REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of the 30th day of July, 1998 by and between APPLIED VOICE
RECOGNITION, INC., a Delaware corporation (the "Company") and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇-
▇▇▇▇▇▇▇.
R E C I T A L S:
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WHEREAS, the Shareholder is acquiring Five Thousand (5,000) shares of the
Company's Series C 4% cumulative convertible preferred stock, stated value
$12.50 per share (the "Series C Preferred Stock") pursuant to that certain
Investor Subscription Agreement by and between the Company and the Shareholder
of even date herewith (the "Investor Agreement"); and
WHEREAS, the Company desires to grant to the Shareholder certain
registration rights relating to the shares of Common Stock issuable upon
conversion of any of the Series C Preferred Stock (the "Shares") and the
Shareholder desires to obtain such registration rights, subject to the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual premises, representations,
warranties and conditions set forth in this Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
A. Definitions and References. For purposes of this Agreement, in addition to
the definitions set forth above and elsewhere herein, the following terms shall
have the following meanings:
(a) The term "Commission" shall mean the Securities and Exchange Commission and
any successor agency.
(b) The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act (as herein defined) and
the declaration or ordering of effectiveness of such registration statement
or document.
(c) For purposes of this Agreement, the term "Registrable Stock" shall mean (i)
any shares of Common Stock issuable upon conversion of any of the Series C
Preferred Stock, (ii) any shares of Common Stock issued by way of a stock
split, reorganization, merger or consolidation, and (iii) any Common Stock
issued as a dividend on the Series C Preferred Stock. For purposes of this
Agreement, any Registrable Stock shall cease to be Registrable Stock when
(v) a registration statement covering such Registrable Stock has been
declared effective and such Registrable Stock has been disposed of pursuant
to such effective registration statement, (w) such Registrable Stock is
sold pursuant to Rule 144 (or any similar provision then in force) under
the 1933 Act, (x) such Registrable Stock is eligible to be sold pursuant to
Rule 144(k) under the 1933 Act, (y) such Registrable Stock has been
otherwise transferred, no stop transfer order affecting such stock is in
effect and the Company has
delivered new certificates or other evidences of ownership for such
Registrable Stock not bearing any legend indicating that such shares have
not been registered under the 1933 Act, or (z) such Registrable Stock is
sold by a person in a transaction in which the rights under the provisions
of this Agreement are not assigned.
(d) The term "Holder" shall mean the Shareholder or any transferee or assignee
thereof to whom the rights under this Agreement are assigned in accordance
with Section hereof, provided that the Shareholder or such transferee or
assignee shall then own the Registrable Stock.
(e) The term "1933 Act" shall mean the Securities Act of 1933, as amended.
(f) An "affiliate of such Holder" shall mean a person who controls, is
controlled by or is under common control with a Holder, or the spouse or
children (or a trust exclusively for the benefit of the spouse and/or
children) of a Holder, or, in the case of a Holder that is a partnership,
its partners.
(g) The term "Person" shall mean an individual, corporation, partnership,
trust, limited liability company, unincorporated organization or
association or other entity, including any governmental entity.
(h) The term "Requesting Holder" shall mean a Holder or Holders of in the
aggregate at least a majority of the Registrable Stock.
(i) References in this Agreement to any rules, regulations or forms promulgated
by the Commission shall include rules, regulations and forms succeeding to
the functions thereof, whether or not bearing the same designation.
1. Demand Registration.
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(a) Commencing immediately upon the date of Closing (as defined in the Investor
Agreement), any Requesting Holders may make a written request to the
Company (specifying that it is being made pursuant to this Section ) that
the Company file a registration statement under the 1933 Act (or a similar
document pursuant to any other statute then in effect corresponding to the
▇▇▇▇ ▇▇▇) covering the registration of Registrable Stock. In such event,
the Company shall (x) within ten (10) days thereafter notify in writing all
other Holders of Registrable Stock of such request, and (y) use its best
efforts to cause to be registered under the 1933 Act all Registrable Stock
that the Requesting Holders and such other Holders have, within forty-five
(45) days after the Company has given such notice, requested be registered.
(b) If the Requesting Holders intend to distribute the Registrable Stock
covered by their request by means of an underwritten offering, they shall
so advise the Company as a part of their request pursuant to Section
above, and the Company shall include such information in the written notice
referred to
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in clause (x) of Section above. In such event, the Holder's right to
include its Registrable Stock in such registration shall be conditioned
upon such Holder's participation in such underwritten offering and the
inclusion of such Holder's Registrable Stock in the underwritten offering
to the extent provided in this Section. All Holders proposing to
distribute Registrable Stock through such underwritten offering shall enter
into an underwriting agreement in customary form with the underwriter or
underwriters. Such underwriter or underwriters shall be selected by a
majority in interest of the Requesting Holders and shall be approved by the
Company, which approval shall not be unreasonably withheld; provided, that
all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall
also be made to and for the benefit of such Holders and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement shall be conditions precedent to the obligations of
such Holders; and provided further, that no Holder shall be required to
make any representations or warranties to or agreements with the Company or
the underwriters other than representations, warranties or agreements
regarding such Holder, the Registrable Stock of such Holder and such
Holder's intended method of distribution and any other representation
required by law or reasonably required by the underwriter.
(c) Notwithstanding any other provision of this Section to the contrary, if
the managing underwriter of an underwritten offering of the Registrable
Stock requested to be registered pursuant to this Section advises the
Requesting Holders in writing that in its opinion marketing factors require
a limitation of the number of shares to be underwritten, the Requesting
Holders shall so advise all Holders of Registrable Stock that would
otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Stock that may be included in such underwritten offering shall
be allocated among all such Holders, including the Requesting Holders, in
proportion (as nearly as practicable) to the amount of Registrable Stock
requested to be included in such registration by each Holder at the time of
filing the registration statement; provided, that in the event of such
limitation of the number of shares of Registrable Stock to be underwritten,
the Holders shall be entitled to an additional demand registration pursuant
to this Section . If any Holder of Registrable Stock disapproves of the
terms of the underwriting, such Holder may elect to withdraw by written
notice to the Company, the managing underwriter and the Requesting Holders.
The securities so withdrawn shall also be withdrawn from registration.
(d) Notwithstanding any provision of this Agreement to the contrary, the
Company shall not be required to effect a registration pursuant to this
Section during the period starting with the fourteenth (14th) day
immediately preceding the date of an anticipated filing by the Company of,
and ending on a date ninety (90) days following the effective date of, a
registration
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statement pertaining to a public offering of securities for the account of
the Company; provided, that the Company shall actively employ in good faith
all reasonable efforts to cause such registration statement to become
effective; and provided further, that the Company's estimate of the date of
filing such registration statement shall be made in good faith.
(c) The Company shall be obligated to effect and pay for a total of only one
(1) registration pursuant to this Section , unless increased pursuant to
Section hereof; provided, that a registration requested pursuant to this
Section shall not be deemed to have been effected for purposes of this
Section , unless (i) it has been declared effective by the Commission, (ii)
if it is a shelf registration, it has remained effective for the period set
forth in Section , (iii) the offering of Registrable Stock pursuant to such
registration is not subject to any stop order, injunction or other order or
requirement of the Commission (other than any such action prompted by any
act or omission of the Holders), and (iv) no limitation of the number of
shares of Registrable Stock to be underwritten has been required pursuant
to Section hereof.
2. Obligations of the Company. Whenever required under Section to use its
best efforts to effect the registration of any Registrable Stock, the Company
shall, as expeditiously as possible:
(a) prepare and file with the Commission, not later than ninety (90) days after
receipt of a request to file a registration statement with respect to such
Registrable Stock, a registration statement on any form for which the
Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of such issue of
Registrable Stock in accordance with the intended method of distribution
thereof, and use its best efforts to cause such registration statement to
become effective as promptly as practicable thereafter; provided that
before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will (i) furnish to one (1) counsel
selected by the Requesting Holders copies of all such documents proposed to
be filed, and (ii) notify each such Holder of any stop order issued or
threatened by the Commission and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered;
(b) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for such
period of time as would satisfy the holding period requirements of Rule
144(k) promulgated by the Commission with respect to the Shares or such
shorter period which will terminate when all Registrable Stock covered by
such registration statement has been sold (but not before the expiration of
the forty (40) or ninety (90) day period referred to in Section 4(3) of the
1933 Act and Rule 174
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thereunder, if applicable), and comply with the provisions of the 1933 Act
with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such
registration statement;
(c) furnish to each Holder and any underwriter of Registrable Stock to be
included in a registration statement copies of such registration statement
as filed and each amendment and supplement thereto (in each case including
all exhibits thereto), the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents
as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Stock owned by such Holder;
(d) use its best efforts to register or qualify such Registrable Stock under
such other securities or blue sky laws of such jurisdictions as any selling
Holder or any underwriter of Registrable Stock reasonably requests, and do
any and all other acts which may be reasonably necessary or advisable to
enable such Holder to consummate the disposition in such jurisdictions of
the Registrable Stock owned by such Holder; provided that the Company will
not be required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section
hereof, (ii) subject itself to taxation in any such jurisdiction, or (iii)
consent to general service of process in any such jurisdiction;
(e) use its best efforts to cause the Registrable Stock covered by such
registration statement to be registered with or approved by such other
governmental agencies or other authorities as may be necessary by virtue of
the business and operations of the Company to enable the selling Holders
thereof to consummate the disposition of such Registrable Stock;
(f) notify each selling Holder of such Registrable Stock and any underwriter
thereof, at any time when a prospectus relating thereto is required to be
delivered under the 1933 Act (even if such time is after the period
referred to in Section ), of the happening of any event as a result of
which the prospectus included in such registration statement contains an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
in light of the circumstances being made not misleading, and prepare a
supplement or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Stock, such prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances being made not misleading;
(g) make available for inspection by any selling Holder, any underwriter
participating in any disposition pursuant to such registration statement,
and any attorney, accountant or other agent retained by any such seller or
underwriter
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(collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company (collectively,
the "Records"), and cause the Company's officers, directors and employees
to supply all information reasonably requested by any such Inspector, as
shall be reasonably necessary to enable them to exercise their due
diligence responsibility, in connection with such registration statement.
Records or other information which the Company determines, in good faith,
to be confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records or other information is necessary to avoid or correct a
misstatement or omission in the registration statement, or (ii) the release
of such Records or other information is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction. Each selling Holder
shall, upon learning that disclosure of such Records or other information
is sought in a court of competent jurisdiction, give notice to the Company
and allow the Company, at the Company's expense, to undertake appropriate
action to prevent disclosure of the Records or other information deemed
confidential;
(h) furnish, at the request of any Requesting Holder, on the date that such
shares of Registrable Stock are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Stock is not being
sold through underwriters, on the date that the registration statement with
respect to such shares of Registrable Stock becomes effective, (1) a signed
opinion, dated such date, of the legal counsel representing the Company for
the purposes of such registration, addressed to the underwriters, if any,
and if such Registrable Stock is not being sold through underwriters, then
to the Requesting Holders as to such matters as such underwriters or the
Requesting Holders, as the case may be, may reasonably request and as would
be customary in such a transaction; and (2) a letter dated such date, from
the independent certified public accountants of the Company, addressed to
the underwriters, if any, and if such Registrable Stock is not being sold
through underwriters, then to the Requesting Holders and, if such
accountants refuse to deliver such letter to such Holder, then to the
Company (i) stating that they are independent certified public accountants
within the meaning of the 1933 Act and that, in the opinion of such
accountants, the financial statements and other financial data of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereto, comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act, and (ii)
covering such other financial matters (including information as to the
period ending not more than five (5) business days prior to the date of
such letter) with respect to the registration in respect of which such
letter is being given as the Requesting Holders may reasonably request and
as would be customary in such a transaction;
(i) enter into customary agreements (including if the method of distribution is
by means of an underwriting, an
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underwriting agreement in customary form) and take such other actions as
are reasonably required in order to expedite or facilitate the disposition
of the Registrable Stock to be so included in the registration statement;
(j) otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, but not later than eighteen (18) months
after the effective date of the registration statement, an earnings
statement covering the period of at least twelve (12) months beginning with
the first full month after the effective date of such registration
statement, which earnings statements shall satisfy the provisions of
Section 11(a) of the 1933 Act; and
(k) use its best efforts to cause all such Registrable Stock to be listed on
The Nasdaq Small Cap Market and/or any other securities exchange on which
similar securities issued by the Company are then listed or traded.
The Company may require each selling Holder of Registrable Stock as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Stock as the Company
may from time to time reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section hereof, such Holder
will forthwith discontinue disposition of Registrable Stock pursuant to the
registration statement covering such Registrable Stock until such Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section hereof, and, if so directed by the Company, such Holder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such Holder's possession, of the prospectus covering such
Registrable Stock current at the time of receipt of such notice. In the event
the Company shall give any such notice, the Company shall extend the period
during which such registration statement shall be maintained effective pursuant
to this Agreement (including the period referred to in Section ) by the number
of days during the period from and including the date of the giving of such
notice pursuant to Section hereof to and including the date when each selling
Holder of Registrable Stock covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section hereof.
3. Incidental Registration. Commencing immediately after the date of
Closing (as defined in the Investor Agreement), if the Company determines that
it shall file a registration statement under the 1933 Act (other than a
registration statement on a Form S-4 or S-8 or filed in connection with an
exchange offer or an offering of securities solely to the Company's existing
stockholders) on any form that would also permit the
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registration of the Registrable Stock and such filing is to be on its behalf
and/or on behalf of selling holders of its securities for the general
registration of its common stock to be sold for cash, at each such time the
Company shall promptly give each Holder written notice of such determination
setting forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than thirty (30) days from the date of
such notice, and advising each Holder of its right to have Registrable Stock
included in such registration. Upon the written request of any Holder received
by the Company no later than twenty (20) days after the date of the Company's
notice, the Company shall use its best efforts to cause to be registered under
the 1933 Act all of the Registrable Stock that each such Holder has so requested
to be registered. If, in the written opinion of the managing underwriter or
underwriters (or, in the case of a non-underwritten offering, in the written
opinion of the placement agent, or if there is none, the Company), the total
amount of such securities to be so registered, including such Registrable Stock,
will exceed the maximum amount of the Company's securities which can be marketed
(i) at a price reasonably related to the then current market value of such
securities, or (ii) without otherwise materially and adversely affecting the
entire offering, then the amount of Registrable Stock to be offered for the
accounts of Holders shall be reduced pro rata to the extent necessary to reduce
the total amount of securities to be included in such offering to the
recommended amount; provided, that if securities are being offered for the
account of other Persons as well as the Company, such reduction shall not
represent a greater fraction of the number of securities intended to be offered
by Holders than the fraction of similar reductions imposed on such other Persons
other than the Company over the amount of securities they intended to offer.
4. Holdback Agreement - Restrictions on Public Sale by Holder.
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(a) To the extent not inconsistent with applicable law, each Holder whose
Registrable Stock is included in a registration statement agrees not to
effect any public sale or distribution of the issue being registered or a
similar security of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant
to Rule 144 under the 1933 Act, during the fourteen (14) days prior to, and
during the ninety (90) day period beginning on, the effective date of such
registration statement (except as part of the registration), if and to the
extent requested by the Company in the case of a nonunderwritten public
offering or if and to the extent requested by the managing underwriter or
underwriters in the case of an underwritten public offering.
(b) Restrictions on Public Sale by the Company and Others. The Company agrees
(i) not to effect any public sale or distribution of any securities similar
to those being registered, or any securities convertible into or
exchangeable or exercisable
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for such securities, during the fourteen (14) days prior to, and during the
ninety (90) day period beginning on, the effective date of any registration
statement in which Holders are participating (except as part of such
registration), if and to the extent requested by the Holders in the case of
a non-underwritten public offering or if and to the extent requested by the
managing underwriter or underwriters in the case of an underwritten public
offering; and (ii) that any agreement entered into after the date of this
Agreement pursuant to which the Company issues or agrees to issue any
securities convertible into or exchangeable or exercisable for such
securities (other than pursuant to an effective registration statement)
shall contain a provision under which holders of such securities agree not
to effect any public sale or distribution of any such securities during the
periods described in (i) above, in each case including a sale pursuant to
Rule 144 under the 1933 Act.
5. Expenses of Registration. The Company shall bear all expenses incurred
in connection with each registration pursuant to Sections and of this
Agreement, excluding underwriters' discounts and commissions, but including,
without limitation, all registration, filing and qualification fees, word
processing, duplicating, printers' and accounting fees (including the expenses
of any special audits or "cold comfort" letters required by or incident to such
performance and compliance), exchange listing fees or National Association of
Securities Dealers fees, messenger and delivery expenses, all fees and expenses
of complying with securities or blue sky laws, fees and disbursements of counsel
for the Company. The selling Holders shall bear and pay the underwriting
commissions and discounts applicable to the Registrable Stock offered for their
account in connection with any registrations, filings and qualifications made
pursuant to this Agreement.
6. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify, to the
full extent permitted by law, each Holder, its officers, directors and
agents and each Person who controls such Holder (within the meaning of the
▇▇▇▇ ▇▇▇) against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material fact contained
in any registration statement, prospectus or preliminary prospectus or any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement therein (in case of a
prospectus or preliminary prospectus, in the light of the circumstances
under which they were made) not misleading. The Company will also indemnify
any underwriters of the Registrable Stock, their officers and directors and
each Person who controls such underwriters (within the meaning of the ▇▇▇▇
▇▇▇) to the same extent as provided above with respect to the
indemnification of the selling Holders.
(b) Indemnification by Holders. In connection with any registration statement
in which a Holder is participating, each such Holder will furnish to the
Company in writing such
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information with respect to such Holder as the Company reasonably requests
for use in connection with any such registration statement or prospectus
and agrees to indemnify, to the extent permitted by law, the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the ▇▇▇▇ ▇▇▇) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of
material fact or any omission or alleged omission of a material fact
required to be stated in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein (in the case of a prospectus or
preliminary prospectus, in the light of the circumstances under which they
were made) not misleading, to the extent, but only to the extent, that such
untrue statement or omission is contained in any information with respect
to such Holder so furnished in writing by such Holder. Notwithstanding the
foregoing, the liability of each such Holder under this Section shall be
limited to an amount equal to the initial public offering price of the
Registrable Stock sold by such Holder, unless such liability arises out of
or is based on willful misconduct of such Holder.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such Person of any written notice
of the commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which such Person will claim
indemnification or contribution pursuant to this Agreement and, unless in
the reasonable judgment of such indemnified party, a conflict of interest
may exist between such indemnified party and the indemnifying party with
respect to such claim, permit the indemnifying party to assume the defense
of such claims with counsel reasonably satisfactory to such indemnified
party. Whether or not such defense is assumed by the indemnifying party,
the indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be
unreasonably withheld). Failure by such Person to provide said notice to
the indemnifying party shall itself not create liability except to the
extent of any injury caused thereby. No indemnifying party will consent to
entry of any judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of such
claim or litigation. If the indemnifying party IS not entitled to, or
elects not to, assume the defense of a claim, it will not be obligated to
pay the fees and expenses of more than one (1) counsel with respect to such
claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
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(d) Contribution. If for any reason the indemnity provided for in this Section
is unavailable to, or is insufficient to hold harmless, an indemnified
party, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate
to reflect the relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, or
provides a lesser sum to the indemnified party than the amount hereinafter
calculated, in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying party on the one hand and
the indemnified party on the other but also the relative fault of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied
by, such indemnifying party or indemnified parties; and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section , any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section , the indemnifying
parties shall indemnify each indemnified party to the full extent provided
in Sections and without regard to the relative fault of said indemnifying
party or indemnified party or any other equitable consideration provided
for in this Section .
7. Participation in Underwritten Registrations. No Holder may participate
in any underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's securities on the basis provided in any underwriting arrangements
approved by the Holders entitled hereunder to approve such arrangements, and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
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8. Rule 144. The Company covenants that it will file the reports required
to be filed by it under the 1933 Act and the Securities Exchange Act of 1934, as
amended, and the rules and regulations adopted by the Commission thereunder; and
it will take such further action as any Holder may reasonably request, all to
the extent required from time to time to enable such Holder to sell Registrable
Stock without registration under the 1933 Act within the limitation of the
exemptions provided by (a) Rule 144 under the 1933 Act, as such Rule may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
9. Transfer of Registration Rights. The registration rights of any Holder
under this Agreement with respect to any Registrable Stock may be transferred to
any transferee of such Registrable Stock; provided that such transfer may
otherwise be effected in accordance with applicable securities laws; provided
further, that the transferring Holder shall give the Company written notice at
or prior to the time of such transfer stating the name and address of the
transferee and identifying the securities with respect to which the rights under
this Agreement are being transferred; provided further, that such transferee
shall agree in writing, in form and substance satisfactory to the Company, to be
bound as a Holder by the provisions of this Agreement; and provided further,
that such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by such transferee is
restricted under the 1933 Act. Except as set forth in this Section , no transfer
of Registrable Stock shall cause such Registrable Stock to lose such status.
10. Mergers, Etc. The Company shall not, directly or indirectly, enter into
any merger, consolidation or reorganization in which the Company shall not be
the surviving corporation unless the proposed surviving corporation shall, prior
to such merger, consolidation or reorganization, agree in writing to assume the
obligations of the Company under this Agreement, and for that purpose references
hereunder to "Registrable Stock" shall be deemed to be references to the
securities which the Holders would be entitled to receive in exchange for
Registrable Stock under any such merger, consolidation or reorganization;
provided, however, that the provisions of this Section shall not apply in the
event of any merger, consolidation or reorganization in which the Company is not
the surviving corporation if each Holder is entitled to receive in exchange for
its Registrable Stock consideration consisting solely of (i) cash, (ii)
securities of the acquiring corporation which may be immediately sold to the
public without registration under the 1933 Act, or (iii) securities of the
acquiring corporation which the acquiring corporation has agreed
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to register within ninety (90) days of completion of the transaction for resale
to the public pursuant to the 1933 Act.
11. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company will not hereafter enter into any
agreement with respect to its securities which is inconsistent with the
rights granted to the Holders in this Agreement.
(b) Remedies. Each Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees
that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive (to the extent permitted by law) the defense in
any action for specific performance that a remedy of law would be adequate.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given unless the Company has obtained
the written consent of the Holders of at least a majority of the
Registrable Stock then outstanding affected by such amendment,
modification, supplement, waiver or departure.
(d) Successors and Assigns. Except as otherwise expressly provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto.
Nothing in this Agreement, express or implied, is intended to confer upon
any Person other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided in this Agreement.
(e) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Texas applicable to
contracts made and to be performed wholly within that state, without regard
to the conflict of law rules thereof.
(f) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(g) Headings. The headings in this Agreement are used for convenience of
reference only and are not to be considered in construing or interpreting
this Agreement.
(h) Notices. Any notice required or permitted under this Agreement shall be
given in writing and shall be delivered in person or by telecopy or by
overnight courier guaranteeing no
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later than second business day delivery, directed to (i) the Company at the
address set forth below its signature hereof or (ii) a Holder at the
address of the Administrator set forth below its signature hereof. Any
party may change its address for notice by giving ten (10) days advance
written notice to the other parties. Every notice or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, or on the date actually received, if sent by
telecopy or overnight courier service, with receipt acknowledged.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all of the rights and
privileges of the Holders shall be enforceable to the fullest extent
permitted by law.
(j) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings other than those set forth or referred
to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(k) Enforceability. This Agreement shall remain in full force and effect
notwithstanding any breach or purported breach of, or relating to, the
Investor Agreement.
(l) Recitals. The recitals are hereby incorporated in the Agreement as if
fully set forth herein.
(m) Attorneys Fees. If any action is necessary to enforce or interpret the
terms of this agreement, the prevailing party shall be entitled to
reasonable attorneys' fees and costs, in addition to any other relief to
which he is or may be entitled. This provision shall be construed as
applicable to the entire agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written hereinabove.
APPLIED VOICE RECOGNITION, INC.
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman & C.E.O.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Telephone: (____) ____
Telecopier: (____)
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