EXHIBIT 10.12
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
BIZCOM, U.S.A., INC.
AND
SOPHIA COMMUNICATIONS, INC.
NOVEMBER 25, 2003
TABLE OF CONTENTS
ARTICLE I GENERAL PROVISIONS.....................................................................................1
1.1 DEFINITIONS..........................................................................................1
ARTICLE II REGISTRATION; RESTRICTIONS ON TRANSFER................................................................4
2.1 RESTRICTIONS ON TRANSFER.............................................................................4
2.2 PIGGYBACK REGISTRATIONS..............................................................................5
2.3 OBLIGATIONS OF THE COMPANY...........................................................................6
2.4 INFORMATION BY HOLDER................................................................................8
2.5 EXPENSES OF REGISTRATION.............................................................................8
2.6 INDEMNIFICATION......................................................................................8
2.7 RULE 144 REPORTING..................................................................................10
2.8. TAG-ALONG RIGHTS....................................................................................11
ARTICLE III GOVERNANCE OF THE COMPANY...........................................................................13
3.1 VOTING RIGHTS.......................................................................................13
3.2 BOARD OBSERVATION...................................................................................13
ARTICLE IV TERMINATION AND ASSIGNMENT OF COVENANTS..............................................................14
4.1 TERMINATION.........................................................................................14
ARTICLE V MISCELLANEOUS.........................................................................................14
5.1 SUCCESSORS AND ASSIGNS..............................................................................14
5.2 GOVERNING LAW.......................................................................................14
5.3 JURISDICTION AND VENUE; SERVICE OF PROCESS; WAIVER OF TRIAL BY JURY; ATTORNEYS' FEES................14
5.4 COUNTERPARTS........................................................................................14
5.5 NOTICES.............................................................................................15
5.6 ATTORNEY'S FEES.....................................................................................15
5.7 ENTIRE AGREEMENT....................................................................................15
5.8 ADDITIONAL ACTIONS AND DOCUMENTS....................................................................15
5.9 AMENDMENT AND WAIVER................................................................................15
5.10 DELAYS OR OMISSIONS.................................................................................15
5.11 SEVERABILITY........................................................................................15
5.12 THIRD PARTY BENEFICIARIES...........................................................................16
i
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "RIGHTS AGREEMENT") is entered
into as of the 25th day of November, 2003, by and among (i) BizCom U.S.A., Inc.,
a Florida corporation (the "COMPANY") and (ii) Sophia Communications, Inc.,
("SOPHIA"), a Delaware corporation, in its capacity as an investor in the
Company and on behalf of each and any shareholder of Sophia which may receive
securities in the Company as a result of its ownership in Sophia (collectively
"INVESTORS").
W I T N E S S E T H:
WHEREAS, on November 25, 2003 Sophia and the Company entered into that
certain Asset Purchase Agreement wherein Sophia sold substantially all of its
assets to the Company in exchange for certain shares of the common stock and
warrants to purchase shares of common stock of the Company; (the "PURCHASE
AGREEMENT"); and
WHEREAS, as a condition to the First Closing of the Purchase Agreement,
this Rights Agreement must be executed and delivered by the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein and in the Purchase Agreements, the parties hereto agree as
follows:
ARTICLE I
GENERAL PROVISIONS
1.1 Definitions. Capitalized terms used in this Rights Agreement
and not defined in the text hereof shall have the meanings set forth below or in
the Purchase Agreement:
(a) "AFFILIATE" shall mean, with respect to any Person,
any other Person that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common Control with,
such Person, and with respect to any Person who is an individual, the spouse of
such Person or any direct lineal family descendant or any custodian, guardian or
other representative of any of the foregoing, or any trust created by such
Person for the benefit of such Person or his or her spouse or any direct lineal
family descendant.
(b) "BUSINESS DAY" means a day which is not a Holiday.
(c) "COMMON STOCK" means authorized shares of common
stock issued and outstanding by the Company.
(d) "CONTROL" (including the terms "controlled by" and
"under common control with") means with respect to the relationship between or
among two or more Persons, the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
(e) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended
(f) Reserved
(g) "HOLDER" means any Person owning or having the right
to acquire Registrable Securities or any assignee or transferee thereof.
(h) "HOLIDAY" means every Saturday and Sunday, New Year's
Day, Presidents' Day, Xxxxxx Xxxxxx Xxxx, Xx.'s Birthday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day,
Christmas Day or any other holidays designated by an executive order of the
President of the United States or by Act of Congress, or any other day on which
commercial banks in Miami, Florida are authorized or required by law to close.
(i) "JOINDER AGREEMENT" shall mean the joinder agreement,
substantially in the form attached hereto as Exhibit A, by which any applicable
assignee or transferee shall become bound by all the terms and conditions of
this Rights Agreement as a party hereto.
(j) "QUALIFIED IPO" means the Company's closing of an
underwritten public offering of its Common Stock under the Securities Act in
which the aggregate gross proceeds to the Company equal at least $50 million and
that results in a market capitalization (calculated by the managing underwriter
or underwriters for such offering) of at least $150 million.
(k) "PERSON" shall mean any individual, corporation,
limited liability company, partnership, joint venture, firm, association, trust,
or any other separate entity.
(l) "REGISTER," "REGISTERED," and "REGISTRATION" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(m) "REGISTRABLE SECURITIES" means (i) the Sophia Owned
Common Stock; (ii) the Common Stock issuable or issued upon exercise of the
Sophia Owned Warrants and (iii) any Common 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, in exchange for, or in
replacement of, the securities referenced in clauses (i) and (ii) above.
(n) "REGISTRATION EXPENSES" means all expenses, except
Selling Expenses, incurred by the Company in complying with this Rights
Agreement including all Registration, qualification and filing fees, printing
2
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
expenses, escrow fees, fees and disbursements of counsel for the Company, blue
sky fees and expenses, and accounting fees (including the expense of any special
audits incident to or required by any such Registration) .
(o) "RULE 144" means Rule 144 promulgated by the SEC
pursuant to the Securities Act.
(p) "SEC" means the U.S. Securities and Exchange
Commission.
(q) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(r) "SELLING EXPENSES" means all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities.
(s) "SELLING STOCKHOLDER" means any Holder who sells
Registrable Securities under any section of Article II.
(t) "SHAREHOLDER" means the beneficial owner of any
shares of the Company's stock.
(u) "SOPHIA OWNED COMMON STOCK" means the shares of the
Company's Common Stock issued to Sophia pursuant to the terms of the Purchase
Agreement.
(v) "SOPHIA OWNED WARRANTS" means the warrant rights
issued to Sophia pursuant to the terms of the Purchase Agreement.
(w) "TRANSFER" shall mean (i) when used as a verb, to
sell, assign, hypothecate, gift, dispose of, exchange, mortgage, pledge, grant a
security interest or participation in, make any voting trust or other
arrangement or agreement with respect to the transfer of voting rights
(including any proxy or otherwise (whether or not revocable)), or any other
beneficial interest in any of the Shares, or otherwise transfer or encumber,
whether directly or indirectly, voluntarily or involuntarily, (by a derivatives
transaction or otherwise) and (ii) when used as a noun, a direct or indirect (by
a derivatives transaction or otherwise) sale, assignment, hypothecation, gift,
disposition, exchange, mortgage, pledge, granting of a security interest or
participation in, voting trust or other arrangement or agreement with respect to
the transfer of voting rights (including any proxy or otherwise (whether or not
revocable)) or any other beneficial interest in any of the Shares, or other
transfer or encumbrance.
3
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
ARTICLE II
REGISTRATION; RESTRICTIONS ON TRANSFER
2.1 Restrictions on Transfer.
(a) In order to ensure compliance with the provisions of
the Securities Act, each Holder agrees not to Transfer all or any portion of the
Registrable Securities held by it unless and until:
(i) There is in effect a Registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with such Registration statement; or
(ii) (A) The transferee has agreed in writing to
be bound by the terms and conditions of this Rights Agreement as a party hereto
by executing a Joinder Agreement, substantially in the form attached hereto as
Exhibit A, (B) such Holder shall have notified the Company that it proposes to
dispose of such securities in a transaction that does not require Registration
of such securities under the Securities Act, and (C) if requested by the
Company, such Holder shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such disposition will not
require Registration of such shares under the Securities Act.
(b) Notwithstanding the provisions of paragraph (a)(ii)
above, no opinion of counsel shall be necessary for a Transfer to: (i) a wholly
owned subsidiary of Sophia or (ii) to any Person that (A) is a shareholder of
Sophia as of the date hereof; and (B) meets the definition of an "accredited
investor" under the Securities Act at the time of the Transfer as evidenced by a
written representation signed by such person, corporation or entity at the time
of such requested Transfer addressed to the Company confirming his/her/its
status as an accredited investor under the Securities Act at that time, and
signs a customary investment representation letter prepared by and addressed to
the Company; further provided, however, that in each case the transferee has
agreed in writing to be bound by the terms and conditions of this Rights
Agreement as a party hereto by executing a Joinder Agreement, substantially in
the form attached hereto as Exhibit A.
(c) Each certificate representing Registrable Securities
shall (unless otherwise permitted by the provisions of this Rights Agreement or
the Purchase Agreement) be stamped or otherwise imprinted with a legend
substantially similar to the legend set forth in the Purchase Agreement (in
addition to any legend required under applicable state securities laws).
(d) Lock-Up. Each Holder agrees to accept reasonable and
customary indemnification and "lock-up" provisions requested of all
Shareholders, generally, by the underwriter(s) of any Qualified IPO. In
addition, during the period commencing on the First Closing Date of the Purchase
Agreement and ending two (2) years thereafter, no Holder shall be permitted to
Transfer an amount of Common Stock in any calendar quarter which is more than
4
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
12.5% of the aggregate Sophia Owned Common Stock or shares of Common Stock
purchasable upon exercise of the Sophia Owned Warrants held by such Holder
without the prior written consent of the Company which may be withheld in its
sole discretion; provided, however, subject to execution of a Joinder Agreement,
that this restriction shall not apply to any Transfer (i) from the Investor to a
wholly owned subsidiary of Sophia or (ii) from Sophia or any Sophia shareholder
to any other Sophia shareholder or an Affiliate of such shareholder.
2.2 Piggyback Registrations.
(a) If the Company proposes to Register (including for
this purpose a Registration effected by the Company for stockholders other than
the Holders) any of its stock or other securities under the Securities Act in
connection with the public offering of such securities (other than (i) a
Registration relating solely to the sale of securities to participants in an
employee benefit plan, (ii) a Registration relating to a corporate
reorganization or other transaction under Rule 145 of the Securities Act, (iii)
a Registration on any form that does not include substantially the same
information as would be required to be included in a Registration statement
covering the sale of the Registrable Securities, or (iv) a Registration in which
the only Common Stock being Registered is Common Stock issuable upon conversion
of debt securities that are also being Registered), the Company shall, at such
time, promptly give each Holder written notice of such Registration. Subject to
the terms and conditions of this Section 2.2, each Holder shall be entitled to
include in any Registration pursuant to this Section 2.2, for sale for such
Holder's account in accordance with the method of disposition specified by the
Company, all Registrable Securities owned by it unless at the time of such
Registration all Registrable Securities held by such Holder can be sold without
Registration under the Securities Act as a result of the applicability of Rule
144 or Rule 144(k). Upon the written request of any Holder given within 20 days
after mailing of such notice by the Company in accordance with Section 5.5, the
Company shall, subject to the terms, conditions and limitations of this Section
2.2, use its best efforts to cause to be Registered under the Securities Act all
of the Registrable Securities that each such Holder has requested to be
Registered.
(b) In connection with any offering involving an
underwriting of Common Stock by one or more members of the National Association
of Securities Dealers, Inc., the Company shall not be required under this
Section 2.2 to include any of the securities of the Holders in such underwriting
unless they accept the terms of the underwriting as agreed upon between the
Company and the underwriters selected by the Company and, if requested, enter
into an underwriting agreement in customary form with an underwriter or
underwriters selected by the Company, and then only in such quantity as the
underwriters determine in their sole discretion will not jeopardize the success
of the offering by the Company. Notwithstanding any other provision of this
Rights Agreement, if the managing underwriter or underwriters determine in good
faith that marketing factors require a limitation of the number of shares to be
underwritten, the definitive number of shares that may be included in the
underwriting shall be allocated, first, to the Company, and second, to the
Holders and to any other Shareholder on a pro rata basis. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter,
5
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
delivered at least 10 business days prior to the effective date of the
Registration statement. Any securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the Registration.
(c) The Company shall have the right to terminate or
withdraw any Registration initiated by it under this Section 2.2 prior to the
effectiveness of such Registration whether or not any Holder has elected to
include securities in such Registration. The expenses of such withdrawn
Registration shall be borne by the Company in accordance with Section 2.5
hereof.
(d) In the event that the Company hereafter grants to any
Shareholder who, through one or a series of transactions purchases or becomes
the holder of a similar volume or value of securities in the Company as those
being issued to Investor as a result of the Purchase Agreement any right to
Register Common Stock or securities convertible into Common Stock which are more
favorable than the Registration rights granted to the Investors hereunder
(including any demand Registration rights or any other right to Registration
earlier than that granted hereunder to the Investors), then Company shall notify
Investor of such circumstance, and the parties shall promptly amend this Rights
Agreement to include all such additional and more favorable Registration rights
as may be so granted to such other transferor.
2.3 Obligations of the Company. Whenever required under
Article II to effect any Registration, the Company shall, as expeditiously as
reasonably possible:
(a) prepare and file with the SEC a Registration
statement and use its best efforts to cause such Registration statement to
become effective, and keep such Registration statement effective for a period of
120 days or, if earlier, until the distribution contemplated in such
Registration statement has been completed;
(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 Securities Act with respect to the disposition of all
securities covered by such Registration statement;
(c) furnish to the Selling Stockholders such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of 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 as shall be reasonably requested by the
Selling Stockholders, 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;
6
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
(e) before filing the Registration statement or any
amendments or supplements thereto, furnish the Selling Stockholders with copies
of all documents proposed to be filed, and afford them or any of their counsel a
reasonable opportunity to review and, acting only through the Purchaser
Designee(s) and not directly with the Company, to comment upon such documents;
(f) in the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form (including representations, warranties and indemnitees of the
Company for the benefit of the underwriters and the Selling Stockholders), with
the underwriter or underwriters of such offering;
(g) cause the securities covered by such Registration
statement to be listed on each securities exchange, the over-the-counter market
or any other market on which the Company's securities of the same class and
series are then listed, or, if no such securities are then listed, the
securities exchange, the over-the-counter market or any other market as the
Company its sole discretion may decide;
(h) notify each Selling Stockholder covered by such
Registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; and
(i) use its best efforts to furnish to the underwriters,
on the date that securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of such
date, of counsel representing the Company for the purposes of such Registration,
in form and substance as is customarily given to underwriters in an underwritten
public offering, and (ii) a letter, dated as of such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering.
(j) For the convenience of the Company, Investor shall
designate up to three (3) Persons ("Purchaser Designees") from among its current
shareholders, and at any time Persons holding at least 15% of the then
outstanding Registrable Securities may designate one additional Purchase
Designee. Whenever one or more of the Purchaser Designees designated at the time
is among the Selling Stockholders covered by a Registration Statement, such
Purchaser Designee(s) shall serve as the duly authorized representative of all
other Holders of Registrable Securities who are also Selling Shareholders
covered by such Registration Statement, but only for purposes of receiving
communications and providing comments on agreements as contemplated by Sections
2.3(e) and 2.3(h). All communications under Section 2.3(e) should be directed to
such Purchaser Designees at the addressed listed for them on Schedule 2.02(p) to
the Purchase Agreement or such other current address listed on the books and
records of the Company. If at any time any Purchase Designee ceases to be a
shareholder of Investor or a Holder of Registrable Securities, such Purchaser
7
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
Designee may be replaced by Persons holding at least 25% of the Registrable
Securities, and if at any time none of the then-designated Purchaser Designees
is a Holder of Registrable Securities, then the Company may designate any
remaining Holders of Registrable Securities by notice to all other remaining
Holders of Sophia Owned Common Stock.
2.4 Information by Holder. Any Selling Stockholder holding
securities included in any Registration effected under Section 2.2 shall
promptly furnish to the Company such information regarding itself, the
securities to be sold by it, and the intended method of disposition of such
securities as shall be required to effect the Registration of such stockholder's
securities.
2.5 Expenses of Registration. All Registration Expenses incurred
by the Company in connection with any and all with Registrations pursuant to
Section 2.3, or any other Registration shall be borne by the Company.
2.6 Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Article II:
(a) The Company will indemnify and hold harmless each
Selling Stockholder, the officers, directors, managers, stockholders, partners
and members of each Selling Stockholder (as applicable), legal counsel and
accountants for each Selling Stockholder, any underwriter (as defined in the
Securities Act) for such stockholder and each Person, if any, who Controls any
of the foregoing within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities (including reasonable
attorneys' fees), joint or several), to which they may become subject under the
Securities Act, the Exchange Act or any state securities laws, insofar as such
losses, claims, damages, or liabilities, (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively, a "VIOLATION"): (i) any untrue statement or alleged
untrue statement of a material fact contained or deemed to be contained in such
Registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities laws or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities laws; and the
Company will reimburse any Person entitled to be indemnified pursuant to this
Section 2.6(a) for any reasonable legal expenses incurred by such Person, as
incurred, in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company's obligations
under this Section 2.6(a) shall not apply to (A) any Person who participates as
an underwriter in the offering or sale of Registrable Securities or any other
Person if any, who Controls such underwriter within the meaning of the
Securities Act, with respect to any prospectus, as amended or supplemented as
the case may be, to the extent that any such loss, claim, damage or liability of
such underwriter or Controlling Person results from the fact that such
underwriter sold Registrable Securities to a Person to whom there was not sent
8
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
or given, at or prior to the written confirmation of such sale, a copy of the
final prospectus (including any documents incorporated by reference therein), if
the Company has previously furnished copies thereof to such underwriter and such
final prospectus, as then amended or supplemented, is free of any statements or
omissions constituting a Violation, or (B) any loss, claim, damage, liability or
action to the extent that it arises out of or is based upon a Violation that
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such Registration by any Person entitled to
be indemnified pursuant to this Section 2.6(a).
(b) Each Selling Stockholder will, if Registrable
Securities held by such stockholder are included in the securities as to which
such Registration is being effected, indemnify and hold harmless the Company,
each of its directors and officers, legal counsel and accountants for the
Company, any underwriter, any other stockholder selling securities in such
Registration statement and any Controlling Person of any of the foregoing within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities (INCLUDING REASONABLE ATTORNEYS' FEES), joint and
several), to which they may become subject under the Securities Act, the
Exchange Act or any state securities laws, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by such stockholder or Purchaser Designee expressly for
use in connection with such Registration; and each such stockholder will
reimburse any Person entitled to be indemnified pursuant to this Section 2.6(b)
for any legal or other expenses incurred by such Person, as incurred, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, the liability of each Selling
Stockholder under this Section 2.6(b) shall be limited to an amount equal to the
proceeds of the offering received by such stockholder, unless such liability
arises out of or is based on a willful omission or misconduct by such
stockholder.
(c) Each party entitled to indemnification under this
Section 2.6 (the "INDEMNIFIED Party") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, and, to the extent an
Indemnifying Party so desires, jointly with any other Indemnifying Party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an Indemnified Party
(together with all other Indemnified Parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between such Indemnified Party and any other party or parties
represented by such counsel in such proceeding. The failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 2.6 unless the failure to give such notice
is materially prejudicial to an Indemnifying Party's ability to defend such
action. No Indemnifying Party, in the defense of any such claim or litigation,
9
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
shall, except upon the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a full and unconditional release from all liability in
respect to such claim or litigation.
(d) If the indemnification provided for in this Section
2.6 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or expense
referred to herein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage or expense, as
well as any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement, omission or other violation; provided, however, that in
no event shall any contribution by a Selling Stockholder hereunder exceed the
net proceeds from the offering received by such stockholder.
(e) The obligations of the Company and Selling
Stockholders under this Section 2.6 shall survive the completion of any offering
of Registrable Securities in a Registration statement under Section 2.2, and the
termination of this Rights Agreement.
2.7 Rule 144 Reporting. The Company agrees that it shall, utilize
best efforts at all times after the effective date of the Registration statement
filed in the first underwritten public offering of the Company's Common Stock
under the Securities Act to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements and (ii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC that
permits the selling of any such securities without Registration or pursuant to
such form.
10
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
2.8. Tag-along Rights.
(a) If at any time prior to a Qualified IPO, any
Shareholder or group of Shareholders acting in concert (the "Tag Sellers")
proposes, in a single transaction or series of related transactions, to Transfer
to any Person who is not an Affiliate of such Tag Sellers, so many of the shares
of the Company's stock as to constitute either (a) at least 50% of the total
number of shares of the Company's stock outstanding as of the date of the
proposed sale or (b) a sufficient number of shares of the Company's stock
entitled to vote on such matters for the purchaser to be able to elect at least
a majority in number of the Board of Directors of the Company, the Holders of
Sophia Owned Common Stock (each, a "Tagging Party") at the time shall each be
entitled to participate in such Transfer by the Tag Sellers (the "Tag-along
Right"), at the same price and on the same terms as such Tag Sellers will
receive in connection with such Transfer, up to the number of Shares determined
in accordance with Section 2.8(e). Any sale of Shares subject to this provision
shall be deemed a "Tag-along Sale".
(b) Not later than 10 Business Days prior to the
anticipated closing date of the Tag-along Sale (the "Sale Date"), the Tag
Sellers shall give notice (the "Tag-along Notice") to each Holder of Sophia
Owned Common Stock at the time which shall state:
(i) the name and address of the proposed
purchaser;
(ii) the number of Shares subject to the
Tag-along Sale and the Tag-along Ratio;
(iii) the proposed amount and form of
consideration per Share;
(iv) the Sale Date; and
(v) any other material terms and conditions of
the Tag-along Sale, including, without limitation, if the consideration payable
in connection with the Tag-along Sale consists in part or in whole of
consideration other than cash, such information as may be required for each
Tagging Party to evaluate such non-cash consideration.
The Tag Seller shall supplement in a timely manner the Tag-along Notice with any
additional information which any Holder of Sophia Owned Common Stock at the time
may reasonably request in order to evaluate the Tag-along Sale and its rights
under this Section 2.8. The date on which the Tag-along Notice is delivered to
each Holder of Sophia Owned Common Stock shall be the "Tag-along Notice Date."
(c) Each Holder of Sophia Owned Common Stock may accept
the Tag-along Sale for up to the maximum permissible number of shares determined
in accordance with Section 2.8 by giving revocable notice to the Tag Seller
(with a concurrent copy to the Company) (a "Tag-along Acceptance") within seven
(7) Business days after the Tag-along Notice Date (the "Tag-along Acceptance
11
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
Period"), specifying therein the number of Shares which such Tagging Party
desires to sell. Any Holder of Sophia Owned Common Stock accepting such offer
shall be a "Tagging Party." Any Tag-along Acceptance may be withdrawn or
modified at any time prior to the end of the Tag-along Acceptance Period. At the
expiration of the Tag-along Acceptance Period, the Tag-along Acceptance (if not
earlier revoked) shall become irrevocable and legally binding with respect to
the shares specified therein or (if revoked) shall become an irrevocable waiver
of such Tagging Party's rights under this Section 2.8 with respect to the sale
or other disposition of its shares pursuant to such Tag-along Sale, as the case
may be. The failure of any Holder of Sophia Owned Common Stock to deliver a
Tag-along Acceptance during the Tag-along Acceptance Period shall constitute an
irrevocable waiver by such party of its rights under this Section 2.8 with
respect to the sale or other disposition of its shares pursuant to such
Tag-along Sale (but not with respect to any subsequent Tag-along Sale).
(d) If a Tag-along Sale has been accepted by any Tagging
Party:
(i) within two (2) Business Days after the
expiration of the Tag-along Acceptance Period, the Tag Sellers shall give notice
to each such Tagging Party confirming the number of Shares such Tagging Party is
obligated to sell or otherwise dispose of in the Tag-along Sale; and
(ii) Each such Tagging Party shall promptly
deliver to the attorney for the Tag Seller, in escrow, a duly endorsed
certificate or certificates representing the Shares to be sold or otherwise
disposed of by the Tagging Party, together with a limited power-of-attorney
authorizing the Tag Seller to sell or otherwise dispose of such Shares pursuant
to the terms of the Tag-along Sale and all other documents reasonably required
to be executed in connection with the Tag-along Sale.
(e) If the purchaser at the Tag Along Sale is unwilling
or unable to purchase all Shares being offered by the Tag Seller and all Tagging
Parties, the "Tag-along Ratio" shall be the number of Shares that the Tag Seller
proposes to Transfer pursuant to the Tag-along Sale divided by the total number
of issued and outstanding Shares held by the Tag Seller immediately prior to the
Tag-along Sale and the maximum permissible Shares that any Tagging Party shall
be entitled to sell pursuant to a Tag-along Sale shall be the total number of
Shares owned by such Tagging Party multiplied by the Tag-along Ratio.
(f) Unless otherwise agreed by the proposed purchaser,
the Tag Seller and all Tagging Parties, the Tag-along Sale shall be consummated
on the Tag Sale Date or as close thereto as the parties determine shall be
possible. Contemporaneously with the consummation of the sale or other
disposition of the Shares pursuant to the Tag-along Sale (A) the Tag Seller
shall notify each Tagging Party thereof, (B) the purchaser of the Shares shall
remit to each Tagging Party, by wire transfer of immediately available funds to
an account designated by such Tagging Party, the total consideration for the
sale or other disposition of the Shares of such Tagging Party and (C) the Tag
Seller shall furnish such other evidence of such sale (including the time of
completion) and the terms thereof as may be reasonably requested by any such
Tagging Party.
12
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
(g) Notwithstanding the foregoing, if there are any
material change in the terms of the Tag-along Sale which are adverse to the
selling parties, taken as a whole, including any change in the cash component of
a Tag-along Sale in which the consideration payable for Shares consists in part
or in whole of consideration other than cash, then the Tag Seller shall be
required to issue a new Tag-along Notice and to comply with the requirements of
this Section 2.8. If the Tag Sale is not completed generally as contemplated in
the Tag-along Sale Notice, all of the restrictions on sale or other disposition
then in effect contained in this Shareholders Agreement with respect to Shares
owned by the Tag Seller and each Tagging Party shall again be in effect.
(h) No Tagging Party shall be required to make any
representation or warranty in connection with any Tag-along Sale other than as
to such Tagging Party's ownership and authority to Transfer, free and clear of
all Liens, the Shares proposed to be Transferred by it or bear any share of any
escrows, holdbacks or adjustments in purchase price under the terms of the
purchase agreement relating to such Tag-along Sale.
ARTICLE III
GOVERNANCE OF THE COMPANY
3.1 Voting Rights. With respect to all matters submitted to a vote
or consent of the Company's stockholders, a holder of Sophia Owned Common Stock
will have the right in accordance with applicable law to be notified of and to
participate in, all stockholder meetings, and to receive copies of any consents
or other written materials soliciting stockholder consents or approvals and (ii)
the right to vote its shares of Common Stock along with other holders of Common
Stock.
3.2 Board Observation.
In addition to any other rights to nominate or elect members
of the Company's Board of Directors as may be available to the Holders under the
Company's organizational documents, Holders may, acting as a group, nominate one
Person (the "Sophia Observer") to attend and observe on their behalf every duly
held meeting of the Company's Board of Directors, and upon notice of such
nomination, such Sophia Observer shall be entitled to not less than seven (7)
days written notice of any such meeting, unless the Company's organizational
documents provide for less notice to its directors, in which event such lesser
notice shall be provided. This provision shall terminate upon the earlier to
occur of the date on which (i) Sophia or its Persons who are shareholders of
Sophia as of the date hereof own less than twenty-five percent (25%) of the
Registrable Securities or (ii) when at least seventy-five percent (75%) of the
Registrable Securities held by Sophia or its shareholders are eligible to be
sold without Registration under the Securities Act as a result of the
applicability of Rule 144.
13
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
ARTICLE IV
TERMINATION AND ASSIGNMENT OF COVENANTS
4.1 Termination. The covenants set forth in Article II of this
Agreement shall terminate upon the earlier of the date on which: (i) a
Qualifying IPO is consummated; (ii) another company or entity consummates an
acquisition of the Company by consolidation, merger or other business
combination in which the holders of the Company's outstanding securities
immediately prior to such transaction own, immediately after such transaction,
securities representing less than 50% of the voting power of the corporation or
other entity surviving such transaction; or (iii) fifty percent (50%) of the
Registrable Securities held by Sophia or its shareholders are eligible to be
sold without Registration under the Securities Act as a result of the
applicability of Rule 144.
ARTICLE V
MISCELLANEOUS
5.1 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Rights Agreement shall inure to the benefit of
and be binding upon the respective successors, heirs, executors, administrators
and assigns of the parties.
5.2 Governing Law. This Rights Agreement and the legal relations
between the parties hereto shall be governed by and construed solely in
accordance with the substantive laws of the State of Florida, without giving
effect to its conflict or choice of law principles thereof.
5.3 Jurisdiction and Venue; Service of Process; Waiver of Trial by
Jury; Attorneys' Fees. If any dispute or controversy shall arise between any of
the parties hereto, such dispute or controversy may only be brought for
resolution solely in the federal and/or state courts located in Broward County,
Florida. Each of the parties hereto hereby consent solely to the jurisdiction
and venue of such courts, and agree that they shall not contest or challenge the
jurisdiction or venue of such courts. Each of the parties hereto agrees that
service of any process, summons, notice or document, by U.S. registered or
certified mail, to the notice address referenced in Section 5.5 below and shall
be effective service of process for any action, suit or proceeding brought
against it in any such court. In recognition of the fact that the issues which
would arise under or relating to this Rights Agreement, are of such a complex
nature that they could not be properly be tried before a jury, each of the
parties hereto waives trial by jury. The prevailing party in any action and/or
proceeding shall be entitled to recover its reasonable attorneys' fees and costs
from the other party/parties to such action, suit or proceeding.
5.4 Counterparts. This Rights Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
5.5 Notices. Unless otherwise provided, any notice required or
permitted under this Rights Agreement shall be given in writing and shall be
deemed effectively given upon personal delivery to the party to be notified or
upon delivery by confirmed facsimile transmission, nationally recognized
overnight courier service, or upon deposit with the United States Post Office,
by registered or certified mail, postage prepaid and addressed to the party to
be notified at the address indicated for such Person reflected in the books and
records of the Company or in the case of the Company, the place listed as its
principle place of business in any securities filings made with the Securities
and Exchange Commission or if unavailable, the address of its registered office
in the State of Florida
5.6 Attorney's Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Rights Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
5.7 Entire Agreement. This Rights Agreement and the Purchase
Agreement and any other agreements referenced herein constitute the entire
agreement among the parties with respect to the matters described herein and no
party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.
5.8 Additional Actions and Documents. The parties shall execute
and deliver further documents and instruments and shall take other further
actions as may be required or appropriate to carry out the intent and purposes
of this Rights Agreement.
5.9 Amendment and Waiver. Except as otherwise provided herein, any
term of this Rights Agreement may be amended and the observance of any term of
this Rights Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of (i) the Company and (ii) the holders of at least a majority of the
Registrable Securities.
5.10 Delays or Omissions. It is agreed that no delay or omission to
exercise any rights, power, or remedy accruing to any party upon any breach,
default or noncompliance of the Company under this Rights Agreement shall impair
any such rights, power, or remedy, nor shall it be construed to be a waiver of
any such breach, default or noncompliance, or any acquiescence therein, or of
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, consent or approval of any kind or character of any
breach, default or noncompliance under this Rights Agreement or any waiver of
any provisions or conditions of this Rights Agreement must be in writing, must
be made in accordance with Section 5.8 and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this Rights
Agreement, by law or otherwise, shall be cumulative and not alternative.
5.11 Severability. If one or more provisions of this Rights
Agreement are held to be unenforceable under applicable law, such provision
15
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
shall be excluded from this Rights Agreement and the balance of the Rights
Agreement shall be interpreted as if such provision was so excluded and shall be
enforceable in accordance with its terms.
5.12 Third Party Beneficiaries. Except as specifically contemplated
herein, nothing in this agreement is intended or shall be construed to confer
upon or to give to any Person, firm or corporation any right, remedy, or claim
under or by reason of this Rights Agreement other than the parties hereto.
16
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
IN WITNESS WHEREOF, the parties hereto have executed this Rights
Agreement as of the date set forth in the first paragraph hereof.
THE COMPANY:
BizCom U.S.A., Inc.
By: /s/ Xxxxx Xxxxx
Name: Hanan "Xxxx" Xxxxx
Title:
INVESTORS:
Sophia Communications, Inc.
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Chairman of the Board of Directors
17
Registration Rights Agreement
Execution Copy - 11/25/2003 11:43 AM
EXHIBIT A
[FORM OF JOINDER AGREEMENT]
[Date]
To the parties to the
Registration Rights Agreement
dated as of November [__], 2003
Ladies and Gentlemen:
Reference is made to that certain Registration Rights Agreement dated
as of November [__], 2003 (the "RIGHTS AGREEMENT") among BizCom U.S.A., Inc.
(the "COMPANY") and Sophia Communications, Inc. ("SOPHIA") and each other Person
who has or shall become a party to the Rights Agreement as provided therein
(hereafter an "Investor"). Capitalized terms used herein and not defined have
the meanings ascribed to them in the Rights Agreement.
The undersigned has agreed to acquire, in accordance with the terms and
conditions of the Rights Agreement, Registrable Securities of the Company from
Sophia or another Holder. In consideration of the covenants and agreements
contained in the Rights Agreement, the undersigned hereby confirms and agrees
that upon such acquisition and transfer, it shall be bound, to the same extent
and in the same manner as the transferor of such Registrable Securities, by all
of the provisions of the Rights Agreement and shall have the rights of the
transferor set forth therein in the case of an acquisition of such Registrable
Securities from Sophia or another Investor, and upon the acquisition of such
Registrable Shares, it shall be deemed to be a Holder under the Rights Agreement
and as such, it shall be bound by all of the provisions thereof relating to a
Holder and shall have the rights of a Holder thereunder.
All notices and other communications to the undersigned should be sent
to the following address and facsimile numbers:
-----------------------
-----------------------
-----------------------
This letter shall be construed and enforced in accordance with the laws
of the State of Florida without regard to its choice or conflict of law
principles.
Very truly yours,
