case of the initial public offering of the Company's Common
Stock, pro rata among the Holders thereof, in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement, and
(II) in all other cases, first (X) pro rata among the Initiating Holders
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and other Holders of the applicable group of Registrable Securities (i.e., the
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Group 1 Registrable Securities or the Group 2 Registrable Securities, as
applicable), and second (Y) (to the extent such limitation has not theretofore
been reached) pro rata among the other such Holders thereof, in proportion, as
to each such class and as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement.
No Registrable Securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration.
With respect to any "selling Holder" that is selling securities hereunder and
which is a partnership or corporation, in the event of any underwriter cutback,
the partners, retired partners, stockholders, and Affiliates of such "selling
Holder," or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall
be deemed to be a single "selling Holder," and any pro rata allocation with
respect to such "selling Holder" shall be based upon the aggregate amount of
shares carrying registration rights owned by all entities and individuals
included in such "selling Holder," as defined in this sentence.
If any Holder disapproves of the terms of the underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company, the underwriter,
and the Initiating Holders. The Registrable Securities so withdrawn shall also
be withdrawn from registration.
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If by the withdrawal of such Registrable Securities a greater number of
Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities in the same proportion used in determining the underwriter limitation
in this Section 2(b).
If the underwriter has not limited the number of Registrable Securities to
be underwritten, the Company may include securities for its own account (or for
the account of other shareholders) in such registration if the underwriter so
agrees and if the number of Registrable Securities that would otherwise have
been included in such registration and underwriting will not thereby be limited.
3. Company Registration.
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(a) General. If at any time or from time to time the Company shall
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determine to register any of its securities, either for its own account or the
account of security holders, other than a registration relating solely to
employee benefit plans, a registration on Form S-4 relating solely to a
transaction or transactions described in SEC Rule 145, or a registration
pursuant to Section 2 hereof, the Company will:
(i) promptly give to each Holder written notice thereof (which shall
include a list of the jurisdictions in which the Company intends to attempt to
qualify such securities under the applicable blue sky or other state securities
laws); and
(ii) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved therein,
all the Registrable Securities specified in a written request or requests, made
within thirty (30) days after receipt of such written notice from the Company,
by any Holder subject to the limitations set forth in Section 3(b) below.
(b) Underwriting. If the registration of which the Company gives notice
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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 3(a)(i). In such event the right of any Holder to registration
pursuant to this Section 3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
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 parties distributing their securities
through such underwriting, enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 3, if the
underwriter advises the Company in writing (and if the underwriter or the
Company advises in writing the Holders of Registrable Securities that have
demanded registration) that marketing factors (including, without limitation,
an adverse effect on the per share offering price) require a limitation of the
number of shares to be underwritten, and (i) if such registration is the first
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registered offering of the Company's securities to the public, the underwriter
may limit the number of Registrable Securities that may be included in the
registration and underwriting pursuant hereto to the full extent required by
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such marketing factors, and (ii) if such registration is other than the first
registered offering of the sale of the Company's securities to the public, the
underwriter may limit the number of Registrable Securities to be included in
the registration and underwriting to not less than fifty percent (50%) of the
securities included therein (based on aggregate market values); provided,
however, that in the case of each of clauses (i) and (ii) such number of
Registrable Securities shall not be reduced if any shares are to be included in
such underwriting for the account of any person other than the Company or
Holders of Registrable Securities. The Company shall so advise all holders of
the Company's securities requesting registration of any such limitation, and
the number of shares of securities, including Registrable Securities, held by
such holders that are entitled to be included in the registration and
underwriting shall be allocated in the following manner: shares, other than
Registrable Securities, requested to be included in such registration by
shareholders shall be excluded, and if a limitation on the number of shares is
still required, the number of Registrable Securities that may be included in
the registration shall be allocated among the Holders in proportion, as nearly
as practicable, to the respective amounts of Registrable Securities held by
each such Holder at the time of filing the registration statement; subject to
the immediately preceding sentence, securities to be registered by the Company
for its own account shall be excluded only if a limit on the number of shares
is still required after exclusion of Registrable Securities held by each such
Holder as provided above. With respect to any "selling Holder" that is selling
securities hereunder and which is a partnership or corporation, in the event of
any underwriter cutback, the partners, retired partners, stockholders, and
Affiliates of such "selling Holder," or the estates and family members of any
such partners and retired partners and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single "selling Holder," and any pro
rata allocation with respect to such "selling Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "selling Holder," as defined in this sentence.
No securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration.
If any Holder disapproves ofwithdraw therefrom by written notice to the
Company and the underwriter. Any securities so withdrawn shall also be withdrawn
from registration. If by the withdrawal of such securities a greater number of
Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities in the same proportion used in determining the underwriter limitation
in this Section 3(b).
4. Registration on Form S-3. The Company shall use its best efforts
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to qualify for registration on Form S-3 or any comparable or successor form or
forms; and to that end the Company shall register (whether or not required by
law to do so) the Common Stock under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), in accordance with the provisions of the 1934 Act
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following the effective date of the first registration of any securities of the
Company on Form X-0, X-0 or Form SB-2 or any comparable or successor form or
forms. After the Company has qualified for the use of Form S-3, in addition to
the rights contained in the foregoing provisions of this agreement, the Holders
of Registrable Securities shall have the right to request unlimited
registrations on Form S-3 as provided in this Section 4 (such requests
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shall be in writing and shall state the number of shares of Registrable
Securities to be disposed of and the intended methods of disposition of such
shares by such Holder or Holders). If the Company receives a written request
from the Holders of Securities worth an aggregate price of at least two hundred
fifty thousand dollars ($250,000) to the public requesting that the Company file
a registration statement with respect to all or part of the Registrable
Securities, the Company shall:
(a) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any Holder or Holders
joining in such request as are specified in a written request given within ten
(10) business days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
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registration, qualification, or compliance, pursuant to this Section 4: (i) if
the Holders, together with holders of any other securities of the Company
entitled to inclusion in such registration, if any, propose to sell Registrable
Securities and such other securities, if any, at an aggregate price to the
public of less than two hundred fifty thousand dollars ($250,000), (ii) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance and in which it has not already filed such a
consent, or (iii) if the Company shall furnish to the Holders a certificate of
the type described in Section 2(a)(ii)(B) hereof, in which case the Company's
obligation to effect such registration shall be deferred as provided in that
Section provided, that no registration pursuant to this Section 4 shall be
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deferred more than once pursuant to such certificates). Subject to the
foregoing, the Company shall file a registration statement covering the
Registrable Securities and the securities so requested to be registered as soon
as practicable after receipt of the request or requests of the Holder.
Registrations effected pursuant to this Section 4 shall not be counted as
requests for registrations or Company registrations pursuant to Sections 2 or
3, respectively.
5. Expenses of Registration.
All expenses incurred in connection with (a) any registration effected
pursuant to Section 2, (b) all registrations effected pursuant to Section 3 and
(c) one registration per year effected pursuant to Section 4 (including,
without limitation, (i) all SEC and any NASD registration and filing fees and
expenses, (ii) all fees and expenses in connection with the qualification of
the Registrable Securities for offering and sale under the State securities and
blue sky laws (including reasonable fees and disbursements of counsel for the
underwriters, if any, incurred in connection therewith), (iii) all expenses
relating to the preparation, printing, distribution and reproduction of the
registration statement, each prospectus included therein or prepared for
distribution pursuant hereto, each amendment or supplement to the foregoing,
the certificates representing the Registrable Securities and all other
documents relating thereto, (iv) fees and expenses of any escrow agent or
custodian, (v) fees, disbursements and expenses of counsel and independent
certified public accountants of the Company (including the expenses of any
opinions
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or "comfort" letters required), (vi) the cost of any special or other
non-ordinary course of business audit required, (vii) any fees and expenses of
the Company's registrar and transfer agent, (viii) any stock exchange listing
fees and (ix) if required by the underwriters, reasonable and customary
reimbursement and disbursements of the underwriters, including the reasonable
fees and disbursements of counsel to the underwriters) xxxxx.xx borne by the
Company; provided, however, that the Company shall not be required to pay stock
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transfer taxes or underwriters' discounts, or commissions relating to
Registrable Securities. Notwithstanding anything to the contrary above, the
Company shall not be required to pay for any expenses of any registration
proceeding under Section 2 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Registrable
Securities to have been registered of the Initiating Holders' group (i.e.,
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Group 1 or Group 2; provided, that in the case of Group 1, such majority shall
be calculated in a manner consistent with the exclusion specified in Section
l(b)), unless such Holders agree (irrevocably, and on behalf the Holders of the
Group 1 Registrable Securities or the Group 2 Registrable Securities, as
applicable) to forfeit their right to a demand registration pursuant to Section
2 (in which event such right shall be forfeited by all Holders of the
applicable group). In the absence of such an agreement to forfeit, the Holders
of Registrable Securities to have been registered who withdrew their
registration request shall bear all such expenses pro rata on the basis of such
withdrawing Holders' Registrable Securities to have been registered.
Notwithstanding the foregoing, however, if at the time of the withdrawal, the
Holders have learned of a material adverse change in the condition, business,
or prospects of the Company from that known to the Holders at the time of their
request, of which the Company had knowledge at the time of the request, then
the Holders shall not be required to pay any of said expenses and shall retain
their rights under Section 2.
6. Obligations of the Company. Whenever required by this agreement to
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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 diligent best efforts to cause such
registration statement to become effective, and keep such registration statement
effective for up to one hundred eighty (180) days or until the Holder or Holders
have completed the distribution relating thereto, whichever first occurs.
(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 such other securities or Blue Sky laws of
such jurisdictions within
10
the United States as shall be reasonably requested by the Holders, 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 states or jurisdictions.
(e) Use its best efforts to list the Common Stock covered by such
registration statement with any securities exchange (including the NASDAQ
National Market System) on which the Common Stock of the Company is then
listed; or, if the Common Stock is not then listed, use its best efforts to
list the Common Stock on such securities exchange (including the NASDAQ
National Market System) as the Company and Holders of at least sixty-six and
two-thirds percent (66-2/3%) of each of the Group 1 Registrable Securities and
the Group 2 Registrable Securities shall agree (provided, that if the Company
--------
and such Holders cannot reach such agreement, the decision of the Company shall
be controlling).
(f) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering (including, without
limitation, arranging for the delivery of customary legal opinions and
accountants' comfort letters). Each Holder participating in such underwriting
shall also enter into and perform its obligations under such an agreement.
(g) Make available for inspection by each seller of Registrable
Securities, any underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant, or other agent retained
by such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant, or agent in
connection with such registration statement in order to permit such parties to
conduct a reasonable investigation of the Company within the meaning of Section
11 of the 1933 Act.
(h) 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
there in not misleading in the light of the circumstances then existing, and
promptly prepare and furnish to each such Holder selling Registrable Securities
a reasonable number of copies of a prospectus supplemented or amended so that,
as so supplemented or amended, such prospectus shall not include any 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 in
the light of the circumstances then existing.
7. Indemnification.
---------------
(a) The Company will, and does hereby agree to, indemnify and hold
harmless each Holder participating in any registration, qualification or
compliance effected pursuant hereto, each of such Holder's officers, directors,
partners and agents, and each person controlling such Holder, and each
underwriter, if any, and each person who controls any
11
underwriter, against all claims, losses, damages, and liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, to which they may become subject under the
1933 Act, the 1934 Act, or other federal or state law arising out of or based on
(i) any untrue statement (or alleged untrue statement) of a material fact
contained in any preliminary, final, or summary prospectus, offering circular,
or other similar document (including any related Registration Statement,
notification, or the like), or any amendment or supplement thereto, 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, in light of the
circumstances in which they were made, not misleading, or (ii) any violation or
alleged violation by the Company of any federal, state or common law rule or
regulation applicable to the Company in connection with any such registration,
qualification, or compliance, and will reimburse, as incurred, each such Holder,
each such underwriter, and each such director, officer, partner, agent and
controlling person, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability, or action; provided that the Company will not be liable to
any Holder or underwriter 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 alleged untrue statement) or omission (or alleged omission) made
in reliance upon and in conformity with written information furnished to the
Company by such Holder or underwriter and stated to be specifically for use
therein.
(b) Each Holder will, and does hereby agree to, if Registrable Securities
held by or issuable to such Holder are included in such registration,
qualification, or compliance, indemnify the Company, each of its directors, and
each officer who signs a Registration Statement in connection therewith, and
each person controlling the Company, each underwriter, if any, and each person
who controls any underwriter, of the Company's securities covered by such a
Registration Statement, and each other Holder, each of such other Holder's
officers, partners, directors and agents and each person controlling such other
Holder, against all claims, losses, damages, and liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
such Registration Statement, preliminary, final, or summary prospectus,
offering circular, or other document, or any amendment or supplement thereto,
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, and will reimburse,
as incurred, the Company, each such underwriter, each such other Holder (as the
case may be), and each such director, officer, partner, and controlling person,
for any legal or any other expenses reasonably incurred in connection with
investigating, preparing 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) was
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, that the liability of each Holder hereunder shall be limited
to the net proceeds, if any, received by such Holder from the sale of
securities under such Registration Statement. In no event will any Holder be
required to enter into any agreement or undertaking in connection with any
registration hereunder
12
providing for any indemnification or contribution obligations on the part of
such Holder greater than such Holder's obligations under this Section 7.
(c) Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide such
-----------------
indemnification (the "Indemnifying Party") of any claim as to which
------------------
indemnification may be sought. Promptly after such Indemnified Party has
actual knowledge thereof, and defense of any such claim or any litigation
resulting therefrom; provided that the Indemnified Party may participate in such
defense at the Indemnified Party's expense or at the Indemnifying Party's
expense if (and only if) representation of such Indemnified Party by counsel for
the Indemnifying Party would be inappropriate due to actual or potential
differing interests between such Indemnified Party and the Indemnifying Party;
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
hereunder, except to the extent that such failure to give notice shall
materially adversely affect the Indemnifying Party in the defense of any such
claim or any such litigation. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the written consent of the applicable
Indemnified Party, consent to entry of any judgment or enter into any settlement
unless such judgment or settlement (i) includes as an unconditional term thereof
the giving by the claimant or plaintiff therein, to such Indemnified Party, of a
release from all liability in respect to such claim or litigation, and (ii) does
not include a statement as to or an admission of fault, culpability, or failure
to act by or on behalf of such Indemnified Party.
(d) The Company and each Holder hereby agree that, if for any reason the
indemnification contemplated by Section 7(a) and (b) is unavailable to or
insufficient to hold harmless an Indemnified Party in respect of any claims,
losses, damages or liabilities (or actions in respect thereof) referred to
therein, then each Indemnifying Party shall contribute to the amount paid or
payable by such Indemnified Party as a result of such claims, losses, damages
or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by them from the
offering. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each Indemnifying Party shall
contribute to such amount paid or payable by such Indemnified Party in such
proportion as is appropriate to reflect not only such relative benefits but
also their relative fault in connection with the statements or omissions that
resulted in such claims, losses, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the selling Holders on the one hand and
the underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received
by the Company and the selling Holders bear to the total underwriting discounts
and commissions received by the underwriters in each case as set forth in the
applicable prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact related
to information supplied by the Company, the selling Holders, or the
underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Holders agree that it would not be just and equitable if contribution
pursuant to this Section 7(d) were determined by pro rata allocation (even if
the Holders or any
13
underwriters or all of them were treated as one entity for such purpose) or by
any other method of allocation which does not take account of the equitable
considerations referred to in this Section 7(d). The amount paid or payable by
an Indemnified Party as a result of the claims, losses, damages, or liabilities
(or actions in respect thereof) referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), no Holder shall be required
to contribute any amount in excess of the amount by which the dollar amount of
the proceeds received by such Holder from the sale of any Registrable Securities
(after deducting any fees, discounts, and commissions applicable thereto)
exceeds the amount of any damages which such Holder has otherwise been required
to pay be reason of such untrue or alleged untrue statement or omission or
alleged omission, and no underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent 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. The Holders' and any underwriter's obligations in this
Section 7(d) to contribute shall be several in proportion to the number or
amount of Registrable Securities registered or underwritten, as the case may be,
by them, and not joint.
(e) The indemnification of and contribution to underwriters provided for
in this Section 7 shall be on such additional or alternative terms and
conditions as are States, and reasonably required by such underwriters, in which
event the foregoing indemnification and contribution provisions as applicable to
such public offering shall at the underwriters' request be modified to conform
to such terms and conditions.
8. Information by Persons Registering Securities. Each Holder including
---------------------------------------------
securities of the Company in any registration pursuant hereto 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 required in connection with any registration, qualification, or
compliance referred to herein.
9. Transfer of Registration Rights. The rights contained in this
-------------------------------
agreement may be assigned or otherwise conveyed to a transferee or assignee of
Registrable Securities, who shall be considered a "Holder" for purposes of this
agreement, only if (a) such transfer is effected in accordance with applicable
federal and state securities laws and (b) such transferee or assignee (i) is a
wholly owned subsidiary or constituent partner (including limited partner) of
the transferring Holder, or (ii) acquires at least one thousand (1,000) shares
of the Registrable Securities held by the transferring Holder and, provided
further, that the Company is given written notice by such Holder at the time of
or within a reasonable time after said transfer, stating the name and address of
said transferee or assignee and identifying the securities with respect to which
such registration rights are being assigned.
14
10. Delay of Registration. No Holder shall have any right to obtain or
---------------------
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this agreement.
11. Limitations on Subsequent Registration Rights. From and after the date
---------------------------------------------
of this agreement, the Company shall not, without the prior written consent of
Holders holding at least sixty-six and two-thirds percent (66-2/3%) of the
Registrable Securities, enter into any agreement with any holder or prospective
holder of any securities of the Company which would allow such holder or
prospective holder to (i) require the Company to effect a registration or (ii)
include any securities in any registration filed under Section 2 or 3 hereof,
unless, under the terms of such agreement, such holder or prospective holder
may include such securities in any such registration only to the extent that
the inclusion of such securities will not diminish the amount of Registrable
Securities which are included in such registration and includes the equivalent
of Section 13 as a term; provided, that in the case of any sale of registered
securities of the Company consistent with the provisions of Sections 2, 3, or 4
hereof, the restrictions of this Section 11 shall not apply to agreements with
the underwriter or underwriters for such sale or the holders of such registered
securities.
12. Rule 144 Reporting. With a view to making available to the Holders the
------------------
benefits of certain rules and regulations of the SEC which may permit the sale
of the Registrable Securities to the public without registration, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the 1933 Act, at all times after the effective date of the
first registration filed by the Company for an offering of its securities to
the general public;
(b) File with the SEC, in a timely manner, all reports and other documents
required of the Company under the 1933 Act and 1934 Act;
(c) So long as a Holder owns any Registrable Securities, furnish to such
Holder forthwith upon reasonable request: a written statement by the Company as
to its compliance with the reporting requirements of SEC Rule 144, of the 1933
Act, and of the 1934 Act (at any time after it has become subject to such
reporting requirements); a copy of the most recent annual or quarterly report
of the Company; and such other reports and documents as a Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing it to
sell any such securities without registration.
13. "Market Stand-Off" Agreement. Each Holder hereby agrees that for a
---------------------------
period of ninety (90) days following the effective date of the first
registration statement of the Company covering Common Stock (or other
securities) to be sold on its behalf in an underwritten public offering, not to
sell or other-wise transfer or dispose of (other than to donees who agree to be
similarly bound) any Common Stock of the Company held by it at any time during
such period except Common Stock included in such registration; provided,
however, that all officers and directors of the Company who hold securities of
the Company or options to acquire securities
15
of the Company and all other persons with registration rights (whether or not
pursuant to this agreement) enter into similar agreements.
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 shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
14. Termination of Registration Rights. The rights to cause the Company to
----------------------------------
register securities granted Holders under Sections 2, 3 and 4 and the rights
provided in Section 11 shall terminate as to any Holder who becomes eligible to
sell, pursuant to Rule 144 under the 1933 Act, all Registrable Securities held
by such Holder within a three-month period and current public information
concerning the Company (as defined in Rule 144) is available.
15. Miscellaneous.
-------------
(a) Except as otherwise expressly provided herein, including, without
limitation, as provided in Section 9, the provisions hereof shall inure to the
benefit of, and be binding upon, the parties and their respective the
successors, assigns, heirs, executors, and administrators.
(b) This agreement (including Schedule 1 hereto) constitutes the full and
----------
entire understanding and agreement among the parties with regard to the subject
matter hereof.
(c) Any invalidity, illegality, or limitation of the enforceability with
respect to any Holder of any one or more of the provisions of this agreement,
or any part thereof, whether arising by reason of the law of any such Holder's
domicile or otherwise, shall in no way affect or impair the validity, legality,
or enforceability of this agreement with respect to other Holders. In case any
provision of this agreement shall be invalid, illegaL or unenforceable, it
shall to the extent practicable, be modified so as to make it valid, legal and
enforceable and to retain as nearly as practicable the intent of the parties,
and the validity, legality, and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
(d) Any term of this agreement may be amended and the observance of any
term of this agreement may be waived (either generally or in a particular
instance, either retroactively or prospectively, and either for a specified
period of time or indefinitely), only with the written consent of the Company
and holders of not less than sixty-six and two-thirds percent (66-2/3%) of the
Registrable Securities then outstanding which have not been sold to the public;
provided, that (i) no such amendment or waiver shall reduce the percentage of
Registrable Securities the holders of which are required to consent to any
waiver or amendment without the consent of the record or beneficial holders of
all of such Registrable Securities, and (ii) no such amendment or waiver shall
adversely affect Group 1 Registrable Securities or Group 2 Registrable
Securities (or their Holders) or disproportionately benefit Group 1 Registrable
Securities or Group 2 Registrable Securities (or their Holders) compared to the
other group without the written consent of Holders of not less than sixty-six
and two-thirds percent (66-2/3%) of the Registrable Securities of the group(s)
adversely affected or disproportionately less
16
benefited. Any amendment or waiver effected in accordance with this subsection
shall be binding upon each holder of Registrable Securities, each future holder
of all such securities, and the Company. Upon the effectuation of each such
amendment or waiver, the Company shall promptly give written notice thereof to
the record holders of the Registrable Securities who have not previously
consented thereto in writing.
(e) No delay or omission to exercise any right, power, or remedy accruing
to any Holder or any subsequent holder of any Registrable Securities upon any
breach, default or noncompliance of the Company under this agreement, shall
impair any such right, power, or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence there
in, or of any similar breach, default or noncompliance thereafter occurring.
It is further agreed that any waiver, permit, consent, or approval of any kind
or character on the Holders' part of any breach, default or noncompliance under
this agreement or any waiver on the Holders' part of any provisions or
conditions of this agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing, and that all remedies,
either under this agreement, by law, or otherwise afforded to the Holders,
shall be cumulative and not alternative.
(f) All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed effectively given upon personal
delivery or (except in the case of demands for registration under Section 2) by
telecopier confirmed by one of the other methods of giving notice described in
this paragraph, and in the case where delivery is made by any established and
reputable next day delivery service, delivery shall be deemed to occur on the
day after delivery to such delivery service in the case of domestic delivery
and two business days after delivery to such delivery service in the case of
international deliveries, or on the fifth (5th) day following mailing for
domestic deliveries by registered or certified mail, return receipt requested,
postage prepaid, addressed: (a) if to a Holder, at such Holder's address as set
forth on Schedule 1 hereto, or at such other address as such Holder shall have
----------
furnished to the Company in writing, or (b) if to the Company, at its address
as set forth at the beginning of this agreement (facsimile number
617-564-6599), or at such other address as the Company shall have furnished to
the Holders in writing.
(g) This agreement shall substantive laws of the State of Delaware.
(h) The titles of the Sections of this agreement are for convenience of
reference only and are not to be considered in construing this agreement.
(i) This agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one instrument.
17
The foregoing agreement is hereby executed as an instrument under seal
as of the date first above written.
Company:
---------------------------------------
FAX INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxx, President
/s/ several stockholders
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