Exhibit 10(ba)
EXHIBIT A TO PRIVATE
EQUITY CREDIT AGREEMENT
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement"), dated as of April 12,2001
is made by and between NCT GROUP, INC., a corporation organized and existing
under the laws of the State of Delaware (the "Company"), and XXXXXXX ROAD LLC, a
corporation organized and existing under the laws of the Cayman Islands (the
"Subscriber").
Recitals
WHEREAS, upon the terms and subject to the conditions of the Private Equity
Credit Agreement ("Equity Credit Agreement"), between the Subscriber and the
Company, the Company has agreed to issue and sell to the Subscriber up to Fifty
Million Dollars ($50,000,000) of the common stock of the Company ("Subscribed
Shares") par value $.01 per share (the "Common Stock"), and
WHEREAS, to induce the Subscriber to execute and deliver the Equity Credit
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, "Securities Act"),
and applicable state securities laws with respect to the Subscribed Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Subscriber
hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
(i) "Potential Material Event" means any of the following: (a) the
possession by the Company of material information not ripe for disclosure in a
Registration Statement, which shall be evidenced by determinations in good faith
by the Board of Directors of the Company that disclosure of such information in
the Registration Statement would be detrimental to the business and affairs of
the Company, or (b) any material engagement or activity by the Company which
would, in the good faith determination of the Board of Directors of the Company,
be adversely affected by disclosure in a Registration Statement at such time,
which determination shall be accompanied by a good faith determination by the
Board of Directors of the Company that the Registration Statement would be
materially misleading absent the inclusion of such information.
(ii) "Subscription Date" means the date of this Agreement.
(iii) "Subscriber", has the meaning set forth in the preamble to this
Agreement.
(iv) "Register", "registered" and "registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the Securities Act and pursuant to Rule 415 under the Securities
Act or any successor rule providing for offering securities on a delayed or
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(v) "Registrable Securities" means the Subscribed Shares.
(vi) "Registration Statement" means a registration statement of the Company
under the Securities Act.
(b) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Equity Credit Agreement.
2. Registration.
(a) Mandatory Registration. The Company shall prepare and file with the
SEC, no later than five (5) business days after the effectiveness of the
Registration Statement under the Registration Rights Agreement relating to the
Exchange Agreement between the Subscriber and the Company dated April 12, 2001,
a Registration Statement on Form S-1 (if use of such other form is 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 for the offering of the
Registrable Securities) ("Registration Statement"), registering for distribution
by the Subscriber no less than 125% of the number of shares of Common Stock into
which the Registrable Securities would be xxxxxxxxxxx.xx the time of filing or
effectiveness (the "Initial Registrable Securities"). Such Registration
Statement shall state that, in accordance with Rules 416 and 457 under the
Securities Act, it also covers such indeterminate number of additional shares of
Common Stock as may become issuable to prevent dilution resulting from stock
splits, or stock dividends. If at any time (i) the number of Subscribed Shares
exceeds the aggregate number of shares of Common Stock then registered, the
Company shall, within sixty (60) business days after receipt of written notice
from the Subscriber, file with the SEC an additional Registration Statement on
Form S-1 or any other applicable registration statement, to register the
Subscribed Shares that exceed the aggregate number of shares of Common Stock
already registered.
(b) Payment by the Company. If the Registration Statement covering the
Registrable Securities required to be filed by the Company pursuant to Section
2(a) hereof is not declared effective by September 15, 2001 , then the Investor
shall have the right to terminate the commitment contained in in this Agreement
(the "Commitment") and whether or not so terminated, shall be entitled to the
sums set forth in Section 2.1(b) of the Private Equity Credit Agreement,
immediately in cash..
(c) Failure to Maintain Effectiveness Of A Registration Statement. In the
event the Company fails to maintain the effectiveness of any Registration
Statement (or the underlying prospectus), including the payment of all necessary
fees, until the earlier of the time that Investor either sells the Put Shares or
eighteen (18) months from the last day of the calendar month in which the Put
Notice pursuant to which Shares were issued was given (the "Registration
Period"), other than temporary suspensions permitted by Section 3(h), and the
Investor holds any Put Shares included in the Registration Statement at any time
during such period, the Company shall at the Investor's option, redeem the Put
Shares at the Investment Amount or pay to the Investor liquidated damages in
immediately available funds into an account designated by the Investor an amount
equal to two percent (2%) of the aggregate Purchase Price of Put Shares,
resulting from any Put Notice, if any, then held by the Investor for each thirty
(30) calendar day period (prorated for partial periods).
3. Obligation of the Company. In connection with the registration of the
Registrable Securities, the Company shall do each of the following:
(a) Prepare promptly, and file with the SEC on the date previously set
forth , a Registration Statement with respect to not less than the number of
Registrable Securities provided in Section 2(a) above, and, thereafter, use all
diligent efforts to cause the Registration Statement relating to the Registrable
Securities to become effective the earlier of (a) five (5) business days after
notice from the Securities and Exchange Commission that the Registration
Statement may be declared effective, or (b) September 15, 2001, and keep the
Registration Statement effective at all times until the earliest of (i) the date
that is one year after the completion of the last Closing Date under the Equity
Credit Agreement, (ii) the date when the Subscriber may sell all Registrable
Securities under Rule 144 without volume limitations, or (iii) the date the
Subscriber no longer owns any of the Registrable Securities (collectively, the
"Registration Period"), which Registration Statement (including any amendments
or supplements, thereto and prospectuses contained therein) shall not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement as may be necessary to keep
the Registration Statement effective at all times during the Registration
Period, and, during the Registration Period, and to comply with the provisions
of the Securities Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement until the
expiration of the Registration Period.
(c) Permit a single firm of counsel designated by Subscriber to review the
Registration Statement and all amendments and supplements thereto a reasonable
period of time (but not less than three (3) Business Days) prior to their filing
with the SEC, and not file any document in a form to which such counsel
reasonably objects.
(d) Notify Subscriber and Subscriber's legal counsel identified to the
Company (which, until further notice, shall be deemed to be Xxxxxxx & Xxxxxx,
LLP, ATTN: Xxxxxx Xxxxxxx, Esq.; "Subscriber's Counsel") (and, in the case of
(i)(A) below, not less than one (1) Business Day prior to such filing) and (if
requested by any such person) confirm such notice in writing no later than one
(1) Business Day following the day (i): (A) when a prospectus or any prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed; (B) whenever the SEC notifies the Company whether there will be a
"review" of such Registration Statement; and (C) with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective; [(ii) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or the prospectus or for additional information;] (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any proceedings for that purpose; (iv) if at any time any of the
representations or warranties of the Company contained in any agreement
(including any securities purchase agreement) contemplated hereby ceases to be
true and correct in all material respects; (v) of the receipt by the Company 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; and (vi) of the occurrence of any event that to the knowledge of the
Company makes any statement made in the Registration Statement or the prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, the prospectus or other documents so that, in the case
of the Registration Statement or the prospectus, as the case may be, 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.
(e) Furnish to Subscriber, (i) promptly after the same is prepared and
publicly distributed, filed with the SEC, or received by the Company, one (1)
copy of the Registration Statement, each preliminary prospectus and the
prospectus, and each amendment or supplement thereto, and (ii) such number of
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents, as the Subscriber may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by the Subscriber;
(f) Use all diligent efforts to (i) register and/or qualify the Registrable
Securities covered by the Registration Statement under such other securities or
blue sky laws of such jurisdictions as the Subscriber may reasonably request and
in which significant volumes of shares of Common Stock are traded, (ii) prepare
and file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof at all times during the
Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualification in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions:
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(f), (B) subject itself to general taxation in any such jurisdiction,
(C) file a general consent to service of process in any such jurisdiction, (D)
provide any undertakings that cause more than nominal expense or burden to the
Company or (E) make any change in its charter or by-laws or any then existing
contracts, which in each case the Board of Directors of the Company determines
to be contrary to the best interests of the Company and its stockholders;
(g) As promptly as practicable after becoming aware of such event, notify
the Subscriber of the happening of any event of which the Company has knowledge,
as a result of which the prospectus included 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, in the light of the circumstances under which they were
made, not misleading ("Registration Default"), and use its best efforts to
promptly prepare a supplement or amendment to the Registration Statement or
other appropriate filing with the SEC to correct such untrue statement or
omission, and any other necessary steps to cure the Registration Default, and
deliver a number of copies of such supplement or amendment to the Subscriber as
the Subscriber may reasonably request. [Failure to cure the Registration Default
within thirty (30) business days shall result in the Company incurring a
liquidated damage penalty of $1,000 per day for so long as more than 10,000
shares of Common Stock are held by the Subscriber;
(h) As promptly as practicable after becoming aware of such event, notify
the Subscriber (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any notice of effectiveness or any
stop order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time;
(i) Notwithstanding the foregoing, if at any time or from time to time
after the date of effectiveness of the Registration Statement, the Company
notifies Subscriber in writing of the existence of a Potential Material Event
("Blackout Notice"), Subscriber shall not offer or sell any Registrable
Securities, or engage in any other transaction involving or relating to the
Registrable Securities, from the time of the giving of notice with respect to a
Potential Material Event until Subscriber receives written notice from the
Company that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event; provided, however,
that (a) the Company may not so suspend the right of the Subscriber to sell the
Registrable Securities for more than two fifteen (15) day periods in the
aggregate during any 12-month period ("Blackout Period") with at least a ten
(10) Business Day interval between such periods, during the periods the
Registration Statement is required to be in effect.
(j) Use its commercially reasonable efforts, if eligible, either to (i)
cause all the Registrable Securities covered by the Registration Statement to be
listed on a national securities exchange and on each additional national
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation of all the Registrable Securities covered by the Registration
Statement as a National Association of Securities Dealers Automated Quotations
System ("Nasdaq) "Small Capitalization" within the meaning of Rule 11Aa2-1 of
the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the quotation of the Registrable Securities on the Nasdaq Small Cap
Market; or if, despite the Company's commercially reasonable efforts to satisfy
the preceding clause (i) or (ii), the Company is unsuccessful in doing so, to
secure NASD authorization and quotation for such Registrable Securities on the
over-the-counter bulletin board and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
to such Registrable Securities; provided, however, that the Subscriber
acknowledges that the Company does not currently meet the requirements for
listing on a national securities exchange or the Nasdaq Small Cap Market
pursuant to (i) or (ii) and that nothing in this section shall be construed to
require the Company to pursue such qualification until such time as the Company
satisfies such requirements for a period of not less than forty-five (45) days;
(k) Provide a transfer agent for the Registrable Securities not later than
the Effective Date of the Registration Statement;
(l) Cooperate with the Subscriber to facilitate the timely preparation and
delivery of certificates for the Registrable Securities to be offered pursuant
to the Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts as the case may be, as the
Subscriber may reasonably request and registration in such names as the
Subscriber may reasonably request; and, within five (5) business days after a
Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the transfer agent for the Registrable
Securities (with copies to the Subscriber) an appropriate instruction and
opinion of such counsel, if so required by the Company's transfer agent; and
(m) Take all other reasonable actions necessary to expedite and facilitate
distribution to the Subscriber of the Registrable Securities pursuant to the
Registration Statement.
4. Obligations of the Subscriber. In connection with the registration of
the Registrable Securities, the Subscriber shall have the following obligations;
(a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of the Subscriber that the Subscriber shall timely
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall timely execute such
documents in connection with such registration as the Company may reasonably
request.
(b) The Subscriber by such Subscriber's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder; and
(c) The Subscriber agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(g) or 3(h)
above, the Subscriber will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until the Subscriber receives the copies of the supplemented or
amended prospectus contemplated by Section 3(g) or 3(h) and, if so directed by
the Company, the Subscriber shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in the Subscriber's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
5. Expenses of Registration. (a) All reasonable expenses (other than
underwriting discounts and commissions to the Subscriber) incurred in connection
with Registrations, filings or qualifications pursuant to Section 3, including,
without limitation, all Registration, listing, and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the Company and a
fee for a single counsel for Subscriber of $4,500 for the initial Registration
Statement and $2,000 for each Additional Registration Statement covering the
Registrable Securities shall be borne by the Company; and
(b) Except as otherwise provided for in Schedule 5(b) attached hereto, the
Company nor any of its subsidiaries has, as of the date hereof, and the Company
shall not on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to
Subscriber in this Agreement or otherwise conflicts with the provisions hereof.
Except as otherwise provided for in Schedule 5(b), the Company has not
previously entered into any agreement granting any registration rights with
respect to any of its securities to any person. Except as otherwise provided for
in this Section 5, and without limiting the generality of the foregoing, without
the written consent of Subscriber, the Company shall not grant to any person any
new right to request the Company to Register any securities of the Company under
the Securities Act unless the rights so granted are subject in all respects to
the prior rights in full of Subscriber set forth herein, and are not otherwise
in conflict or inconsistent with the provisions of this Agreement and the other
Transaction Documents.
6. Indemnification. After Registrable Securities are included in a
Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless, the Subscriber, the directors, if any, of such Subscriber, the
officers, if any, of such Subscriber, each person, if any, who controls the
Subscriber within the meaning of the Securities Act or the Exchange Act (each,
an "Indemnified Person"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced in respect
thereof) arise out of or are based upon: (i) any untrue statement or untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or the omission or omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or untrue statement of a
material fact contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or omission to state therein any material fact necessary to make
the statements made therein, in the light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or violation
by the Company of the Securities Act, the Exchange Act, any state securities law
or any rule or regulation under the Securities Act, the Exchange Act or any
state securities law (the matters in the foregoing clauses (i) through (iii)
being collectively referred to as "Violations"). The Company shall reimburse the
Subscriber, promptly as such expenses are incurred and are due and payable, for
any reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a) shall not (i) apply to any Claims arising out of
or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(b) hereof; (ii) be available to the extent such Claim is based on a failure of
the Subscriber to deliver or cause to be delivered the prospectus made available
by the Company; or (iii) apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. The Subscriber will indemnify
the Company, its officers, directors and agents (including legal counsel) (each
an "Indemnified Person") against any claims arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company, by or on behalf of such Subscriber,
expressly for use in connection with the preparation of the Registration
Statement, subject to such limitations and conditions set forth in this Section
6. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person or Indemnified
Party, and shall survive the offering of the Registrable Securities by the
Subscriber.
(b) Promptly after receipt by an Indemnified Person under this Section 6 of
notice of the commencement of any action (including any governmental action),
such Indemnified Person shall, if a Claim in respect thereof is to be made
against any indemnifying party under this Section 6, 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 control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Person, as the case may be; provided,
however, that an Indemnified Person shall have the right to retain its own
counsel with the reasonable fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person and the
indemnifying party would be inappropriate due to actual or potential differing
interests between such Indemnified Person and any other party represented by
such counsel in such proceeding. [In such event, the Company shall pay for only
one separate legal counsel for the Subscriber selected by the Subscriber.] The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person under this Section 6, except to
the extent that the indemnifying party is prejudiced in its ability to defend
such action. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as such expense, loss, damage or liability is incurred and is due
and payable.
7. Contribution. To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6; and (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation.
8. Reports under Exchange Act. With a view to making available to the
Subscriber the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit the
Subscriber to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to use its reasonable best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Exchange Act; and
(c) furnish to the Subscriber so long as the Subscriber owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company
solely if unavailable by Xxxxx, and (iii) such other information as may be
reasonably requested to permit the Subscribers to sell such securities pursuant
to Rule 144 without registration.
9. Miscellaneous.
(a) Registered Owners. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities, who shall provide a bond or other form of satisfactory
protection to Company so as to cover contingent liability against any other
claimants.
(b) Rights Cumulative; Waivers. The rights of each of the parties under
this Agreement are cumulative. The rights of each of the parties hereunder shall
not be capable of being waived or varied other than by an express waiver or
variation in writing. Any failure to exercise or any delay in exercising any of
such rights shall not operate as a waiver or variation of that or any other such
right. Any defective or partial exercise of any of such rights shall not
preclude any other or further exercise of that or any other such right. No act
or course of conduct or negotiation on the part of any party shall in any way
preclude such party from exercising any such right or constitute a suspension or
any variation of any such right.
(c) Benefit; Successors Bound. This Agreement and the terms, covenants,
conditions, provisions, obligations, undertakings, rights, and benefits hereof,
shall be binding upon, and shall inure to the benefit of, the undersigned
parties and their heirs, executors, administrators, representatives, successors,
and permitted assigns.
(d) Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof. There are no promises,
agreements, conditions, undertakings, understandings, warranties, covenants or
representations, oral or written, express or implied, between them with respect
to this Agreement or the matters described in this Agreement, except as set
forth in this Agreement and in the other documentation relating to the
transactions contemplated by this Agreement solely as same are referred to
herein. Any such negotiations, promises, or understandings shall not be used to
interpret or constitute this Agreement.
(e) Assignment. The rights to have the Company register Registrable
Securities pursuant to this Agreement may be assigned by the Subscribers to any
transferee, only if: (a) the assignment relates to not less than one million
dollars ($1,000,000) of Registrable Securities and the Transferee is an
Institutional Accredited Investor under Regulation D; (b) the Company receives a
legal opinion in form and substance satisfactory to the Company that the
proposed transfer complies with federal and state securities laws and does not
adversely effect the validity of the transactions executed (or to be executed)
under this Agreement and the Equity Credit Agreement under federal and state
securities laws; (c) the assignment requires that the Transferee be bound by all
of the provisions contained in this Agreement, and Subscriber, the Company and
the transferee or assignee (the "Transferee") enter into a written agreement,
which shall be enforceable by the Company against the Transferee and by the
Transferee against the Company, to assign such rights; and (d) immediately
following such transfer or assignment the further disposition of such securities
by the transferee or assignee is restricted under the Securities Act and
applicable state securities laws. In the event of any delay in filing or
effectiveness of the Registration Statement as a result of such assignment, the
Company shall not be liable for any damages arising from such delay.
(f) Amendment. Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and Subscriber. Any amendment or waiver effected in accordance with this
Section 9 shall be binding upon the Company and any subsequent Transferees.
(g) Severability. Each part of this Agreement is intended to be severable.
In the event that any provision of this Agreement is found by any court or other
authority of competent jurisdiction to be illegal or unenforceable, such
provision shall be severed or modified to the extent necessary to render it
enforceable and as so severed or modified, this Agreement shall continue in full
force and effect.
(h) Notices. Notices required or permitted to be given hereunder shall be
in writing and shall be deemed to be given as provided in Section S-1 of the
Equity Credit Agreement.
(i) Governing Law. This Agreement shall be governed by the interpreted in
accordance with the laws of the State of New York without reference to its
conflicts of laws rules or principles. Each of the parties consents to the
exclusive jurisdiction of the federal courts of the State of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non coveniens, to the bringing of any such proceeding in such
jurisdictions.
(j) Jury Trial Waiver. The Company and the Subscriber hereby waive a trial
by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other in respect of any matter arising out of or in
connection with the Transaction Documents.
(k) Consents. The person signing this Agreement on behalf of each party
hereby represents and warrants that he has the necessary power, consent and
authority to execute and deliver this Agreement on behalf of that party.
(l) Further Assurances. In addition to the instruments and documents to be
made, executed and delivered pursuant to this Agreement, the parties hereto
agree to make, execute and deliver or cause to be made, executed and delivered,
to the requesting party such other instruments and to take such other actions as
the requesting party may reasonably require to carry out the terms of this
Agreement and the transactions contemplated hereby.
(m) Section Headings. The Section headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(n) Construction. Unless the context otherwise requires, when used herein,
the singular shall be deemed to include the plural, the plural shall be deemed
to include each of the singular, and pronouns of one or no gender shall be
deemed to include the equivalent pronoun of the other or no gender.
(o) Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement. A facsimile transmission of this signed Agreement
shall be legal and binding on all parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
NCT GROUP, INC.
By:_________________________________
Name: ______________________________
Title:________________________________
XXXXXXX ROAD LLC
By:_________________________________
Name:_______________________________
Title:________________________________
