LOCK-UP AGREEMENT
Exhibit
1.3
This
agreement is dated as of December 10, 2010, is effective as of 11:59 p.m. on
November 30, 2010 (the “Effective Date”), and is between Kind Chin Associates,
LLC, a California limited liability company (“LLC”), its sole member Xxxx Xxxxx
(“Xx. Xxxxx”), and C2 Global Technologies, Inc. (“C2”).
LLC and C2 are parties that certain LLC
Interest Purchase Agreement dated of even date herewith (the “Purchase
Agreement”), pursuant to which LLC agreed to sell all of its membership
interests, limited liability company interests and other ownership interests in
Counsel RB Capital, LLC to C2 in exchange for a certain number of shares of C2’s
common stock (the “Purchased Shares”).
C2 would not agree to enter into the
Purchase Agreement without LLC and Xx. Xxxxx also agreeing to enter into this
agreement.
The parties therefore agree as
follows:
1. Lock-Up.
1.1 General Prohibition on
Transfer of Permitted Shares. LLC agrees that it shall not, and Xx. Xxxxx
agrees that he shall not cause or permit LLC to, sell, assign, convey, pledge,
hypothecate or otherwise dispose of (“Transfer”) any of the Purchased Shares,
whether or not for value, except as permitted by this agreement.
1.2 Permitted Transfers.
Section 1.1 notwithstanding and subject to compliance with Section 2.1, LLC is
permitted to Transfer Purchased Shares in the following circumstances (each of
which constitutes a “Permitted Transfer”):
(a) LLC
may at any time Transfer all or any portion of its Purchased Shares to C2 on
terms mutually agreeable to the parties;
(b) on
and from the first anniversary of the Effective Date until the day before the
second anniversary of the Effective Date, LLC may Transfer up to 25% of its
Purchased Shares to any party;
(c) on
and from the second anniversary of the Effective Date until the day before the
third anniversary of the Effective Date, LLC may Transfer up to 50% of its
Purchased Shares, less any Purchased Shares sold or otherwise disposed of by LLC
pursuant to clause (b), to any party;
(d) on
and from the third anniversary of the Effective Date until the day before the
fourth anniversary of the Effective Date, LLC may Transfer up to 75% of its
Purchased Shares, less any Purchased Shares sold or otherwise disposed of by LLC
pursuant to clauses (b) or (c), to any party; and
(e) on
and from the fourth anniversary of the Effective Date, LLC may Transfer any or
all of its Purchased Shares to any party.
2. No Transfer in Violation of
Law; Xxxxxxx Xxxxxxx Policies; Ownership of LLC.
2.1 LLC
covenants that it will not, and Xx. Xxxxx covenants that he will not cause or
permit LLC to: (i) Transfer any of the Purchased Shares in violation of any law,
including, without limitation, the Securities Act of 1933 (the “Securities
Act”), the Securities Exchange Act of 1934 (the “Exchange Act”), the securities
or “blue sky” laws of any applicable state and the rules and regulations
promulgated under any of the foregoing; or (ii) Transfer any of the Purchased
Shares in violation of the rules, procedures or restrictions relating to the
Transfer of common stock by insiders which are established by C2 from time to
time, in each case whether or not such Transfer would otherwise be deemed a
Permitted Transfer under Section 1.2.
2.2 LLC
and Xx. Xxxxx jointly and severally represent, warrant and covenant that as of
the Effective Date and for the duration of the Term (defined below), Xx. Xxxxx
owns and will continue to own at all times 100% of the membership and limited
liability company interests of LLC.
3. Piggy-Back
Registration.
3.1 If
C2 proposes to register any shares of C2’s common stock (“Shares”) under the
Securities Act either (i) at any time on behalf of Counsel Corporation
(“Counsel”), or (ii) on C2’s behalf after the date that is eighteen (18) months
from the Effective Date in connection with an underwritten public offering, and
the registration form to be used may be used for the registration of Purchased
Shares, then C2 shall give LLC, Xx. Xxxxx, Forsons Equity, LLC, a New York
limited liability company and Xxxxxxxx Xxxxx (each a “Piggy-Back Stockholder”)
written notice of its intent to do so not less than fifteen (15) business days
prior to the contemplated filing date for such registration statement. Upon the
written request of any Piggy-Back Stockholder (a “Piggy-Back Request”), given
within ten (10) business days after such Piggy-Back Stockholder is deemed to
have been given any such written notice (which request shall specify the number
of Shares requested to be registered on behalf of such Piggy-Back Stockholder),
C2 shall include in such registration statement (a “Piggy-Back Registration”),
subject to the provisions of Section 3.2, the number of Purchased Shares (up to
the number of Purchased Shares LLC is permitted to Transfer pursuant to Section
1.2) set forth in each such Piggy-Back Request.
3.2 In
the event that in connection with any underwritten Piggy-Back Registration any
underwriter thereof reasonably and in good faith shall have advised C2 or any
Piggy-Back Stockholder intending to offer Shares in the offering that, in its
opinion, the inclusion in the registration statement of some or all of the
Shares sought to be registered by a Piggy-Back Stockholder would adversely
affect the price or success of the offering, C2 shall include in such
registration statement such number of Shares as C2 is advised can be sold in
such offering without such an effect, with Counsel and each Piggy-Back
Stockholder entitled to register their Shares on a pro rata basis, according to
the total number of Shares requested to be registered by each. In
connection with any underwritten Piggy-Back Registration, the underwriters for
such Piggy-Back Registration shall be selected by C2.
3.3 In
connection with each registration statement prepared pursuant to this Section 3,
and in accordance with the intended method or methods of distribution of Shares
as described in such registration statement, C2 shall, as soon as reasonably
practicable:
(a) prepare
and file with the Securities and Exchange Commission (the “SEC”) a registration
statement on an appropriate registration form of the SEC and use reasonable
efforts to cause such registration statement to become effective promptly and
cause it to remain effective, which registration statement shall comply as to
form in all material respects with the requirements of the applicable form and
include all financial statements required by such form to be filed
therewith;
(b) furnish
without charge to each Registering Stockholder, and the underwriters, if any, at
least one conformed copy of the registration statement and each post-effective
amendment or supplement thereto (including all schedules and exhibits but
excluding all documents incorporated or deemed incorporated therein by
reference, unless requested in writing by any Registering Stockholder or
underwriter) and such number of copies of the registration statement and each
amendment or supplement thereto and the summary, preliminary, final, amended and
supplemented prospectuses, as applicable, included in such registration
statement as each Registering Stockholder and/or underwriter may reasonably
request in order to facilitate the public sale or other disposition of the
Shares being sold by such Registering Stockholder (and C2 hereby consents to the
use in accordance with the U.S. securities laws of such registration statement
(or post-effective amendment thereto) and each such prospectus (or preliminary
prospectus or supplement thereto) by each Registering Stockholder and/or
underwriter, if any, in connection with the offering and sale of the Shares
covered by such registration statement or prospectus);
(c) use
reasonable efforts to keep such registration statement effective for the shorter
of (A) ninety (90) days, and (B) such time as all of the Shares covered by the
registration statement have been disposed of (the “Effective Period”), and to
prepare and file with the SEC such amendments, post-effective amendments and
supplements to the registration statement as may be necessary to maintain the
effectiveness of the registration statement for the Effective
Period;
(d) use
reasonable efforts to register or qualify the Shares covered by such
registration statement under, and to the extent required by, the securities and
blue sky laws of any jurisdiction and keep such registrations or qualifications
in effect for so long as the registration statement remains in effect and do any
and all other acts and things which may be necessary to enable each Registering
Stockholder and/or underwriter to consummate the disposition of such Shares in
such jurisdictions; provided, however, that in no event shall C2 be required to
(A) qualify to do business as a foreign corporation in any jurisdiction where if
would not, but for the requirements of this section, be required to be so
qualified, (B) execute or file any general consent to service of process under
the laws of any jurisdiction, (C) take any action that would subject it to
service of process in suits other than those arising out of the offer and sale
of the Shares covered by the registration statement, or (D) subject itself to
taxation in any jurisdiction where it would not otherwise be obligated to do so
but for this section;
(e) promptly
notify each Registering Stockholder and the managing underwriter or
underwriters, if any, after becoming aware thereof: (A) when the registration
statement or any related prospectus or any amendment or supplement thereto has
been filed, and, with respect to the registration statement or any
post-effective amendment, when the same has become effective, (B) of any request
by the SEC or any United States state securities authority for amendments or
supplements to the registration statement or the related prospectus or for
additional information, (C) of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceedings for that purpose, (D) of the receipt by C2 of any notification
with respect to the suspension of the qualification of Shares for sale in any
jurisdiction or the initiation of any proceeding for such purpose or (E) during
the Effective Period, of the happening of any event or the existence of any fact
which makes any statement in the registration statement or any post-effective
amendment thereto, prospectus or any amendment or supplement thereto, or any
document incorporated therein by reference, untrue in any material respect or
which requires the making of any changes in the registration statement or
post-effective amendment thereto or any prospectus or amendment or supplement
thereto, so that none 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;
(f) during
the Effective Period, use reasonable efforts to obtain, as promptly as
practicable, the withdrawal of any order enjoining or suspending the use or
effectiveness of the registration statement or any post-effective amendment
thereto or the lifting of any suspension of the qualification of any Shares in
any jurisdiction; and
(g) use
reasonable efforts to provide and cause to be maintained a transfer agent and
registrar for all Shares covered by such registration statement not later than
the effective date of such registration statement;
3.4 Each
Registering Stockholder agrees that, upon receipt of any notice from C2 pursuant
to Section 3.3(e)(E), it shall, and shall use its reasonable best efforts to
cause any sales or placement agent or agents for its Shares and the
underwriters, if any, to, forthwith discontinue any disposition of Shares until
such person shall have received copies of such amended or supplemented
prospectus and, if so directed by C2, to destroy or to deliver to C2 all copies,
other than permanent file copies, then in its possession of the prospectus
(prior to such amendment or supplement) covering such Shares as soon as
practicable after such Registering Stockholder’s receipt of such
notice.
3.5 Each
Registering Stockholder shall furnish to C2 in writing such information
regarding such Registering Stockholder and its intended method of distribution
of its Shares as C2 may from time to time reasonably request to comply with its
obligations under all applicable securities and other laws in connection with
such registration and to ensure that the prospectus relating to such Shares
conforms to the applicable requirements of the Securities Act and the rules and
regulations thereunder. Each Registering Stockholder shall notify C2
as promptly as practicable of any inaccuracy or change in information previously
furnished by such Registering Stockholder to C2 or of the occurrence of any
event, in either case as a result of which any prospectus relating to Shares
contains or would contain an untrue statement of a material fact or omits 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, and promptly furnish to C2 any additional information required
to correct and update any previously furnished information or required so that
such prospectus shall not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.6 Each
Registering Stockholder agrees not to effect any public sale or distribution of
any Shares, including any sale pursuant to Rule 144 under the Securities Act,
and not to effect any such public sale or distribution of any other equity
security of C2 or of any security convertible into or exchangeable or
exercisable for any equity security of C2 (in each case, other than as part of
such underwritten public offering) during the seven (7) days (or such greater
number of days as C2 specifies) prior to, and during the ninety (90) days (or
such greater number of days as C2 specifies) beginning on the consummation of
any underwritten public offering of the Shares covered by a registration
statement referred to in Section 3.1.
3.7 In
the case of a Piggy-Back Registration where C2 has entered into an underwriting
agreement in connection therewith, all Shares to be included in such
registration statement shall be subject to the applicable underwriting agreement
and no Registering Stockholder may participate in such registration unless such
Registering Stockholder agrees to sell such Registering Stockholder’s Shares on
the basis provided therein and completes and executes all questionnaires,
indemnities, underwriting agreements and other documents (other than powers of
attorney) which must be executed in connection therewith, and provides such
other information to C2 or the underwriter as may be reasonably requested to
register such Registering Stockholder’s Shares; provided that no Registering
Stockholder selling Shares included in any underwritten registration shall be
required to make any representations or warranties to C2 or the underwriters
(other than representations and warranties regarding such Registering
Stockholder and such Registering Stockholder’s intended method of distribution)
or to undertake any indemnification obligations to C2 or the underwriters with
respect thereto, except as otherwise provided in Section 4.2.
3.8 C2
shall bear all expenses (other than commissions and underwriting discounts) in
connection with any registration of Shares pursuant to this Section 3 and the
fees and expenses of a single counsel selected by the holders of a majority of
the Shares being registered. Each Registering Stockholder shall bear
the fees and expenses of its own other agents and advisors, if any.
4. Indemnification.
4.1 LLC
and Xx. Xxxxx (each an “Indemnifying Party”) jointly and severally agree to
indemnify, defend and hold harmless C2, C2’s affiliates, and each of the
foregoing’s shareholders, directors, officers, employees, agents, successors and
assigns (each a “C2 Indemnified Party”) against any and all losses, claims,
damages or liabilities, costs or expenses (including reasonable attorneys’ and
experts’ fees) (“Claims”), whether incurred in an action between any such C2
Indemnified Party and an Indemnifying Party, a third party or otherwise, to
which any such C2 Indemnified Party may become subject under the Securities Act,
the Exchange Act, state securities laws, or otherwise, and any rules and
regulations promulgated under any of the foregoing, insofar as such Claims (or
actions in respect thereof) arise out of or are based upon any breach by any
Indemnifying Party of any of the provisions of this agreement.
4.2 The
Indemnifying Parties jointly and severally agree to (i) indemnify, defend and
hold harmless the C2 Indemnified Parties and each underwriter and its partners,
managers, members, directors, officers, employees and controlling persons, if
any, in any offering or sale of Shares, against any Claims to which any such
indemnified party may become subject, insofar as such Claims (including any
amounts paid in settlement as provided herein), or actions or proceedings in
respect thereof, arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any registration statement, or
any preliminary or final prospectus contained therein, or any amendment or
supplement thereto or any document incorporated by reference therein, or arise
out of or are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with information furnished to C2 by an
Indemnifying Party expressly for use therein, and (ii) reimburse C2 for any
legal or other out-of-pocket expenses reasonably incurred by C2 in connection
with investigating or defending any such Claim; provided that, notwithstanding
anything to the contrary contained herein, the foregoing obligation to indemnify
shall be limited in the aggregate to the net amount of proceeds received by the
Indemnifying Parties from the sale of Shares pursuant to such registration
statement.
4.3 C2
agrees to indemnify, defend and hold harmless LLC and Xx. Xxxxx (each a “Xxxxx
Indemnified Party”) in any offering or sale of Shares against any Claims to
which a Xxxxx Indemnified Party may become subject, insofar as such Claims
(including any amounts paid in settlement effected with the consent of C2 as
provided herein), or actions or proceedings in respect thereof, arise out of or
are based upon (i) an untrue statement or alleged untrue statement of a material
fact contained in any registration statement, or any preliminary or final
prospectus contained therein, or any amendment or supplement thereto, or any
document incorporated by reference therein, or (ii) 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 (iii) any violation or alleged violation by
C2 of any U.S. federal, state or common law rule or regulation applicable to C2
and relating to action required, or inaction, by C2 in connection with any such
registration, and C2 shall, and it hereby agrees to, reimburse on an as-incurred
basis each Xxxxx Indemnified Party for any legal or other out-of-pocket expenses
reasonably incurred by them in connection with investigating or defending any
such Claims; provided, however, that C2 shall not be liable to any such person
in any such case to the extent that any such Claims arise out of or are based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, or preliminary or final
prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with information furnished to C2 by a Xxxxx Indemnified Party (or any
representative of a Xxxxx Indemnified Party) in its capacity as a shareholder
expressly for use therein, or by a Xxxxx Indemnified Party’s failure to furnish
C2, upon request, with the information with respect to a Xxxxx Indemnified Party
or a Xxxxx Indemnified Party’s intended method of distribution, that is the
subject of the untrue statement or omission or if such Xxxxx Indemnified Party
sold securities to the person alleging such Claims without sending or giving, at
or prior to the written confirmation of such sale, a copy of the applicable
prospectus (excluding any documents incorporated by reference therein) or of the
applicable prospectus, as then amended or supplemented (excluding any documents
incorporated by reference therein), if C2 had previously furnished copies
thereof to a Xxxxx Indemnified Party, and such prospectus corrected such untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement.
5. Term and Termination;
Survival.
5.1 The
term of this agreement begins on the Effective Date and continues until the
earlier of (i) the fourth anniversary of the Effective Date, or (ii) the
effective date of termination of Xx. Xxxxx’x employment pursuant to any written
Employment Agreement between Xx. Xxxxx and C2 (“Employment Agreement”) in the
event such employment is terminated by C2 without Cause or by Xx. Xxxxx for Good
Reason (the “Term”). For purposes of this agreement, “Cause” and “Good Reason”
shall each have the meaning given such terms in such Employment
Agreement.
5.2 Notwithstanding
Section 5.1, the rights and obligations of the parties set forth in Section 3
shall continue until the earlier of (i) the fifth anniversary of the Effective
Date, or (ii) the effective date of termination of Xx. Xxxxx’x employment for
any reason.
5.3 The
provisions of Sections 2.1, 4, 5.2, 5.3 and 6 shall survive the termination of
this agreement.
6. Miscellaneous.
6.1 This agreement constitutes the entire
agreement between the parties and supersedes any prior or contemporaneous
communications, representations or agreements between the parties, whether oral
or written, regarding the subject matter of this agreement.
6.2 If any provision of this agreement is found to be void, invalid or
unenforceable: (i) the same will be conformed to the extent necessary to comply
with applicable law or stricken if not so conformable, so as not to affect the validity of this
agreement; and (ii) the
remaining provisions will remain in effect. No amendment of this
agreement is binding unless
in writing and executed by each of the parties. Any waiver or consent
is valid only if in a signed writing and only in the specific instance in which
it is given, and such waiver or consent is not to be construed as a waiver of
any subsequent breach of any other provision or as a consent with respect to any
similar instance or circumstance.
6.3 This agreement inures to the benefit of and is
binding upon the parties and their respective legal representatives, successors,
and assigns. Seller may not directly or indirectly, including by
assignment, operation of law or change of control, transfer or assign this agreement without C2’s prior written consent, and any
purported transfer or assignment in violation of this section will be null and
void.
6.4 This Agreement will be governed by and
construed in accordance with the laws of the State of New York, without regard to conflict of laws
principles. Exclusive venue for any action arising out of or related
to this Agreement will be in state or federal court located in the County of New
York, New York, and each party consents to the jurisdiction of such courts and
waives any defense based on lack of personal jurisdiction or inconvenient
forum.
6.5 EACH PARTY IRREVOCABLY WAIVES ANY AND
ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATED TO THIS AGREEMENT BE TRIED BY JURY. EACH
PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHT TO DEMAND TRIAL BY
JURY.
6.6 This agreement may be executed in
counterparts, each of which will be an original, and all of which together will
be one and the same agreement. A signed copy of this agreement delivered by facsimile, e-mail
or other means of electronic transmission will have the same legal effect as
delivery of an original signed copy of this agreement. The headings of
this agreement are provided for convenience
only and are not intended to affect its construction or
interpretation.
6.7 The
parties acknowledge that there may be no adequate remedy at law for a breach of
this agreement and that money damages may not be an appropriate remedy for
breach of this agreement. Therefore, the parties agree that each
party has the right to injunctive relief and specific performance of this
agreement in the event of any breach hereof in addition to any rights it may
have for damages. The remedies set forth in this section are
cumulative and will in no way limit any other remedy any party has at law, in
equity or pursuant hereto.
[signature
page follows]
The parties have executed this
agreement effective as of the Effective Date.
| C2 Global Technologies Inc. | |||
|
|
By:
|
/s/Xxxxx Xxxxxx | |
| Its: | Chairman & CEO | ||
| Kind Chin Associates, LLC | |||
|
|
/s/Xxxx Xxxxx | ||
|
By:
|
Xxxx Xxxxx, Sole Member | ||
| Xxxx Xxxxx | |||
|
|
/s/Xxxx Xxxxx | ||
