EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of June
17, 1999, by and between Executive Telecard, Ltd., a Delaware corporation (the
"Company"), and American United Global, Inc. (the "Holder").
WHEREAS, pursuant to an Asset Purchase Agreement dated July 10, 1998
and amendments (including Amendment No. 3) thereto (the "Asset Purchase
Agreement ") the Company is issuing to the Holder one share of the Company's 6%
Series G Preferred Stock (the "Preferred Stock").
WHEREAS, the Preferred Stock may be converted into the Company's Common
Stock and may receive dividends, at the Company's option in Common Stock. (The
Company's Common Stock issuable upon conversion of the Preferred Stock and any
shares of Common Stock issued as dividend on the Preferred Stock are referred to
collectively as the "Registrable Securities");
WHEREAS, the transfer of the Preferred Stock to Holder is exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"1933 Act").
WHEREAS, pursuant to the terms of the Asset Purchase Agreement and in
order to induce the Holder to accept the Preferred Stock, the Company and the
Holder have agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and in the Asset Purchase Agreement, the Company
hereby agrees as follows:
1. Registration Rights.
(a) Mandatory Registration. The Company shall file with reasonable
diligence a registration statement covering the Registrable Securities as soon
as reasonably practicable, but in no event later than is reasonably calculated
to ensure such registration statement shall become effective prior to October 1,
1999. The Company shall use its best efforts to effect the registration under
the Securities Act of all the Registrable Securities on or prior to October 1,
1999, for resale under the 1933 Act, unless prior to filing a registration
statement to effect such registration the Company shall receive a written
request from the holder of the Preferred Stock requesting that such registration
be delayed for a specified period. Upon receipt of such a request the Company
shall delay the effective date of the registration required pursuant to this
Section 1(a) to such requested date.
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(b) Demand Registration. If the Company, at any time after October 1,
1999, at a time when no registration statement with respect to Registrable
Securities is then effective (whether due to the suspension of a prior
registration statement or otherwise), receives a written request from the holder
of the Preferred Stock to register the Registrable Securities not then subject
to an effective registration statement, the Company shall use its reasonable
best efforts to effect, as soon as practicable, the registration of such
Registrable Securities for resale under the 1933 Act; provided, however, that
the Company shall not be obligated to file a registration statement with respect
to any Registrable Securities that have been sold pursuant to an effective
registration statement or that may be sold under Rule 144(k) under the 1933 Act.
(c) "Piggyback Registration". If the Company at any time, after October
1, 1999, at a time when no registration statement with respect to Registrable
Securities is then effective (whether due to the suspension of a prior
registration statement or otherwise), proposes to register any of its securities
under the 1933 Act (other than in connection with a merger or pursuant to Form
S-8 or other comparable form), the Company shall give notice to the holder of
the Preferred Stock of such registration. If the holder of the Preferred Stock
requests within fifteen (15) days of such notice that the Registrable Securities
be included in such registration, the Company shall request that the underwriter
or managing underwriter (if any) of an underwritten offering, or if not an
underwritten offering the Company shall include the Registrable Securities in
such registration. If the offering is underwritten and such underwriter or
managing underwriter agrees to include the Registrable Securities in the
underwritten offering the Company shall include the Registrable Securities in
such registration; provided, however, that:
(1) If, at any time after giving such written notice of the
Company's intention to register any of the Holder' Registrable Securities and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register or to delay the registration of its securities, at its sole election,
the Company may give written notice of such determination to each Holder and
thereupon shall be relieved of its obligation to register any Registrable
Securities issued or issuable in connection with such registration (but not from
its obligation to pay registration expenses in connection therewith or to
register the Registrable Securities in a subsequent registration) ; and in the
case of a determination to delay a registration shall thereupon be permitted to
delay registering any Registrable Securities for the same period as the delay in
respect of securities being registered for the Company's own account; and
(2) The Company shall not be obligated to file a registration
statement with respect to any Registrable Securities that have been sold
pursuant
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to an effective registration statement or that may be sold under Rule 144(k)
under the 1933 Act.
(d) Cooperation with Company. The Holder will cooperate with the
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
2. Registration Procedures. If and whenever the Company is required by
any of the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Securities under the 1933 Act, the
Company shall as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement and shall use its best efforts to cause
such registration statement to become effective and remain effective until all
the Registrable Securities are sold.
(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 comply with the provisions of the 1933 Act with
respect to the sale or other disposition of all securities covered by such
registration statement (including prospectus supplements with respect to the
sales of securities or the exercise of Preferred Stock from time to time in
connection with a registration statement pursuant to Rule 415 of the
Commission);
(c) furnish to the Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the 1933 Act, and such other documents, as the Holder may reasonably request
in order to facilitate the public sale or other disposition of the securities
owned by the Holder;
(d) use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or blue sky laws of
such jurisdictions as the Holder shall reasonably request, except that the
Company shall not for any such purpose be required to qualify to do business as
a foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(e) use its best efforts to list such securities on any securities
exchange on which any securities of the Company is then listed, if the listing
of such securities is then permitted under the rules of such exchange;
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(f) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(g) notify the Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the 1933 Act,
of the happening of any (event of which it has knowledge 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 a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(h) take such other actions as shall be reasonably requested by any
Holder to facilitate the registration and sale of the Registrable Securities;
provided, however, that the Company shall not be obligated to take any actions
not specifically required elsewhere herein which in the aggregate would cost in
excess of $5,000.
3. Expenses. All expenses incurred in any registration of the Holder's
Registrable Securities under this Agreement shall be paid by the Company,
including, without limitation, printing expenses, fees and disbursements of
counsel for the Company, expenses of any audits to which the Company shall agree
or which shall be necessary to comply with governmental requirements in
connection with any such registration, all registration and filing fees for the
Holder' Registrable Securities under federal and State securities laws, and
expenses of complying with the securities or blue sky laws of any jurisdictions
pursuant to Section 2 (d); provided, however, the Company shall not be liable
for (a) any discounts or commissions to any underwriter; (b) any stock transfer
taxes incurred with respect to Registrable Securities sold in the Offering or
(c) the fees and expenses of counsel for any Holder, provided that the Company
will pay the costs and expenses of Company counsel when the Company's counsel is
representing any or all selling security holders.
4. Indemnification. In the event any Registrable Securities are
included in a registration statement pursuant to this Agreement:
(a) Company Indemnity. Without limitation of any other indemnity
provided to any Holder, to the extent permitted by law, the Company shall
indemnify and hold harmless each Holder, the affiliates, officers, directors and
partners of each Holder, any underwriter (as defined in the 1933 Act) for such
Holder, and each person, if any, who controls such Holder or underwriter (within
the meaning of the 1933 Act or the Securities Exchange Act of 1934 (the
"Exchange Act") , against any losses, claims, damages or liabilities (joint or
several) to which they may become subject under the 1933 Act, the Exchange Act
or other federal or
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state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statements including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or any blue sky filings made
in any jurisdiction, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (iii) any violation or alleged violation by the Company of the 1933
Act, the Exchange Act, or any state securities law or any rule or regulation
promulgated under the 1933 Act, the Exchange Act or any state securities law,
and in each case, the Company shall reimburse the Holder, affiliate, officer or
director or partner, underwriter or controlling person for any legal or other
expenses incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
shall not be liable to any Holder 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
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
the Holder or any other officer, director or controlling person thereof.
(b) Holder Indemnity. The Holder shall indemnify and hold harmless the
Company, its officers and directors, any underwriter (as defined in the 1933
Act) of such registration statement and each person, if any, who controls the
Company or such underwriter (within the meaning of the 1933 Act or the Exchange
Act) , against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the 1933 Act, the Exchange Act or any state
securities law, and the Holder shall reimburse the Company, officer or director,
underwriter or controlling person for any legal or other expenses incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action; insofar as such losses, claims, damages or liabilities (or
actions and respect thereof) arise out of or are based upon any Violation;
provided, however, that the Holder shall not be liable to the Company 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 a Violation which occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by the Company or any other officer, director
or controlling person thereof.
(c) Notice; Right to Defend. Promptly after receipt by an indemnified
party under this Section 4 of notice of the commencement of any action
(including any governmental action), such indemnified party shall, if a claim in
respect thereof is to be made against any indemnifying party under this Section
4, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in the
defense of such claim, and if the indemnifying party agrees in writing that it
will be responsible for
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any costs, expenses, judgments, damages and losses incurred by the indemnified
party with respect to such claim, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if the indemnified party reasonably believes that
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. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified
party under this Agreement only if and to the extent that such failure is
prejudicial to its ability to defend such action, and the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Agreement.
(d) Contribution. If the indemnification provided for in this Agreement
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties, relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount the Holder shall be obligated to
contribute pursuant to the Agreement shall be limited to an amount equal to the
proceeds to the Holder of the Registrable Securities sold pursuant to the
registration statement which gives rise to such obligation to contribute (less
the aggregate amount of any damages which the Holder has otherwise been required
to pay in respect of such loss, claim, damage, liability or action or any
substantially similar loss, claim, damage, liability or action arising from the
sale of such Registrable Securities).
(e) Survival of Indemnity. The indemnification provided by this
Agreement shall be a continuing right to indemnification and shall survive the
registration and sale of any Registrable Securities by any person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
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5. Assignment of Registration Rights. The right to cause the Company to
register Registrable Securities pursuant to this Agreement may be assigned by
the Holder to a transferee or assignee of the Preferred Stock.
6. Blackout Periods. On not more than two occasions per year, the
Company may defer the filing of any registration statement or suspend the use of
any registration statement for periods of not more than 45 consecutive days each
(a "Blackout Period"), if there is a possible acquisition or business
combination or other transaction, significant business development or event
involving the Company that, in the opinion of the Company's primary outside
counsel, would require disclosure in the registration statement and the Board of
Directors of the Company determines in the exercise of its reasonable judgment
that such disclosure is not in the best interests of the Company and its
stockholders or obtaining any financial statements relating to an acquisition or
business combination required to be included in the registration statement would
be impracticable.
In such a case, the Company shall promptly notify the holders of
Registrable Securities of the suspension of the use of registration statement
(provided that such notice shall not require the Company to disclose the
possible acquisition or business combination or other transaction, business
development or event if the Board of Directors of the Company determines in good
faith that such acquisition or business combination or other transaction,
business development or event should remain confidential) Promptly after
receiving such notice the holders shall cease disposition of any Registrable
Securities pursuant to the Registration Statement.
Upon the abandonment, consummation, or termination of the possible
acquisition or business combination or other transaction, business development
or event, the availability of the required financial statements with respect to
a possible acquisition or business combination, or the expiration of the 45 day
period, whichever comes first, the suspension of the use of the registration
statement pursuant to this Section 6 shall cease and the Company shall promptly
notify the holders of Registrable Securities that disposition of Registrable
Securities may be resumed. The Company may not defer the filing of any
registration statement or suspend the use of any registration statement within
45 days of the end of a Blackout Period.
7. Limitations on other Registration Rights. Except as otherwise set
forth in this Agreement, the Company shall not, without the prior written
consent of the holder of the Preferred Stock, file any registration statement
under the 1933 Act (other than in connection with a merger or pursuant to Form
S-8 or other comparable form), on behalf of any person, including the Company
(other than for the holder of the Preferred Stock), to become effective during
any period when the Company has failed to effect a registration statement in
breach of the terms of this
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Agreement; provided, however, that nothing in this Agreement shall preclude the
Company from filing a registration statement (i) pursuant to a good faith
contractual obligation with another person or entity not entered into with the
intention of circumventing this Agreement, or (ii) on behalf of the Company if
one of the uses of proceeds is the redemption in full of the Preferred Stock.
8. Remedies.
(a) Time is of the Essence. The Company agrees that time is of the
essence of each of the covenants contained herein and that, in the event of a
dispute hereunder, this Agreement is to be interpreted and construed in a
manner, consistent with the fair meaning of the language of this Agreement, that
will enable the holder to sell its Registrable Securities as quickly as possible
after such holder has given written notice to the Company, pursuant to one of
its rights hereunder to require the Company to register its Registrable
Securities, that the holder desires its Registrable Securities to be registered.
(b) Remedies Upon Default or Delay. The Company acknowledges the breach
of any part of this Agreement may cause irreparable harm to the Holder and that
monetary damages alone may be inadequate. The Company therefore agrees that the
Holder shall be entitled to injunctive relief or such other applicable remedy as
a court of competent jurisdiction may provide. Nothing contained herein will be
construed to limit a Holder's right to any remedies at law, including recovery
of damages for breach of any part of this Agreement.
9. Notices.
(a) All communications under this Agreement shall be in writing and
shall be mailed by first class mail, postage prepaid, or telegraphed or telexed
with confirmation of receipt or delivered by hand or by overnight delivery
service at,
i. If to the Company, at:
Executive Telecard, Ltd.
2000 Pennsylvania Avenue, N.W.
Washington, DC 20006
or at such other address as it may have furnished in writing to the Holder or
ii. if to the Holder at the address of the Holder
as it appears in the stock ledger of the Company.
(b) Any notice so addressed, when mailed by registered or certified
mail shall be deemed to be given three days after so mailed, when telegraphed or
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telexed shall be deemed to be given when transmitted, or when delivered by hand
or overnight shall be deemed to be given when delivered.
11. Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the Company and the Holder.
12. Amendment and Waiver. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, but only with the
written consent of the Company and the Holder. No delay on the part of any party
in the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by any party of any right, power or
remedy preclude any other or further exercise thereof, or the exercise of any
other right, power or remedy.
13. Counterparts. One or more counterparts of this Agreement may be
signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument.
14. Governing Law. This Agreement shall be construed in accordance with
and governed by the internal laws of the State of New York, without giving
effect to conflicts of law principles.
15. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
16. Headings. The headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
EXECUTIVE TELECARD, LTD. AMERICAN UNITED GLOBAL, INC.
BY:______________________ BY:__________________________
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