EXHIBIT 10.9
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of March 17, 1997 by and among JFAX Communications, Inc., a Delaware
corporation (the "Company"), and the holders of Registrable Securities (the
"Holders") signatory to this Agreement.
This Agreement is made pursuant to the Investment Agreement (the
"Investment Agreement") dated as of March __, 1997 by and among the Company and
certain Persons including the Holders pursuant to which Orchard/JFAX Investors,
L.L.C. ("Orchard L.L.C.") is purchasing certain shares of Common Stock of the
Company, Boardrush LLC ("LLC") is making a secured borrowing from the Company
and certain related transactions are provided for. In order to induce the
Holders to enter into the Investment Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement for the benefit of
the Holders. The execution and delivery of this Agreement is called for in the
Investment Agreement.
The parties hereby agree as follows:
1. Certain Definitions.
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As used in this Agreement, certain terms (not otherwise defined
herein) shall have the meanings set forth in the Investment Agreement, and the
following terms shall have the following respective meanings:
Affiliate of a specified Person means any other Person that directly,
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or indirectly through one or more intermediates, controls, is controlled by or
is under common control with the Person specified, or who holds or beneficially
owns 50% or more of the equity interest in the Person specified or 50% or more
of the voting securities of the Person specified. A managed account of a Person
is also an Affiliate of such Person. Notwithstanding the foregoing, solely for
the purposes of Section 8, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
shall be deemed an Affiliate of LLC.
Commission means the Securities and Exchange Commission.
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Company means JFAX Communications, Inc., a Delaware corporation or any
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successor to it or to its business.
Common Stock means (except where the context otherwise indicates) the
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Common Stock of the Company, par value $.01 per share, as constituted as of the
date hereof, and any capital stock into which such Common Stock may thereafter
be changed, and shall also include (i) capital stock of the Company of any other
class (regardless of how denominated) issued to the holders of shares of any
Common Stock upon any reclassification thereof which is also not preferred as to
dividends or liquidation over any other class of stock of the Company and which
is not subject to
redemption and (ii) shares of common stock of any successor corporation or
acquiring corporation of the Company that may be acquired by holders of the
previous Common Stock.
Continuously Effective means, with respect to a specified registration
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statement, that it shall not cease to be effective and available for transfers
of Registrable Securities thereunder for longer than any forty-five (45)
consecutive Business Days prior to the Expiration Date.
Exchange Act means the Securities Exchange Act of 1934, as amended, or
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any successor statute thereto, and the rules and regulations of the Commission
promulgated thereunder.
Expiration Date means the earlier of (i) the tenth (10th) anniversary
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of the date of this Agreement or (ii) the date on which no Holder holds any
Registrable Securities.
Holders shall have the meaning set forth in the first paragraph
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hereof, and as the context may require shall include their respective successors
and assigns provided that the registration rights hereunder shall only be
available to the initial Holders, their Affiliates and their Transferees.
Investment Agreement shall have the meaning set forth in the second
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paragraph hereof.
LLC shall have the meaning set forth in the second paragraph hereof.
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Orchard L.L.C. shall have the meaning set forth in the second
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paragraph hereof.
Person means any individual, corporation, partnership, joint venture,
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association, joint-stock company, limited liability company, trust,
unincorporated organization or governmental or other agency or political
subdivision thereof.
Piggyback Registration shall have the meaning set forth in Section
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2(b).
Registrable Securities means any shares of Common Stock of the Company
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owned by a Holder. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when (x) such securities shall have
been disposed of pursuant to an effective registration statement, (y) such
securities shall have been transferred to any Person other than the Holders
pursuant to Rule 144 (or any successor provision) or shall be transferable
pursuant to paragraph (k) thereof (or any successor provision) under the
Securities Act, or (z) they shall have ceased to be held by the Holders or any
Affiliate of the Holders or any Transferee of the Holders or their Affiliates.
Registration Expenses means all expenses incident to the performance
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of or compliance with the registration rights granted herein, including, without
limitation, all registration, filing, listing and NASD fees, all fees and
expenses of complying with securities or blue sky laws,
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all word processing, duplicating and printing expenses, messenger and delivery
expenses, the reasonable fees and expenses of the Company's counsel, the
reasonable fees and expenses of one counsel for the Selling Holders chosen by a
majority in interest of them, the fees and expenses of the Company's independent
public accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and compliance, and
any fees and disbursements of underwriters customarily paid by issuers and
sellers of securities; provided, however, that Registration Expenses shall not
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include underwriting discounts, commissions and transfer taxes, if any,
applicable to the Registrable Securities all of which shall be borne by the
Selling Holders.
Securities Act means the Securities Act of 1933, as amended, or any
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successor statute thereto, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
Selling Holders means those Holders who are participating in a
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registration pursuant to Section 2 hereof and who are selling Registrable
Securities thereunder.
Shares means the Company's Common Stock.
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Transferee shall mean the first holder of Registrable Securities by a
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transfer from a Holder or an Affiliate of a Holder provided, however, that a
Person acquiring such Registrable Securities pursuant to a transfer under an
effective registration statement or pursuant to a sale under Rule 144 (or any
successor provision) shall not be a Transferee.
Underwriters' Representative shall mean the managing underwriter, or,
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in the case of a co-managed underwriting, the managing underwriter designated as
the Underwriters' Representative by the co-managers.
Violation shall have the meaning set forth in Section 6(a).
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2. Registration Rights.
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(a) Initial Registration. The Company shall have sole discretion to
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determine the timing for its initial public offering, if any, and shall further
have the sole discretion, in consultation with any underwriter or underwriters
for such offering, to determine the amount and allocation of Registrable
Securities of any Holder or Holders to be included in the registration for such
initial public offering. In making such determinations, the Company shall be
guided by its evaluation of the overall best interest of the Company and its
stockholders generally and the desirability of achieving a successful initial
public offering. Within these parameters, and without limiting its discretion
under this Section 2(a), the Company will give appropriate consideration to
inclusion of the Registrable Securities of the Holders in such initial public
offering.
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(b) Subsequent Registrations. In the event that, subsequent to its
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initial public offering as aforesaid and prior to the Expiration Date, the
Company intends to register shares of its Common Stock under the Securities Act,
on a registration form and pursuant to a plan of distribution that would
reasonably permit inclusion of the Registrable Securities of the Holders (any
such registration, a "Piggyback Registration"), the Company will promptly give
to each of the Holders written notice thereof and use its reasonable efforts to
include in such registration all of the Registrable Securities that are
specified in a written notice given to the Company by each such Holder within
ten (10) business days after the date the notice is given by the Company, unless
the Company reasonably determines that, or the managing underwriter or
underwriters advise the Company that, a limitation on the total number of
Registrable Securities to be included in such registration is advisable. In
such case, the Company will include in such registration such number of
Registrable Securities, together with such number of shares of Common Stock as
are proposed to be sold by the Company, allocated according to the following
priorities: (1) first, the shares of Common Stock that the Company proposes to
sell pursuant to such registration and (2) second, the number of Registrable
Securities that the Holders proposed to sell pursuant to such registration. As
to each Holder, if a reduction is required, the allocation shall be made pro
rata according to the number of Registrable Securities initially requested to be
included therein by the Holders. The Company shall have full discretion to
delay or postpone or to place in abeyance any registration pursuant to this
Agreement if the Company reasonably determines that it should not be made or
continued because it would materially interfere with any financing, acquisition,
corporate reorganization or merger or any other significant corporate
transaction involving the Company, and the Holders agree to comply and cooperate
with the Company's decisions in this regard, pending the Company's determination
to resume such registration.
(c) Registration Statement Form. The Company may, if permitted by
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law, effect any registration requested hereunder by the filing of a registration
statement on Form S-3 (or any successor or similar short-form registration
statement).
(d) Expenses. The Company shall pay all Registration Expenses
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incurred in connection with the registration of Registrable Securities pursuant
to Section 2(a) or 2(b).
(e) Effective Registration Statement. Any registration pursuant to
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this Agreement shall not be deemed to have been effected unless it has become
effective with the Commission. Notwithstanding the foregoing, a registration
statement will not be deemed to have been effected if (i) after it has become
effective with the Commission, such registration is interfered with by any stop
order, injunction or other order or requirement of the Commission or other
governmental agency or any court proceeding for any reason or (ii) the
conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration are not satisfied.
(f) Conflicting Instructions from Holders. (i) The Company may rely
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and shall be protected in relying upon any resolution, certificate, opinion,
request, communication, demand,
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receipt or other paper or document in good faith believed by it to be genuine
and to have been signed or presented by the proper party or parties. The Company
may act in reliance upon the advice of its counsel in reference to any matter in
connection with this Agreement and shall not incur any liability for any action
taken in good faith in accordance with such advice.
(ii) In the event the Company receives conflicting
instructions regarding any action to be taken or withheld hereunder, the Company
may suspend further action relating to such action until such time as the
conflicting instructions are resolved by the parties giving the same or until
the Company is instructed to take or withhold the requested action by a final
order from which no appeal may be taken issued by a court of competent
jurisdiction.
3. Registration Procedures.
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(a) Whenever the Company effects the registration of any
Registrable Securities under the Securities Act as provided in Section 2, the
Company, as expeditiously as possible and subject to the terms and conditions
herein, will use its reasonable efforts to:
(i) prepare and file with the Commission the requisite
registration statement to effect such registration and to cause such
registration to become effective;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
Continuously Effective and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement until such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the Selling Holders
thereof set forth in such registration statement or, if earlier, until the
Expiration Date;
(iii) furnish to the Selling Holders such number of
conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of copies
of the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, in each case, as the Selling Holders
may reasonably request;
(iv) register or qualify all Registrable Securities
covered by such registration statement under such other United States state
securities or blue sky laws of such jurisdictions as the Selling Holders shall
reasonably request, to keep such registration statement qualification in effect
for so long as such registration remains in effect, and take any other action
which may be reasonably necessary or advisable to enable the Selling Holders to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by the Selling Holders, except that the Company shall not for any such
purpose be required to (a) qualify generally to do business
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as a foreign corporation in any jurisdiction wherein it would not but for the
requirements of this subdivision (iv) be obligated to be so qualified, (b)
subject itself to taxation in any such jurisdiction or (c) consent to general
service of process in any such jurisdiction;
(v) in any underwritten offering, and if reasonable and
customary in the context of such offering, use its reasonable efforts to furnish
to the Selling Holders a signed counterpart, addressed to the Selling Holders as
seller of Registrable Securities (and the underwriters, if any), of
(x) an opinion of counsel for the Company, dated
the effective date of such registration statement (or, if such registration
includes an underwritten public offering, dated the date of the closing
under the underwriting agreement), reasonably satisfactory to the Selling
Holders in their reasonable judgment, and
(y) a "comfort" letter, reasonably satisfactory
to the Selling Holders dated the effective date of such registration
statement (or, if such registration includes an underwritten public
offering, dated the date of the closing under the underwriting agreement),
signed by the independent public accountants who have certified the
Company's financial statements included in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the underwriters in underwritten public
offerings of securities and, in the case of the accountants' letter, such other
financial matters as such seller or such Holder (or the underwriters, if any)
may reasonably request;
(vi) immediately notify the Selling Holders 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 any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, and at
the request of the Selling Holders promptly prepare and furnish to the Selling
Holders a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include 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 not misleading in the
light of the circumstances under which they were made;
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(vi) comply with all applicable rules and regulations of
the Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen months, beginning with the first full
calendar month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act, and not file (or withdraw or correct) any amendment or
supplement to such registration statement or prospectus to which the Selling
Holders shall have reasonably objected in writing on the grounds that such
amendment or supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations thereunder.
(vi) provide a transfer agent and registrar for all
Registrable Securities covered by such registration statement not later than the
effective date of such registration statement; and
(ix) list all Registrable Securities covered by such
registration statement on any securities exchange on which any of the
Registrable Securities are then listed.
(b) As a condition of these Registration Rights, the Company may
require the Selling Holders, at their own expense, to furnish the Company with
such information and undertakings regarding such Holders and the distribution of
such securities as the Company may from time to time reasonably request in
writing, and the Holders, by their execution hereof, agree to provide such
information and make such undertakings as are requested.
(c) The Selling Holders agree (A) that upon receipt of any notice
from the Company of the happening of any event of the kind described in
subdivision (vi) of Section 3(a), the Selling Holders will forthwith discontinue
their disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until the Selling Holders'
receipt of the copies of the supplemented or amended prospectus contemplated by
subdivision (vi) of Section 3(a) and, if so directed by the Company, will
deliver to the Company all copies, other than permanent file copies, then in the
Selling Holders' possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice and (B) that they will
immediately notify the Company, at any time when a prospectus relating to the
registration of such Registrable Securities is required to be delivered under
the Securities Act, of the happening of any event as a result of which
information previously furnished by the Selling Holders to the Company for
inclusion in such prospectus contains 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 not misleading in the light of the circumstances
under which they were made.
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(d) Notwithstanding anything in this Agreement to the contrary, the
Company will not be required to file any registration statement hereunder if it
receives an opinion of counsel in form and substance reasonably satisfactory to
the Selling Holders, or counsel to the Selling Holders, to the effect that the
sale of the Registrable Securities in the manner contemplated by the Selling
Holders may be effected without registration regardless of the identity or
status of the buyer(s) of such Registrable Securities. Also, the Company will
not be required to file any registration statement to cover Registrable
Securities that are already registered pursuant to a previous registration
statement that is effective and available for use by the Holders of such
Registrable Securities to effect sales thereof at such time.
4. Underwritten Offerings.
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(a) Underwritten Offerings. If requested by the underwriters for
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any underwritten offering including the Selling Holders pursuant to a
registration under Section 2, the Company will enter into an underwriting
agreement with such underwriters for such offering, such agreement to be in form
and substance reasonably satisfactory to the Company, the Selling Holders and
the underwriters and to contain such representations and warranties by the
Company and such other terms as are customarily contained in agreements of this
type, including, without limitation, indemnities to the effect and to the extent
substantially as provided in Section 6. The Selling Holders shall be a party to
such underwriting agreement and may, at their option (reasonably exercised),
require that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of the Selling Holders
and that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of the Selling Holders.
(b) Selection of Underwriters. If a registration pursuant to
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Section 2 involves an underwritten offering, then the Company will be entitled
to select the underwriter or underwriters and the Underwriters' Representative
therefor.
(c) Holdback Agreements. (i) Each Holder agrees, if so required by
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the Company or the Underwriters' Representative, not to effect any public sale
or distribution of Registrable Securities or sales of such Registrable
Securities pursuant to Rule 144 or Rule 144A under the Securities Act, during a
reasonable period prior to and the 90 days after any firm commitment
underwritten registration pursuant to Section 2 has been priced (except as part
of such registration), whether or not the Holder participates in such
registration.
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5. Preparation, Reasonable Investigation.
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In connection with the preparation and filing of each registration
statement under the Securities Act, the Company will give the Selling Holders,
the underwriters, if any, and their respective counsel and accountants, the
reasonable opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission and
each amendment thereof or supplement thereto, and will give each of them such
reasonable access to its books and records and such reasonable opportunities to
discuss the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary to
conduct a reasonable investigation within the meaning of the Securities Act.
6. Indemnification; Contribution. If any Registrable Securities are
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included in a registration statement under this Agreement:
(a) To the extent permitted by applicable law, the Company shall
indemnify and hold harmless each Selling Holder, each Person, if any, who
controls such Selling Holder within the meaning of the Securities Act, and each
officer, director, partner, and employee of such Selling Holder and such
controlling Person, against any and all losses, claims, damages, liabilities and
expenses (joint or several), including reasonable attorneys' fees and
disbursements and expenses of investigation, incurred by such party pursuant to
any actual or threatened action, suit, proceeding or investigation, or to which
any of the foregoing Persons may become subject under the Securities Act, the
Exchange Act or any other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses 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 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 applicable state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
applicable state securities law; provided, however, that the indemnification
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required by this Section 6(a) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or expense if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case for any
such loss, claim, damage, liability or expense to the extent (and only to the
extent) that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished to the
Company by the indemnified party expressly for use in connection with such
registration; provided, further, that the indemnity
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agreement contained in this Section 6 shall not apply to any underwriter to the
extent that any such loss is based on or arises out of an untrue statement or
alleged untrue statement of a material fact, or an omission or alleged omission
to state a material fact, contained in or omitted from any preliminary
prospectus if the final prospectus shall correct such untrue statement or
alleged untrue statement, or such omission or alleged omission, and a copy of
the final prospectus has not been sent or given to such person at or prior to
the confirmation of sale to such person if such underwriter was under an
obligation to deliver such final prospectus and failed to do so. The Company
shall also indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, their
officers, directors, agents and employees and each person who controls such
persons (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) to the same extent as provided above with respect to the
indemnification of the Selling Holders.
(b) To the extent permitted by applicable law, each Selling Holder
shall indemnify and hold harmless the Company, each of its directors, each of
its officers who shall have signed the registration statement, each Person, if
any, who controls the Company within the meaning of the Securities Act, any
other Selling Holder, any controlling Person of any such other Selling Holder
and each officer, director, partner, and employee of such other Selling Holder
and such controlling Person, against any and all losses, claims, damages,
liabilities and expenses (joint and several), including reasonable attorneys'
fees and disbursements and expenses of investigation, incurred by such party
pursuant to any actual or threatened action, suit, proceeding or investigation,
or to which any of the foregoing Persons may otherwise become subject under the
Securities Act, the Exchange Act or any other federal or state laws, insofar as
such losses, claims, damages, liabilities and expenses 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 Selling Holder expressly for use in connection
with such registration; provided, however, that (x) the indemnification required
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by this Section 6(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or expense if settlement is effected without the
consent of the relevant Selling Holder of Registrable Securities, which consent
shall not be unreasonably withheld, and (y) in no event shall the amount of any
indemnity under this Section 6(b) exceed the gross proceeds from the applicable
offering received by such Selling Holder.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, suit, proceeding,
investigation or threat thereof made in writing for which such indemnified party
may make a claim under this Section 6, such indemnified party shall deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the 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 shall
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have the right to retain its own counsel at its own expense except as provided
below. The failure to deliver written notice to the indemnifying party within a
reasonable time following the commencement of any such action, if and to the
extent prejudicial to its ability to defend such action,
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shall relieve such indemnifying party of any liability to the indemnified party
under this Section 6 but shall not relieve the indemnifying party of any
liability that it may have to any indemnified party otherwise than pursuant to
this Section 6. Any fees and expenses incurred by the indemnified party
(including any fees and expenses incurred in connection with investigating or
preparing to defend such action or proceeding) shall be paid to the indemnified
party, as incurred, within sixty (60) days of written notice thereof to the
indemnifying party (regardless of whether it is ultimately determined that an
indemnified party is not entitled to indemnification hereunder, but in such
event such amounts shall be refunded). Any such indemnified party shall have the
right to employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such indemnified party unless (i) the indemnifying
party has agreed to pay such fees and expenses or (ii) the indemnifying party
shall have failed to promptly assume the defense of such action, claim or
proceeding or (iii) the named parties to any such action, claim or proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying party, and such indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or in addition to those available to the indemnifying party and
that the assertion of such defenses would create a conflict of interest such
that counsel employed by the indemnifying party could not faithfully represent
the indemnified party (in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action, claim or proceeding on behalf of
such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action, claim or proceeding or
separate but substantially similar or related actions, claims or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel) at any time
for all such indemnified parties, unless in the reasonable judgment of such
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such action,
claim or proceeding, in which event the indemnifying party shall be obligated to
pay the reasonable fees and expenses of such additional counsel or counsels). No
indemnifying party shall be liable to an indemnified party for any settlement of
any action, proceeding or claim without the written consent of the indemnifying
party, which consent shall not be unreasonably withheld.
(d) If the indemnification required by this Section 6 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to in this
Section 6:
(i) The indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant
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equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any Violation has been committed by, or relates to information supplied
by, such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such Violation. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 6(a) and Section 6(b),
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in Section 6(d)(i). No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(e) If indemnification is available under this Section 6, the
indemnifying parties shall indemnify each indemnified party to the full
extent provided in this Section 6 without regard to the relative fault of
such indemnifying party or indemnified party or any other equitable
consideration referred to in Section 6(d).
(f) The obligations of the Company and the Selling Holders of
Registrable Securities under this Section 6 shall survive the completion of any
offering of Registrable Securities pursuant to a registration statement under
this Agreement, and otherwise.
7. Covenants of the Company. The Company hereby agrees and covenants as
------------------------
follows:
The Company shall file as and when applicable, on a timely
basis, all reports required to be filed by it under the Exchange Act. If, after
the Company has first become a reporting company under the Exchange Act,
thereafter the Company is not required to file reports pursuant to the Exchange
Act, thereupon the request of any Holder of Registrable Securities, the Company
shall make publicly available the information specified in subparagraph (c)(2)
of Rule 144 of the Securities Act, and take such further action as may be
reasonably required from time to time and as may be within the reasonable
control of the Company, to enable the Holders to transfer Registrable Securities
to a Transferee without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 under the Securities Act or
any similar rule or regulation hereafter adopted by the Commission.
8. Tag-Along Rights. Orchard L.L.C. hereby agrees as follows, solely for
----------------
the benefit of LLC and its Affiliates, and without affecting the other
provisions of this Agreement with respect to registration rights. During the
period from the date hereof and until the Company effects its initial public
offering as referred to in Section 2(a) above, if Orchard L.L.C. shall intend to
dispose of any
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of its Registrable Securities, in a private transaction or transactions
involving negotiation with a discreet number of parties, then Orchard L.L.C.
shall use its reasonable efforts to include the Registrable Securities of LLC
and its Affiliates in such transaction, on the same or substantially the same
terms as are available to Orchard L.L.C., and so that, if the amount of
securities to be disposed of must be limited, LLC and its Affiliates shall be
permitted to dispose of the same proportion of their Registrable Securities as
the proportion being disposed of by Orchard L.L.C. In order to effectuate this
provision, Orchard L.L.C. shall give prior written notice thereof to LLC and its
Affiliates who are parties to this Agreement, and they (in coordination with
LLC) shall be given a period of ten (10) business days after such notice to
advise Orchard L.L.C. as to their interest in disposing of their Registrable
Securities on the terms proposed. This provision shall cease to be applicable
when the Company has effected its initial public offering and shall further not
be applicable to any disposition or dispositions by Orchard L.L.C. amounting
cumulatively to less than 15% of the total number of outstanding shares of the
Common Stock of the Company. This provision shall not give LLC or its Affiliates
any rights to participate in the negotiations by Orchard L.L.C. of any such
transaction, their sole rights being to participate on the same or substantially
the same terms, if they choose to do so, as negotiated by Orchard L.L.C. For
purposes of this provision, any disposition of Registrable Securities by Orchard
L.L.C. shall include dispositions by its Affiliates other than the Company and
its subsidiaries.
9. Miscellaneous.
-------------
9.1 Specific Performance. The parties hereto acknowledge that
--------------------
there may be no adequate remedy at law if any party fails to perform any of its
obligations hereunder and that each party may be irreparably harmed by any such
failure, and accordingly agree that each party, in addition to any other remedy
to which it may be entitled at law or in equity, may be entitled to compel
specific performance of the obligations of any other party under this Agreement
in accordance with the terms and conditions of this Agreement.
9.2 Notices. All notices, requests, claims, demands, waivers and
-------
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered by hand, if delivered
personally by courier, or three days after being deposited in the mail
(registered or certified mail, postage prepaid, return receipt requested) as
follows:
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(a) The Holders at the addresses indicated on the
signature page hereof.
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(b) The Company at:
JFAX Communications, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
9.3 Law Governing. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICT OF LAWS.
9.4 Attorneys' Fees. In any action or proceeding brought to
---------------
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees (including any fees incurred in any appeal) in
addition to its costs and expenses and any other available remedy.
9.5 Headings. The descriptive headings of the several Sections and
--------
paragraphs of this Agreement are inserted for convenience only, and do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
9.6 Entire Agreement; Amendments. This Agreement and the other
----------------------------
writings referred to herein or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with respect to its
subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only by a written instrument duly executed by the Company and the
Holder or Holders concerned. Each holder of any Registrable Securities at the
time or thereafter outstanding shall be bound by an amendment or waiver
authorized by this Section 9.6, whether or not any such Registrable Securities
shall have been marked to indicate such consent.
9.7 Assignability. This Agreement shall be binding upon and inure
-------------
to the benefit of the respective successors and assigns of the parties hereto
provided, however, that the registration rights hereunder shall only be
available to the initial Holders, their Affiliates and to their Transferees.
9.8 Counterparts. This 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.
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9.9 Validity, Due Authorization. By its execution hereof, the
---------------------------
Company represents and warrants that it has the corporate power to execute,
deliver and perform the terms and provisions of this Agreement and that it has
taken all appropriate and necessary corporate action to authorize the
transactions contemplated hereby and the execution, delivery and performance of
this Agreement.
JFAX COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
HOLDERS:
Orchard/JFAX Investors, L.L.C. Address:
c/o Orchard Capital Corp.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
--------------------------------- ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Title: Manager
Boardrush LLC Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------- Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Manager
c/o Boardrush LLC
/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
c/o Boardrush LLC
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
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c/o JFAX Communications, Inc
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o JFAX Communications, Inc.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
The address of JFAX Communications,
Inc. currently set forth in Section
9.2 hereof.
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