REGISTRATION RIGHTS AGREEMENT
Dated: November ___, 2000
Parties: The Investors (the "Investors") in Registrable Securities (as
defined herein) whose names appear on the signature pages of this
Agreement; and
WIZZARD SOFTWARE CORPORATION (f/k/a Balanced Living, Inc.), with an
address at 000 Xxxx Xxx, Xxxxxxxxxx, XX 00000 (the "Company").
WHEREAS, the Investors are purchasing shares of the Company's common
stock (the "Common Stock"), pursuant to Subscription Agreements with the
Company in connection with the private placement of the Company's shares of
Common Stock described in the certain Private Placement Memorandum dated
August 1, 2000, as supplemented October 1, 2000 and as further supplemented
November 15, 2000 (the "Private Placement"); and
WHEREAS, the Company has undertaken to register the Common Stock
purchased thereunder (the "Registrable Securities"), under the terms set forth
herein.
NOW, THEREFORE, the Company and the Investors hereby covenant and agree
as follows:
Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Closing Date" shall mean the earlier of (a) the closing of the
Reorganization, having reached the minimum of $500,001 and the closing or
termination of the Offering, or (b) February 16, 2001.
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, $0.001 par value, of the
Company, as constituted as of the date of this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Register," "registered" and "registration" shall mean a registration
effected by preparing and filing a registration statement or statements or
similar documents in compliance with the Securities Act and the declaration or
ordering of effectiveness of the registration statement (as defined below) or
other document by the Commission.
"Requisite Period" shall mean, with respect to a firm commitment
underwritten public offering, the period commencing on the effective date of
the registration statement and ending on the date each underwriter has
completed the distribution of all securities purchased by it, and, with
respect to any other registration, the period commencing on the effective date
of the registration statement and ending on the earlier of the date on which
the sale of all Registrable Securities covered thereby is completed and 180
days after such effective date.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statue, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
Capitalized terms not defined herein shall have the meanings set forth in
the Subscription Agreements.
1. Registration.
1.1 Registration Statement. Pursuant to Section 2 hereof, the Company
shall file a registration statement covering the Registrable Securities as
soon as practicable but in no event later than 60 days from the Closing Date.
The obligation of the Company under this Section 1.1 shall be limited to one
registration statement.
1.2 Incidental Registration. The Investors shall have the right to
include the Registrable Securities as part of any other registration of
securities filed by the Company (other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Securities Act or pursuant
to Forms S-4 or S-8). In the event of such a proposed registration, the
Company shall furnish the Investors holding outstanding Registrable Securities
with not less than thirty (30) days' written notice thereof prior to the
proposed date of filing of such registration statement. Such notice to
Investors shall continue to be given for each registration statement filed by
the Company until such time as all of the Registrable Securities have been
sold by the Investors. The Investors holding the Registrable Securities
shall exercise the incidental rights provided for herein by giving written
notice, within twenty (20) days of the receipt of the Company's notice of its
intention to file a registration statement. Upon such exercise, the Company
will use its best efforts to cause the Registrable Securities as to which
registration has been requested, subject to any cutbacks imposed by the
Company's managing underwriting (if any), to be included in the securities to
be covered by such registration statement to be filed by the Company, all to
the extent and under the conditions such registration is permitted by the
Securities Act. Notwithstanding anything to the contrary set forth herein,
the Company may withdraw any registration statement referred to in this
Section 1.2 which it initially proposed to file in its sole discretion without
thereby incurring any liability to the Investors. The Company shall cause any
registration statement filed pursuant to the above incidental rights to remain
effective for the Requisite Period.
2. Registration Procedures.
2.1 If and whenever the Company is required by the provisions hereof to
effect the registration of any Registrable Securities under the Securities
Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such securities, and, with respect to the registration statement
required to be filed pursuant to Section 1.1 hereof, use its best efforts to
cause the registration statement to become effective not later than 180 days
from the Closing Date and to remain effective for the Requisite Period;
(b) prepare and file with the Commission such amendments to the
registration statement and supplements to the prospectus used in connection
therewith as may be necessary to keep the registration statement effective for
the Requisite Period and comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by the
registration statement in accordance with the intended method of disposition
set
forth in the registration statement for such period;
(c) furnish to each Investor selling Registrable Securities and to each
underwriter such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the intended disposition
of the Registrable Securities covered by the registration statement;
(d) use its best efforts (i) to register or qualify the Registrable
Securities covered by the registration statement under the securities or "blue
sky" laws of such jurisdictions as the Investor selling Registrable Securities
or, in the case of an underwritten public offering, the managing underwriter
reasonably shall request, (ii) to prepare and file in those jurisdictions such
amendments (including post effective amendments) and supplements, and take
such other actions, as may be necessary to maintain such registration and
qualification in effect at all times for the period of distribution
contemplated thereby, and (iii) to take such further action as may be
necessary or advisable to enable the disposition of the Registrable Securities
in such jurisdictions, provided, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(e) immediately notify each Investor selling Registrable Securities and
each underwriter under the 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 of which the Company has knowledge as a
result of which the prospectus contained in the registration statement, as
then in effect, includes any 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 light of the circumstances then existing
and promptly amend or supplement the registration statement to correct any
such untrue statement or omission;
(f) notify each Investor selling Registrable Securities of the issuance
by the Commission of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that purpose
and make every reasonable effort to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible time;
(g) permit a single firm of counsel designated as selling Investors'
counsel by the Investors holding a majority in interest of the Registrable
Securities being registered to review the registration statement and all
amendments and supplements thereto for a reasonable period of time prior to
their filing (provided, however, that in no event shall the Company be
required to reimburse legal fees in excess of $25,000 for the registration
statement pursuant to this Section 2.1(g)) and the Company shall not file any
document in a form to which such counsel reasonably objects;
(h) make generally available to its security holders as soon as
practicable, but not later than 90 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 under the Securities Act) covering a 12-month period beginning not later
than the first day of the Company's next fiscal quarter following the
effective date of the registration statement;
(i) if the offering is an underwritten offering, enter into a written
agreement with the managing underwriter selected in the manner herein provided
in such form and containing such provisions as are usual and customary in the
securities business for such an arrangement between such underwriter and
companies of the Company's size and investment stature, including, without
limitation, customary indemnification and contribution provisions;
(j) if the offering is an underwritten offering, at the request of any
Investor selling Registrable Securities, use its best efforts to furnish to
such Investor on the date that Registrable Securities are delivered to the
underwriters for sale pursuant to such registration: (i) a copy of an opinion
dated such date of counsel representing the Company for the purposes of such
registration, addressed to the underwriters, and (ii) a copy of a letter dated
such date from the independent public accountants retained by the Company,
addressed to the underwriters;
(k) make available for inspection by each Investor selling Registrable
Securities and any attorney, accountant or other agent retained by such
Investor, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such Investor,
attorney, accountant or agent in connection with the registration statement;
and
(l) take all other reasonable actions necessary to expedite and
facilitate the registration of the Registrable Securities pursuant to the
registration statement.
2.2 In connection with the registration hereunder, Investors selling
Registrable Securities will furnish to the Company in writing such information
and documentation with respect to themselves and the proposed distribution by
them as reasonably shall be necessary in order to assure compliance with
federal and applicable state securities laws.
2.3 If the registration pursuant to this Agreement is in connection with
an underwritten public offering by the Company, Investors selling Registrable
Securities (a) hereby agree to enter into a written agreement with the
managing underwriter selected by the Company in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such underwriter and companies of the Company's size and investment
stature, (b) hereby appoint Corporate Capital Management, LLC to act as their
agent to negotiate the terms of any restriction on the right of such Investors
to sell their Registrable Securities which shall be imposed by the managing
underwriter for such offering; provided, however, that Investors holding a
majority of the Registrable Securities to be registered shall approve any
terms so negotiated, (c) agree to provide such information and execute such
documents as may reasonably be required in connection with such registration,
(d) agree to sell the Registrable Securities on the basis provided in any
underwriting arrangements, and (e) agree to complete and execute all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements,
which arrangements shall not be inconsistent herewith.
2.4 If the registration statement required by Section 1.1 has not been
declared effective within 180 days of the Closing Date, then the Company shall
pay liquidated damages pro rata to the Investors as follows: one (1%) percent
of the initial purchase price of the Registrable Securities paid by the
Investors in the Private Placement for each full 30 day period until the
registration statement has been declared effective or the Registrable
Securities may be sold pursuant to Rule 144 promulgated under the Securities
Act. Such liquidated damages shall be allocated among the Investors pro rata
based upon the number of Registrable Securities purchased by each Investor in
the Private Placement as compared to the total number of Registrable
Securities sold by the Company in the Private Placement. The liquidated
damages payable hereunder shall be the exclusive remedy of the Investor, shall
be payable in cash promptly upon notice to the Company delivered pursuant to
Section 9 hereof and shall be prorated for any portion of a 30 day period for
which such liquidated damages are due and payable.
3. Expenses. All expenses incurred by the Company in complying with
this Agreement, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses (including counsel fees)
incurred in connection with complying with state securities or "blue sky"
laws, fees of the National Association of Securities Dealers, Inc., fees of
transfer agents and registrars and fees and disbursements of one counsel for
the Investors selling Registrable Securities (subject to the limitation in
Section 2.1(g), but excluding any Selling Expenses, are called "Registration
Expenses". All underwriting discounts and selling commissions applicable to
the sale of Registrable Securities are called "Selling Expenses".
3.1 The Company will pay all Registration Expenses in connection with
the registration statements filed hereunder, and the Selling Expenses in
connection with each registration statement shall be borne by the
participating Investors selling Registrable Securities in proportion to the
number of Registrable Securities sold by each or as they may otherwise agree.
4. Indemnification and Contribution. (a) In the event of a
registration of any of the Registrable Securities under the Securities Act
pursuant to the terms of this Agreement, the Company will indemnify and hold
harmless and pay and reimburse, each Investor selling such Registrable
Securities thereunder, and each other person, if any, who controls such
Investor within the meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which such Investor or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement under
which such Registrable Securities were registered under the Securities Act
pursuant hereto or any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon 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 any violation or alleged violation of the Securities Act or any
state securities or blue sky laws and will reimburse each such Investor and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, that the Company will not be liable in any such
case if and to the extent that any such loss, claim, damage or liability (or
action in respect thereof) arises out of or is based upon the Company's
reliance on an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by any such
Investor or any such controlling person (whether or not the Investor or
controlling person asserting the claims for indemnification) in
writing specifically for use in the registration statement or prospectus.
(b) In the event of a registration of any of the Registrable Securities
under the Securities Act pursuant hereto, each Investor selling Registrable
Securities thereunder, severally and not jointly, will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of the Securities Act, each officer of the Company who signs the
registration statement and each director of the Company against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registrable Securities were
registered under the Securities Act pursuant hereto or any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon 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, and will reimburse
the Company and each such officer, director and controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided, that such Investor will be liable hereunder in any such case if and
only to the extent that any such loss, claim, damage or liability (or action
in respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information furnished in writing to the Company by such
Investor specifically for use in the registration statement or prospectus, and
provided, that the liability of each Investor hereunder shall be limited to
the proceeds received by such Investor from the sale of Registrable Securities
covered by the registration statement. Notwithstanding the foregoing, the
indemnity provided in this Section 4(b) 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 such indemnified party.
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 4 and shall only
relieve it from any liability which it may have to such indemnified party
under this Section 4 if and to the extent the indemnifying party is materially
prejudiced by such omission. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in and, to the extent it shall wish, to assume and undertake the defense
thereof with counsel reasonably satisfactory to such indemnified party, and,
after notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the indemnifying
party shall not be liable to such indemnified party under this Section 4 for
any legal expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected, provided, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
based upon written advice of his counsel that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party, or if the interests of the indemnified
party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party if and to the extent that it is
determined that the indemnified party is entitled to indemnification
hereunder.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which any Investor selling
Registrable Securities exercising rights under this Agreement, or any
controlling person of any such Investor, makes a claim for indemnification
pursuant to this Section 4, and it is agreed by the indemnifying party or it
is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may be enforced
in such case, contribution under the Securities Act may be required on the
part of any such Investor or any such controlling person in circumstances for
which indemnification is provided under this Section 4; then, and in each such
case, the Company and such Investor will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion so that each such Investor is
responsible for the portion represented by the percentage that the aggregate
public offering price of its Registrable Securities offered by the
registration statement bears to the aggregate public offering price of all
securities offered by the registration statement, and the Company is
responsible for the remaining portion; provided, that, in any such case (A) no
such Investor will be required to contribute any amount in excess of the
aggregate public offering price of all such Registrable Securities offered by
it pursuant to the registration statement, and (B) no person or entity guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
5. Changes in Capital Stock. If, and as often as, there is any change
in the capital stock of the Company by way of a stock split, stock dividend,
combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the capital stock as
so changed.
6. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration, at
all times after 90 days after any registration statement covering a public
offering of securities of the Company under the Securities Act shall have
become effective, the Company agrees to:
6.1 make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
6.2 file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and
6.3 furnish to each Investor selling Registrable Securities forthwith
upon request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
Investor may reasonably request in availing itself of any rule or regulation
of the Commission allowing such Investor to sell any Registrable Securities
without registration.
7. Representations and Warranties. The Company represents and warrants
to the Investors as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will
not violate any provision of law, any order of any court or other agency of
government, the Articles of Incorporation or By-laws of the Company or any
provision of any indenture, agreement or other instrument to which it or any
or its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon
any of the properties or assets of the Company or its subsidiaries; and
(b) This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
` 7.1 The Investors represent and warrant to the Company as follows:
(a) The Investor: (i) if a natural person represents that the Investor
has full power and authority to execute and deliver this Agreement; (ii) if a
corporation, partnership, limited liability company, limited liability
partnership, association, joint stock company, trust, unincorporated
organization or other entity, such entity has full power and authority to
execute and deliver this Agreement and the Agreement has been duly authorized
by all requisite entity action, and (iii) if executing this Agreement in a
representative or fiduciary capacity, it has full power and authority to
execute and deliver this Agreement in such capacity and on behalf of the
subscribing individual, xxxx, partnership, trust, estate, corporation, limited
liability company, limited liability partnership, or other entity for whom the
Investor is executing this Agreement, and such individual, xxxx, partnership,
trust, estate, corporation, limited liability company, limited liability
partnership, or other entity has full power and authority to execute and
deliver this Agreement and the Agreement has been duly authorized by all
requisite entity action. Where applicable, the execution, delivery and
performance of this Agreement has been duly authorized by all requisite
charter or other organizational action and will not violate any provision of
law, any order of any court or other agency of government, the Articles of
Incorporation or By-laws or other organizational document of the Investor or
any provision of any indenture, agreement or other instrument to which it or
any of its properties or assets is bound, conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument whatsoever upon any of the
properties or assets of the Investor or its subsidiaries.
(b) This Agreement has been duly executed and delivered by the Investor
and constitutes the legal, valid and binding obligation of the Investor,
enforceable in accordance with its terms.
8. Miscellaneous.
(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and permitted assigns of the parties hereto, whether so
expressed or not. No party hereto shall assign all or any of its rights,
benefits, obligations or burdens hereunder to any other person (including
without limitation any transferees of any Registrable Securities) without the
prior written consent of the other party, in its sole discretion.
(b) All notices, requests, consents and other communications hereunder
shall be in writing and shall be delivered in person, mailed by certified or
registered mail, return receipt requested, or sent by telecopier or telex,
addressed (i) if to the Company, at 000 Xxxx Xxx, Xxxxxxxxxx, XX, and (ii) if
to any other party hereto, at the address of such party set forth beneath such
party's signature to this Agreement.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of Colorado applicable to contracts entered into and to
be performed wholly within said State.
(d) Any judicial proceeding brought against any of the parties to this
Agreement on any dispute arising out of this Agreement of any matter related
hereto shall be brought exclusively in the State or Federal Courts in Ohio,
and, by execution and delivery of this Agreement, each of the parties hereto
accepts for itself and himself the process in any such action or proceeding by
the mailing of copies of such process to it, at its or his address as set
forth in Section 8(b) and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. Each party hereto
irrevocably waives to the fullest extent permitted by law any objection that
it or he may now or hereafter have to the laying of the venue of any judicial
proceeding brought in such courts and any claim that any such judicial
proceeding has been brought in an inconvenient forum. The foregoing consent
to the sole and exclusive jurisdiction in Ohio shall not constitute general
consent to service of process in the State of Ohio for any purpose except as
provided above and shall not be deemed to confer rights on any person other
than the respective parties to this Agreement.
(e) This Agreement may not be amended or modified without the prior
written consent of the Company and the holders of at least a majority of the
Registrable Securities.
(f) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof. No waiver shall be effective
unless and until it is in writing and signed by the party granting the waiver.
(g) 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.
(h) The Company shall not grant to any third party any registration
rights more favorable than or inconsistent with any of those contained herein,
or which would in any way adversely affect the rights of holders of
Registrable Securities hereunder, so long as any of the registration rights
under this Agreement remains in effect.
(i) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability
shall attach only to such provision and shall not in any manner affect or
render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
date first above written.
WIZZARD SOFTWARE CORPORATION
By: ________________________________
Name:
Title:
INVESTOR:
____________________________________
Name of Investor
____________________________________
Signature
____________________________________
Title (if applicable)
Address:
____________________________________
____________________________________
____________________________________
No. of Shares:
________________________
