REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of May 25,
2001 is made and entered into among NCT Group, Inc., a Delaware corporation (the
"Company"), and the Holders who are signatories hereto and identified on
Schedule A hereto (individually a "Holder" or collectively "Holders").
WHEREAS, the Company and the Holders have entered into that certain
Exchange Rights Agreement, dated at or about the date hereof (the "Exchange
Right Agreement"), pursuant to which the Company will issue, from time to time,
to the Holder shares of common stock, $.01 par value per share, of the Company
(the "Common Stock"), in exchange for Convertible Notes ("Notes") issued by
Artera Group, Inc., a subsidiary of the Company incorporated in the State of
Delaware, in the principal amounts set forth on Schedule A hereto, which Notes
have been issued pursuant to a certain Subscription Agreement dated at or about
the date hereof (the "Subscription Agreement");
WHEREAS, pursuant to the terms of, and in consideration of the Holder's
agreement to enter into the Subscription Agreement, the Company has agreed to
provide the Holder with certain registration rights with respect to the Notes
and Registrable Securities (as hereinafter defined); and
WHEREAS, the Company has filed on September 29, 2000, with the Securities
and Exchange Commission ("SEC") a Form S-1 registration statement under file
number 333-47084 ("Form S-1"), and amendments thereto.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein and in the Subscription
Agreement and Exchange Rights Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
intending to be legally bound hereby, the parties hereto agree as follows
(capitalized terms used herein and not defined herein shall have the meaning
ascribed to them in the Subscription Agreement and the Exchange Rights
Agreement):
ARTICLE I REGISTRATION RIGHTS
Section 1.1 FORM S-1 REGISTRATION STATEMENTS.
(a) Filing of Form S-1 Registration Statements. Subject to the terms and
conditions of this Agreement, the Company shall file with the SEC on Form S-1
under the Securities Act or an amendment to the Form S-1 (the "Registration
Statement") on or before July 31, 2001 for the registration of the resale by the
Holder of the Required Reserved, and all such other Common Stock issuable upon
exchange of the Notes. The term "Registrable Securities" as employed herein
refers to the Common Stock of the Company issuable upon exchange of the Notes.
(b) Effectiveness of the Registration Statement. The Company shall use its
reasonable best efforts to have the Registration Statement declared effective by
the SEC by no later than September 15, 2001 and to insure that the Registration
Statement remains in effect throughout the term of this Agreement as set forth
in Section 4.2.
(c) Failure to Timely File or Maintain Effectiveness of Registration
Statements. In the event the Company fails to timely amend or file the
Registration Statement in the time period set forth in Section 1.1(a) or fails
to timely respond to SEC comments as required pursuant to Section 2.1(a), or
fails to maintain the effectiveness of a Registration Statement (or the
underlying prospectus) throughout the period set forth in Section 4.2, and the
Holder holds Note or Registrable Securities at any time during the period of
such ineffectiveness (an "Ineffective Period"), the Company shall pay to the
Holder in immediately available funds into one or more accounts designated by
the Holder an amount equal to one-half of one percent (0.5%) of the aggregate
Note principal (as set forth on Schedule A hereto) of Note Registrable
Securities then held by the Holder for each of the first four seven-calendar-day
periods (or portion thereof) of an Ineffective Period and one percent (1.0%) of
such aggregate Note principal or each subsequent seven-calendar-day periods (or
portion thereof) of such Ineffective Period. Such payments shall be made on the
first business day after the earliest to occur of (i) the expiration of an
Ineffective Period, (ii) the expiration of the first twenty-eight calendar days
of an Ineffective Period and (iii) the expiration of each additional
twenty-eight calendar-day period during an Ineffective Period.
(d) The parties hereto acknowledge and agree that the sums payable under
Section 1(c) above shall constitute liquidated damages and not penalties. The
parties further acknowledge that (a) the amount of loss or damages likely to be
incurred is incapable or is difficult to precisely estimate, (b) the amounts
specified in such Sections bear a reasonable proportion and are not plainly or
grossly disproportionate to the probable loss likely to be incurred in
connection with any failure by the Company to obtain or maintain the
effectiveness of a Registration Statement, (c) one of the reasons for the
parties hereto reaching an agreement as to such amounts was the uncertainty and
cost of litigation regarding the question of actual damages, and (d) the parties
are sophisticated business parties and have been represented by sophisticated
and able legal and financial counsel and negotiated this Agreement at arm's
length.
ARTICLE II
REGISTRATION PROCEDURES
Section 2.1 FILINGS; INFORMATION. The Company will effect the registration
and sale of such Registrable Securities in accordance with the intended methods
of disposition thereof. Without limiting the foregoing, the Company in each such
case will do the following as expeditiously as possible, but in no event later
than the deadline, if any, prescribed therefor in this Agreement:
(a) The Company shall prepare and file with the SEC one or more
Registration Statement as defined in Section 1.1(a) (if use of such forms are
then available to the Company pursuant to the rules of the SEC and, if not, on
such other form promulgated by the SEC for which the Company then qualifies and
which counsel for the Company shall deem appropriate and which form shall be
available for the sale of the Registrable Securities to be registered thereunder
in accordance with the provisions of this Agreement and in accordance with the
intended method of distribution of such Registrable Securities); use reasonable
best efforts to cause such filed Registration Statement to become and remain
effective (pursuant to Rule 415 under the Act or otherwise); prepare and file
with the SEC such amendments and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective for the time periods prescribed by Section
1.1(b); and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during such
period in accordance with the intended methods of disposition by the Holder set
forth in such Registration Statement. The Company shall file complete and full
responses, including amendments to the Registration Statements and provision of
supplemental information to letters of comment and oral comments made by the SEC
within fourteen (14) days of the receipt by the Company or its counsel of the
oral or written comments.
(b) The Company shall file all necessary amendments to the Registration
Statement in order to effectuate the purpose of this Agreement, Subscription
Agreement and the Exchange Rights Agreement.
(c) If so requested by the managing underwriters, if any, or the holders of
a majority in aggregate principal amount of the Registrable Securities being
sold in connection with the filing of a Shelf Registration, the Company shall
(i) promptly incorporate in a prospectus supplement or post-effective amendment
such information as the managing underwriters, if any, and such holders agree
should be included therein, and (ii) make all required filings of such
prospectus supplement or post-effective amendment as soon as practicable after
the Company has received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment; provided, however, that the
Company shall not be required to take any action pursuant to this Section
2.1(c)(ii) that would, in the opinion of counsel for the Company, violate
applicable law.
(d) In connection with the filing of a Registration Statement, the Company
shall enter into such agreements and take all such other reasonable actions in
connection therewith (including those reasonably requested by the managing
underwriters, if any, or the holders of a majority in aggregate principal amount
of the Registrable Securities being sold) in order to expedite or facilitate the
disposition of such Registrable Securities, and in such connection, whether or
not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, (i) make such representations and
warranties to the holders of such Registrable Securities and the underwriters,
if any, with respect to the business of the Company (including with respect to
businesses or assets acquired or to be acquired by the Company), and the
Registration Statement, prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested; (ii) if an underwriting
agreement is entered into, the same shall contain indemnification provision and
procedures no less favorable to the selling holders of such Registrable
Securities and the underwriters, if any, than those set forth herein (or such
other provisions and procedures acceptable to the holders of a majority in
aggregate principal amount of Registrable Securities covered by such
Registration Statement and the managing underwriters, if any); and (iii) deliver
such documents and certificates as may be reasonably requested by the holders of
a majority in aggregate principal amount of the Registrable Securities being
sold, their counsel and the managing underwriters, if any, to evidence the
continued validity of their representations and warranties made pursuant to
clause (i) above and to evidence compliance with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company.
(e) Intentionally Omitted.
(f) After the filing of the Registration Statement, the Company shall
promptly notify the Holder of any stop order issued or threatened by the SEC in
connection therewith and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.
(g) The Company shall use its reasonable best efforts to (i) register or
qualify such Registrable Securities under such other securities or blue sky laws
of such jurisdictions in the United States as the Holder may reasonably (in
light of its intended plan of distribution) request, and (ii) cause such
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable the
Holder to consummate the disposition of the Registrable Securities; provided
that the Company will not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (g), subject itself to taxation in any such jurisdiction, or consent
or subject itself to general service of process in any such jurisdiction.
(h) The Company shall immediately notify the Holder upon the occurrence of
any of the following events in respect of a Registration Statement or related
prospectus in respect of an offering of Registrable Securities: (i) receipt of
any request for additional information by the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or related
prospectus; (ii) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
(iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in the Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case of
the Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the case
of the related prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (v) the Company's reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate; and the Company will promptly make available to the Holder
any such supplement or amendment to the related prospectus.
(i) The Company shall enter into customary agreements and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities (whereupon the Holder may, at its
option, require that any or all of the representations, warranties and covenants
of the Company also be made to and for the benefit of the Holder).
(j) The Company shall make available to the Holder (and will deliver to
Holder's counsel), subject to restrictions imposed by the United States federal
government or any agency or instrumentality thereof, copies of all
correspondence between the SEC and the Company, its counsel or auditors and will
also make available for inspection by the Holder and any attorney, accountant or
other professional retained by the Holder (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the Company's
officers and employees to supply all information reasonably requested by any
Inspectors in connection with such Registration Statement. Records that the
Company determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such Registration Statement or (ii) the disclosure or release of
such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or other
order from a court of competent jurisdiction or other process; provided that
prior to any disclosure or release pursuant to clause (ii), the Inspectors shall
provide the Company with prompt notice of any such request or requirement so
that the Company may seek an appropriate protective order or waive such
Inspectors' obligation not to disclose such Records; and, provided further, that
if failing the entry of a protective order or the waiver by the Company
permitting the disclosure or release of such Records, the Inspectors, upon
advice of counsel, are compelled to disclose such Records, the Inspectors may
disclose that portion of the Records which counsel has advised the Inspectors
that the Inspectors are compelled to disclose. The Holder agrees that
information obtained by it solely as a result of such inspections (not including
any information obtained from a third party who, insofar as is known to the
Holder after reasonable inquiry, is not prohibited from providing such
information by a contractual, legal or fiduciary obligation to the Company)
shall be deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Company or its Affiliates unless
and until such information is made generally available to the public. The Holder
further agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential.
(k) The Company shall deliver, in accordance with the notice provisions of
Section 4.8, to the Holder a signed counterpart, addressed to the Holder, of an
opinion or opinions of counsel to the Company, to the extent required by law or
reasonably necessary to effect a sale of Registrable Securities in accordance
with prevailing business practices at the time of any sale of Registrable
Securities pursuant to a Registration Statement, in customary form and covering
such matters of the type customarily covered by opinions as the Holder therefor
reasonably requests.
(l) The Company shall otherwise comply with all applicable rules and
regulations of the SEC, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act. (m) The Company shall
appoint a transfer agent and registrar for all such Registrable Securities
covered by such Registration Statement not later than the effective date of such
Registration Statement.
(n) The Company may require the Holder to promptly furnish in writing to
the Company such information as may be legally required in connection with such
registration including, without limitation, all such information as may be
requested by the SEC or the National Association of Securities Dealers. The
Holder agrees to provide such information requested in connection with such
registration within ten (10) business days after receiving such written request
and the Company shall not be responsible for any delays in obtaining or
maintaining the effectiveness of the Registration Statement caused by the
Holder's failure to timely provide such information.
Section 2.2 REGISTRATION EXPENSES. In connection with each Registration
Statement, the Company shall pay all registration expenses incurred in
connection with the registration thereunder (the "Registration Expenses"),
including, without limitation: (i) all registration, filing, securities exchange
listing and fees required by the National Association of Securities Dealers,
(ii) all registration, filing, qualification and other fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) all word processing, duplicating, printing,
messenger and delivery expenses, (iv) the Company's internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (v) the fees and expenses
incurred in connection with the listing of the Registrable Securities, (vi)
reasonable fees and disbursements of counsel for the Company and customary fees
and expenses for independent certified public accountants retained by the
Company (including the expenses of any special audits or comfort letters or
costs associated with the delivery by independent certified public accountants
of such special audit(s) or comfort letter(s) requested pursuant to Section
2.1(l) hereof), (vii) the fees and expenses of any special experts retained by
the Company in connection with such registration, (viii) premiums and other
costs of policies of insurance against liabilities arising out of any public
offering of the Registrable Securities being registered, and (ix) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting fees, discounts, transfer taxes or
commissions, if any, attributable to the sale of Registrable Securities, which
shall be payable by each seller of Registrable Securities pro rata on the basis
of the number of Registrable Securities of each such seller that are included in
a registration under this Agreement.
ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
Section 3.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless each seller of Registrable Securities, its partners,
Affiliates, officers, directors, employees and duly authorized agents, and each
Person or entity, if any, who controls the seller of Registrable Securities
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, together with the partners, Affiliates, officers, directors,
employees and duly authorized agents of such controlling Person or entity
(collectively, the "Controlling Persons"), from and against any loss, claim,
damage, liability, costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements and costs and expenses of investigating and
defending any such claim) (collectively, "Damages"), joint or several, and any
action or proceeding in respect thereof to which the seller of Registrable
Securities, its partners, Affiliates, officers, directors, employees and duly
authorized agents, and any such Controlling Person may become subject under the
Act or otherwise as incurred and, insofar as such Damages (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or prospectus relating to the Registrable Securities or
any preliminary prospectus, or arises out of, or are based upon, any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
the same are based upon information furnished in writing to the Company by the
seller of Registrable Securities expressly for use therein, and shall reimburse
the seller of Registrable Securities, its partners, Affiliates, officers,
directors, employees and duly authorized agents, and each such Controlling
Person for any legal and other expenses reasonably incurred by the seller of
Registrable Securities, its partners, Affiliates, officers, directors, employees
and duly authorized agents, or any such Controlling Person, as incurred, in
investigating or defending or preparing to defend against any such Damages or
actions or proceedings; provided, however, that the Company shall not be liable
to the seller of Registrable Securities to the extent that any such Damages
arise out of or are based upon an untrue statement or omission made in any
preliminary prospectus if (i) the seller of Registrable Securities failed to
send or deliver a copy of the final prospectus delivered by the Company to the
seller of Registrable Securities with or prior to the delivery of written
confirmation of the sale by the seller of Registrable Securities to the Person
asserting the claim from which such Damages arise, and (ii) the final prospectus
would have corrected such untrue statement or alleged untrue statement or such
omission or alleged omission.
Section 3.2 INDEMNIFICATION BY SELLER OF REGISTRABLE SECURITIES. Each
seller of Registrable Securities agrees to indemnify and hold harmless the
Company and each person, if any, who controls the Company, or entity, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, and each officer of the Company who signs the
Registration Statement, the Company's directors, together with the partners,
Affiliates, officers, directors, employees and duly authorized agents of such
controlling Person or entity (collectively, the "Controlling Persons"), from and
against any loss, claim, damage, liability, costs and expenses (including,
without limitation, reasonable attorneys' fees and disbursements and costs and
expenses of investigating and defending any such claim) (collectively,
"Damages"), joint or several, and any action or proceeding in respect thereof to
which the Company and Controlling Person may become subject under the Act or
otherwise as incurred and, insofar as such Damages (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or prospectus relating to the Registrable Securities or any
preliminary prospectus, or arises out of, or are based upon, any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, only insofar as the
same are based upon information furnished in writing to the Company by the
seller of Registrable Securities expressly for use therein, and shall reimburse
the Company and each such Controlling Person for any legal and other expenses
reasonably incurred by the Company, or any such Controlling Person, in
investigating or defending or preparing to defend against any such Damages or
actions or proceedings; provided, however, that the seller of Registrable
Securities shall be limited to the proportion of any such loss, claim, damage,
liability or expense which is equal to the proportion that the public offering
price of the Registrable Securities sold by the seller under such registration
statement bears to the total public offering price of all securities offered
thereunder, but not in any event to exceed the net proceeds actually received by
the seller of Registrable Securities from the sale of Registrable Securities
covered by such registration statement.
Section 3.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt
by any person or entity in respect of which indemnity may be sought pursuant to
Section 3.1 or 3.2 (an "Indemnified Party") of notice of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the person or entity against whom such indemnity
may be sought (the "Indemnifying Party"), notify the Indemnifying Party in
writing of the claim or the commencement of such action; in the event an
Indemnified Party shall fail to give such notice as provided in this Section 3.3
and the Indemnifying Party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was materially prejudiced
by the failure to give such notice, the indemnification provided for in Section
3.1 and 3.2 shall be reduced to the extent of any actual prejudice resulting
from such failure to so notify the Indemnifying Party; provided, that the
failure to notify the Indemnifying Party shall not relieve it from any liability
that it may have to an Indemnified Party otherwise than under Section 3.1 or
3.2. If any such claim or action shall be brought against an Indemnified Party,
and it shall notify the Indemnifying Party thereof, the Indemnifying Party shall
be entitled to participate therein, and, to the extent that it wishes, jointly
with any other similarly notified Indemnifying Party, to assume the defense
thereof with counsel reasonably satisfactory to the Indemnified Party. After
notice from the Indemnifying Party to the Indemnified Party of its election to
assume the defense of such claim or action, the Indemnifying Party shall not be
liable to the Indemnified Party for any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation; provided that the Indemnified Party
shall have the right to employ separate counsel to represent the Indemnified
Party and its controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Indemnified Party
against the Indemnifying Party, but the fees and expenses of such counsel shall
be for the account of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) in the reasonable judgment of the Company and such Indemnified
Party, representation of both parties by the same counsel would be inappropriate
due to actual or potential conflicts of interest between them, it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such claim or action or separate but substantially similar or related
claims or actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys together with appropriate local counsel) at any
time for all Indemnified Parties, or for fees and expenses that are not
reasonable. No Indemnifying Party shall, without the prior written consent of
the Indemnified Party, effect any settlement of any claim or pending or
threatened proceeding in respect of which the Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such claim or proceeding.
Whether or not the defense of any claim or action is assumed by the Indemnifying
Party, such Indemnifying Party will not be subject to any liability for any
settlement made without its consent, which consent will not be unreasonably
withheld.
Section 3.4 OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding paragraphs of this Article 3 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any federal or state law or regulation of any governmental
authority other than the Securities Act. The provisions of this Article III
shall be in addition to any other rights to indemnification, contribution or
other remedies which an Indemnified Party may have pursuant to law, equity,
contract or otherwise.
Section 3.5 CONTRIBUTION. If the indemnification provided for in this
Article III is unavailable to the Indemnified Parties in respect of any Damages
referred to herein, then 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 Damages as between the Company on the one
hand and the Holder on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of the Holder in connection with
such statements or omissions, as well as other equitable considerations. The
relative fault of the Company on the one hand and of the Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Holder agree
that it would not be just and equitable if contribution pursuant to this Section
3.5 were determined by pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified
Party as a result of the Damages referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 3.5, the Holder shall in no event
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of the seller of Registrable
Securities were sold to the public (less underwriting discounts and commissions)
exceeds the amount of any damages which the Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
ARTICLE IV
MISCELLANEOUS
Section 4.1 NO OUTSTANDING REGISTRATION RIGHTS. The Company represents and
warrants to the seller of Registrable Securities that there is not in effect on
the date hereof any agreement by the Company pursuant to which any holders of
securities of the Company have a right to cause the Company to register or
qualify such securities under the Securities Act or any securities or blue sky
laws of any jurisdiction that would conflict or be inconsistent with any
provision of this Agreement or the Exchange Rights Agreement. The Company
further represents and warrants that upon issuance, the Registrable Securities
will not have been issued or sold in violation of any preemptive or other
similar rights of holders of any securities of the Company or any other person.
Section 4.2 TERM. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate at such time as all the Common
Stock (i) have been disposed of pursuant to the Registration Statement, (ii)
have been sold under circumstances under which all of the applicable conditions
of Rule 144 (or any similar provision then in force) under the Securities Act
("Rule 144") are met, (iii) have been otherwise transferred to holders who may
trade such shares without restriction under the Securities Act, and the Company
has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend, or (iv) may be sold without any
time, volume or manner limitations pursuant to Rule 144(k) (or any similar
provision then in effect) under the Securities Act in the opinion of counsel to
the Company, which counsel shall be reasonably acceptable to the holder of
Registrable Securities; provided, however, that such registration rights shall
not terminate sooner than three years following the Subscription Date.
Notwithstanding the foregoing, paragraphs (c) and (d) of Section 1.1, Article
III, Section 4.8, and Section 4.9 shall survive the termination of this
Agreement.
Section 4.3 RULE 144. The Company covenants that it will file all reports
required to be filed by it under the Securities Act and the Exchange Act and
that it will take such further action as holders of Registrable Securities may
reasonably request, all to the extent required from time to time to enable the
seller of Registrable Securities to sell Registrable Securities without
registration under the Act within the limitation of the exemptions provided by
(a) Rule 144, as such Rule may be amended from time to time, or (b) any similar
rule or regulation hereafter adopted by the SEC. If at any time the Company is
not required to file such reports, it will, upon the request of any holder of
Registrable Securities, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144. Upon the request of the seller
of Registrable Securities, the Company will deliver to the seller of Registrable
Securities a written statement as to whether it has complied with such
requirements.
Section 4.4 CERTIFICATE. The Company will, at its expense, forthwith upon
the request of any holder of Registrable Securities, deliver to such holder a
certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
Company's Internal Revenue Service identification number, (c) the Company's
Commission file number, (d) the number of shares of each class of Stock
outstanding as shown by the most recent report or statement published by the
Company, and (e) whether the Company has filed the reports required to be filed
under the Exchange Act for a period of at least ninety (90) days prior to the
date of such certificate and in addition has filed the most recent annual report
required to be filed thereunder.
Section 4.5 AMENDMENT AND MODIFICATION. Any provision of this Agreement may
be waived, provided that such waiver is set forth in a writing executed by both
parties to this Agreement. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of the holders of a majority
of the then outstanding Registrable Securities. Notwithstanding the foregoing,
the waiver of any provision hereof with respect to a matter that relates
exclusively to the rights of holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and does not directly or
indirectly affect the rights of other holders of Registrable Securities may be
given by holders of at least a majority of the Registrable Securities being sold
by such holders; provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence. No course of dealing between or among any
Person having any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations of
any person under or by reason of this Agreement.
Section 4.6 SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. The Holder may
assign its rights under this Agreement to any subsequent holder the Registrable
Securities, provided that the Company shall have the right to require any holder
of Registrable Securities to execute a counterpart of this Agreement as a
condition to such holder's claim to any rights hereunder. This Agreement,
together with the Subscription Agreement and Exchange Rights Agreement and the
documents and agreements referred to therein set forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.
Section 4.7 SEPARABILITY. In the event that any provision of this Agreement
or the application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
Section 4.8 NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing and
shall be (i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered by
reputable air courier service with charges prepaid, or (iv) transmitted by hand
delivery, telegram or facsimile, addressed as set forth below or to such other
address as such party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given hereunder shall
be deemed effective (a) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile machine, at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
If to NCT Group, Inc.:
NCT Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopier: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. X'Xxxxx, Esq.
Telecopier: (000) 000-0000
If to the Holder:
To the address and telecopier number set forth on Schedule A
hereto
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 4.8 by giving at least ten (10) days' prior
written notice of such changed address or facsimile number to the other party
hereto.
Section 4.9 GOVERNING LAW. This Agreement shall be subject to the same
choice of law, venue and jurisdiction as the Exchange Rights Agreement and
construed under the laws of the State of New York, without giving effect to
provisions regarding conflicts of law or choice of law.
Section 4.10 HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not constitute a part of this Agreement, nor shall
they affect their meaning, construction or effect.
Section 4.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.
Section 4.12 FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
Section 4.13 REMEDIES. In the event of a breach or a threatened breach by
any party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach will be entitled to specific performance
of its rights under this Agreement or to injunctive relief, in addition to being
entitled to exercise all rights provided in this Agreement and granted by law.
The parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at law would be adequate
is waived.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.
NCT GROUP, INC.
By:_________________________________
------------------------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT
- Holder
------------------------------------
Amro International, S. A. - Holder
------------------------------------
- Holder
------------------------------------
- Holder
------------------------------------
- Holder
SCHEDULE A TO REGISTRATION RIGHTS AGREEMENT
--------------------------------------------------------------------------------
HOLDER NOTE PRINCIPAL PROPORTIONATE SHARE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT $293,750.00 78.33%
A Lichtenstein corporation
Xxxxxxxxx 0, 0000 Xxxxxxxxxxx
Vaduz, Lichtenstein
Fax: 000-00-00000000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AMRO INTERNATIONAL, S.A. $81,250.00 21.67%
X/x Xxxxx Xxxxxx
Xxxxxxxxxxxxx Xxxxx 0
Xxxxxx, Xxxxxxxxxxx CH8022
Fax: 000-000-000-0000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL $375,000.00 100%
--------------------------------------------------------------------------------
