EXHIBIT 4.1
------------
REGISTRATION RIGHTS AGREEMENT
------------------------------
(Exhibits and Schedules are omitted pursuant to Item 601(b)(2) of
Regulation S-K. The Company agrees, however, to furnish supplementary a copy
of such omitted items to the Commission upon request.)
------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Among
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V.
and
THE STOCKHOLDERS OF DICTAPHONE CORPORATION
Dated as of , 2000
----------
------------------------------------------------------------------------------
Table of Contents
ARTICLE I. THE MERGER
Section 1.1 Effective Time of the Merger.................................1
Section 1.2 Closing......................................................2
Section 1.3 Effects of the Merger........................................2
Section 1.4 Directors and Officers.......................................2
Section 1.5 Actions Prior to Closing.....................................2
Section 1.6 Alternative Merger Structure.................................3
ARTICLE II. CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock..................................4
Section 2.2 Exchange of Certificates.....................................5
Section 2.3 Optional Adjustment to Merger Shares for Indebtedness........8
Section 2.4 Stonington's Merger Shares..................................10
Section 2.5 Escrow Shares...............................................10
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF COMPANY
Section 3.1 Organization of Company.....................................10
Section 3.2 Company Capital Structure...................................11
Section 3.3 Authority; No Conflict; Required Filings and Consents.......12
Section 3.4 SEC Filings; Financial Statements...........................14
Section 3.5 No Undisclosed Liabilities..................................15
Section 3.6 Absence of Certain Changes or Events........................15
Section 3.7 Taxes.......................................................17
Section 3.8 Title to Properties.........................................17
Section 3.9 Intellectual Property.......................................19
Section 3.10 Agreements, Contracts and Commitments.......................20
Section 3.11 Litigation..................................................20
Section 3.12 Environmental Matters.......................................23
Section 3.13 ERISA and Employee Benefit Plans............................26
Section 3.14 Compliance With Laws........................................26
Section 3.15 Permits.....................................................26
Section 3.16 Labor Matters...............................................26
Section 3.17 Insurance...................................................27
Section 3.18 Government Contracts........................................27
Section 3.19 Year 2000...................................................27
Section 3.20 Inventory...................................................28
Section 3.21 Warranty....................................................28
Section 3.22 Customers and Suppliers.....................................28
Section 3.23 Accounts Receivable.........................................28
Section 3.24 Section 203 of the DGCL Not Applicable......................29
Section 3.25 Transactions with Interested Persons........................29
Section 3.26 Absence of Sensitive Payments...............................29
Section 3.27 Indebtedness................................................29
Section 3.28 Consent.....................................................29
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER AND SUB
Section 4.1 Organization of Buyer and Sub...............................30
Section 4.2 Capitalization..............................................30
Section 4.3 Authority; No Conflict; Required Filings and Consents.......31
Section 4.4 Public Filings; Financial Statements........................32
Section 4.5 No Undisclosed Liabilities..................................33
Section 4.6 Absence of Certain Changes or Events........................33
Section 4.7 Intellectual Property.......................................33
ARTICLE V. CONDUCT OF BUSINESS
Section 5.1 Covenants of Company........................................34
Section 5.2 Options; Warrants...........................................37
Section 5.3 Covenants of Buyer..........................................37
Section 5.4 Cooperation.................................................38
Section 5.5 Confidentiality.............................................38
Section 5.6 Investigation...............................................38
ARTICLE VI. ADDITIONAL AGREEMENTS
Section 6.1 Exclusivity.................................................39
Section 6.2 Access to Information.......................................40
Section 6.3 Environmental Review........................................40
Section 6.4 Legal Conditions to Merger..................................40
Section 6.5 Employee Benefit Plans......................................41
Section 6.6 Public Disclosure...........................................42
Section 6.7 Tax-Free Reorganization.....................................42
Section 6.8 Nasdaq Listing..............................................42
Section 6.9 Brokers or Finders..........................................42
Section 6.10 Notification of Certain Matters.............................43
Section 6.11 Special Stockholders Meeting of the Company.................43
Section 6.12 Special Board Meeting of the Buyer..........................43
Section 6.13 Liability Insurance.........................................44
ARTICLE VII. CONDITIONS TO MERGER
Section 7.1 Conditions to Each Party's Obligation To Effect the Merger..45
Section 7.2 Additional Conditions to Obligations of Buyer and Sub...... 45
Section 7.3 Additional Conditions to Obligations of Company.............47
ARTICLE VIII. TERMINATION AND AMENDMENT
Section 8.1 Termination.................................................49
Section 8.2 Effect of Termination.......................................49
Section 8.3 Fees and Expenses...........................................50
Section 8.4 Amendment...................................................50
Section 8.5 Extension; Waiver...........................................50
ARTICLE IX. MISCELLANEOUS
Section 9.1 Survival of Representations, Warranties and Agreements........50
Section 9.2 Notices.......................................................50
Section 9.3 Interpretation; Incorporation by Reference....................52
Section 9.4 Counterparts..................................................52
Section 9.5 Entire Agreement; No Third Party Beneficiaries................53
Section 9.6 Governing Law and Venue.......................................53
Section 9.7 Waiver of Jury Trial..........................................53
Section 9.8 Assignment....................................................54
Section 9.9 Severability..................................................54
Section 9.10 Other Remedies; Specific Performance..........................54
ARTICLE X. DEFINITIONS
Section 10.1 Definitions....................................................1
ARTICLE XI. REGISTRATION RIGHTS
Section 11.1 Restrictive Legend............................................3
Section 11.2 Notice of Proposed Transfer...................................4
Section 11.3 Request for Registration......................................4
Section 11.4 Incidental Registration.......................................6
Section 11.5 Obligations of the Company....................................7
Section 11.6 Additional Holder Obligations.................................9
Section 11.7 Expenses of Registration.....................................10
Section 11.8 Underwriting Requirements....................................10
Section 11.9 Rule 144 Information.........................................10
Section 11.10 Indemnification..............................................11
Section 11.11 Lockup.......................................................13
ARTICLE XII. MISCELLANEOUS
Section 12.1 Transfer of Registration Rights..............................14
Section 12.2 Interpretation...............................................14
Section 12.3 Amendments...................................................15
Section 12.4 Assignment...................................................15
Section 12.5 No Third-Party Beneficiaries.................................15
Section 12.6 Notices......................................................15
Section 12.7 Counterparts.................................................16
Section 12.8 Severability.................................................17
Section 12.9 Consent to Jurisdiction......................................17
Section 12.10 Waiver of Jury Trial.........................................17
Section 12.11 Specific Performance.........................................17
Section 12.12 Governing Law................................................18
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of May 5,2000 (this "Agreement"),
among Lernout & Hauspie Speech Products N. V., a corporation organized under the
laws of Belgium (the "Company"), and the undersigned stockholders of the Company
(individually, a "Stockholder" and collectively, the "Stockholders").
WHEREAS, the execution and delivery of this Agreement is a condition to the
obligations of Dictaphone Corporation, a Delaware corporation ("Dictaphone"),
under the Agreement and Plan of Merger dated as of March 7,2000, among the
Company, Dark Acquisition Corp., a Delaware corporation and a direct wholly
owned subsidiary of the Company ("Merger Sub"), and Dictaphone (the "Merger
Agreement"), pursuant to which Dictaphone shall merge with and into Merger Sub,
all upon the terms and subject to the conditions set forth in the Merger
Agreement;
WHEREAS, upon consummation of the transactions contemplated by the Merger
Agreement, each Stockholder will beneficially own the number of shares of common
stock of the Company, BEF 10.77 fractional value, set forth opposite such
Stockholder's name in Schedule I hereto, which has been adjusted to reflect the
two for one stock split by the Company that will become effective on May
12,2000, (together with any common stock of the Company issued as a dividend or
other distribution with respect thereto, or in exchange therefor, or in
replacement thereof, the "Company Common Stock"); and
WHEREAS, the Company and the Stockholders now wish to enter into this
Agreement to set forth their understanding as to the registration rights of the
Stockholders with respect to the Company Common Stock;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the Company and the Stockholders hereby
agree as follows:
ARTICLE X.
----------
Definitions
-----------
Section 10.1 Definitions. (a) As used in this Agreement, the following
-------------
terms shall have the following meanings:
"Affiliate" has the meaning set forth in Rule 12b-2, as in effect on the
---------
date hereof, under the Exchange Act.
1
2
"beneficially own" has the meaning set forth in Rule 13d-3, as in effect on
----------------
the date hereof, under the Exchange Act.
"Business Day" means any day that is not a Saturday, Sunday or other day on
------------
which banks are required or authorized by law to be closed in The City of New
York.
"Closing Date" has the meaning set forth in the Merger Agreement.
------------
"Commission" means the U.S. Securities and Exchange Commission and any successor
-------------
agency.
"Eligible Registrable Stock" means Registrable Stock that is not then
--------------------------
subject to restrictions on transfer pursuant to the Stockholders Agreement.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
------------
amended. "Holder" means a Stockholder and any Permitted Transferee.
"Note Termination Agreement" means the Note Termination Agreement among
--------------------------
Company, Dictaphone and Stonington Financing IV, LLC, dated as of March 7, 2000.
"Permitted Transferee" means in the case of each Stockholder, (a) any
--------------------
Affiliate of the Stockholder or of any member of such Stockholder's immediate
family, (b) spouses, lineal descendants and members of the Stockholder's
immediate family or trusts for their benefits or (c) upon such Stockholder's
death, such Stockholder's executors, administrators, testamentary trustees,
legatees, heirs and beneficiaries.
"Person" means any individual, firm, corporation, partnership, limited
------
partnership, limited liability company, association, trust, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Exchange Act.
"Register," "registered" and "registration" shall refer to a registration
-------- ---------- ------------
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act and the declaration or ordering of
effectiveness of such registration statement or document.
"Registrable Stock" means the Stockholder Shares and any securities issued
-----------------
or issuable with respect to any Stockholder Shares by way of conversion,
exchange, replacement, stock dividend, stock split or other distribution or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. For purposes of this Agreement, any
Registrable Stock shall cease to be Registrable Stock when (i) 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, (ii) such Registrable Stock is sold by a Person in a transaction in
which the rights under the provisions of this Agreement are not assigned
pursuant to the terms hereof, (iii) such Registrable Stock is sold pursuant to
Rule 144(k) (or any similar provision then in force, but not Rule 144A) under
the Securities Act without registration under the Securities Act or (iv) the
market value of such
3
Holder's Registrable Stock at the time of determination is less than
$100,000,000 and it is capable of being sold pursuant to Rule 144 (or any
similar provision then in force, but not Rule 144A) within a single three month
period.
"Registration Period" means the period beginning on the date hereof and
-------------------
ending on the fourth anniversary of such date, provided that if on such date the
Stockholders own Registrable Stock with an aggregate market value of
$150,000,000 or more, such period will be extended until the fifth anniversary
of the Closing.
"Securities Act" means the United States Securities Act of 1933, as
--------------
amended.
"Stockholders Agreement" means the Stockholders Agreement, dated as of
----------------------
the date hereof, among the Company, Stonington Holdings LLC and certain other
stockholders of the Company.
"Stockholder Shares" means the shares of Company Common Stock issued by
------------------
Light to (a) the Stockholders upon the completion of the merger contemplated by
the Merger Agreement and (b) Stonington or any of its subsidiaries pursuant to
the Note Termination Agreement.
(b) The following terms have the meanings set forth in the Sections set
forth below:
Term Location
---- --------
Agreement Preamble
Company Preamble
Company Common Stock Recitals
Dictaphone Recitals
Initiating Holders (S)2.03(a)
Merger Agreement Recitals
Merger Sub Recitals
Stockholder Preamble
Stockholders Preamble
ARTICLE XI.
------------
Registration Rights
--------------------
Section 11.1 Restrictive Legend. (a) Each certificate representing shares
-------------------------------
of Registrable Stock shall, except as otherwise provided in this Section 2.01 or
in Section 2.02, be stamped or otherwise imprinted with a legend substantially
in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE."
(b) The Company shall, at the request of the Holder, remove from each
certificate evidencing Stockholder Shares the legend described in Section
2.01(a) if in the opinion of
4
counsel reasonably satisfactory to the Company the securities evidenced thereby
may be publicly sold without registration under the Securities Act.
Section 11.2 Notice of Proposed Transfer. Prior to any proposed transfer of
----------------------------------------
any shares of Registrable Stock (other than to a Permitted Transferee or under
the circumstances described in Sections 2.03 or 2.04), the holder thereof shall
give written notice to the Company of such Holder's intention to effect such
transfer. Each such notice shall describe the manner of the proposed transfer
and, if requested by the Company, shall be accompanied by an opinion of counsel
reasonably satisfactory to the Company to the effect that the proposed transfer
may be effected without registration under the Securities Act, whereupon the
holder of such Registrable Stock shall be entitled to transfer such Registrable
Stock in accordance with the terms of such notice. Each certificate for
Registrable Stock transferred as above provided shall bear the legend set forth
in Section 2.01(a), except that such certificate shall not bear such legend if
(i) such transfer is in accordance with the provisions of Rule 144 of the
Securities Act (or any other rule permitting public sale without registration
under the Securities Act) or (ii) the opinion of counsel referred to above is to
the further effect that the transferee and any subsequent transferee ( other
than an Affiliate of the Company) would be entitled to transfer such securities
in a public sale without registration under the Securities Act. The restrictions
provided for in this Section 2.02 shall not apply to securities that are not
required to bear the legend prescribed by Section 2.01(a) in accordance with the
provisions of Section 2.01.
Section 11.3 Request for Registration. (a) During the Registration Period,
any Holder or Holders of at least 20% of the Registrable Stock (the "Initiating
Holders") may request in a written notice that the Company file a registration
statement under the Securities Act (or a similar or successor document pursuant
to any other statute then in effect corresponding to the Securities Act)
covering the registration of any or all Eligible Registrable Stock then held by
such Initiating Holders in the manner specified in such notice, provided that
there must be included in such registration at least 20% of the Registrable
Stock issued. Following receipt of any notice under this Section 2.03, the
Company shall (i) within 10 days notify any other Holders of Registrable Stock
of such request in writing and (ii) use all reasonable efforts to cause to be
registered under the Securities Act all Eligible Registrable Stock that the
Initiating Holders and any such other Holders have, within 10 days after the
Company has given such notice, requested be registered in accordance with the
manner of disposition specified in such notice by the Initiating Holders.
(b) If the Initiating Holders intend to have the Registrable Stock
distributed by means of an underwritten offering, the Holders shall enter into
an underwriting agreement and other ancillary agreements (such as a custody
agreement) in customary form with the underwriter or underwriters. The Company
will select the lead underwriter for such offering from the list of institutions
set forth on Schedule II hereto or their successors and the Holders shall select
the co- manager for such offering from the institutions on such list or their
successors. All of the representations and warranties by, and the other
agreements on the part of, the Company in the underwriting agreement and other
ancillary agreements to and for the benefit of such underwriters, shall, except
as they relate to information provided to the Company in writing by the Holders
for purposes of the proposed underwriting and registration, also be made to and
for the benefit of such Holders of Registrable Stock for the limited purpose of
their participation in such offering. No Holder shall be required to make any
representations or warranties to or
5
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
representations required by law or reasonably required by the underwriter. If
any Holder of Registrable Stock disapproves of the terms of the underwriting,
such Holder may elect to withdraw all its Registrable Stock by written notice to
the Company, the managing underwriter and the Initiating Holders. The securities
so withdrawn shall also be withdrawn from registration.
(c) Notwithstanding any provision of this Agreement to the contrary,
(i) the Company shall not be required to effect a registration
pursuant to this Section 2.03 if the Company has effected a
registration pursuant to this Section 2.03 within the 120-day
period next preceding such request which permitted Holders to
register Registrable Stock; and
(ii) if the Company shall furnish to such Holders a certificate signed
by a majority of the managing directors of the Company stating
that in their good faith opinion such registration would have a
material adverse effect on the Company or would interfere with
any material transaction then being pursued by the Company, then
the Company's obligation to use all reasonable efforts to file or
confidentially submit a registration statement shall be deferred,
provided that (A) the period of any such deferral shall terminate
upon public disclosure of any such material transaction, (B) the
Company shall not obtain any deferral under this Section
2.03(c)(ii) more than three times in any twelve-month period and
(C) all deferrals under this Section 2.03(c)(ii) in any twelve-
month period shall not exceed 60 days in the aggregate.
(d) The Company shall be obligated to effect and pay for a maximum
of three registrations pursuant to this Section 2.03; provided, that such
obligation shall be in respect of no more than two registrations following the
second anniversary of this Agreement, and no more than one registration
following the third anniversary of this Agreement; and provided, further, that a
registration requested pursuant to this Section 2.03 shall not be deemed to have
been effected for purposes of this Section 2.03(d) unless (i) it has been
declared effective by the Commission, (ii) it has remained effective for the
period set forth in Section 2.05(a) and (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 stop order,
injunction, or other requirement of the Commission prompted by any act or
omission of Holders of Registrable Stock).
Section 11.4 Incidental Registration. (a) Subject to Section 2.08, if at
------------------------------------
any time the Company determines that it shall file a registration statement
under the Securities Act for the registration of Company Common Stock in a firm
commitment underwritten public offering (other than the registration of an offer
and sale of securities pursuant to an employee or similar benefit plan,
registered on Form S-8 or comparable form; or relating to a merger, acquisition
or other transaction of the type described in Rule 145 under the Securities Act
or comparable rule, registered on Form F-4 or Form S-4 or similar forms or filed
in connection with an exchange offer or an offering of securities solely to the
Company's existing stockholders) on any form that
6
would also permit the registration of the Registrable Stock and such filing is
to be on its behalf or on behalf of selling holders of its securities for the
general registration of Company Common Stock to be sold for cash, the Company
shall each such time promptly give each of the Stockholders 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 15 Business
Days from the date of such notice, and advising the Stockholders of their right
to have any or all of the Registrable Stock included in such registration. Upon
the written request of any Holder received by the Company no later than 10
Business Days after the date of the Company's notice, the Company shall cause to
be registered under the Securities Act all of the Eligible Registrable
Stock that each such Holder has so requested to be registered, subject to
reduction in accordance with paragraph (b) of this Section.
(b) If, in the written opinion of the managing underwriter, 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 It adversely affecting the
entire offering, then the Company shall be entitled to reduce the number of
shares of Registrable Stock to be sold in such offering by the Holders and any
other stockholder of the Company offered the opportunity to participate in such
offering in accordance with the terms of the agreements listed on Schedule III
hereto, and subject thereto, in proportion (as nearly as practicable) to the
number of shares of Registrable Shares held, at the time of filing the
registration statement, by each Holder and each other stockholder of the Company
who is participating in such offering; provided however, that no provision
herein shall require the Company to reduce the number of shares of Company
Common Stock participating in such offering held by any stockholder of the
Company who is entitled to inclusion in such offering by reason of such
stockholder's demand registration rights.
(c) A request by Holders to include Registrable Stock in a proposed
registration pursuant to Section 2.04(a) shall not be deemed to be one of its
request registration rights granted pursuant to Section 2.03.
Section 11.5 Obligations of the Company. Whenever required under Section
---------------------------------------
2.03 to effect the registration of any Registrable Stock, the Company shall, as
expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Stock (which, subject to Section 2.03(c)(ii), shall
be confidentially submitted or filed in no event later than 60 days after
written notice requesting a registration statement under Section 2.03 has been
received by the Company) and use all reasonable efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby determined as provided hereafter; provided
that the Company shall not be required to keep any Registration Statement
effective more than 120 days;
(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 c to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Stock covered by such
registration statement and, as may be necessary to complete the contemplated
distribution of the Registrable Stock, to keep such Registration Statement
7
effective for a reasonable period not to exceed 120 days and promptly notify the
Holders of any stop order issued or, to the Company's knowledge, threatened to
be issued by the Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered;
(c) furnish to the Holders such numbers of copies of the registration
statement and the prospectus included therein (including each preliminary
prospectus) and any amendments or supplements thereto in conformity with the
requirements of the Securities Act and any exhibits filed therewith and such
other documents and information as they may reasonably request;
(d) use all reasonable efforts to register or qualify the Registrable
Stock covered by such registration statement under such other securities or blue
sky laws of such jurisdiction within the United States and Puerto Rico as shall
be reasonably appropriate for the distribution of the Registrable Stock covered
by the registration statement; 2rovided, however, that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business in or to file a general consent to service of process in any
jurisdiction wherein it would not but for the requirements of this paragraph (d)
be obligated to do so; and provided, further, that the Company shall not be
required to qualify such Registrable Stock in any jurisdiction in which the
securities regulatory authority requires that any Holder submit any shares of
its Registrable Stock to the terms, provisions and restrictions of any escrow,
lockup or similar agreement(s) for consent to sell Registrable Stock in such
jurisdiction unless such Holder agrees to do so;
(e) promptly notify each Holder for whom such Registrable Stock is
covered by such registration statement, 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 under
which they were made, and at the request of any such Holder promptly prepare and
furnish to such Holder 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 or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made. In the
event the Company shall give such notice, the Company shall extend the period
during which such Registration Statement shall be maintained effective as
provided in Section 2.05(a) by the number of days during the period from and
including the date of the giving of such notice to the date when the Company
shall make available to the Holders such supplemented or amended prospectus;
(f) furnish, at the request of any Holder requesting registration of
Registrable Stock pursuant to Sections 2.03, if the method of distribution is by
means of an underwriting, on the date that the 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 independent legal
counsel representing the Company
8
for the purpose of such registration, addressed to the underwriters, if any, as
to such matters as such underwriters may reasonably request and as would be
customary in such a transaction; and (2) letters dated such date and the date
the offering is priced from the independent certified public accountants of the
Company, addressed to the underwriters, if any, (i) stating that they are
independent certified public accountants within the meaning of the Securities
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 Securities
Act and (ii) covering such other financial matters with respect to the
registration in respect of which such letter is being given as such underwriters
may reasonably request and as would be customary in such a transaction;
(g) 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;
(h) otherwise use all reasonable efforts to comply with all applicable
rules and regulations of the Commission; and
(i) use all reasonable efforts to list the Registrable Stock covered
by such registration statement with any securities exchange on which the Company
Common Stock is then listed.
For purposes of Sections 2.05(a) and 2.05(b), the period of distribution of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby and 120 days after the effective
date thereof.
Section 11.6 Additional Holder Obligations. (a) It shall be a condition
------------------------------------------
precedent to the obligations of the Company to take any action pursuant to this
Agreement that the Holders shall furnish to the Company such information
regarding themselves, their relationship with the Company and its Affiliates,
their beneficial ownership of Company Common Stock, the Registrable Stock held
by them, and the intended method of disposition, if any, of such securities as
the Company shall reasonably request and as shall be required in connection with
the action to be taken by the Company.
(b) The Company may, upon written notice to such Holder, suspend such
Holder's use of the prospectus for a reasonable period not to exceed sixty (60)
days if the Company in its reasonable judgment believes it may possess material
non-public information the disclosure of which at that point in time in its
reasonable judgment would have a material Adverse effect on the Company or
interfere with any material transaction then being pursued by the Company;
provided that (A) the Company may not effect any suspension under this Section
2.06 (b) more than three times in any twelve-month period and (B) all
suspensions under this Section 2.06(b) in any twelve-month period shall not
exceed 60 days in aggregate. Each Holder further agrees by acquisition of such
Registrable Stock that, upon receipt of any notice from the
9
Company of the happening of any event of the kind described in Section 2.05(e)
or this Section 2.06(b), such Holder will forthwith discontinue disposition of
such Registrable Stock covered by the registration (other than in transactions
exempt from the registration requirements under the Securities Act) until such
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 2.05(e), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such prospectus. If the Company shall give any such notice, the
Company shall extend the period during which the registration shall be
maintained effective as provided herein by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each Holder shall have received (x) the copies of the supplemented or
amended prospectus contemplated by Section 2.05(e) or (y) the Advice, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such prospectus.
(c) Each Holder understands that information provided to it pursuant
to any notice under Sections 2.05 or 2.06(b) or otherwise pursuant to this
Agreement or any of the registrations to be effected hereby may contain
confidential information, as designated in writing by the Company, and agrees
that unless such information otherwise becomes generally known to the public to
maintain such information in confidence and not use such information for its own
benefit other than as expressly contemplated by this Agreement.
(d) Each Holder agrees to comply with the prospectus delivery
requirements under the Securities Act in connection with the sale of any
Registrable Stock pursuant to a registration statement filed hereunder.
Section 11.7 Expenses of Registration. All expenses incurred by the Company
-------------------------------------
in connection with each registration pursuant to Sections 2.03 and 2.04 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), fees of the National Association of Securities
Dealers, Inc. or listing fees, messenger and delivery expenses, all fees and
expenses of complying with state securities or blue sky laws, and the fees and
disbursements of counsel for the Company, shall be paid by the Company;
provided, however, that if a registration request pursuant to Section 2.03 is
subsequently withdrawn by the Holders of a number of Registrable Stock such that
the remaining Holders requesting registration would not have been able to
request registration under the provisions of such Section 2.03, the Company
shall not be required to pay any expenses of such registration proceeding, and
such withdrawing Holders shall bear such expenses. The Holders shall bear and
pay the underwriting commissions and discounts applicable to securities offered
for their account and the fees and disbursements of their counsel in connection
with any registrations, filings and qualifications made pursuant to this
Agreement.
Section 11.8 Underwriting Requirements. In connection with any underwritten
--------------------------------------
offering, the Company shall not be required under Section 2.04 to include shares
of Registrable Stock in such underwritten offering unless the Holders of such
shares of Registrable Stock accept
10
the terms of the underwriting of such offering that have been reasonably agreed
upon between the Company and the underwriters selected by the Holders.
Section 11.9 Rule 144 Information. 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 the Registrable stock to the public without
registration, at all times after 90 days after any registration statement
covering a public offering of securities of the Company under the Securities Act
shall have become effective, the Company agrees to:
(a) I make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) I use its reasonable best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Exchange Act; and I
(c) I furnish to each Holder of Registrable Stock forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of such Rule ~ 44 and of the Securities Act and 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 Company as such Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing such Holder to sell any Registrable Stock without
registration.
Section 11.10 Indemnification. In the event any Registrable Stock is
-----------------------------
included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Holder, such
Holder's directors, officers, agents, trustees and stockholders, and each Person
who participates in the offering of such Registrable Stock, including
underwriters (as defined in the Securities Act), and each Person, if an, who
controls such Holder or participating Person within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which they may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or proceedings in
respect thereof) arise out of or are based on any untrue or alleged untrue
statement of any material fact contained in such registration statement on the
effective date therof (including any prospectus filed under Rule 424 under the
Securities Act or any amendments r supplements thereto) or arise out of or are
based upon the omission or alleged omission t state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse each such Holder, such Holder's directors and
officers, such participating person or controlling person for any legal or other
expenses reasonably incurred by them (but not in excess of expenses incurred in
respect of one counsel for all oft em, subject to the limitations set forth in
Section 2.10(c)) in connection with investigating or d fending any such loss,
claim, damage, liability or action; provided, however, that the indemnity I
agreement contained in this Section 2.10(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company; provided, further,
that the Company shall not be liable to any Holder, such Holder's directors,
officers, agents, trustees and stockholders, and participating
11
Person or controlling Person in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon (i) an
untrue statement or alleged untrue statement or omission or alleged omission
made in connection with such registration statement, preliminary prospectus,
final prospectus or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, such Holder's directors, officers,
agents, trustees and stockholders, and participating Person or controlling
Person or (ii) an untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendments or supplements thereto
corrected in a final or amended registration statement or prospectus if such
Holder or underwriter received written notice of such final or amended
prospectus prior to the confirmation of any sale but failed to deliver a copy of
the final or amended prospectus at or prior to the confirmation of the sale of
the Registrable Stock to the person asserting such loss, claim, damage or
liability. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of any such Holder, such Holder's
directors, officers, agents, trustees and stockholders, and participating Person
or controlling Person, and shall survive the transfer of such securities by such
Holder.
(b) Each Holder requesting or joining in a registration severally and
not jointly shall indemnify and hold harmless the Company, each of its directors
and officers, each Person, if any, who controls the Company within the meaning
of the Securities Act, and each agent and any underwriter for the Company
(within the meaning of the Securities Act) against any losses, claims, damages
or liabilities, joint or several, to which the Company or any such director,
officer, controlling Person, agent or underwriter may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement on the effective date thereof (including any
prospectus filed under Rule 424 under the Securities Act or any amendments or
supplements thereto) or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in such registration
statement, preliminary or final prospectus, or amendments or supplements
thereto, in reliance upon and in conformity with written information furnished
by or on behalf of such Holder expressly for use in connection with such
registration; and each such Holder shall reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
Person, agent or underwriter (but not in excess of expenses incurred in respect
of one counsel for all of them) in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 2.1 (b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Holder, and provided,
further, that the liability of each Holder hereunder shall be limited to the
amount received by such Holder from the sale of all Registrable Stock covered by
such registration statement.
(c) Promptly after receipt by an indemnified party under this Section
2.10 of notice of the commencement of any action, such indemnified party shall,
if a claim in respect thereof is to be made against any indemnifying party under
this Section 2.10, notify the
12
indemnifying party in writing of the commencement thereof and the indemnifying
party shall have the right to participate in and assume the defense thereof with
counsel selected by the indemnifying party and reasonably satisfactory to the
indemnified party (unless (i) such indemnified party reasonably objects to such
assumption on the grounds that there may be defenses available to it which are
different from or in addition to those available to such indemnifying party,
(ii) the indemnifying party and such indemnified party shall have mutually
agreed to the retention of such counselor (iii) in the reasonable opinion of
such indemnified party representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding, in which case the indemnified
party shall be reimbursed by the indemnifying party for the reasonable expenses
incurred in connection with retaining separate legal counsel); provided,
however, that an indemnified party shall have the right to retain its own
counsel, with all fees and expenses thereof to be paid by such indemnified
party, and to be apprised of all progress in any proceeding the defense of which
has been assumed by the indemnifying party. The failure to notify an
indemnifying party promptly of the commencement of any such action shall not
relieve the indemnifying party from any liability in respect of such action
which it may have to such indemnified party on account of the indemnity
contained in this Section 2.10, unless (and only to the extent) the indemnifying
party was prejudiced by such failure, and in no event shall such failure relieve
the indemnifying party from any other liability which it may have to such
indemnified party. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any claim or pending
or threatened proceeding in respect of which the indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability arising out of such claim or
proceeding.
(d) (i) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of, such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses, claims, damages
or liabilities, 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 any' action in
question, including any untrue or alleged untrue statement of 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 party, 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 or
liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or ' proceeding.
(ii) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.10(d) were determined by pro
rata allocation or by any other method of allocation which does not
take account of the equitable
13
considerations referred to in the immediately preceding paragraph. No
person guilty of fraudulent misrepresentation (within the meaning of
Section ll(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
Section 11.11 Lockup. Each Holder shall, in connection with any
--------------------
registration of the Company's securities, upon the request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
agree in writing not to effect any sale, disposition or distribution of any
Company Common Stock (other than that included in the registration) without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time from 30 days prior to the effective date of such
registration as the Company or the underwriters may specify; Provided, however,
that (i) all executive officers and directors of the Company and holders of
Company Common Stock participating in such registration shall also have agreed
not to effect any sale, disposition or distribution of any Company Common Stock
under the circumstances and pursuant to the terms set forth in this Section 2.11
and (ii) in no event shall the Holders be required to not effect any sale,
disposition or distribution for longer than 90 days after the Registration
Statement becomes effective.
ARTICLE XII.
------------
Miscellaneous
-------------
Section 12.1 Transfer of Registration Rights. The registration rights of
---------------------------------------------
any Holder under this Agreement with respect to any Registrable Stock may be
transferred to a Permitted Transferee; Provided, however, that (i) the
transferring Holder shall give the Company 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 to be
transferred, (ii) such transferee shall agree in writing, in form and substance
reasonably satisfactory to the Company, to be bound as a Holder by the
provisions of this Agreement and (iii) immediately following such transfer the
further disposition of such securities by such transferee is restricted under
the Securities Act. Any transfer of Registrable Stock other than as set forth in
this Section 3.01 shall cause such Registrable Stock to lose such status.
Section 12.2 Interpretation. (a) The headings contained in this Agreement
---------------------------
and, in the table of contents to this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
(b) In the event of an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
(c) The definitions of the terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (i) any definition of or reference to any agreement,
instrument or other
14
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (ii) any reference herein to any Person shall be construed to
include the Person's successors and permitted assigns, (iii) the words "herein",
"hereof' and "hereunder", and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, and (iv) all references herein to Articles and Sections shall be
construed to refer to Articles and Sections of this Agreement.
Section 12.3 Amendments. No amendment, modification or waiver in respect of
-----------------------
this Agreement shall be effective unless it shall be in writing and signed by
both parties hereto.
Section 12.4 Assignment. Except where otherwise expressly provided herein,
-----------------------
this Agreement and the rights and obligations hereunder shall not be assignable
or transferable by the parties hereto (except by operation of law in connection
with a merger, or sale of substantially all the assets, of the parties hereto)
without the prior written consent of the other party hereto. Any attempted
assignment in violation of this Section 3.04 shall be void. Notwithstanding
anything to the contrary in this Agreement, it is acknowledged and agreed that
any change in any trustee or fiduciary acting for a Stockholder that is an
employee benefit plan, or any transfer of any Registrable Stock to one or more
successor trusts or plans by merger or reorganization, shall not be deemed an
assignment of this Agreement or any rights hereunder, or an assignment or
transfer of such Registrable Stock, for purposes of, or in any way prohibited
by, or subject to any limitations or requirements of this Agreement and that
such trustee, fiduciary, trust or plan shall have all of the benefits hereunder
and that such Registrable Stock shall continue to be Registrable Stock
hereunder.
Section 12.5 No Third-Party Beneficiaries. This Agreement is for the sole
-----------------------------------------
benefit of the parties hereto and their permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any Person, other
than the parties hereto and such assigns, any legal or equitable rights
hereunder.
Section 12.6 Notices. All notices or other communications required or
--------------------
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by prepaid telex, cable or telecopy or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service and
shall be deemed given when so delivered by hand, telexed, cabled or telecopied,
or if mailed, five days after mailing (two Business Days in the case of express
mail or overnight courier service), as follows:
(i) if to the Company,
Lernout & Hauspie Speech Products ▇ .▇.
▇▇▇▇▇▇▇▇ Language Valley 50
8900 Ieper
Belgium
Attention: General Counsel and Chief Financial Officer
with a copy to:
15
Brown, Rudnick, Freed & Gesmer
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(ii) if to the Stockholders,
c/o Stonington Partners Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, III
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇'▇▇▇▇▇
(ii) if to ▇▇▇▇ Atlantic Master Trust
Mellon Bank, N.A., as
Trustee for the ▇▇▇▇ Atlantic
Master Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇ Atlantic Asset Management Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇.▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
---------------------------------
Section 12.7 Counterparts. This Agreement may be executed in one or more
-------------------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party. Copies of executed
counterparts transmitted by te1ecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section 3.07; provided that receipt of copies of such counterparts is confirmed.