EXHIBIT 4.5
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (this "Agreement") is made and entered
into effective as of the 1st day of September, 2000 by and between APPLIED VOICE
RECOGNITION, INC., a Delaware corporation doing business as x-XXXX.xxx (the
"Company") and ______________ (the "Noteholder").
R E C I T A L S:
----------------
WHEREAS, the Company has executed that certain Convertible Promissory Note
of even date herewith in the amount of $____________ and payable to the
Noteholder (the "Note") whereby the Noteholder will lend such funds to the
Company and principal and accrued interest under the Note will be converted into
common stock, $0.001 par value per share, of the Company (the "Common Stock")
pursuant to the terms of the Note (the Common Stock received by the Noteholder
shall hereinafter be referred to as the "Subject Stock"); and
WHEREAS, the Company desires to grant to the Noteholder certain
registration rights relating to the shares of the Subject Stock, and the
Noteholder desires to obtain such registration rights, subject to the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the Note, and other good and valuable consideration, the receipt and sufficiency
of which is acknowledged and agreed, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Registration Rights.
-------------------
a. The Company covenants and agrees that it will cause to be filed
pursuant to Rule 415 of The Securities Act of 1933, as amended (the "Securities
Act"), a Shelf Registration Statement (the "Shelf Registration Statement") as to
the shares of Subject Stock that were or are to be issued to the Noteholder
following conversion of the Note, naming such holders who wish to be named
therein as selling stockholders. The Company will use its commercially
reasonable efforts to see that the Shelf Registration Statement is declared
effective on or before December 31, 2000 and that it is kept continuously
effective in compliance with applicable laws until two years following the
conversion of the Note. If any event occurs that would cause the Shelf
Registration Statement to contain a material misstatement or omission or not to
be effective and usable during the period that such Shelf Registration Statement
is required to be effective and usable, the Company shall promptly file an
amendment to the Shelf Registration Statement and use its best efforts to cause
such amendment to be declared effective as soon as practicable thereafter. The
Noteholder shall furnish to the Company such information regarding its holdings
and the proposed manner of distribution thereof as the Company may reasonably
request and as shall be required in connection with the Shelf Registration
Statement. Notwithstanding any provision contained herein to the contrary, the
Company's obligation to include, or continue to include, shares of Common Stock
in the Shelf Registration Statement under this Section 1 shall
-1-
terminate to the extent such shares are eligible for resale under Rule 144(k)
promulgated under the Securities Act.
b. All costs and expenses of any registration and qualification
pursuant to this Section 1 shall be borne by the Company. Such costs and expense
shall include, without limitation, the fees and expenses of counsel for the
Company and of its accountants, all other costs, fees and expenses of the
Company incident to the preparation, printing and filing under the Securities
Act of the registration statement and all amendments on supplements thereto, the
cost of furnishing copies of each preliminary prospectus, each final prospectus
and each amendment or supplement thereto to underwriters, dealers and other
purchases of the Common Stock and the costs and expenses (including fees and
disbursements of counsel) incurred in connection with the qualification of the
Common Stock under the securities laws of various jurisdictions. Notwithstanding
the foregoing, the Company shall not be obligated to bear any fees, or expenses
for counsel or other advisors to the Noteholder or any underwriting fees,
discounts or commissions or brokerage fees allocable to the registration or
qualification of the Subject Stock.
c. In the case of any registration or qualification pursuant to this
Section 1, the Company will keep the Noteholder advised in writing as to the
initiation of proceedings for such registration and qualification and as to the
completion thereof, and will advise the Noteholder, upon request, of the
progress of such proceeding.
d. At the Company's expense, the Company will keep each registration
and qualification under this Section 1 effective (and in compliance with the
Securities Act) by such action as may be necessary or appropriate for a period
of two years after the conversion of the Note, including, without limitation,
the filing of post-effective amendments and supplements to any registration
statement or prospectus necessary to keep the registration statement current and
the further qualification under any applicable state securities laws to permit
such sale or distribution, all as reasonably requested by the Noteholder. The
Company will immediately notify the Noteholder, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the 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 light of the
circumstances then existing.
e. In connection with any registration of the Subject Stock under
this Section 1, the Company will provide a transfer agent and registrar for the
Subject Stock not later than the effective date of such registration statement.
f. In connection with any registration of the Subject Stock under
this Section 1, the Company will, if requested by the underwriters for any
Common Stock included in such registration, enter into an underwriting agreement
with such underwriters for such offering, such agreement to contain such
representations and warranties by the Company and such other terms and
provisions as are customarily contained in underwriting agreements with respect
to secondary distributions, including, without limitation, provisions relating
to indemnification and contribution. The Noteholder shall be party to any such
underwriting agreement, and the
-2-
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 the Noteholder.
g. In connection with the preparation and filing of each registration
statement registering the Subject Stock under this Section 1, the Company will
give the Noteholder and its underwriter, if any, and their respective counsel
and accountants (at their sole expense), the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Securities and Exchange Commission (the "Commission"), and each
amendment thereof or supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss the business of the
Company with its officers, its counsel and the independent public accountants
who have certified its financial statements, as shall be necessary, in the
opinion of the Noteholder or such underwriters or their respective counsel, in
order to conduct a reasonable and diligent investigation within the meaning of
the Securities Act. Without limiting the foregoing, each registration
statement, prospectus, amendment, supplement or any other document filed with
respect to a registration under this Section 1 shall be subject to a reasonable
review and comment period by the Noteholder registering the Subject Stock in
such registration and by its counsel.
h. The Company will, at the expense of the Company, furnish to the
Noteholder such number of registration statements, prospectuses, offering
circulars and other documents incident to any registration or qualification
referred to in this Section 1 as the Noteholder from time to time may reasonably
request.
i. (1) The Company agrees to indemnify, to the extent permitted by
law, the Noteholder and its officers, directors, stockholders, employees, agents
and representatives, and any other person deemed to control the Noteholder
within the meaning of the Securities Act against all losses, claims, damages,
liabilities and expenses caused by (a) any violation or alleged violation by the
Company of the Securities Act, the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or any other federal or state securities law, rule or
regulation applicable to the Company or (b) any untrue statement of material
fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such Noteholder expressly
for use therein or by such Noteholder's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto.
(2) In connection with any registration statement in which the
Noteholder is participating, such Noteholder will furnish to the Company in
writing such information as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, will indemnify the Company, its directors, officers,
stockholders, employees, agents and representatives, and any other person deemed
to control the Company against any losses, claims, damages, liabilities and
expenses resulting from any untrue statement or material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission of a material fact required to be
stated therein or necessary to make the statements therein not
-3-
misleading, but only to the extent that such untrue statement or omission is
contained in any information so furnished in writing by such Noteholder. In
connection with an underwritten offering, the Noteholder will indemnify the
underwriters, the officers and directors and each person who controls such
underwriters to the same extent as provided above with respect to the
indemnification of the Company.
(3) Any party entitled to indemnification hereunder will (a)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (b) 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. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim 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 such claim, unless 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.
(4) 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. If for
any reason the foregoing indemnification is unavailable to any party or
insufficient to hold it harmless as and to the extent contemplated by the
preceding paragraphs, then the Company or the Noteholder, as the case may be,
shall contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Noteholder or any other applicable indemnified party, as the case
may be, on the other hand, and also the relative fault of the Company and the
Noteholder or other applicable indemnified party, as the case may be, as well as
any other relevant equitable considerations.
j. The Company agrees that if it shall become eligible to list its
shares of the Common Stock on a national securities exchange or on an automated
national quotation system, the Company shall use its best efforts to cause its
Common Stock to be so listed. If the Company shall list any shares of Common
Stock on any securities exchange or on an automated national quotation system,
it will, at its expense, list thereon, maintain, and increase when necessary
such listing of, all shares of Common Stock so long as any shares of Common
Stock shall be so listed.
k. With a view to making available to the Noteholder the benefits of
Rule 144 promulgated under the Securities Act, the Company agrees to maintain
registration of its Common Stock under Section 12(g) or 15(d) of the Exchange
Act and to file with the Commission in a timely manner all reports and other
documents required to be filed by an issuer of securities registered under the
Exchange Act so as to maintain the availability of Rule 144. When Rule 144(k) is
being complied with, the Company shall deliver securities not bearing any legend
restricting transfer for such securities, as may be requested from time to time
by the
-4-
Noteholder upon delivery to the Company of a customary shareholder
representation letter in a form reasonably acceptable to the Company.
l. If the Shelf Registration Statement is not declared effective by
December 31, 2000, the Company shall pay to the Noteholder each month thereafter
until such Shelf Registration Statement is declared effective or the Subject
Stock is illegible to be sold pursuant to Rule 144(k) promulgated under the
Securities Act, an amount equal to one and one quarter percent (1-1/4%) times
the basis in each such share, times the number of shares of Subject Stock
remaining unsold (the "Penalty Payments"). The Penalty Payments shall be made to
the Noteholder on or before the tenth day of each month for the prior month and
shall be pro rated for any period of less than 30 days. The Noteholder agrees
that the Penalty Payments shall be the Noteholder's sole and exclusive remedy
against the Company for the Company's failure to cause the Shelf Registration
Statement to be declared effective hereunder.
2. Miscellaneous.
-------------
a. No Inconsistent or Senior Agreements. The Company will not
------------------------------------
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Noteholder in this Agreement. The
Company will not hereafter enter into any agreement with respect to its
securities which confers upon any party any registration rights that would pre-
empt the registration rights granted pursuant hereto.
b. Remedies. Each Holder, in addition to being entitled to
--------
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive (to the extent permitted by law) the defense in any
action for specific performance that a remedy of law would be adequate.
c. Amendments and Waivers. The provisions of this Agreement may
----------------------
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given unless the Company has obtained the
written consent of the holders of at least a majority of the Common 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 Texas applicable to
contracts made and to be performed wholly within that state, without regard to
the conflict of law rules thereof.
-5-
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) the Noteholder at the address 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
Noteholder shall be enforceable to the fullest extent permitted by law.
j. Entire Agreement. This Agreement is intended by the parties as
----------------
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
k. Recitals. The recitals are hereby incorporated in the Agreement
--------
as if fully set forth herein.
l. 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.
m. Arbitration. All disputes, claims, and/or requests for
-----------
specific contractual performance, or other equitable relief, or damages or any
other matters in question between the parties arising out of this Agreement
shall be submitted for arbitration, provided that the parties have first made a
good faith effort to resolve such matters together. Demand shall be made to the
American Arbitration Association ("AAA") and shall be conducted in Houston,
Texas by a panel of three (3) arbitrators. The Noteholder and the Company shall
each choose one (1) panel member from a panel of person having experience with
and knowledge of the purchase and sale of securities. The third member shall be
an independent party, chosen by the first two members.
-6-
At least one member of the panel must have a legal background. Arbitration shall
be in accordance with the commercial rules of the AAA. The Award of the
Arbitrators shall be final and judgement may be entered upon it in any court
having jurisdiction thereof, and the prevailing party shall be entitled to costs
and reasonable attorneys' fees arising out of Arbitration.
EXECUTED as of the date first written above.
Company: APPLIED VOICE RECOGNITION, INC.
d/b/a x-XXXX.xxx
By:______________________________
Xxxxxxx X. Xxxxxxxx, President
0000 Xx. Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Noteholder: _________________________________
Address:
-7-
