EXHIBIT 99.2
NETVOICE TECHNOLOGIES CORPORATION
AND
THE PARTIES LISTED ON
THE SIGNATURE PAGES HERETO
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into on and as of June 30, 2000 by and among NetVoice Technologies
Corporation, a Nevada corporation (the "COMPANY"), and the parties listed
on the signature pages hereto (each individually a "PARTY" and
collectively, the "PARTIES.")
WHEREAS, simultaneously with the execution of this Agreement, the
Company has entered into a Securities Purchase Agreement of even date
herewith, as it may be amended from time to time (the "SECURITIES PURCHASE
AGREEMENT") among the Company and the Holders (as hereinafter defined)
pursuant to which the Company is issuing the Series A Shares (as
hereinafter defined); and
WHEREAS, it is a condition precedent to the obligation of the
Holders (as hereinafter defined) pursuant to the Securities Purchase
Agreement to purchase the Series A Shares that the Holders be granted the
registration rights provided for herein.
NOW THEREFORE, the Company and the Parties hereto agree as follows:
1. DEFINITIONS
In addition to the terms defined elsewhere herein, when used herein
the following terms shall have the meanings indicated:
"COMMISSION" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"COMMON SHARES" shall mean (i) the shares of Common Stock owned of record
by the Holders and (ii) any Common Stock from time to time acquired by the
Holders after the date hereof (in each case subject to adjustment for stock
splits, reverse stock splits, stock dividends, or other similar
transactions involving Common Stock).
"COMMON STOCK" shall mean the common stock, par value U.S. $0.001 per
share, of the Company, and any capital stock of the Company into which such
Common Stock thereafter may be changed.
"COMMON STOCK EQUIVALENTS" shall mean (without duplication with any other
Common Stock or Common Stock Equivalents) rights, warrants, options (other
than any options issued pursuant to the Company's stock option plans),
convertible securities (including the Series A Shares) or convertible
indebtedness, exchangeable securities or exchangeable indebtedness, or
other rights, exercisable for or convertible or exchangeable into, directly
or indirectly, Common Stock, whether at the time or upon the occurrence of
some future event.
"HOLDERS" shall mean the Persons who purchase Series A Shares pursuant to
the Securities Purchase Agreement, and their respective transferees.
"MATERIAL ADVERSE EFFECT" shall have the meaning set forth in Section 3(a).
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"PERSON" shall mean a natural person, corporation, general partnership,
limited partnership, limited liability company, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust,
business trust or other organization, whether or not a legal entity, or a
government or agency or political subdivision thereof.
"REGISTRABLE SHARES" shall mean at any time (i) any Common Shares and (ii)
any shares of Common Stock issuable upon exercise or conversion by the
Holders of any Common Stock Equivalent; PROVIDED, HOWEVER, that Registrable
Shares shall not include any shares (x) the sale of which has been
registered pursuant to the Securities Act and which shares have been sold
pursuant to such registration or (y) which have been sold to the public
pursuant to Rule 144 (or any other similar provision then in force)
promulgated under the Securities Act ("Rule 144").
"SECURITIES ACT" shall mean the United States Securities Act of 1933, as
amended.
"SECURITIES EXCHANGE ACT" shall mean the United States Securities Exchange
Act of 1934, as amended.
"SERIES A SHARES" shall mean shares of Series A Convertible Preferred
Stock, par value $0.001 per share, of the Company.
"STOCKHOLDERS' AGREEMENT" shall mean the Stockholders' Agreement dated as
of the date hereof among the Company and the other persons named therein.
2. DEMAND REGISTRATION
(a) REQUEST FOR REGISTRATION. At any time after six (6) months from the
date hereof, a Holder may make a written request to the Company (a
"DEMAND REQUEST"), for the registration under the Securities Act of
all or part of its or their Registrable Shares (a "DEMAND
REGISTRATION") so as to permit a public offering and sale of such
Registrable Shares for up to nine (9) consecutive months; PROVIDED,
HOWEVER, that such six (6) month waiting period shall not be
applicable in the case of short-form registrations on Form S-3 or any
substitute form or forms adopted by the Commission ("SHORT-FORM
REGISTRATIONS"). Such request shall specify the number of Registrable
Shares proposed to be sold and the intended method of disposition
thereof. Upon receipt of such request, the Company shall promptly (but
in any event within ten (10) days after receipt) give written notice
of such registration request to all Holders. Such Holders shall have
the right, by giving written notice to the Company within 10 days
after the receipt of notice from the Company, to elect to have
included in such registration all or part of their Registrable Shares
as such Holders may request in such notice of election. Each such
request will also specify the number of Registrable Shares to be
registered and the intended method of disposition thereof. Provided
that (i) Registrable Shares representing at least 20% of the
Registrable Shares then outstanding in the case of a Demand
Registration other than a Short-Form Registration are requested to be
included in such Demand Registration, or (ii) Holders of Registrable
Shares and holders of any other securities of the Company entitled to
inclusion in a Short-Form Registration propose to
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sell Registrable Securities and such other securities (if any) at an
aggregate price to the public (before deduction of any underwriters'
discounts or commissions) of at least $5,000,000, the Company shall
use its best efforts to file the Demand Registration within forty-five
(45) days after receiving a Demand Request (the "REQUIRED FILING
DATE") and shall use its best efforts to cause the same to be declared
effective by the Commission as promptly as practicable after such
filing. Notwithstanding the foregoing, in no event shall the Company
be required to effect more than two (2) Demand Registrations pursuant
to this Section 2(a) (which Demand Registrations shall be at least
nine (9) months apart) other than Short-Form Registrations. Subject
to the foregoing provisions, the Holders may make an unlimited number
of Demand Requests for Short-Form Registrations so long as such Short-
Form Registrations are at least twelve (12) months apart. Notwithstanding
the foregoing, if all Registrable Shares requested to be included in a
Demand Registration are not included in such Demand Registration due to
the limitations contained in Section 2(d) hereof, such registration shall
not be counted as one of the Demand Registrations permitted hereunder.
(b) EFFECTIVE REGISTRATION AND EXPENSES. A registration will not count as
a Demand Registration until it has become effective (unless all
Holders making or joining such request pursuant to Section 2(a) above
(the "REQUESTING HOLDERS") withdraw all their Registrable Shares, in
which case such demand will count as a Demand Registration unless the
Requesting Holders pay all expenses in connection with such withdrawn
registration), provided that if, after it has become effective, an
offering of Registrable Shares pursuant to a registration is
interfered with by any stop order, injunction, or other order or
requirement of the Commission or other governmental agency or court,
such registration will be deemed not to have been effected.
(c) SELECTION OF UNDERWRITERS. If the Holders of a majority of the
Registrable Shares to be registered in a Demand Registration so elect,
the offering of Registrable Shares pursuant to a Demand Registration
shall be in the form of an underwritten public offering. The
Requesting Holders who hold a majority of the Registrable Shares to be
registered in the Demand Registration shall be entitled to select the
investment banking firm or firms to manage the underwritten offering,
which selection shall be subject to the Company's approval, not to be
unreasonably withheld.
(d) PRIORITY ON DEMAND REGISTRATIONS. No securities to be sold for the
account of any Person (including the Company and including any other
holder of capital stock of the Company) other than Requesting Holders
shall be included in a Demand Registration unless (i) the managing
underwriter or underwriters shall advise the Company or the Requesting
Holders in writing that the inclusion of such securities will not
materially and adversely affect the price or success of the offering
(a "MATERIAL ADVERSE EFFECT") and (ii) the Holders of not less than a
majority of the Registrable Shares held by the Holders to be covered
by such registration (by numbers of shares of Common Stock of the
Company represented by such Registrable Shares on an as-if-converted
basis) shall have consented in writing to the inclusion of such other
securities; PROVIDED, HOWEVER, that
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such consent required by clause (ii) shall not be required with
respect to the inclusion of securities for the account of members of
the Company's management representing up to 33% of the total dollar
value of securities to be included in the Demand Registration (the
"MANAGEMENT HOLDERS"). Furthermore, and subject to the immediately
preceding sentence, in the event the managing underwriter or
underwriters shall advise the Company or the Requesting Holders that
even after exclusion of all securities of other Persons (other than
the Management Holders) pursuant to the immediately preceding
sentence, the amount of Registrable Shares proposed to be included in
such Demand Registration by Requesting Holders is sufficiently large
to cause a Material Adverse Effect, the Registrable Shares of
Requesting Holders and Management Holders to be included in such
Demand Registration shall be allocated pro rata among the Requesting
Holders and Management Holders on the basis of the number of
Registrable Shares requested to be included in such Demand
Registration by each such Requesting Holder and Management Holder.
(e) DEFERRAL OF FILING. The Company may defer the filing (but not the
preparation) of a registration statement required by this Section 2
until a date not later than ninety (90) days after the Required Filing
Date if at the time the Company receives the Demand Request:
(i) the Company or any of its Subsidiaries are engaged in
confidential negotiations or other confidential business
activities, disclosure of which would be required in such Demand
Registration (but would not be required if such Demand
Registration were not filed), and the Board of Directors of the
Company determines in good faith that such disclosure would be
materially detrimental to the Company and its shareholders. A
deferral of the filing of a registration statement pursuant to
this Section 2(e) shall be lifted, and the requested registration
statement shall be filed forthwith if the negotiations or other
activities are disclosed or terminated. In order to defer the
filing of a registration statement pursuant to this Section
2(e)(i), the Company shall promptly, upon determining to seek
such deferral, deliver to each Requesting Holder a certificate
signed by the Chairman of the Board of the Company stating that
the Company is deferring such filing pursuant to this Section
2(e) and the basis therefor in such detail as the Company
reasonably believes, after consultation with legal counsel, may
be provided without obligating the Company to make such
disclosure to the public generally. Within twenty (20) days after
receiving such certificate, the holders of a majority of the
Registrable Shares held by the Requesting Holders and for which
registration was previously requested may withdraw such request
by giving notice to the Company. If so withdrawn, the Demand
Request shall be deemed not to have been made for all purposes of
this Agreement; or
(ii) the Company is engaged, or has fixed plans to engage within 60
days, in an underwritten primary registration at the time that a
Demand Request is made. Within twenty (20) days after receiving
notification from the Company of such
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underwritten primary registration, the holders of a majority of
the Registrable Shares held by the Requesting Holders and for
which registration was previously requested may withdraw such
request by giving notice to the Company. If so withdrawn, the
Demand Request shall be deemed not to have been made for all
purposes of this Agreement. A deferral of the filing of a
registration statement pursuant to this clause of Section 2(e)
shall be lifted, and the requested registration statement shall
be filed forthwith upon the effectiveness of the Company's
underwritten primary registration.
The Company may defer the filing of a particular registration
statement pursuant to this Section 2(e) only once and the aggregate number
of days in any 12 month period that the Company may defer all registration
statements pursuant to this Section 2(e) shall not exceed 90.
3. PIGGYBACK REGISTRATION
(a) RIGHT TO PIGGYBACK. If the Company proposes to file a registration
statement under the Securities Act with respect to an equity security
of the Company for its own account or for the account of any of its
security holders (other than pursuant to Section 2 and other than a
registration statement on Form S-4 or S-8 (or any substitute forms
adopted by the Commission)), including in connection with the initial
public offering of Common Stock, then the Company shall give prompt
written notice to the Holders of its intention to effect such a
registration (which notice shall be given not less than thirty (30)
days prior to the anticipated filing date of such registration
statement) and such notice shall offer the Holders who are holders of
Registrable Shares the opportunity to have any or all of their
Registrable Shares included in such registration statement, subject to
the limitations contained in Section 3(b) hereof. The Holders shall
advise the Company in writing within twenty (20) days after the date
of receipt of such notice from the Company of such Holder's desire to
have their Registrable Shares registered under this Section 3. Subject
to Section 3(b) below, the Company shall include in such registration
statement all such Registrable Shares so requested to be included
therein pursuant to the piggyback rights granted under this Section
3(a); PROVIDED, HOWEVER, that the Company may at any time withdraw or
cease proceeding with any such registration if it shall at the same
time withdraw or cease proceeding with the registration of all other
Common Shares originally proposed to be registered. The Company shall
be entitled to select the investment banking firm or firms to manage
any underwritten offering contemplated by this Section 3(a).
(b) PRIORITY ON REGISTRATIONS. If any managing underwriter advises the
Company in writing that including all the shares of Common Stock
requested to be included in the registration by all Persons (including
the Company) would have a Material Adverse Effect, subject to the
immediately following sentence, the Company will be obligated to
include in such registration only Common Shares in the following
priority: (i) FIRST, if the registration statement has been proposed
to be filed by the Company for its own account, any and all Common
Stock for sale by the Company, and (ii) SECOND, pro rata among any
security
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holders of the Company, including members of management of the
Company, holders other than Holders of Registrable Shares ("OTHER
HOLDERS") and the Holders of the Registrable Shares requesting to be
included in the registration based on the number of shares of Common
Stock underlying, on an as-if-converted basis, the securities and
Registrable Shares requested to be included in such registration by
each such Other Holders and Holders, and (iii) THIRD, in the event
that all Common Stock for sale by the Company and all Registrable
Shares requested to be included in such registration statement by the
Holders of Registrable Shares have been included in such registration,
any other Common Stock requested to be included pursuant to any other
registration rights that may hereafter be and to the extent granted by
the Company (pro rata on the basis of the total number of shares of
Common Stock that each holder of such shares has requested to be
registered).
4. MISCELLANEOUS REGISTRATION RIGHTS PROVISIONS
(a) HOLDBACK AGREEMENT. (i) To the extent reasonably requested by the
managing underwriter, each of the Holders agrees not to effect any
public sale or distribution (including pursuant to Rule 144
promulgated under the Securities Act) of any Common Shares or Common
Share Equivalents during the seven days prior to and the 180-day
period beginning on the effective date of any underwritten
registration (except as part of such underwritten registration),
unless (A) the underwriters managing the registered public offering
otherwise agree, (B) the registration is pursuant to a registration on
Form S-4 or Form S-8, (C) the managing underwriter determines not to
proceed with the offering or (D) the Company withdraws the related
registration statement.
(ii) The Company agrees (A) not to effect any public sale or distribution
of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days
prior to and during the 180-day period beginning on the effective date
of any underwritten registration (except as part of such underwritten
registration or pursuant to a registration on Form S-4 or Form S-8),
unless the underwriters managing the registered public offering
otherwise agree, and (B) to use its best efforts to cause each officer
and director of the Company or any of its subsidiaries, each holder of
Registrable Shares and each other holder of 5% or more of its equity
securities (or any securities convertible into or exchangeable for
such securities), on a fully diluted basis purchased from the Company
at any time (other than in a registered public offering) to agree not
to effect any public sale or distribution (including sales pursuant to
Rule 144) of any such securities during such period (except as part of
such underwritten registration, if otherwise permitted), unless the
underwriters managing the registered public offering otherwise agree.
(iii) Notwithstanding anything herein to the contrary, the Company
shall not be required to file a registration statement fewer than
180 days after filing any other registration statement other than
a registration statement on Form S-4 or Form S-8.
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(b) REGISTRATION PROCEDURES. Whenever the Holders have requested that any
Registrable Shares be registered pursuant to this Agreement, the
Company will use its best efforts to effect the registration and the
sale of such Registrable Shares in accordance with the intended method
of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(i) prepare and, subject to Section 2(e), file with the Commission a
registration statement on any appropriate form under the
Securities Act, with respect to such Registrable Shares and use
its best efforts to cause such registration statement to become
effective at the earliest possible time (provided that before
filing a registration statement or prospectus or any amendments
or supplements thereto, the Company will furnish to the counsel
selected by the holders of a majority of the Registrable Shares
covered by such registration statement copies of all such
documents proposed to be filed);
(ii) prepare and file with the Commission and notify each seller of
such Registrable Shares immediately after the filing of such
amendments, post-effective 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 a period of not less than 90 days, in the case of
a piggyback registration, or 270 days in the case of a Demand
Registration (or such lesser periods as is necessary for the
underwriters in an underwritten offering to sell unsold
allotments) and comply with the provisions of the Securities 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;
(iii) furnish to each seller of Registrable Shares and the
underwriters of the securities being registered such number
of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits),
the prospectus included in such registration statement
(including each preliminary and summary prospectus) and any
other prospectus filed under Rule 424 or Rule 430-A under
the Securities Act, and such other documents as such seller
or underwriters may reasonably request in order to
facilitate the disposition of the Registrable Shares owned
by such seller or the sale of such securities by such
underwriters;
(iv) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such
jurisdictions as the managing underwriter and each seller
reasonably requests, to keep such registration or qualification
in effect for so long as such registration statement remains in
effect, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to
consummate the disposition of the Registrable Shares owned by
such seller in such jurisdictions (PROVIDED, HOWEVER, that the
Company will not be
8
required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (B) consent to general
service of process in any such jurisdiction or (C) subject
itself to any taxation (other than stamp taxes) in any such
jurisdiction);
(v) notify each seller of Registrable Shares promptly after it shall
receive notice thereof, of the time when such registration
statement has become effective;
(vi) notify each seller of Registrable Shares promptly of any request
by the Commission for the amending or supplementing of such
registration statement or prospectus or for additional
information;
(vii) provide a transfer agent and registrar for all Registrable
Shares sold under the registration not later than the
effective date of the registration statement;
(viii) furnish to each Holder participating in the registration a
signed counterpart, addressed to such Holder (a) of an
opinion of counsel as to such matters that are customarily
covered in an opinion of counsel delivered to an
underwriter, including that the registration is valid and
effective and such other matters as such Holder may
reasonably request and (b) of a "cold comfort" letter signed
by the independent public accountants who have issued a
report on the Company's financial statements included in the
registration statement, covering substantially the same
matters with respect to such registration statement (and the
prospectus included therein) and, in the case of such
accountant's letter, with respect to events subsequent to
the date of such financial statements, as are customarily
delivered to underwriters in underwritten public offerings
of securities and such other financial matters as such
Holder may reasonably request;
(ix) advise each seller of such Registrable Shares, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance
of any stop order by the Commission suspending the effectiveness
of such registration statement or of any order suspending or
preventing the use of any related prospectus or suspending the
qualification of any common stock included in such registration
statement for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose and promptly use
reasonable best efforts to prevent the issuance of any stop order
or to obtain its withdrawal if such stop order should be issued;
(x) notify each seller of Registrable Shares covered by such
registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act,
upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration
statement, as then in effect, includes 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 in the light of the circumstances under which they
were made, and at the request of any such seller promptly
prepare, file with the Commission and to
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furnish such seller a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement
of a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made;
(xi) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning
with the first full calendar month after the effective date of
such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act,
and Rule 158 promulgated thereunder and will furnish to each such
seller at least two business days prior to the filing thereof a
copy of any amendment or supplement to such registration
statement or prospectus and shall not file any thereof to which
any such seller shall have reasonably objected on the grounds
that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or of the
rules or regulations thereunder;
(xii) use its reasonable best efforts (A) to list all Registrable
Shares covered by such registration statement on any
securities exchange on which similar securities of the
Company are then listed and, if not so listed, to be listed
on the Nasdaq National Market ("NASDAQ MARKET") and, if
listed on the Nasdaq Market, use its reasonable best efforts
to secure designation of all such Registrable Shares covered
by such registration statement as a Nasdaq "National Market
System security" within the meaning of Rule 11Aa2-1 of the
SEC or, failing that, to secure Nasdaq Market authorization
for such Registrable Shares and, without limiting the
generality of the foregoing, to use its reasonable best
efforts to arrange for at least two market makers to
register as such with respect to such Registrable Shares
with the National Association of Securities Dealers;
(xiii) enter into such customary agreements (including underwriting
agreements in customary form) and take such other customary
actions as the holders of Registrable Shares or the
underwriters, if any, shall reasonably request in order to
expedite or facilitate the disposition of such Registrable
Shares, (including, without limitation, effecting a stock
split or a combination of shares);
(xiv) make available for inspection by any seller of Registrable
Shares, 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, all financial and other records, pertinent
corporate documents and properties of the Company, and cause
the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested
by any
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such sellers, underwriter, attorney, accountant or agent in
connection with such registration statement;
(xv) deliver promptly to each Holder participating in an offering who
so requests the file correspondence and memoranda described
below, copies of all correspondence between the Commission and
the Company, its counsel or auditors with respect to the
registration statement and permit each Holder to do such
investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration
statement as it deems reasonably necessary to comply with
applicable securities laws or the rules and regulations of the
National Association of Securities Dealers, Inc. ("NASD"). Such
investigation shall include reasonable access to books, records
and properties and opportunities to discuss the business of the
Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as
any such Holder shall reasonably request;
(xvi) permit any holder of Registrable Shares which holder, in its
sole and exclusive judgment, might be deemed to be an
underwriter or a controlling person of the Company, to
participate in the preparation of such registration or
comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the
reasonable judgment of such holder and its counsel should be
included; and
(xvii) use its best efforts to cause such Registrable Shares
covered by such registration statement to be registered with
or approved by such other governmental agencies or
authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Shares.
If any such registration or comparable statement refers to any holder
by name or otherwise as the holder of any securities of the Company
and if, in its sole and exclusive judgment, such holder is or might be
deemed to be a controlling person of the Company, such holder shall
have the right to require (i) the insertion therein of language, in
form and substance satisfactory to such holder and presented to the
Company in writing, to the effect that the holding by such holder of
such securities is not to be construed as a recommendation by such
holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such holder will
assist in meeting any future financial requirements of the Company, or
(ii) in the event that such reference to such holder by name or
otherwise is not required by the Securities Act or any similar Federal
statute then in force, the deletion of the reference to such holder;
provided that with respect to this clause (ii) such holder shall
furnish to the Company an opinion of counsel to such effect, which
opinion and counsel shall be reasonably satisfactory to the Company.
The Company may require each Holder of Registrable Shares to be
included in such registration statement to promptly furnish in writing
to the Company such information
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regarding the distribution of the Registrable Shares as the Company
may from time to time reasonably request and any such other
information as may be legally required in connection with such
registration.
(c) SUSPENSION OF DISPOSITIONS. Each Holder agrees by acquisition of any
Registrable Shares that, upon receipt of any notice (a "SUSPENSION
NOTICE") from the Company of the happening of any event of the kind
which, in the opinion of the Company, requires the amendment or
supplement of any prospectus, such Holder will forthwith discontinue
disposition of Registrable Shares until such Holder's receipt of the
copies of the supplemented or amended prospectus (which the Company
shall prepare and file as promptly as practicable), or until it is
advised in writing (the "ADVICE") by the Company that the use of the
prospectus may be resumed, and such Holder has received copies of any
additional or supplemental filings which are incorporated by reference
in the prospectus, and, if so directed by the Company, such Holder
will deliver to the Company all copies, other than permanent file
copies then in such Holder's possession, of the prospectus covering
such Registrable Shares current at the time of receipt of such notice.
In the event the Company shall give any such notice, the time period
regarding the effectiveness of registration statements set forth in
Section 4(b)(ii) hereof shall be extended by the number of days during
the period from and including the date of the giving of the Suspension
Notice to and including the date when each seller of Registrable
Shares covered by such registration statement shall have received the
copies of the supplemented or amended prospectus or the Advice.
(d) REGISTRATION EXPENSES. All expenses incident to the Company's
performance of or compliance with this Agreement including, without
limitation, all registration and filing fees, reasonable fees and
expenses of one legal counsel for all Holders of Registrable Shares to
be included in the registration statement, all fees and expenses
associated with filings required to be made with the National
Association of Securities Dealers, Inc. ("NASD") (including, if
applicable, the fees and expenses of any "qualified independent
underwriter" as such term is defined in Schedule E of the By-Laws of
the NASD, and of its counsel), as may be required by the rules and
regulations of the NASD, fees and expenses of compliance with
securities or "blue sky" laws (including reasonable fees and
disbursements of counsel in connection with "blue sky" qualifications
of the Registrable Shares), all word processing, duplicating and
printing expenses (including expenses of printing certificates for the
Registrable Shares and of printing prospectuses if the printing of
prospectuses is requested by a holder of Registrable Shares),
messenger and delivery expenses, fees and expenses of counsel for the
Company and its independent certified public accountants (including
the expenses of any special audit or "cold comfort" letters required
by or incident to such performance), securities acts liability
insurance (if the Company elects to obtain such insurance), the fees
and expenses of any special experts retained by the Company in
connection with such registration, the fees and expenses of
underwriters customarily paid by issuers or sellers of securities
(including fees paid to a qualified independent underwriter but
excluding underwriting discounts and commissions), and the fees and
expenses of other persons retained by the Company (all
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such expenses being herein called "REGISTRATION EXPENSES") will be
borne by the Company whether or not any registration statement becomes
effective; PROVIDED that in no event shall Registration Expenses
include any underwriting discounts, commissions, or any out of pocket
expenses of the Holders (or agents who manage their accounts) other
than as expressly provided above.
(e) REQUIREMENTS TO PARTICIPATE No Person may participate in any
registration hereunder unless such Person (x) agrees to sell such
Person's Registrable Shares on the basis provided in any underwriting
arrangements approved by the Company and (y) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting
agreements, and other documents required under the terms of such
underwriting arrangements; PROVIDED, HOWEVER, that no such Person
shall be required to make any representations or warranties in
connection with any such registration other than representations and
warranties as to (i) such Person's ownership of his or its Registrable
Shares to be sold or transferred free and clear of all liens, claims,
and encumbrances, (ii) such Person's power and authority to effect
such transfer, and (iii) such matters pertaining to compliance with
securities laws as may be reasonably requested; PROVIDED FURTHER,
HOWEVER, that the obligation of such Person to indemnify pursuant to
any such underwriting arrangements shall be several, not joint and
several, among such Persons selling Registrable Shares, and the
liability of each such Person will be in proportion to, and provided
further that such liability will be limited to, the net amount
received by such Person from the sale of his or its Registrable Shares
pursuant to such registration.
5. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless, to the fullest
extent permitted by law, each seller of Registrable Shares, and each
of its employees, advisors, agents, representatives, partners,
officers, directors and affiliates and each Person who controls such
seller (within the meaning of the Securities Act or the Securities
Exchange Act) (collectively, the "SELLER AFFILIATES") and each other
Person who participated as an underwriter in the offering or sale of
such securities and each of its employees, advisors, agents,
representatives, partners, stockholders, officers, directors and
affiliates and each Person who controls such underwriters (within the
meaning of the Securities Act or the Exchange Act) (i) against any and
all losses, claims, damages, liabilities, and expenses, joint or
several (including, without limitation, reasonable attorneys' fees
except as limited by Section 5(c) below) arising out of or caused by
any untrue or alleged untrue statement of a material fact contained in
any registration statement, preliminary prospectus, final prospectus,
summary prospectus, or any amendment thereof or supplement thereto if
the Company shall have furnished any amendments or supplements, or any
omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading,
(ii) against any and all loss, liability, claim, damage, and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue
13
statement or omission or alleged untrue statement or omission, and
(iii) against any and all costs and expenses (including reasonable
fees and disbursements of counsel) as may be reasonably incurred in
investigating, preparing, or defending against any litigation, or
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission or alleged untrue statement or omission,
to the extent that any such expense or cost is not paid under
subparagraph (i) or (ii) above; except insofar as the same are made in
reliance upon and in strict conformity with information furnished in
writing to the Company by such seller or any Seller Affiliate for use
therein. The reimbursements required by this Section 5(a) will be made
by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred.
(b) In connection with any registration statement in which a seller of
Registrable Shares is participating, each such seller will furnish to
the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such registration
statement or prospectus and, to the fullest extent permitted by law,
each such seller will indemnify the Company, its directors, agents,
officers and each Person who controls the Company (within the meaning
of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act) to the same extent as the foregoing indemnity from the
Company to the selling Holders, but only to the extent that such
untrue statement or alleged untrue statement or omission or alleged
omission is contained in any information or affidavit so furnished in
writing by such seller or any of its Seller Affiliates for specific
inclusion in such registration statement; provided that the obligation
to indemnify will be several, not joint and several, among such
sellers of Registrable Shares, and the liability of each such seller
of Registrable Shares will be in proportion to, and provided further
that such liability will be limited to, the net amount received by
such seller from the sale of Registrable Shares pursuant to such
registration statement.
(c) Any Person entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give such
notice shall not limit the rights of such Person) and (ii) unless in
such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the
indemnified party; PROVIDED, HOWEVER, that any person entitled to
indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person
unless (X) the indemnifying party has agreed to pay such fees or
expenses, (Y) the indemnifying party shall have failed to assume the
defense of such claim and employ counsel reasonably satisfactory to
such person or (Z) in the reasonable judgment of any indemnified
party, a conflict of interest may exist between such indemnified party
and any other of such indemnified parties with respect to such claim.
An indemnifying party will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to
14
such claim. If such defense is assumed by the indemnified party as
permitted hereunder, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its
written consent (which consent shall not be unreasonably withheld). If
such defense is assumed by the indemnifying party pursuant to the
provisions hereof, such indemnifying party shall not settle or
otherwise compromise the applicable claim unless (1) such settlement
or compromise contains a full and unconditional release of the
indemnified party from all liabilities arising out of such proceeding
or (2) the indemnified party otherwise consents in writing.
(d) Each Party hereto agrees that, if for any reason the indemnification
provisions contemplated by Section 5(a) or Section 5(b) are
unavailable to or insufficient to hold harmless an indemnified party
in respect of any losses, claims, damages, liabilities, or expenses
(or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims,
liabilities, or expenses (or actions in respect thereof) in such
proportion as is appropriate to reflect 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 party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state
a material fact relates to information supplied by such indemnifying
party or indemnified party, and the parties' relative knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The Parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 5(d) were
determined by pro rata allocation (even if the Holders were treated as
one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred
to in this Section 5(d). The amount paid or payable by an indemnified
party as result of the losses, claims, damages, liabilities, or
expenses (or actions in respect thereof) referred to above shall be
deemed to include any legal or other fees or expenses reasonably
incurred by such indemnified party in connection with investigating
or, except as provided in Section 5(c), defending any such action or
claim. Notwithstanding the provisions of this Section 5(d), no Holder
shall be required to contribute an amount greater than the dollar
amount of the net proceeds received by uch Holder with respect to the
sale of any Registrable Shares. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Holders'
obligations in this Section 5(d) to contribute shall be several in
proportion to the amount of Registrable Shares registered by them and
not joint.
(e) The indemnification provided for under this Agreement will remain in
full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or
controlling Person of such indemnified party and will survive the
transfer of securities.
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6. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Holders that:
(a) The Company is a corporation duly organized and validly existing and
in good standing under the laws of the State of Nevada, and has
corporate power and corporate authority to own, operate, and lease its
properties and conduct its business as now conducted. The Company is
duly qualified to do business and is in good standing in all
jurisdictions in which the failure to so qualify would have a material
adverse effect on the operations, business, financial conditions,
assets, or liabilities of the Company and its Subsidiaries, taken as
a whole.
(b) The Company has the corporate power and is duly authorized and
empowered to enter into and perform its obligations under this
Agreement. This Agreement has been duly and validly executed, issued,
and delivered and constitutes the legal, valid, and binding obligation
of the Company.
(c) The execution, delivery, and performance of this Agreement by the
Company shall not, by the lapse of time, the giving of notice or
otherwise, constitute a violation of any applicable statute, law, rule
or regulation of any governmental authority, any applicable provision
contained in the articles of incorporation or bylaws of the Company or
contained in any agreement, instrument, or document to which the
Company is a party or by which it is bound, or any order, ruling,
judgment or decree of any court, arbitral body or governmental authority.
7. COMPLIANCE WITH RULE 144
With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of
Registrable Shares to the public without registration, at all times, the
Company agrees to:
(a) Make and keep available adequate current public information, as those
terms are understood and defined in Rule 144 under the Securities Act,
at all times after it has become subject to the reporting requirements
of the Securities Exchange Act;
(b) Use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act; and
(c) Furnish to each Holder of Registrable Shares forthwith upon request a
written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 ninety (90) days after any
registration statement covering a public offering of securities of the
Company under the Securities Act shall have become effective, and of
the Securities Act and the Securities Exchange Act, a copy of the most
recent annual or quarterly report of the Company, and such other
reports and documents so filed by the
16
Company as such Holder may reasonably request availing itself of any
rule or regulation of the Commission allowing such Holder to sell any
Registrable Shares without registration.
8. SUBSEQUENT INVESTORS
The Company shall not grant registration rights or enter into any
registration rights agreement or similar agreement with any Person which
are equal to, superior to or conflict, impair or interfere in any way with
the rights granted hereunder, without the consent of Holders, at the time
of determination, of a majority of the Registrable Shares (based on the
number of shares of Common Stock underlying the Registrable Shares on an
as-if converted basis).
9. TERMINATION
The provisions of this Agreement shall terminate upon the date on
which there are no longer any Registrable Shares.
10. NOTICES
All notices and communications to be given or otherwise to be made to
any Party to this Agreement shall be deemed to have been duly given or
delivered by any Party, (i) when received by such Party if delivered by
hand, (ii) upon confirmation when delivered by telecopy, or (iii) within
one day after being sent by recognized overnight delivery service, and in
each case addressed as follows:
If to the Company:
NetVoice Technologies Corporation
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: President
with a copy to:
Xxxxx Xxxxxxx & Xxxx LLP
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
If to any Holder, as indicated on the signature pages hereto.
Any Party by written notice to the other Parties pursuant to this
Section may change the address or the Persons to whom notices or copies
thereof shall be directed.
17
11. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon the Parties and their respective
successors and assigns. No Party may assign any of its rights or
obligations under this Agreement, except in connection with sales and
transfers of Common Shares or Common Share Equivalents made in accordance
with the terms and conditions of the Stockholders' Agreement, if
applicable, or to a successor by merger or similar succession to the
business or assets of such Person, in which case the term "Holder" shall be
deemed to include such transferees or successors to the extent provided herein.
12. MODIFICATION
Except as otherwise provided herein, neither this Agreement nor any
provision hereof can be amended, modified, changed, discharged, waived or
terminated (each, an "Amendment") except by an instrument in writing
executed in good faith by the Company and Holders, at the time of
determination, of a majority of Registrable Shares (based on the number of
shares of Common Stock underlying the Registrable Shares on an as-if
converted basis), in which event such Amendment shall be binding upon all
of the Parties in accordance with its terms, PROVIDED, that no such
Amendment shall (i) reduce the number of Demand Registrations provided to
any Holder in Section 2(a), (ii) amend the 20% threshold provided in
Section 2(a), (iii) impose any threshold of Registrable Shares required to
effect a Demand Registration pursuant to Section 2(a)(ii), or (iv) amend
the provisions of Section 8, 9 or this Section 12, unless such Amendment
has been unanimously approved by all Holders.
13. WAIVER
Any waiver by any Party of a breach of any provision of this Agreement
shall not operate as or be construed to be a waiver of any other breach of
that provision or of any breach of any other provision of this Agreement.
The failure of a Party to insist upon strict adherence to any term of this
Agreement on one or more occasions shall not be considered a waiver or
deprive that Party of the right thereafter to insist upon strict adherence
to that term or any other term of this Agreement. Subject to the
provisions of Section 12 hereof, any waiver must be evidenced by a writing
signed by the Party against whom the waiver is sought to be enforced.
14. AVAILABILITY OF EQUITABLE REMEDIES
Each Party acknowledges that a breach of the provisions of this
Agreement could not adequately be compensated by money damages.
Accordingly, it is the intention of the Parties that any Party shall be
entitled, in addition to any other right or remedy available to it, to an
injunction restraining such breach or a threatened breach and/or to
specific performance of any such provision of this Agreement, and in either
case no bond or other security shall be required in connection therewith,
and the Parties hereby consent to such injunction and to the ordering of
specific performance.
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15. ENTIRE AGREEMENT
This Agreement, together with the Stockholders' Agreement and the
Securities Purchase Agreement with respect to those Parties hereto that are
parties thereto as well, sets forth the entire understanding, and
supersedes all prior agreements and understandings, both written and oral,
among the Parties with respect to the subject matter hereof.
16. SEVERABILITY
If any provision of this Agreement shall be determined to be illegal
or unenforceable by any court of law of competent jurisdiction, the Parties
intend that such provision shall be deemed not to form part of this
Agreement and, the remaining provisions shall be severable and enforceable
in accordance with their terms.
17. GOVERNING LAW
The corporate laws of the State of Nevada will govern all questions
concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity and interpretation of
this Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York without regard to principles of conflicts of
laws. The Parties agree that any suit, action or proceeding instituted
against one or more of them with respect to this Agreement (including any
exhibits hereto) shall be brought in any federal or state court located in
the State of New York. The Parties, by the execution and delivery of this
Agreement, irrevocably waive any objection or defense to the institution of
any action in New York based on improper venue, the convenience of the
forum or the jurisdiction of such courts, or from the execution of
judgments resulting therefrom, and the parties hereto irrevocably accept
and submit to the jurisdiction of the aforesaid courts in any suit, action
or proceeding and consent to the service of process by certified mail at
the address set forth in Section 10 hereof.
18. CAPTIONS
The captions herein are inserted for convenience only and shall not
define, limit, extend or describe the scope of this Agreement or affect the
construction hereof.
19. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which taken together
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been executed and
delivered as of the date first set forth above.
NETVOICE TECHNOLOGIES CORPORATION.
By: /s/ XXXX XXXXXXX
-------------------------------------
Name: Xxxx Xxxxxxx
Title: President and Chief Executive Officer
BG MEDIA INTERMEDIATE FUND L.P.
By: BG MEDIA INTERMEDIATE INVESTORS L.L.C.,
its general partner
By: /s/ J. XXXXXXX XXXXXX
-------------------------------------
Name: J. Xxxxxxx Xxxxxx
Title: Member
Address for Notices:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: J. Xxxxxxx Xxxxxx
NV INVESTMENTS, L.P.
By: NV GP, L.L.C., its general partner
By: /s/ Xxxxxx X. XXXXXX
----------------
Name: Xxxxxx
Title: Manager
Address for Notices:
0000 Xxx Xxxxxx
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: __________________
20
