Exhibit 10.10
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated April 9,
2002, is by and between PC-EPhone, Inc., a Nevada corporation (the "Company"),
and Process Control (Holdings) Limited, a company organized under the laws of
the Republic of Ireland (the "Holder")
WHEREAS, the Company, its Subsidiaries and the Holder are party to that
certain Credit Agreement, dated as of the date hereof (the "Credit Agreement"),
whereby the Company is issuing to the Holder that certain Convertible Promissory
Note, dated the date hereof (the "Note"), in the maximum principal amount of
$480,000; and
WHEREAS, the Note is convertible at the option of the Holder upon or
after and during the continuance of any Event of Default, or after and during
the continuance of a Default pursuant to Section 7.1(c) of the Credit Agreement,
into shares of the Company's common stock, par value $.001 per share (the
"Common Stock"); and
WHEREAS, the Company has agreed to grant the Holder certain
registration rights in respect of any shares issued or issuable upon conversion
of the Note.
NOW, THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Definitions: Capitalized terms not otherwise defined herein have
the meanings given to such terms in the Credit Agreement
2. Registration Rights.
2.1. Demand Registrations. Upon or at any time, or from time to
time, after and during the continuance of any Event of Default, or
after and during the continuance of a Default pursuant to Section
7.1(c) of the Credit Agreement, the Company shall, upon the
written demand of the Holder, use its best efforts to effect the
registration (a "Demand Registration") under the Securities Act of
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such number of shares of Common Stock issuable upon conversion of
the Note ("Registration Shares") then beneficially owned by the
Holder as shall be indicated in a written demand sent to the
Company by the Holder; provided that, if a Demand Registration is
initiated by the Holder, and the Company (or any other stockholder
of the Company with registration rights) then wishes to offer any
of its securities in connection with the registration, no such
securities may be offered by the Company or any other such
stockholder unless the managing underwriters advise the Company in
writing that in their opinion the number of securities requested
to be included in the Demand Registration does not exceed the
number which can efficiently be sold in the offering. Upon receipt
of a written demand under this Section 2.1, the Company shall
expeditiously effect the registration under the Securities Act of
the Registration Shares and use its best efforts to have such
registration become and remain effective as provided in Section
2.8. The Holder shall have the right to select the underwriters
for a Demand Registration, subject to the approval of such
selection by the Company (which approval shall not be unreasonably
withheld).
2.2. Piggyback Registrations. (a) Upon or at any time, or from
time to time, after and during the continuance of an Event of
Default, or after and during the continuance of a Default pursuant
to Section 7.1(c) of the Credit Agreement, if the Company proposes
to register any of its equity securities under the Securities Act
for sale for cash (otherwise than in connection with the
registration of securities issuable pursuant to an employee stock
option, stock purchase or similar plan or pursuant to a merger,
exchange offer or a transaction of the type specified in Rule
145(a) under the Securities Act), the Company shall give the
Holder notice of such proposed registration at least 30 days prior
to the filing of a registration statement. At the written request
of the Holder delivered to the Company within 20 days after the
receipt of the notice from the Company, which request shall state
the number of Registration Shares that the Holder wishes to sell
or distribute publicly under the registration statement proposed
to be filed by the Company, the Company shall use its best efforts
to register under the Securities Act such Registration Shares, and
to cause such registration (a "Piggyback Registration") to become
and remain effective as provided in Section 2.8.
(b) If a Piggyback Registration relates to an
underwritten offering by the Company, and the managing
underwriters thereof advise the Company in writing that in their
opinion the number of securities requested to be included in the
registration exceeds the number which can be sold in the
offering, the Company may exclude from the registration all or
any Registration Shares that the Holder proposes to sell on a pro
rata basis by reference to the total number of Registration
Shares requested to be included by the Holder.
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(c) If a Piggyback Registration is an underwritten
secondary registration on behalf of holders of the Company's
securities who have exercised demand registration rights and the
managing underwriters thereof advise the Company in writing that
in their opinion the number of securities requested to be
included in the registration exceeds the number which can be sold
in the offering, the Company shall first include in the
registration the securities that all holders of Company
securities propose to sell in proportion to the number of
securities each proposes to sell. In the event that all
Registration Shares that the Holder desires to sell are included
in such offering, and Company then desires to participate in such
a registration of Securities, the Company shall include in the
registration only such number of securities the Company proposes
to sell as the managing underwriter may permit.
2.3. Indemnification by the Company. In the event of any
registration of any Registration Shares of the Holder under the
Securities Act, the Company shall, and hereby does, indemnify and
hold harmless the Holder, its directors and officers, each other
Person who participates as an underwriter in the offering or sale
of such Registration Shares and each other Person, if any, who
controls such party or any such underwriter within the meaning of
Section 15 of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which such party or
any such director or officer or underwriter or controlling Person
may become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any
registration statement under which the Registration Shares were
registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein in light of
the circumstances in which they were made not misleading, and the
Company shall reimburse such party and each such director,
officer, underwriter and controlling Person for any legal or any
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that the
Company shall not be liable in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
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alleged omission made in such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written
information about such party as a stockholder of the Company
furnished to the Company through an instrument duly executed by
such party specifically stating it is for use in the preparation
thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such
party or any such director, officer, controlling Person or
underwriter and shall survive any transfer of the Registration
Shares.
2.4. Indemnification by Holder. The Company may require, as a
condition to including any Registration Shares of the Holder in
any registration statement filed pursuant to Section 2.1 or 2.2,
that the Company shall have received an undertaking satisfactory
to it from the Holder to indemnify and hold harmless (in the same
manner and to the same extent as set forth in section 2.3) the
Company, each director of the Company, each officer of the
Company signing such registration statement, each Person who
participates as an underwriter in the offering or sale of such
Registration Shares and each other Person, if any, who controls
the Company or any such underwriter within the meaning of Section
15 of the Securities Act with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from
such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein or any
amendment or supplement thereto, if such untrue statement or
alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information about
the Holder as a stockholder of the Company furnished to the
Company through an instrument duly executed by the Holder
specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such
indemnity shall remain in full force and effect, regardless of
any investigation made by or an behalf of the Company or any such
director, officer or controlling Person and shall survive the
transfer by the seller of the securities of the Company being
registered.
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2.5. Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in Section 2.3 or 2.4,
such indemnified party will, if a claim in respect thereof is to
be made against an indemnifying party, give notice to the latter
of the commencement of such action; provided, however, that the
failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its
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obligations under Section 2.3 or 2.4, except to the extent that
the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have
defenses not available to the indemnifying party in respect of
such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs
of investigation. No indemnifying party shall be liable for any
settlement of any action or proceeding effected without its
written consent. No indemnifying party shall, without the consent
of the indemnified party, 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 to such claim or litigation.
2.6. Indemnification Payments. The indemnification required by
Sections 2.3 and 2.4 hereof shall be made by periodic payments of
the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage
or liability is incurred.
2.7. Adjustments Affecting Registration Shares. The Company shall
not effect or permit to occur any combination, subdivision or
other recapitalization of any of its securities that would (i)
materially adversely affect the ability of the Holder to include
its Registration Shares, or reduce the number of Registration
Shares that the Holder would otherwise be entitled to include
pursuant to this Agreement, in any registration of securities of
the Company contemplated by this Agreement or (ii) materially
adversely affect the marketability of such Registration Shares
under any such registration.
2.8. Registration Covenants of the Company. In the event that any
Registration Shares are to be registered pursuant to Section 2.1
or 2.2, the Company covenants and agrees that it shall use its
best efforts to effect the registration and cooperate in the sale
of the Registration Shares to be registered and shall as
expeditiously as possible:
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(a) (i) within 60 days prepare and file with the SEC
a registration statement with respect to the Registration Shares
(as well as any necessary amendments or supplements thereto) (a
"Registration Statement") and (ii) use its best efforts to cause
the Registration Statement to become effective; provided,
however, that the Company may extend such 60 day period for not
more than an additional 60 days if (A) such delay would relieve
the Company of the obligation to include any interim financial
statements in the Registration Statement or (B) the Company would
be required to disclose in the Registration Statement any
material nonpublic information and the Company concludes that the
disclosure of such information would be inadvisable at that time;
(b) prior to the filing described in clause (a),
furnish to the Holder copies of the Registration Statement and
any amendments or supplements thereto and any prospectus forming
a part thereof, which documents shall be subject to the review of
counsel for the Holder (but not approval of such counsel except
with respect to any statement in the Registration Statement which
relates to the Holder);
(c) notify the Holder, promptly after the Company
shall receive notice thereof, of the time when the Registration
Statement becomes effective or when any amendment or supplement
or any prospectus forming a part of the Registration Statement
has been filed;
(d) notify the Holder promptly of any request by the
SEC for the amending or supplementing of the Registration
Statement or prospectus or for additional information;
(e) advise the Holder after the Company shall
receive notice or otherwise obtain knowledge of the issuance of
any order by the SEC suspending the effectiveness of the
Registration Statement or any amendment thereto or of the
initiation or threatening of any proceeding for that purpose and
(B) promptly use its best efforts to prevent the issuance of any
stop order or to obtain its withdrawal promptly if a stop order
should be issued;
(f) prepare and file with the SEC such amendments
and supplements to the Registration Statement and the prospectus
forming a part thereof as may be necessary to keep the
Registration Statement effective for a period of time necessary
to permit the Holder to dispose of all its Registration Shares
and (B) comply with the provisions of the Securities Act with
respect to the disposition of all Registration Shares covered by
the Registration Statement during such period in accordance with
the intended methods of disposition by the Holder set forth in
the Registration Statement;
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(g) furnish to the Holder such number of copies of
the Registration Statement, each amendment and supplement
thereto, the prospectus included in the Registration Statement
(including any preliminary prospectus) and such other documents
as the Holder may reasonably request in order to facilitate the
disposition of the Registration Shares owned by the Holder;
(h) use its best efforts to register or qualify such
Registration Shares under such other securities or blue sky laws
of such jurisdictions as determined by the underwriters after
consultation with the Company and the Holder and do any and all
other acts and things which may be reasonably necessary or
advisable to enable the Holder to consummate the disposition in
such jurisdictions of the Registration Shares;
(i) notify the Holder, at any time when a prospectus
relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the
Registration Statement would 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 not
misleading, and, at the request of the Holder, prepare a
supplement or amendment to the Registration Statement so that the
Registration Statement shall not, to the Company's knowledge,
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 not misleading;
(j) if the Registration Shares are securities of a
class then listed on a securities exchange, NASDAQ or quoted on
the OTC Bulletin Board, cause the Registration Shares to be so
listed or quoted; and if the Registration Shares are securities
of a class not then listed on a securities exchange or NASDAQ or
quoted on the OTC Bulletin Board, use its best efforts to
facilitate the listing of the Registration Shares on a securities
exchange or NASDAQ or the quotation of the Registration Shares on
the OTC Bulletin Board;
(k) provide a transfer agent and registrar, which
may be a single entity, for all the Registration Shares not later
than the effective date of the Registration Statement;
(l) enter into such customary agreements (including
an underwriting agreement in customary form) and take all such
other action, if any, as the Holder or the underwriters shall
reasonably request in order to expedite or facilitate the
disposition of the Registration Shares;
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(m) make available for inspection by the Holder, any
underwriter participating in any disposition pursuant to the
Registration Statement and any attorney, accountant or other
agent retained by the Holder or any such underwriter all
financial and other records, pertinent corporate documents and
properties of the Company reasonably requested by the Holder and
such Persons and (B) cause the Company's officers, directors and
employees to supply all information reasonably requested by the
Holder or any such underwriter, attorney, accountant or agent in
connection with the Registration Statement;
(n) use its best efforts to cause the Registration
Shares covered by the Registration Statement to be registered
with or approved by such other Governmental Authorities as may be
necessary to enable the Holder to consummate the disposition of
such Registration Shares; and
(o) obtain a comfort letter or letters from the
Company's independent public accountants in customary form and
covering such matters of the type customarily covered by comfort
letters as the Holder may reasonably request.
2.9. Expenses. The Company shall pay, on behalf of the Holder,
all the expenses in connection with any Demand Registration or
Piggyback Registration, including all registration, filing and
regulatory review fees, all fees and expenses of complying with
securities or blue sky laws, all listing fees, all word
processing, duplicating and printing expenses, all messenger and
delivery expenses, the fees and disbursements of counsel for the
Company and of its independent public accountants (including the
expenses of comfort letters required by or incident to such
performance and compliance), the reasonable fees and
disbursements of any counsel retained by the Holder, any fees and
disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding any underwriting discounts
and commissions and transfer taxes, if any. In any registration,
the Holder shall pay for its own underwriting discounts and
commissions and transfer taxes.
2.10. Assignment of Registration Rights. The rights of the Holder
under this Agreement shall be transferable to anyone to whom the
Holder transfers the Note or any Registration Shares (other than
in a sale exempt from registration under the Securities Act by
reason of Rule 144 under the Securities Act or a Demand
Registration or a Piggyback Registration).
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2.11. No Preferential Registration. Notwithstanding any other
provision of this Agreement, if the Company grants registration
rights with respect to equity securities to any other Person on
terms that the Holder reasonably considers preferential to the
terms of this Section 2, the Holder shall be entitled to
registration rights with such preferential terms.
3. General.
3.1. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF).
3.2. Interpretation. If any term or provision of this Agreement
shall be held invalid, illegal or unenforceable, the validity of
all other terms and provisions hereof shall in no way be affected
thereby.
3.3. Amendments, Waivers and Consent. None of the terms or
provisions of this Agreement may be waived, altered, modified or
amended orally, but only by an agreement in writing signed by the
Company or any successor or assign of the Company and the Holder
or any successor or assign. No failure to exercise, nor any delay
in exercising, on the part of the Holder, any right, power or
privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the
Holder of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Holder
would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative and are not exclusive of
any rights or remedies provided by law.
3.4. Successors and Assigns; Transferability. This Agreement
shall be binding upon the Company and its successor and assigns
and shall inure to the benefit of the Holder and its successors
and assigns (which shall include transferees), except that the
Company may not assign or otherwise transfer any of its rights or
obligations under this Agreement.
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3.5. Notices. All notices, requests, consents and demands shall
be made in the manner and to the addresses specified in the
Credit Agreement.
3.6. Non-Business Days. If any date that may at any time be
specified in this Agreement as a date for the taking of any
action under this Agreement shall fall on a day that is not a
Business Day, then the date for the taking of that action shall
be the next subsequent Business Day.
3.7. Survival. The provisions of this Agreement shall continue in
full force and effect until all Registration Shares have been
sold by the Holder (or its successors and assigns) in a sale
exempt from registration under the Securities Act by reason of
Rule 144 under the Securities Act or a Demand Registration or a
Piggyback Registration.
3.8. Waiver of Jury Trial; Consent to Jurisdiction, etc. IN THE
EVENT OF ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, THE COMPANY WAIVES (TO THE EXTENT PERMITTED BY LAW)
THE RIGHT TO A TRIAL BY JURY, ALL RIGHTS OF SETOFF AND RIGHTS TO
INTERPOSE COUNTERCLAIMS AND CROSS-CLAIMS (UNLESS SUCH SETOFF,
COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF ANY
APPLICABLE FEDERAL OR STATE PROCEDURAL LAWS, BE INTERPOSED,
PLEADED OR ALLEGED IN ANY OTHER ACTION) AND THE DEFENSES OF FORUM
NON CONVENIENS OR IMPROPER VENUE. The Company hereby irrevocably
consents to the non-exclusive jurisdiction of the courts of the
State of New York and of any Federal court located in the City of
New York in connection with any legal action or proceeding
arising out of or relating to this Agreement. If any term or
provision of this Agreement shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions
herein shall in no way be affected thereby.
3.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and
all of which together shall constitute but one agreement.
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IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement as of the date first above written.
PC-EPHONE, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------
Name: Xxxxx Xxxxxxx
Title: CEO, President, Director
PROCESS CONTROL (HOLDINGS) LIMITED
By:/s/ Xxxxx Xxxxx
---------------------------
Name: Xxxxx Xxxxx
Title: Director
