EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into this 7th day of January, 2000, to be effective as of the 20th day of
December, 1999, by and between APPLIED VOICE RECOGNITION, INC., a Delaware
corporation doing business as x-XXXX.xxx (the "Company") and XXXXXXXX MEDICAL
TRANSCRIPTION USA, INC., a Delaware company (the "Investor").
R E C I T A L S:
---------------
WHEREAS, on even date herewith, the Investor, the Company and others have
executed that certain Asset Purchase Agreement (the "Purchase Agreement"),
pursuant to which the Company and certain of its subsidiaries have agreed to
transfer certain of their assets to the Investor;
WHEREAS, pursuant to the terms of the Purchase Agreement, the Company and
the Investor have executed that certain Warrant Agreement of even date herewith
(the "Warrant Agreement"), which Warrant Agreement grants to the Investor
warrants (the "Warrants") to purchase 800,000 share shares of common stock (the
"Common Stock") of the Company; and
WHEREAS, the Company desires to grant to the Investor certain registration
rights relating to the shares of Common Stock issuable upon exercise of all or a
portion of the Warrants (the "Shares"), and the Investor 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 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.
(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) the Shares, (ii) any shares of Common Stock issued to the Holder
by way of a stock split, reorganization, merger or consolidation, and (iii)
any Common Stock issued to the Holder as a dividend on the Shares. For
purposes of this Agreement, any Registrable
Stock shall cease to be Registrable Stock when (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.
(d) The term "Holder" shall mean the Investor or any transferee or
assignee thereof to whom the rights under this Agreement are assigned in
accordance with Section 10 hereof, provided that the Investor or such
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.
(h) The term "Requesting Holder" shall mean a Holder or Holders of in
the aggregate at least a majority 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
(a) Commencing immediately upon 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 ten (10)
days thereafter notify in writing all other Holders of Registrable Stock of
such request, and (y) use its best efforts to cause to be registered under
the 1933 Act all Registrable Stock that the Requesting Holders and such
other Holders have, within forty-five (45) days after the Company has given
such notice, requested be registered.
2
(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 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 provided further, that no 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 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 a 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 the event of
such limitation of the number of shares of Registrable Stock to be underwritten,
the Holders shall be entitled to an additional demand registration pursuant to
this Section 2. 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 dte of, a registration statement
pertaining to a public offering of securities for the account of the Company;
provided, that the Company shall actively employ in good faith all reasonable
efforts to cause such registration statement to become effective; and
3
provided further, that the Company's estimate of the date of filing such
registration statement shall be made in good faith.
(e) Subject to the additional terms contained herein, the Requesting
Holders shall be entitled to an unlimited number of registrations on Form
S-3, but shall only be allowed three demands that utilize forms other than
Form S-3. 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 ot this Section 2 shall
not be deemed to have been effected for purposes of this Section 2(e),
unless (i) it has been 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 shares of Registrable Stock to be underwritten has been
required pursuant to Section 2(c) hereof.
3. Obligations of the Company. Subject to the provisions of Section 2(e)
hereof, whenever required under Section 2 hereof to use its best 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 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 best efforts to cause such registration
statement to become effective as promptly as practicable thereafter;
provided that before filing a 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 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;
4
(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 best 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 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 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 best 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 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 under which they were 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 an 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
5
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 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;
(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;
(j) otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, but not later than eighteen (18) months after
the effective date of the registration statement, an earnings statement covering
the period of at least twelve (12) months beginning with the first full month
after the effective date of such registration statement, which earnings
statements shall satisfy the provisions of Section 11(a) of the 1933 Act; and
(k) use its best efforts to cause all such Registrable Stock to be listed
on The Nasdaq Small Cap Market and/or any other securities exchange on which
similar securities issued by the Company are then listed or traded.
6
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 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 immediately after the date of
Closing (as defined in the Investor Agreement), 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 shall use its
best 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, 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.
7
5. Holdback Agreement - Restrictions on Public Sale by Holder.
(a) To the extent not inconsistent with applicable law, each Holder
whose Registrable Stock is included in a registration statement 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 ninety (90) day period beginning on, the effective date of such
registration statement (except as part of the registration), if and to the
extent requested by the Company in the case of a nonunderwritten public
offering or if and to the extent requested by the managing underwriter or
underwriters in the case of an underwritten public offering.
(b) Restrictions on Public Sale by the Company and Others. The Company
agrees (i) not to effect any public sale or distribution of any securities
similar to those being registered, or any securities convertible into or
exchangeable or exercisable for such securities, during the fourteen (14)
days prior to, and during the ninety (90) day period beginning on, the
effective date of any registration statement in which Holders are
participating (except as part of such registration), if and to the extent
requested by the Holders in the case of a non-underwritten public offering
or if and to the extent requested by the managing underwriter or
underwriters in the case of an underwritten public offering; and (ii) that
any agreement entered into after the date of this Agreement pursuant to
which the Company issues or agrees to issue any securities convertible into
or exchangeable or exercisable for such securities (other than pursuant to
an effective registration statement) shall contain a provision under which
holders of such securities agree not to effect any public sale or
distribution of any such securities during the periods described in (i)
above, in each case including a sale pursuant to Rule 144 under the 1933
Act.
6. Expenses of Registration. The Company shall bear all expenses incurred
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, and 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.
7. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify,
to 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
8
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
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 reasonable 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 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. Notwithstanding the foregoing, the liability of each such Holder
under this Section 7(b) shall be limited to an amount equal to the initial
public offering price of the Registrable Stock sold by such Holder, unless such
liability arises out of or is based on willful misconduct of such Holder.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
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
9
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 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 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
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.
10
9. Rule 144. The Company covenants that it will file the reports required
to be filed by it under the 1933 Act and the Securities Exchange Act of 1934, as
amended, and the rules and regulations adopted by the Commission thereunder; and
it will take such further action as any Holder may reasonably request, all to
the extent required from time to time to enable such Holder to sell Registrable
Stock without registration under the 1933 Act within the limitation of the
exemptions provided by (a) Rule 144 under the 1933 Act, as such Rule may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
10. Transfer of Registration Rights. The registration rights of any Holder
under this Agreement with respect to any Registrable Stock may be transferred to
any transferee of such Registrable Stock; provided that such transfer may
otherwise be effected in accordance with applicable securities laws; provided
further, that the 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 writing, in form and substance satisfactory to the Company, to be
bound as a Holder by the provisions of this Agreement; 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 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.
(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 of its rights under this Agreement. The Company
agrees that monetary damages would
11
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 Investor 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.
(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.
12
(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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
13
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
----------------------------
Xxxxxxx X. Xxxxxxxx
Chairman
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
XXXXXXXX MEDICAL TRANSCRIPTION USA, INC.
By: /s/ XXXX XXXXXXXXX
----------------------------
Name: Xxxx Xxxxxxxxx
----------------------------
Title: President of Finance
----------------------------
c/o Lernout & Hauspie Speech Products USA
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Telephone: ( )________________
Telecopier: ( )________________
14
