EXHIBIT 4.9
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of the 31st day of December, 1998 by and between APPLIED VOICE
RECOGNITION, INC., a Delaware corporation (the "Company"), and L & H INVESTMENT
COMPANY N.V., a Belgian company (the "Shareholder").
R E C I T A L S:
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WHEREAS, the Shareholder is acquiring up to Five Thousand (5,000) shares of
the Company's Series D Preferred Stock, par value $0.10 per share (such number
of shares as are actually issued to the Shareholder being referred to as the
"Series D Preferred Stock") pursuant to that certain Applied Voice Recognition,
Inc. Series D Preferred Stock and Warrant Purchase Agreement dated of even date
herewith (the "Purchase Agreement");
WHEREAS, the Series D Preferred Stock is convertible into shares of the
Company's common stock, $0.001 par value per share (the "Common Stock");
WHEREAS, pursuant to the terms of the Purchase Agreement, the Company has
issued in favor of the Shareholder a warrant to purchase 1,500,000 share shares
of Common Stock of the Company, and may issue additional warrants to the
Shareholder pursuant to the terms of the Purchase Agreement (such warrants as
are actually issued pursuant to the Purchase Agreement being referred to as the
"Warrants"); and
WHEREAS, the Company desires to grant to the Shareholder certain
registration rights relating to the shares of Common Stock issuable upon
conversion of any of the Series D Preferred Stock and upon exercise of any one
or more of the Warrants (the "Shares"), and the Shareholder desires to obtain
such registration rights, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual premises, representations,
warranties and conditions set forth in this Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Definitions and References. For purposes of this Agreement, in addition
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to the definitions set forth above and elsewhere herein, the following terms
shall have the following meanings:
(a) The term "Commission" shall mean the Securities and Exchange
Commission and any successor agency.
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(b) The terms "register", "registered" and "registration" shall refer
to a registration effected by preparing and filing a registration statement
or similar document in compliance with the 1933 Act (as herein defined) and
the declaration or ordering of effectiveness of such registration statement
or document.
(c) For purposes of this Agreement, the term "Registrable Stock" shall
mean (i) any Shares, (ii) any shares of Common Stock issued to the Holder,
relating to the Shares, by way of a stock split, reorganization, merger or
consolidation; and (iii) any Common Stock issued to the Holder, relating to
the Shares, as a dividend on the Shares. For purposes of this Agreement,
any Registrable Stock shall cease to be Registrable Stock when (u) five
years have passed since an underwritten public offering has been completed
by the Company, (v) a registration statement covering such Registrable
Stock has been declared effective and such Registrable Stock has been
disposed of pursuant to such effective registration statement, (w) such
Registrable Stock is sold pursuant to Rule 144 (or any similar provision
then in force) under the 1933 Act, (x) such Registrable Stock is eligible
to be sold pursuant to Rule 144(k) under the 1933 Act, (y) such Registrable
Stock has been otherwise transferred, no stop transfer order affecting such
stock is in effect and the Company has delivered new certificates or other
evidences of ownership for such Registrable Stock not bearing any legend
indicating that such shares have not been registered under the 1933 Act, or
(z) such Registrable Stock is sold by a person in a transaction in which
the rights under the provisions of this Agreement are not assigned. Nothing
contained in this Agreement shall be construed as requiring the Holder(s)
to exercise their Warrants prior to the initial filing of any registration
statement or the effectiveness thereof.
(d) The term "Holder" shall mean the Holder or any transferee or
assignee thereof to whom the rights under this Agreement are assigned in
accordance with Section 10 hereof, provided that the Holder or such
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transferee or assignee shall then own the Registrable Stock.
(e) The term "1933 Act" shall mean the Securities Act of 1933, as
amended.
(f) An "affiliate of such holder" shall mean a person who controls, is
controlled by or is under common control with a Holder, or the spouse or
children (or a trust exclusively for the benefit of the spouse and/or
children) of a Holder, or, in the case of a Holder that is a partnership,
its partners.
(g) The term "Person" shall mean an individual, corporation,
partnership, trust, limited liability company, unincorporated organization
or association or other entity, including any governmental entity.
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(h) The term "Requesting Holder" shall mean a Holder or Holders of in
the aggregate at least seventy-five percent (75%) of the Registrable Stock.
(i) References in this Agreement to any rules, regulations or forms
promulgated by the Commission shall include rules, regulations and forms
succeeding to the functions thereof, whether or not bearing the same
designation.
2. Demand Registration.
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(a) Commencing three years following the date hereof, any Requesting
Holders may make a written request to the Company (specifying that it is
being made pursuant to this Section 2) that the Company file a registration
statement under the 1933 Act (or a similar document pursuant to any other
statute then in effect corresponding to the 0000 Xxx) covering the
registration of Registrable Stock. In such event, the Company shall (x)
within five (5) days thereafter notify in writing all other Holders of
Registrable Stock of such request, and (y) use its reasonable efforts to
cause to be registered under the 1933 Act all Registrable Stock that the
Requesting Holders and such other Holders have, within fifteen (15) days
after the Company has given such notice, requested be registered.
Notwithstanding the foregoing, the Company shall not be obligated to file
the above described registration statement if the aggregate proceeds from
the registration would reasonably be expected to be less than $500,000.
(b) If the Requesting Holders intend to distribute the Registrable
Stock covered by their request by means of an underwritten offering, they
shall so advise the Company as a part of their request pursuant to Section
2(a) above, and the Company shall include such information in the written
notice referred to in clause (x) of Section 2(a) above. In such event, the
Holder's right to include its Registrable Stock in such registration shall
be conditioned upon such Holder's participation in such underwritten
offering and the inclusion of such Holder's Registrable Stock in the
underwritten offering to the extent provided in this Section 2. All
holders proposing to distribute Registrable Stock through such underwritten
offering shall enter into an underwriting agreement in customary form with
the underwriter or underwriters. Such underwriter or underwriters shall be
selected by a majority in interest of the Requesting Holders and shall be
approved by the Company, which approval shall not be unreasonably withheld;
provided, that all of the representations and warranties by, and the other
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agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such Holders and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement shall be conditions
precedent to the obligations of such Holders; and provided further, that no
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holder shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Holder, the Registrable Stock of
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such Holder and such Holder's intended method of distribution and any other
representation required by law or reasonably required by the underwriter.
(c) Notwithstanding any other provision of this Section 2 to the
contrary, if the managing underwriter of an underwritten offering of the
Registrable Stock requested to be registered pursuant to this Section 2
advises the Requesting Holders in writing that in its opinion marketing
factors require a limitation of the number of shares to be underwritten,
the Requesting Holders shall so advise all Holders of Registrable Stock
that would otherwise be underwritten pursuant hereto, and the number of
shares of Registrable Stock that may be included in such underwritten
offering shall be allocated among all such Holders, including the
Requesting Holders, in proportion (as nearly as practicable) to the amount
of Registrable Stock requested to be included in such registration by each
Holder at the time of filing the registration statement; provided, that in
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the event of such limitation of the number of shares of Registrable Stock
to be underwritten, such registration shall not count against the number of
demand registrations the Requesting Holders are permitted to request
hereunder. If any Holder of Registrable Stock disapproves of the terms of
the underwriting, such Holder may elect to withdraw by written notice to
the Company, the managing underwriter and the Requesting Holders. The
securities so withdrawn shall also be withdrawn from registration.
(d) Notwithstanding any provision of this Agreement to the contrary,
the Company shall not be required to effect a registration pursuant to this
Section 2 during the period starting with the fourteenth (14th) day
immediately preceding the date of an anticipated filing by the Company of,
and ending on a date ninety (90) days following the effective date of, a
registration statement pertaining to an underwritten public offering of
securities for the account of the Company; provided, that the Company shall
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actively employ in good faith all reasonable efforts to cause such
registration statement to become effective; and provided further, that the
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Company's estimate of the date of filing such registration statement shall
be made in good faith.
(e) The Company shall use Form S-3 for registrations pursuant hereto
if such form is available to the Company. If federal law precludes the use
of Form S-3, the Company shall use whatever form is necessary; however, the
Company shall not be obligated to use such non Form S-3 forms more than a
total of three times, unless increased pursuant to Section 2(c) hereof;
provided, that a registration requested pursuant to this Section 2 shall
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not be deemed to have been effected for purposes of this Section 2(e),
unless (i) it has been declared effective by the Commission, (ii) if it is
a shelf registration, it has remained effective for the period set forth in
Section 3(b), (iii) the offering of Registrable Stock pursuant to such
registration is not subject to any stop order, injunction or other order or
requirement of the Commission (other than any such action prompted by any
act or omission of the Holders), and (iv) no limitation of the number of
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shares of Registrable Stock to be underwritten has been required pursuant
to Section 2(c) hereof.
3. Obligations of the Company. Whenever required under Section 2 to use
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its reasonable efforts to effect the registration of any Registrable Stock, the
Company shall, as expeditiously as possible:
(a) prepare and file with the Commission, not later than ninety (90)
days after receipt of a request to file a registration statement with
respect to such Registrable Stock, a registration statement on Form S-3 if
available or, if not, any form for which the Company then qualifies or
which counsel for the Company shall deem appropriate and which form shall
be available for the sale of such issue of Registrable Stock in accordance
with the intended method of distribution thereof, and use its reasonable
efforts to cause such registration statement to become effective as
promptly as practicable thereafter; provided that before filing a
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registration statement or prospectus or any amendments or supplements
thereto, the Company will (i) furnish to one (1) counsel selected by the
Requesting Holders copies of all such documents proposed to be filed, and
(ii) notify each such Holder of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for such period of time as would satisfy the holding
period requirements of Rule 144(k) promulgated by the Commission with
respect to the Shares or such shorter period which will terminate when all
Registrable Stock covered by such registration statement has been sold (but
not before the expiration of the forty (40) or ninety (90) day period
referred to in Section 4(3) of the 1933 Act and Rule 174 thereunder, if
applicable), and comply with the provisions of the 1933 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 sellers thereof set forth in such registration statement;
(c) furnish to each Holder and any underwriter of Registrable Stock to
be included in a registration statement copies of such registration
statement as filed and each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus) and such
other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Stock owned by such Holder;
(d) use its reasonable efforts to register or qualify such Registrable
Stock under such other securities or blue sky laws of such jurisdictions as
any selling Holder or any
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underwriter of Registrable Stock reasonably requests, and do any and all
other acts which may be reasonably necessary or advisable to enable such
Holder to consummate the disposition in such jurisdictions of the
Registrable Stock owned by such Holder; provided that the Company will not
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be required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section
3(d) hereof, (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such jurisdiction;
(e) use its reasonable efforts to cause the Registrable Stock covered
by such registration statement to be registered with or approved by such
other governmental agencies or other authorities as may be necessary by
virtue of the business and operations of the Company to enable the selling
Holders thereof to consummate the disposition of such Registrable Stock;
(f) notify each selling Holder of such Registrable Stock and any
underwriter thereof, at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act (even if such time is after the
period referred to in Section 3(b)), of the happening of any event as a
result of which the prospectus included in such registration statement
contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances being made not misleading,
and prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Stock, such
prospectus will not contain an 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 light of the circumstances being made not
misleading;
(g) make available for inspection by any selling Holder, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller or underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), and cause the Company's officers, directors
and employees to supply all information reasonably requested by any such
Inspector, as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, in connection with such registration
statement. Records or other information which 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 or other information is necessary to avoid or
correct a misstatement or omission in the registration statement, or (ii)
the release of such Records or other information is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction. Each
selling Holder shall, upon learning that disclosure of such Records or
other information is sought in a court of competent jurisdiction, give
notice to the Company and allow the
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Company, at the Company's expense, to undertake appropriate action to
prevent disclosure of the Records or other information deemed confidential;
(h) furnish, at the request of any Requesting Holder, on the date
that such shares of Registrable Stock are delivered to the underwriters for
sale pursuant to such registration or, if such Registrable Stock is not
being sold through underwriters, on the date that the registration
statement with respect to such shares of Registrable Stock becomes
effective, (1) a signed opinion, dated such date, of the legal counsel
representing the Company for the purposes of such registration, addressed
to the underwriters, if any, and if such Registrable Stock is not being
sold through underwriters, then to the Requesting holders as to such
matters as such underwriters or the Requesting holders, as the case may be,
may reasonably request and as would be customary in such a transaction; and
(2) a letter dated such date, from the independent certified public
accountants of the Company, addressed to the underwriters, if any, and if
such Registrable Stock is not being sold through underwriters, then to the
Requesting Holders and, if such accountants refuse to deliver such letter
to such Holder, then to the Company (i) stating that they are independent
certified public accountants within the meaning of the 1933 Act and that,
in the opinion of such accountants, the financial statements and other
financial data of the Company included in the registration statement or the
prospectus, or any amendment or supplement thereto, comply as to form in
all material respects with the applicable accounting requirements of the
1933 Act, and (ii) covering such other financial matters (including
information as to the period ending not more than five (5) business days
prior to the date of such letter) with respect to the registration in
respect of which such letter is being given as the Requesting Holders may
reasonably request and as would be customary in such a transaction; and
(i) enter into customary agreements (including if the method of
distribution is by means of an underwriting, an underwriting agreement in
customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Stock to
be so included in the registration statement.
The Company may require each selling Holder of Registrable Stock as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Stock as the Company
may from time to time reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(f) hereof, such Holder
will forthwith discontinue disposition of Registrable Stock pursuant to the
registration statement covering such Registrable Stock until such Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 3(f) hereof, and, if so directed by the Company, such Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Stock current at the time
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of receipt of such notice. In the event the Company shall give any such notice,
the Company shall extend the period during which such registration statement
shall be maintained effective pursuant to this Agreement (including the period
referred to in Section 3(b)) by the number of days during the period from and
including the date of the giving of such notice pursuant to Section 3(f) hereof
to and including the date when each selling Holder of Registrable Stock covered
by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 3(f) hereof.
4. Incidental Registration. Commencing three years after the date hereof,
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if the Company determines that it shall file a registration statement under the
1933 Act (other than a registration statement on a Form S-4 or S-8 or filed in
connection with an exchange offer or an offering of securities solely to the
Company's existing stockholders) on any form that would also permit the
registration of the Registrable Stock and such filing is to be on its behalf
and/or on behalf of selling holders of its securities for the general
registration of its common stock to be sold for cash, at each such time the
Company shall promptly give each Holder written notice of such determination
setting forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than thirty (30) days from the date of
such notice, and advising each Holder of its right to have Registrable Stock
included in such registration. Upon the written request of any Holder received
by the Company no later than twenty (20) days after the date of the Company's
notice, the Company shall include the shares in such registration statement and
use its reasonable efforts to cause to be registered under the 1933 Act all of
the Registrable Stock that each such Holder has so requested to be registered.
If, in the written opinion of the managing underwriter or underwriters (or, in
the case of a non-underwritten offering, in the written opinion of the placement
agent, or if there is none, the Company), the total amount of such securities to
be so registered, including such Registrable Stock, will exceed the maximum
amount of the Company's securities which can be marketed (i) at a price
reasonably related to the then current market value of such securities, or (ii)
without otherwise materially and adversely affecting the entire offering, then
the amount of Registrable Stock to be offered for the accounts of Holders shall
be reduced pro rata to the extent necessary to reduce the total amount of
securities to be included in such offering to the recommended amount; provided,
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that if securities are being offered for the account of other Persons as well as
the Company, such reduction shall not represent a greater fraction of the number
of securities intended to be offered by Holders than the fraction of similar
reductions imposed on such other Persons other than the Company over the amount
of securities they intended to offer; and provided, further, that the
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Registrable Stock to be offered for the account of Holders and for the account
of other Persons in any secondary offering shall not be reduced without the
consent of the Holders to less than thirty percent of the aggregate offering.
5. Holdback Agreement - Restrictions on Public Sale by Holder. To the
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extent not inconsistent with applicable law, each Holder agrees not to effect
any public sale or distribution of the issue being registered or a similar
security of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, including a sale pursuant to Rule 144 under the
1933 Act, during the fourteen (14) days prior to, and during the thirty (30) day
period
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beginning on, the effective date of any registration statement filed by the
Company in connection with an underwritten public offering in which the Holder
is not participating, if and to the extent requested by the managing underwriter
or underwriters.
6. Expenses of Registration. The Company shall bear all expenses incurred
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in connection with each registration pursuant to Sections 2 and 4 of this
Agreement, excluding underwriters' discounts and commissions, but including,
without limitation, all registration, filing and qualification fees, word
processing, duplicating, printers' and accounting fees (including the expenses
of any special audits or "cold comfort" letters required by or incident to such
performance and compliance), exchange listing fees or National Association of
Securities Dealers fees, messenger and delivery expenses, all fees and expenses
of complying with securities or blue sky laws, fees and disbursements of counsel
for the Company. The selling Holders shall bear and pay the underwriting
commissions and discounts applicable to the Registrable Stock offered for their
account in connection with any registrations, filings and qualifications made
pursuant to this Agreement and fees of their counsel.
7. Indemnification and Contribution.
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(a) Indemnification by the Company. The Company agrees to indemnify, to
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the full extent permitted by law, each Holder, its officers, directors and
agents and each Person who controls such Holder (within the meaning of the
0000 Xxx) against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material fact contained
in any registration statement, prospectus or preliminary prospectus or any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement therein (in case of a
prospectus or preliminary prospectus, in the light of the circumstances
under which they were made) not misleading. The Company will also indemnify
any underwriters of the Registrable Stock, their officers and directors and
each Person who controls such underwriters (within the meaning of the 0000
Xxx) to the same extent as provided above with respect to the
indemnification of the selling Holders.
(b) Indemnification by Holders. In connection with any registration
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statement in which a Holder is participating, each such Holder will furnish
to the Company in writing such information with respect to such Holder as
the Company reasonably requests for use in connection with any such
registration statement or prospectus and agrees to indemnify, to the extent
permitted by law, the Company, its directors and officers and each Person
who controls the Company (within the meaning of the 0000 Xxx) against any
losses, claims, damages, liabilities and expenses resulting from any untrue
or alleged untrue statement of material fact or any omission or alleged
omission of a material fact required to be stated in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or necessary to make the statements therein (in the case
of a prospectus or preliminary prospectus, in the light of the
circumstances under
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which they were made) not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any
information with respect to such Holder so furnished in writing by such
Holder.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
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indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such Person of any written notice
of the commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which such Person will claim
indemnification or contribution pursuant to this Agreement and, unless in
the reasonable judgment of such indemnified party, a conflict of interest
may exist between such indemnified party and the indemnifying party with
respect to such claim, permit the indemnifying party to assume the defense
of such claims with counsel reasonably satisfactory to such indemnified
party. Whether or not such defense is assumed by the indemnifying party,
the indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be
unreasonably withheld). Failure by such Person to provide said notice to
the indemnifying party shall itself not create liability except to the
extent of any injury caused thereby. No indemnifying party will consent to
entry of any judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of such
claim or litigation. If the indemnifying party is not entitled to, or
elects not to, assume the defense of a claim, it will not be obligated to
pay the fees and expenses of more than one (1) counsel with respect to such
claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
(d) Contribution. If for any reason the indemnity provided for in this
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Section 7 is unavailable to, or is insufficient to hold harmless, an
indemnified party, then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, or provides a lesser sum to the indemnified party than the amount
hereinafter calculated, in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnifying party on the one
hand and the indemnified party on the other but also the relative fault of
the indemnifying party and the indemnified party as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among
other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or
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indemnified parties; and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 7(c), any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 7, the indemnifying
parties shall indemnify each indemnified party to the full extent provided
in Sections 7(a) and 7(b) without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 7.
8. Participation in Underwritten Registrations. No Holder may participate
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in any underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's securities on the basis provided in any underwriting arrangements
approved by the Holders entitled hereunder to approve such arrangements, and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
9. Reports Under Securities Exchange Act of 1934. With a view to making
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available to the Holder the benefits of Rule 144 promulgated under the 1933 Act
and any other rule or regulation of the Commission that may at any time permit
the Holder to sell securities of the Company to the public without registration,
the Company agrees to: (a) make and keep public information available, as those
terms are understood and defined in Rule 144, at all times after the date
hereof; (b) file with the Commission in a timely manner all reports and other
documents required of the Company under the 1933 Act and the Securities Exchange
Act of 1934, as amended (the "1934 Act"); and (c) furnish to the Holder, so long
as the Holder owns any Registrable Securities, forthwith upon request (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 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, and (iii) such other information as may be
reasonably requested in availing the Holder of any rule or regulation of the
Commission which permits the selling of any such securities without registration
or pursuant to such form.
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10. Transfer of Registration Rights. The registration rights of any
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Holder under this Agreement with respect to any Registrable Stock may only be
transferred to an affiliate of Holder or to a transferee of at least $500,000 in
Registrable Stock; provided that such transfer may otherwise be effected in
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accordance with applicable securities laws; provided further, that the
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transferring Holder shall give the Company written notice at or prior to the
time of such transfer stating the name and address of the transferee and
identifying the securities with respect to which the rights under this Agreement
are being transferred; provided further, that such transferee shall agree in
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writing, in form and substance satisfactory to the Company, to be bound as a
Holder by the provisions of this Agreement; provided further, that all
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registration rights shall terminate upon the termination of registration rights
of any Holder under this Agreement as a result of any Registrable Stock being
eligible to be sold pursuant to Rule 144(k) under the 1933 Act,; provided
--------
further, that no transfer may be made while a registration statement with
-------
respect to the Shares is on file; and provided further, that such assignment
----------------
shall be effective only if immediately following such transfer the further
disposition of such securities by such transferee is restricted under the 1933
Act. Except as set forth in this Section 10, no transfer of Registrable Stock
shall cause such Registrable Stock to lose such status.
11. Mergers, Etc. The Company shall not, directly or indirectly, enter
------------
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation unless the proposed surviving corporation shall,
prior to such merger, consolidation or reorganization, agree in writing to
assume the obligations of the Company under this Agreement, and for that purpose
references hereunder to "Registrable Stock" shall be deemed to be references to
the securities which the Holders would be entitled to receive in exchange for
Registrable Stock under any such merger, consolidation or reorganization;
provided, however, that the provisions of this Section 11 shall not apply in the
-------- -------
event of any merger, consolidation or reorganization in which the Company is not
the surviving corporation if each Holder is entitled to receive in exchange for
its Registrable Stock consideration consisting solely of (i) cash, (ii)
securities of the acquiring corporation which may be immediately sold to the
public without registration under the 1933 Act, or (iii) securities of the
acquiring corporation which the acquiring corporation has agreed to register
within ninety (90) days of completion of the transaction for resale to the
public pursuant to the 1933 Act.
12. Miscellaneous.
-------------
(a) No Inconsistent or Senior Agreements. The Company will not
------------------------------------
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Holders in this Agreement. The
Company will not hereafter enter into any agreement with respect to its
securities which confers upon any party any registration rights that would
pre-empt the registration rights granted pursuant hereto
(b) Remedies. Each Holder, in addition to being entitled to exercise
--------
all rights granted by law, including recovery of damages, will be entitled
to specific performance
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of its rights under this Agreement. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason
of a breach by it of the provisions of this Agreement and hereby agrees to
waive (to the extent permitted by law) the defense in any action for
specific performance that a remedy of law would be adequate.
(c) Amendments and Waivers. The provisions of this Agreement 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 at least a majority of the
Registrable Stock then outstanding affected by such amendment,
modification, supplement, waiver or departure.
(d) Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties hereto. Nothing in this Agreement, express or implied, is intended
to confer upon any Person other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this
Agreement.
(e) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal laws of the State of Delaware applicable to
contracts made and to be performed wholly within that state, without regard
to the conflict of law rules thereof.
(f) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(g) Headings. The headings in this Agreement are used for convenience
--------
of reference only and are not to be considered in construing or
interpreting this Agreement.
(h) Notices. Any notice required or permitted under this Agreement
-------
shall be given in writing and shall be delivered in person or by telecopy
or by overnight courier guaranteeing no later than second business day
delivery, directed to (i) the Company at the address set forth below its
signature hereof or (ii) a Holder at the address of the Administrator set
forth below its signature hereof. Any party may change its address for
notice by giving ten (10) days advance written notice to the other parties.
Every notice or other communication hereunder shall be deemed to have been
duly given or served on the date on which personally delivered, or on the
date actually received, if sent by telecopy or overnight courier service,
with receipt acknowledged.
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(i) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all of the rights and
privileges of the Holders shall be enforceable to the fullest extent
permitted by law.
(j) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings other than those set
forth or referred to herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
(k) Enforceability. This Agreement shall remain in full force and
--------------
effect notwithstanding any breach or purported breach of, or relating to,
the Investor Agreement.
(l) Recitals. The recitals are hereby incorporated in the Agreement as
--------
if fully set forth herein.
(m) Attorneys Fees. If any action is necessary to enforce or interpret
--------------
the terms of this agreement, the prevailing party shall be entitled to
reasonable attorneys' fees and costs, in addition to any other relief to
which he is or may be entitled. This provision shall be construed as
applicable to the entire agreement.
(n) Arbitration. All disputes, claims, and/or requests for specific
-----------
contractual performance, or other equitable relief, or damages or any other
matters in question between the parties arising out of this Agreement shall
be submitted for arbitration, provided that the parties have first made a
good faith effort to resolve such matters together. Demand shall be made to
the American Arbitration Association ("AAA") and shall be conducted in New
York, New York by a panel of three (3) arbitrators. The Shareholder and the
Company shall each choose one (1) panel member from a panel of person
having experience with and knowledge of the purchase and sale of
securities. The third member shall be an independent party, chosen by the
first two members. At least one member of the panel must have a legal
background. Arbitration shall be in accordance with the commercial rules of
the AAA. The Award of the Arbitrators shall be final and judgement may be
entered upon it in any court having jurisdiction thereof, and the
prevailing party shall be entitled to costs and reasonable attorneys' fees
arising out of Arbitration.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written hereinabove.
APPLIED VOICE RECOGNITION, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: XXXXXXX X. XXXXXXXX
Title: Chairman & C.E.O.
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
L & H INVESTMENT COMPANY N.V.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
C.V.B.A. Xxxxxx Xxxxx, Director
And By: /s/ Xxxxxxx Vanderhooydonck
---------------------------------
C.V.B.A.Xxxxxxx Vanderhooydonck,
Director
Xxxx-Xxxxxxxxxxxxxx 0
0000 Xxxxx
Xxxxxxx
Telephone: 000-00-0-000-0000
Telecopier: 011-32-5-722-9545
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
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