Exhibit 10.3

 

INVESTOR RIGHTS AGREEMENT

 

THIS INVESTOR RIGHTS AGREEMENT, (this “Agreement”), is entered into as of
            , 2005, by and among ACT Teleconferencing, Inc., a Colorado
corporation (the “Company”), and Dolphin Direct Equity Partners, LP, a Delaware
limited partnership, and the Buyers listed on the Schedule of Buyers attached to
the Securities Purchase Agreement (as defined below) (each, a “Buyer” and,
collectively, the “Buyers”).

 

THE PARTIES TO THIS AGREEMENT enter into this agreement on the basis of the
following facts, intentions and understanding:

 

A. The Company and the Buyers entered into that certain Securities Purchase
Agreement, dated as of June 30, 2005 (the “Securities Purchase Agreement”), and,
upon the terms and subject to the conditions of the Securities Purchase
Agreement, the Company has agreed to issue and sell to the Buyers an aggregate
of up to One Hundred Sixty Thousand (160,000) shares of the Company’s Series AA
Convertible Preferred Stock, (the “Series AA Preferred”), issued pursuant to the
Company’s Certificate of Designations, Preferences, and rights of Series AA
Preferred Stock (the “Certificate”) related thereto, which shall be convertible
into shares of Common Stock of the Company (as converted, collectively, the
“Conversion Shares”), no par value per share (the “Common Stock”).

 

B. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights to the
Buyers under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and applicable state securities laws, and provide for certain board
composition and voting matters.

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyers hereby
agree as follows:

 

Section 1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:

 

“Business Day” means any day other than Saturday, Sunday or any other day on
which commercial banks in The City of New York are required by law to remain
closed.

 

“Commission” means the Securities and Exchange Commission.

 

“Investor” means each Buyer and any transferees or assignees thereof to whom a
Buyer assigns its rights under this Agreement and who agrees to become bound by
the provisions of this Agreement in accordance with Section 9 of this Agreement,
and any subsequent transferee or assignee thereof to whom a transferee or
assignee assigns its rights under this Agreement and who agrees to become bound
by the provisions of this Agreement in accordance with Section 9 of this
Agreement.

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“Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization or
association and governmental or any department or agency thereof.

 

“register,” “registered,” and “registration” means a registration effected by
preparing and filing one or more Registration Statements (as defined below) in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous or delayed
basis (“Rule 415”), and the declaration or ordering of effectiveness of such
Registration Statements by the Commission.

 

“Registrable Securities” means (i) the Conversion Shares issued or issuable upon
conversion of the Series AA Preferred, (ii) any shares of capital stock issued
or issuable with respect to securities referenced in the preceding clauses, as a
result of any stock split, stock dividend, recapitalization, exchange or similar
event or otherwise, without regard to any limitations on conversions of the
Series AA Preferred, and (iii) any shares of capital stock of any entity issued
in respect of the capital stock referenced in the preceding clauses as a result
of a merger, consolidation, sale of assets, sale or exchange of capital stock or
other similar transaction; provided, that any Registrable Securities that have
been sold pursuant to a Registration Statement or Rule 144 promulgated under the
1933 Act shall no longer be Registrable Securities.

 

“Registration Statement” means a registration statement or registration
statements of the Company filed under the 1933 Act and covering all of the
Registrable Securities.

 

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.

 

Section 2. Registration.

 

(a) Mandatory Registration. If at any time the Required Holders (as defined
below) request that the Company file a Registration Statement having an
aggregate offering price to the public of not less than Five Million Dollars
($5,000,000), the Company shall use its best efforts to prepare and, as soon as
practicable, file with the Commission a Registration Statement on Form S-3
covering the resale of all of the Registrable Securities; provided however, the
Company shall not be required to effect the foregoing registration prior to the
second anniversary of the Closing (as defined in the Securities Purchase
Agreement). In the event that Form S-3 is unavailable for such a registration,
the Company shall use such other form as is available for such a registration,
subject to the provisions of Section 2(d) of this Agreement. The Registration
Statement prepared pursuant hereto shall register the Registrable Securities for
resale, including at least 130% of the number of shares of Common Stock issuable
upon conversion of the Series AA Preferred by such Investors from time to time
in accordance with the methods of distribution elected by such Investors. The
Registration Statement shall contain (except if otherwise directed by the
holders of at least a majority of the Registrable Securities) the “Selling
Securityholders” and “Plan of Distribution” sections in substantially the form
attached hereto as Exhibit A. The Company shall use its best efforts to have the
Registration Statement declared effective by the Commission as soon as
practicable, but not later than 90 calendar days after such Investors’ request
(the “Effectiveness Deadline”). The Company shall not be obligated to file a

 

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Registration Statement on Form S-1 (or, regardless of the value of the
Registrable Securities covered thereby, on any other Form promulgated under the
1933 Act) and cause it to become effective prior to the second anniversary of
the date hereof nor more than twice under this Section 2(a). There shall be no
limit to the number of Registration Statements on Form S-3 required to be filed
and to become effective under this Section 2(a); provided that the value of the
Registrable Securities covered by each such registration Statement is not less
than $500,000.

 

(b) Allocation of Conversion Shares. The initial number of Conversion Shares
included in any Registration Statement and each increase in the number thereof
included therein shall be allocated pro rata among the Investors based on the
number of Registrable Securities held by each Investor at the time the
Registration Statement covering such initial number of Registrable Securities or
increase thereof is declared effective by the Commission. In the event that an
Investor sells or otherwise transfers any of such Investor’s Registrable
Securities, each transferee shall be allocated the portion of the then remaining
number of the applicable Registrable Securities included in such Registration
Statement allocable to the transferor. In no event shall the Company include any
securities other than Registrable Securities on any Registration Statement
without the prior written consent of the Investors holding at least a majority
in interest of the Registrable Securities, determined as if all of the Series AA
Preferred held by Investors then outstanding had been converted into Conversion
Shares without regard to any limitations on conversion of the Series AA
Preferred (the “Required Holders”).

 

(c) Legal Counsel. Subject to Section 5 of this Agreement, the Required Holders
in interest of the Registrable Securities shall have the right to select one
legal counsel to review and comment upon any registration pursuant to this
Agreement (the “Legal Counsel”), which the Investors agree shall be Hughes
Hubbard & Reed LLP or such other counsel as thereafter designated in writing by
the Required Holders. Hughes Hubbard & Reed LLP, or any other counsel designated
in writing by the Required Holders, shall not represent any Investor that sends
such counsel written notice that such Investor does not wish such counsel to
represent it in connection with the matters discussed in this Section 2(c). The
Investors, other than any Investor that delivers the notice discussed in the
preceding sentence, hereby waive any conflict of interest or potential conflict
of interest that may arise as a result of the representation of such Investors
by Hughes Hubbard & Reed LLP in connection with the subject matter of this
Agreement. This provision will not prohibit any other counsel to an Investor
from reviewing and commenting on any registration statement filed pursuant to
this Agreement at no cost to the Company.

 

(d) Ineligibility for Form S-3. If, for purposes of the last sentence of Section
2(a), Form S-3 is not available for the registration of the resale of the
Registrable Securities hereunder or the Company is not permitted by the 1933 Act
or the Commission to use Form S-3, then the Company shall (i) register the
resale of the Registrable Securities on another appropriate form reasonably
acceptable to the Required Holders and (ii) undertake to register the
Registrable Securities on Form S-3 as soon as such form is available; provided,
however, that the Company shall maintain the effectiveness of the Registration
Statement then in effect until such time as a Registration Statement on Form S-3
covering all of the Registrable Securities has been declared effective by the
Commission or, if earlier, until the end of the Registration Period (as defined
in Section 3(a); provided that such registration shall count as a registration
under such sentence and not pursuant to the other provisions of Section 2(a).

 

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(e) Sufficient Number of Shares Registered. In the event the number of shares
registered under a Registration Statement filed pursuant to Section 2(a) of this
Agreement is insufficient to cover all of the Conversion Shares or all of an
Investor’s allocated portion of the Conversion Shares pursuant to Section 2(b)
of this Agreement, the Company shall amend the Registration Statement, or file a
new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover at least one hundred thirty percent (130%)
of the number of such Conversion Shares as of the trading day immediately
preceding the date of the filing of such amendment and/or new Registration
Statement, in each case, as soon as practicable, but in no event later than
fifteen (15) days after the necessity therefor arises. The Company shall use its
best efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof. The calculation
of the number of shares sufficient to cover all of the Conversion Shares shall
be made without regard to any limitations on the conversion of the Series AA
Preferred, and such calculation shall assume that all of the Series AA Preferred
are then exercisable for, shares of Common Stock at the then prevailing
Conversion Rate (as defined in the Certificate).

 

(f) Effect of Failure to File and Obtain and Maintain Effectiveness of
Registration Statement. Subject to any elections made pursuant to Section 4(b),
if (i) a Registration Statement covering all the Registrable Securities is not
declared effective by the Commission on or before the Effectiveness Deadline,
(ii) a Registration Statement covering all of the Registrable Securities
required to be covered thereby, as described in Section 2(e) of this Agreement,
is not filed with the Commission on or before the deadline described in Section
2(e) of this Agreement or is not declared effective by the Commission on or
before the deadline described in Section 2(e) of this Agreement, (iii) on any
day after such Registration Statement has been declared effective by the
Commission, sales of all of the Registrable Securities required to be included
on such Registration Statement cannot be made as a matter of law (other than
during an Allowable Grace Period (as defined in Section 3(n) of this Agreement)
pursuant to such Registration Statement (including, without limitation, because
of a failure to keep such Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to such Registration
Statement or to register a sufficient number of shares of Common Stock but
excluding failures caused solely by a breach of the applicable Investor’s
obligations hereunder), or (iv) a Grace Period (as defined in Section 3(n) of
this Agreement) exceeds the length of an Allowable Grace Period (each of the
items described in clauses (i), (ii), (iii) and (iv) above shall be referred to
as a “Registration Delay”), then, as partial relief for the damages to any
holder by reason of any such delay in or reduction of its ability to sell the
underlying shares of Common Stock (which remedy shall not be exclusive of any
other remedies available at law or in equity) the Company shall pay on the
occurrence of each Registration Delay and every thirtieth day (pro rated for
periods totaling less than thirty days) thereafter until such Registration Delay
is cured to each holder of the Series AA Preferred an amount in cash equal to
the product of (i) the initial principal amount paid for the Series AA Preferred
held by such holder or the related Conversion Shares multiplied by (ii) two
percent (2%). The payments to which a holder shall be entitled pursuant to this
Section 2(f) are referred to herein as “Registration Delay Payments.” The
Registration Delay Payments shall be paid in cash on the earlier of (A) the last
day of the calendar month during which such Registration Delay Payments are
incurred and (B) the third Business Day after the event or failure giving rise
to the Registration Delay Payments is cured. In the event the Company fails to
make Registration

 

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Delay Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of one and one-half percent (1.5%) per month (prorated for
partial months) until paid in full.

 

(g) If at any time the Company shall propose to register any Common Stock,
whether or not for sale for its own account, under the 1933 Act, by registration
on Form SB-2, S-1, S-2 or S-3 (but not Form S-4 or S-8) or any successor or
similar forms (except for any registrations in connection with an employee
benefit plan or dividend reinvestment plan or a merger, consolidation or other
business combination it shall give written notice to the Investors of its
intention to do so and of the Investors’ rights under this Section 2(g) at least
30 days prior to the filing of a registration statement with respect to such
registration with the Commission. Upon the written request of any Investor made
within 20 days after the receipt of that notice, which request shall specify the
Registrable Securities intended to be registered and disposed of by such
Investor, the Company shall, subject to the provisions hereof, use its best
efforts to include in such registration statement all Registrable Securities
that the Company has been so requested to register by such Investor. If an
Investor decides not to include all of its Registrable Securities in any
registration statement thereafter filed by the Company, such Investor shall
nevertheless continue to have the right pursuant to this Section 1(g) to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, upon all the terms and conditions set forth herein. If, at
any time after giving written notice of its intention to register any securities
and prior to the effective date of the registration statement filed in
connection with a registration under this Section 2(g), the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Holder and upon giving that notice (i) in the case of a
determination not to register, the Company shall be relieved of its obligation
to register any Registrable Securities in connection with such registration
without prejudice and (ii) in the case of a determination to delay registering,
the Company shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other securities. In the
event a Demand Registration is an underwritten offering, the Shareholder shall
select the managing underwriters, which shall be reasonably acceptable to the
Company.

 

(h) If a registration hereunder is an underwritten offering and the managing
underwriters advise the Company in writing that in their opinion the number of
Registrable Securities exceeds the number of Registrable Securities and other
securities, if any, that can be sold therein without adversely affecting the
marketability of the offering, the Company will include in such registration
prior to the inclusion of any securities that are not Registrable Securities the
maximum number of Registrable Securities requested to be included that in the
opinion of such underwriters can be sold without adversely affecting the
marketability of the offering. No holder of any Company security for which the
Company has granted registration rights (other than the Investors) shall have
the right to participate in any registration made by the Company pursuant to a
demand registration.

 

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Section 3. Related Obligations. At such time as the Company is obligated to file
a Registration Statement with the Commission pursuant to Section 2(a), 2(d) or
2(e) of this Agreement, the Company will use reasonable efforts to effect the
registration of all of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:

 

(a) After the Investors’ request, the Company shall promptly prepare and file
with the Commission a Registration Statement with respect to all of the
Registrable Securities and use its best efforts to cause such Registration
Statement relating to all of the Registrable Securities required to be covered
thereby to become effective as soon as practicable after such filing (but in no
event later than the applicable Effectiveness Deadline). The Company shall
submit to the SEC, within two (2) Business Days after the Company learns that no
review of a particular Registration Statement will be made by the staff of the
Commission or that the staff has no further comments on a particular
Registration Statement, as the case may be, a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
48 hours after the submission of such request. The Company shall, subject to the
terms of this Agreement, keep each Registration Statement effective pursuant to
Rule 415 at all times during the period from the date it is initially declared
effective until the earliest of (i) the second anniversary of the date such
Registration Statement is filed, (ii) the date as of which all of the Investors
(other than any Investors who are “affiliates” of the Company as such term is
used in Rule 144(k) promulgated under the 1933 Act) may sell all of the
Registrable Securities without restriction pursuant to Rule 144(k) (or the
successor rule thereto) promulgated under the 1933 Act or (iii) the date on
which all of the Investors shall have sold all of the Registrable Securities
(the “Registration Period”), which Registration Statement, as of its filing and
effective dates and each day thereafter (including all amendments or supplements
thereto, as of their respective filing and effective dates and each day
thereafter), shall not contain any 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, and the prospectus contained in such
Registration Statement, as of its filing date and each day thereafter (including
all amendments and supplements thereto, as of their respective filing dates and
each day thereafter), shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated thereon, or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading.

 

(b) Subject to Section 3(m) of this Agreement, the Company shall prepare and
file with the Commission such amendments (including post-effective amendments)
and supplements to the Registration Statement and the prospectus used in
connection with such Registration Statement, which prospectus is to be filed
pursuant to Rule 424 (or any successor rule thereto) promulgated under the 1933
Act, as may be necessary to keep such Registration Statement effective at all
times during the Registration Period, and, during such period, comply with the
provisions of the 1933 Act. In the case of amendments and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company filing a
report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, or any similar successor statute (the “1934 Act”), the Company shall
have incorporated such report by reference into such Registration Statement, if
applicable, or

 

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shall file such amendments or supplements with the Commission on the same day on
which the 1934 Act report is filed which created the requirement for the Company
to amend or supplement such Registration Statement and prospectus.

 

(c) The Company shall permit Legal Counsel, or if no Legal Counsel shall have
been chosen by the Investors, the Investors, to review and provide written
comment upon each Registration Statement, prospectus and all amendments and
supplements thereto at least three (3) Business Days prior to their filing with
the Commission. The Company shall furnish to the Investors and Legal Counsel,
without charge, (i) promptly after receipt of such correspondence, copies of all
correspondence from the Commission or the staff of the Commission to the Company
or its representatives relating to each Registration Statement, prospectus and
all amendments and supplements thereto, (ii) promptly after the same is prepared
and filed with the Commission, one (1) copy of each Registration Statement,
prospectus and all amendments and supplements thereto, including all exhibits
and financial statements related thereto, and (iii) promptly upon the
effectiveness of each Registration Statement and each amendment and supplement
thereto, one (1) copy of the prospectus included in each such Registration
Statement and all amendments and supplements thereto. The Company agrees that it
will, and it will cause its counsel to, consider in good faith any comments or
objections from Legal Counsel, or if no Legal Counsel shall have been selected,
the Investors, as to the form or content of each Registration Statement,
prospectus and all amendments or supplements thereto or any request for
acceleration of the effectiveness of each Registration Statement, prospectus and
all amendments or supplements thereto.

 

(d) Subject to Section 3(m) of this Agreement, and excluding any Registrable
Shares held by Investors electing to exclude their Registrable Shares from the
Registration Statement under Section 4(b), the Company shall use reasonable
efforts to (i) promptly register and qualify, unless an exemption from
registration and qualification applies, the resale of the Registrable Securities
under such other securities or “blue sky” laws of all applicable jurisdictions
in the United States as any holder of Registrable Shares reasonably requests in
writing, (ii) promptly prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) promptly take such other actions as may be
reasonably necessary to maintain such registrations and qualifications in effect
at all times during the Registration Period, and (iv) promptly take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to file a general
consent to service of process in any such jurisdiction, except in such
jurisdictions where the Company is subject to service of process. The Company
shall promptly notify each Investor who holds Registrable Securities and Legal
Counsel of the receipt by the Company of any notification with respect to the
suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of notice of the initiation or threatening
of any proceeding for such purpose.

 

(e) Notwithstanding anything to the contrary set forth herein, as promptly as
practicable after becoming aware of such event, the Company shall notify each
Investor and Legal Counsel in writing of the happening of any event as a result
of which (i) the Registration

 

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Statement or any amendment or supplement thereto, as then in effect, includes an
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (ii) the prospectus related to such Registration Statement or any
amendment or supplement thereto includes an untrue statement of a material fact
or omission to state 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, and, subject to Section 3(m) of this Agreement,
promptly prepare a supplement or amendment to such Registration Statement and
prospectus to correct such untrue statement or omission, and deliver such number
of copies of such supplement or amendment to each Investor and Legal Counsel as
such Investor or Legal Counsel may reasonably request. The Company shall also
promptly notify each Investor and Legal Counsel in writing (i) when a prospectus
and each prospectus supplement or amendment thereto has been filed, and when a
Registration Statement and each amendment (including post-effective amendments)
and supplement thereto has been declared effective by the Commission
(notification of such effectiveness shall be delivered to each Investor and
Legal Counsel by facsimile on the same day of such effectiveness and by
overnight mail), (ii) of any request by the Commission for amendments or
supplements to a Registration Statement or related prospectus or related
information, and (iii) of the Company’s reasonable determination that an
amendment (including any post-effective amendment) or supplement to a
Registration Statement or prospectus would be appropriate (subject to Section
3(m) hereof).

 

(f) Subject to Section 3(m) of this Agreement, the Company shall use reasonable
efforts to (i) prevent the issuance of any stop order or other suspension of
effectiveness of a Registration Statement, or the suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction,
(ii) if such an order or suspension is issued, obtain the withdrawal of such
order or suspension at the earliest practicable moment and notify each holder of
Registrable Securities and Legal Counsel of the issuance of such order and the
resolution thereof or its receipt of notice of the initiation or threat of any
proceeding for such purpose.

 

(g) The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with United States federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, prospectus
or any amendment or supplement thereto, (iii) the release of such information is
ordered pursuant to a subpoena or other final, non-appealable order from a court
or governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this Agreement or any other agreement. The Company agrees that it
shall, upon learning that disclosure of such information concerning an Investor
is sought in or by a court or governmental body of competent jurisdiction or
through other means, unless ordered or requested by the Commission or other
governmental authority not to do so, give prompt written notice to such Investor
and allow such Investor, at the Investor’s expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information.

 

(h) The Company shall use reasonable efforts to cause all the Conversion Shares
to be listed on each securities exchange on which securities of the same class
or series

 

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issued by the Company are then listed, if any, if the listing of such Conversion
Shares is then permitted under the rules of such exchange. The Company shall pay
all fees and expenses in connection with satisfying its obligation under this
Section 3(h).

 

(i) In connection with any sale or transfer of Registrable Securities pursuant
to a Registration Statement, the Company shall cooperate with the Investors who
hold Registrable Securities being offered and, to the extent applicable,
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the Investors may reasonably
request and, registered in such names as the Investors may request.

 

(j) If requested by an Investor, the Company shall (i) as soon as practicable,
incorporate in each prospectus supplement or post-effective amendment to the
Registration Statement such information as an Investor provides in writing and
reasonably requests to be included therein relating to the sale and distribution
of the Registrable Securities, and (ii) as soon as practicable, make all
required filings of such prospectus supplement or post-effective amendment after
being notified of the matters to be incorporated in such prospectus supplement
or post-effective amendment.

 

(k) The Company shall comply with all applicable rules and regulations of the
Commission in connection with any registration hereunder.

 

(l) Within two (2) Business Days after a Registration Statement is ordered
effective by the Commission the Company will so notify the transfer agent for
the Registrable Securities and the Investors whose Registrable Securities are
included in the Registration Statement.

 

(m) Notwithstanding anything to the contrary herein, at any time after a
Registration Statement has been declared effective by the Commission, the
Company may delay the disclosure of material non-public information concerning
the Company if the disclosure of such information at the time is not, in the
good faith judgment of the Board of Directors of the Company relying upon the
opinion of counsel, in the best interests of the Company (a “Grace Period”);
provided, however, that the Company shall promptly (i) notify the Investors in
writing of the existence of material non-public information giving rise to a
Grace Period (provided that the Company shall not disclose the content of such
material non-public information to the Investors) and the date on which the
Grace Period will begin, and (ii) notify the Investors in writing of the date on
which the Grace Period ends; provided further, that such Grace Period shall not
exceed ninety (90) consecutive days during any three hundred sixty-five (365)
day period. For purposes of determining the length of a Grace Period, the Grace
Period shall be deemed to begin on and include the date the Investors receive
the notice referred to in clause (i) above and shall end on and include the
later of the date the Investors receive the notice referred to in clause (ii)
above and the date referred to in such notice. The provisions of Section 3(f) of
this Agreement shall not be applicable during the period of any Grace Period.
Upon expiration of each Grace Period, the Company shall again be bound by the
first sentence of Section 3(e) of this Agreement.

 

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(n) If reasonably requested in writing in connection with any disposition of
Registrable Securities pursuant to a Registration Statement, the Company shall
make reasonably available for inspection during normal business hours by a
representative for the Investors of such Registrable Securities and any
broker-dealers, attorneys and accountants retained by such Investors, all
relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the appropriate
executive officers, directors and designated employees of the Company and its
subsidiaries to make reasonably available for inspection during normal business
hours all relevant information reasonably requested by such representative for
the Investors or any such broker-dealers, attorneys or accountants in connection
with such disposition, in each case as is customary for similar “due diligence”
examinations; provided, however, that any information that is designated by the
Company, in good faith, as confidential at the time of delivery of such
information shall be kept confidential by such Persons, unless disclosure
thereof is made in connection with a court, administrative or regulatory
proceeding or required by law, or such information has become available to the
public generally through the Company or through a third party without an
accompanying obligation of confidentiality.

 

(o) The Company shall make generally available to its security holders as soon
as practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 1933 Act) covering a
twelve-month period beginning not later than the first day of the Company’s
fiscal quarter next following the effective date of a Registration Statement.

 

Section 4. Obligations of the Investors.

 

(a) At least three (3) Business Days prior to the first anticipated filing date
of a Registration Statement, the Company shall notify each Investor in writing
of the information the Company requires from each such Investor if such Investor
elects to have any of such Investor’s Registrable Securities included in such
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. Each Investor shall promptly notify the Company of any
material change with respect to such information previously provided to the
Company by such Investor.

 

(b) Each Investor agrees to cooperate with the Company as reasonably requested
by the Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor’s election to exclude all of such Investor’s Registrable
Securities from such Registration Statement, in which case, such Investor does
not need to cooperate with the Company until it notifies the Company of its
desire to include one or more shares of the Registrable Securities in such
Registration Statement.

 

10

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(c) Each Investor agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3(f) or 3(m) of this
Agreement or the first sentence of Section 3(e) of this Agreement, such Investor
will immediately discontinue disposition of Registrable Securities pursuant to
any Registration Statements covering such Registrable Securities until such
Investor’s receipt of the copies of the amended or supplemented prospectus
contemplated by Section 3(f) of this Agreement or the first sentence of Section
3(e) of this Agreement or receipt of notice that no amendment or supplement is
required and, if so directed by the Company, such Investor shall deliver to the
Company (at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies of the prospectus covering such
Registrable Securities current at the time of receipt of such notice (other than
a single file copy, which such Investor may keep) in such Investor’s possession.

 

Section 5. Expenses of Registration. All expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3 of this Agreement, including,
without limitation, all registration, listing and qualifications fees, printers
and accounting fees, transfer agent fees and fees and disbursements of counsel
for the Company, shall be paid by the Company. The Company shall pay all of the
Investors’ reasonable costs (including reasonable fees and disbursements of
Legal Counsel) incurred in connection with the registration, filing or
qualification pursuant to this Agreement, up to an aggregate amount of $15,000.

 

Section 6. Indemnification. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:

 

(a) To the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend each Investor, the directors, officers,
members, partners, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the 1933 Act or the 1934
Act (each, an “Indemnified Person”), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’
fees, amounts paid in settlement or expenses, joint or several, (collectively,
“Claims”) incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the Commission, whether pending or threatened, whether or not an
indemnified party is or may be a party thereto (“Indemnified Damages”), to which
any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any amendment (including
post-effective amendments) or supplement thereto or in any filing made in
connection with the qualification of the offering under the securities or other
“blue sky” laws of any jurisdiction in which the Registrable Securities are
offered (“Blue Sky Filing”), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus if authorized for use by
the Company prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if any) or the
omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, (iii) any violation

 

11

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or alleged violation by the Company of the 1933 Act, the 1934 Act, any other
law, including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement, or (iv) any material violation
of this Agreement by the Company (the matters in the foregoing clauses (i)
through (iv) being, collectively, “Violations”). Subject to Section 6(c) of this
Agreement, the Company shall reimburse the Indemnified Persons, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person or its Legal
Counsel expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto; (ii) shall not be
available to the extent such Claim is based on a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the
Company, including a corrected prospectus, if such prospectus or corrected
prospectus was timely made available by the Company pursuant to Section 3(d) of
this Agreement; and (iii) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld, conditioned or
delayed. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9 of this Agreement.

 

(b) In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a) of this Agreement, the Company, each of its directors,
each of its officers who signs the Registration Statement, its agents and each
Person, if any, who controls the Company within the meaning of the 1933 Act or
the 1934 Act (each, an “Indemnified Party”), against any Claims or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claims or Indemnified Damages arise out of or
are based upon any Violation (including for purposes of this paragraph, a
material violation of this Agreement by the Investor), in each case to the
extent, and only to the extent, that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
or its Legal Counsel expressly for use in connection with such Registration
Statement and, subject to Section 6(c) of this Agreement, such Investor will
reimburse any legal or other expenses reasonably incurred by an Indemnified
Party in connection with investigating or defending any such Claim; provided,
however, that the indemnification agreement contained in this Section 6(b) and
the agreement with respect to contribution contained in Section 7 of this
Agreement shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld or delayed; provided, further, that
the Investor shall be liable under this Section 6(b) for only that amount of the
Claims and Indemnified Damages as does not exceed the net proceeds to such
Investors as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnification agreement shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9 of this Agreement. Notwithstanding

 

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anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) shall not inure to the benefit of any Indemnified
Party if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.

 

(c) Promptly after an Indemnified Person or Indemnified Party under this Section
6 has knowledge of any Claim as to which such Indemnified Person or Indemnified
Party reasonably believes indemnity may be sought or promptly after such
Indemnified Person or Indemnified Party receives notice of the commencement of
any action or proceeding (including any governmental action or proceeding)
involving a Claim, such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of such Claim, and
the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding; provided, further, that the indemnifying party shall not be
responsible for the reasonable fees and expense of more than one (1) separate
legal counsel for such Indemnified Person or Indemnified Party. In the case of
an Indemnified Person, the legal counsel referred to in the immediately
preceding sentence shall be selected by the Required Holders. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or Claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or Claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent; provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a full release from all liability in
respect to such Claim and action and proceeding. After indemnification as
provided for under this Agreement, the rights of the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written notice to
the indemnifying party as provided in this Agreement shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.

 

13

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(d) No Person involved in the sale of Registrable Securities who is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to indemnification from any
Person involved in such sale of Registrable Securities who is not guilty of
fraudulent misrepresentation.

 

(e) The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are incurred.

 

(f) The indemnification agreements contained herein shall be in addition to (i)
any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

 

Section 7. Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 of this Agreement to the fullest extent permitted by law;
provided, however, that:

 

(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable
Securities who is guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to
contribution from any Person involved in such sale of Registrable Securities who
is not guilty of fraudulent misrepresentation, and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities
pursuant to such Registration Statement. The provisions of this Section 7 shall
remain in full force and effect, regardless of the investigation made by or on
behalf of the beneficiaries of this Section 7 and shall survive the transfer of
Registrable Securities by the Investors pursuant to Section 9 of this Agreement.

 

Section 8. Reporting.

 

(a) Reports Under The 1934 Act. With a view to making available to the Investors
the benefits of Rule 144 promulgated under the 1933 Act or any other similar
rule or regulation of the Commission that may at any time permit the Investors
to sell securities of the Company to the public without registration (“Rule
144”), the Company shall use its best efforts to:

 

(1) make and keep public information available, as those terms are understood
and defined in Rule 144;

 

(2) file with the Commission in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act; and

 

(3) furnish to each Investor, so long as such Investor owns Registrable
Securities, promptly upon request, (A) a written statement by the Company, if
true, that it has complied with the applicable reporting requirements of Rule
144,

 

14

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the 1933 Act and the 1934 Act, (B) a copy of the most recent annual or quarterly
report of the Company and copies of such other reports and documents so filed by
the Company, and (C) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.

 

(b) Rule 144A Information. The Company shall, upon request of any Investor, make
available to such Investor the information required by Rule 144A(d)(4) (or any
successor rule) under the 1933 Act.

 

Section 9. Assignment of Registration Rights. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Investors, subject to the condition that such
transfer shall have been conducted in accordance with all applicable federal and
state securities laws. The rights under this Agreement shall be automatically
assignable by the Investors, of all or any portion of such Investor’s
Registrable Securities, to (x) any partner or retired partner of any Investor
which is a partnership, (y) any family member or trust for the benefit of an
Investor and (z) any transferee who acquires at least ten percent (10%) of the
originally issued shares of the Registered Securities of all or any portion of
such Investor’s Registrable Securities, if: (i) the Investor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment; (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment, the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws;
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence, the transferee or assignee agrees in writing
with the Company to be bound by all of the obligations of an Investor under this
Agreement; (v) such transfer shall have been made in accordance with the
applicable requirements of the Securities Purchase Agreement and the
Certificate; and (vi) such transfer shall have been conducted in accordance with
all applicable federal and state securities laws. The Company hereby shall
extend the benefits of this Agreement to any Investor and any such Investor may
specifically enforce the provisions of this Agreement as if an original party
hereto.

 

Section 10. Amendment of Registration Rights. Any provision of this Agreement
may be amended and the observance of any provision of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Holders. Any amendment or waiver affected in accordance with this Section 10
shall be binding upon each Investor and the Company. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.

 

15

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Section 11. Board of Directors.

 

(a) From and after the Initial Closing and so long as Dolphin and its Affiliates
(as such term is defined in Rule 405 promulgated by the Commission under the
1933 Act) of Dolphin collectively shall own at least 50% of the Series AA
Preferred, or the shares into which such Series AA Preferred may be converted,
purchased by Dolphin at the Initial Closing the Company shall take all necessary
or desirable actions within its control (including, without limitation, calling
special board and shareholder meetings), so that:

 

(i) the Company shall have delivered to Dolphin a copy of the Company’s Bylaws
and resolutions of the Board of Directors of the Company (the “Board”) all
certified by the Secretary or an executive officer of the Company as in effect
on the Initial Closing Date wherein the size of the Board has been maintained at
seven (7) or reduced to five (5) (which number shall be as determined by Dolphin
and provided by notice to the Company at least three days prior to the Initial
Closing Date) members and Dolphin shall be entitled to appoint five (5) (in the
event of a seven-member Board as contemplated above) or three (3) (in the event
of a five-member Board as contemplated above) members to fill the vacancies
referred to in this clause (i) below, which initial appointees shall be
identified to the Company prior to the Initial Closing Date. In order to achieve
the Board size referenced above: (A) at least one day prior to the Initial
Closing Date the Company shall provide to Dolphin the irrevocable written
letters of resignation, effective as of the Initial Closing but not before, of
such number of Board members as shall leave in place two directors, as approved
in advance by Dolphin, duly elected by shareholders and qualifying as
“independent” for purposes of Rule 10A-3 of the SEC and Rules 4200(15) and 4350
of the NASD, and (B) effective as of the Initial Closing, the foregoing
resignations shall be in full force and effect and such remaining directors
shall appoint the appointees of Dolphin as contemplated above to fill the
vacancies created by such resignations;

 

(ii) notwithstanding the foregoing, at all times after the Initial Closing the
Board shall be comprised of a majority of Dolphin appointees;

 

(iii) the composition of the board of directors of each of the Company’s
Subsidiaries (as defined in the Securities Purchase Agreement) (a “Sub Board”)
shall be the same as that of the Board;

 

(iv) any committees of the Board or a Sub Board shall be created only upon the
approval of a majority of the members of the Board and each such committee shall
include at least one member appointed to the Board by Dolphin;

 

(v) in the event that any representative designated hereunder by Dolphin ceases
to serve as a member of the Board or a Sub Board during his or her term of
office, the resulting vacancy on the Board or the Sub Board shall be filled by
Dolphin

 

16

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(vi) the Company shall at its expense comply in all respects with Section 14(f)
of the 1934 Act and Rule 14f-1 of the SEC, subject to any reasonable
requirements by Dolphin in connection therewith.

 

(b) The Company shall pay the reasonable out-of-pocket expenses incurred by each
director in connection with attending the meetings of the Board, any Sub Board
and any committee thereof. So long as any director serves on the Board, the
Company’s Certificate of Incorporation and Bylaws shall provide for
indemnification and exculpation of directors to the fullest extent permitted
under applicable law and the Company shall obtain, maintain and timely pay for a
directors and officers liability insurance policy in such amount and having such
terms, from time to time, as shall be customary for companies of similar size
and circumstances, which policy shall remain in full force and effect for at
least six years following the first date that no Dolphin designee shall serve on
the Board.

 

(c) The Company agrees that it will not take any of the following actions unless
approved by a majority of the Board including the affirmative vote of the
directors designated by Dolphin:

 

(i) change or amend the Company’s Amended and Restated Certificate of
Incorporation and/or By-Laws;

 

(ii) issue any securities (including, without limitation, any options, warrants
or other rights or securities exercisable, convertible or exchangeable for
securities);

 

(iii) adopt any employee stock option or other equity-based benefit plan;

 

(iv) engage in any acquisition of stock or assets of a third party;

 

(v) incur any indebtedness;

 

(vi) declare a dividend on any capital stock of the Company;

 

(vii) engage in any merger or consolidation or sale of assets;

 

(viii) establish any Subsidiaries;

 

(ix) grant any exclusive rights to intellectual property;

 

(x) grant any exclusive distribution rights;

 

(xi) engage in any related party transaction; and

 

(xii) pledge or grant a security interest in any of the Company’s assets.

 

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(d) In the event that the Company establishes any subsidiaries that are governed
by a board of directors or similar governing body, the Company shall vote its
shares of the capital stock of such subsidiary or its equity interests in such
subsidiary to elect to such board of directors or similar governing body the
same persons who are then serving on the Board and, to the extent permitted by
law, to vote such shares in such a manner that thereafter the composition of the
Board or similar governing body of such subsidiary remains the same as the
composition of the Board.

 

Section 12. Miscellaneous.

 

(a) A Person is deemed to be a holder of Registrable Securities whenever such
Person owns or is deemed to own of record such Registrable Securities. If the
Company receives conflicting instructions, notices or elections from two or more
Persons with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from such record
owner of such Registrable Securities.

 

(b) Any notices, consents, waivers or other communications required or permitted
to be given under the terms of this Agreement must be in writing and will be
deemed to have been delivered: (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile (evidenced by mechanically or
electronically generated receipt by the sender’s facsimile machine); or (iii)
one (1) Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

ACT Teleconferencing, Inc.

1526 Cole Boulevard

Suite 300

Golden, Colorado 80401

Facsimile: (303) 235-4399

Attention: Edward J. Bernica, CFO

 

with a copy to:

 

Faegre & Benson LLP

3200 Wells Fargo Center

1700 Lincoln Street

Denver, Colorado 80203

Facsimile: (303) 607-3600

Attention: William J. Campbell

 

if to Buyer:

 

Dolphin Direct Equity Partners, LP

c/o Dolphin Asset Management Corp.

129 East 17th Street

New York, NY 10003

Attention: Carlos P. Salas

Telecopier No.: (212) 202-3817

 

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with a copy to and if to Legal Counsel:

 

Hughes Hubbard & Reed LLP

One Battery Park Plaza

New York, New York 10004

Telephone: (212) 837-6770

Facsimile: (212) 422-4726

Attention: Gary J. Simon

 

(c) Failure of any party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.

 

(d) All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

(e) This Agreement, the Securities Purchase Agreement, the Certificate and the
other documents referenced herein and therein constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, the
Securities Purchase Agreement and the Certificate supersede all prior

 

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agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.

 

(f) This Agreement shall become effective as of the Closing Date.

 

(g) Subject to the requirements of Section 9 of this Agreement, this Agreement
shall inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.

 

(h) The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.

 

(i) This Agreement may be executed in identical counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other parties hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

 

(j) Each party shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

 

(k) All consents and other determinations required to be made by the Investors
pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by the Required Holders.

 

(l) This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person.

 

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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be duly executed as of day and year first above written.

 

COMPANY: ACT TELECONFERENCING, INC.

By:

       

Name:

   

Title:

BUYER: DOLPHIN DIRECT EQUITY PARTNERS, LP

By:

 

Dolphin Advisors, LLC

its managing general partner

By:

 

Dolphin Management Inc.

its managing member

By:

       

Name:  Peter E. Salas

   

Title:    President

 

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EXHIBIT A

 

SELLING SECURITYHOLDERS

 

The preferred shares were originally issued by us in transactions exempt from
the registration requirements of the 1933 Act to persons reasonably believed to
be “accredited investors” as defined in Regulation D under the 1933 Act. The
shares of common stock being offered by the selling securityholders are issuable
upon conversion of the preferred shares. For additional information regarding
the preferred shares see “Private Placement of Preferred Shares” above. We are
registering the shares of common stock underlying the preferred shares in order
to permit the selling securityholders to offer the shares of common stock for
resale from time to time. Except for the ownership of the preferred shares and
the management agreement, the selling stockholders have not had any material
relationship with us within the past three years.

 

The table below lists the selling securityholders and other information
regarding the beneficial ownership of the shares of common stock by each of the
selling securityholders. The second column lists the number of shares of common
stock beneficially owned by each selling stockholder as of                     ,
2005, assuming conversion of all of the preferred shares held by the selling
securityholders on that date, without regard to any limitations on conversion.
The third column lists the shares of common stock being offered pursuant to this
prospectus by each of the selling securityholders. The fourth column lists the
number of shares that will be beneficially owned by the selling securityholders
assuming all of the shares offered pursuant to this prospectus are sold and that
shares beneficially owned by them, as of                     , 2005, but not
offered hereby are not sold.

 

In accordance with the terms of registration rights agreements with the holders
of the preferred shares, this prospectus generally covers the resale of 130% of
the maximum number of shares of common stock issuable upon conversion of the
preferred shares (without taking into account any limitations on the conversion
of the preferred shares set forth in the certificate of designations relating to
the preferred shares) as of the trading day immediately preceding the date this
registration statement was initially filed with the SEC. Because the conversion
price of the preferred shares may be adjusted, the number of shares that will
actually be issued may be more or less than the number of shares being offered
by this prospectus.

 

The selling securityholders may sell all, some or none of their shares in this
offering. See “Plan of Distribution.”

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The inclusion of any securities in the following table does not constitute an
admission of beneficial ownership by the persons named below.

 

Name of Selling Securityholder

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Shares of Common Stock
Owned Before the Offering

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Shares of Common Stock
Offered Hereby

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   Shares of Common Stock
Owned After the
Offering (1)

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PLAN OF DISTRIBUTION

 

We are registering the shares of common stock issuable upon conversion of the
preferred shares to permit the resale of the underlying shares of common stock
by the holders from time to time after the date of this prospectus. We will not
receive any of the proceeds from the sale by the selling securityholders of the
securities. We will bear all fees and expenses incident to our obligation to
register the preferred shares and shares of common stock.

 

The selling securityholders may sell all or a portion of the securities
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the securities
are sold through underwriters or broker-dealers, the selling securityholders
will be responsible for underwriting discounts or commissions or agent’s
commissions. The securities may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of the sale, at varying prices
determined at the time of sale, or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block transactions,

 

  •   on any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of sale;

 

  •   in the over-the-counter market;

 

  •   in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;

 

  •   through the writing of options, whether such options are listed on an
options exchange or otherwise;

 

  •   ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;

 

  •   block trades in which the broker-dealer will attempt to sell the
securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction;

 

  •   purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;

 

  •   an exchange distribution in accordance with the rules of the applicable
exchange;

 

  •   privately negotiated transactions;

 

  •   short sales;

 

  •   pursuant to Rule 144 under the Securities Act;

 

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  •   broker-dealers may agree with the selling securityholders to sell a
specified number of such securities at a stipulated price per security;

 

  •   a combination of any such methods of sale; and

 

  •   any other method permitted pursuant to applicable law.

 

If the selling securityholders effect such transactions by selling the preferred
shares or shares of common stock to or through underwriters, broker-dealers or
agents, such underwriters, broker-dealers or agents may receive commissions in
the form of discounts, concessions or commissions from the selling
securityholders or commissions from purchasers of the preferred shares or shares
of common stock for whom they may act as agent or to whom they may sell as
principal (which discounts, concessions or commissions as to particular
underwriters, broker-dealers or agents may be in excess of those customary in
the types of transactions involved). In connection with sales of any securities
or otherwise, the selling securityholders may enter into hedging transactions
with broker-dealers, which may in turn engage in short sales of the securities
in the course of hedging in positions they assume. The selling securityholders
may also sell securities short and deliver securities covered by this prospectus
to close out short positions. The selling securityholders may also loan or
pledge securities to broker-dealers that in turn may sell such securities.

 

The selling securityholders may pledge or grant a security interest in some or
all of the preferred shares or shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell shares of common stock from time to time pursuant to
this prospectus or any amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933, as amended, amending,
if necessary, the list of selling securityholders to include the pledgee,
transferee or other successors in interest as selling securityholders under this
prospectus. The selling securityholders also may transfer and donate the
preferred shares or shares of common stock in other circumstances in which case
the transferees, donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.

 

The selling securityholders and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be “underwriters”
within the meaning of the 1933 Act, and any commission paid, or any discounts or
concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the 1933 Act. At the time a particular offering
of the securities is made, a prospectus supplement, if required, will be
distributed which will set forth the aggregate amount of securities being
offered and the terms of the offering, including the name or names of any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling securityholders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers.

 

Under the securities laws of some states, the securities may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
some states the preferred shares and shares of common stock may not be sold
unless such preferred shares or shares of common stock have been registered or
qualified for sale in such state or an exemption from registration or
qualification is available and is complied with.

 

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The selling securityholders may choose not to sell any or may choose to sell
less than all of the shares of common stock registered pursuant to the shelf
registration statement, of which this prospectus forms a part.

 

The selling securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, including,
without limitation, Regulation M of the 1934 Act, which may limit the timing of
purchases and sales of any of the shares of common stock by the selling
securityholders and any other participating person. Regulation M may also
restrict the ability of any person engaged in the distribution of the shares of
common stock to engage in market-making activities with respect to the shares of
common stock. All of the foregoing may affect the marketability of the shares of
common stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.

 

We will pay all expenses of the registration of the preferred shares and shares
of common stock pursuant to the registration rights agreement, estimated to be
$             in total, including, without limitation, Securities and Exchange
Commission filing fees and expenses of compliance with state securities or “blue
sky” laws; provided, however, that a selling securityholder will pay all
underwriting discounts and selling commissions, if any. We will indemnify the
selling securityholders against liabilities, including some liabilities under
the 1933 Act, in accordance with the registration rights agreements, or the
selling securityholders will be entitled to contribution. We may be indemnified
by the selling securityholders against civil liabilities, including liabilities
under the 1933 Act, that may arise from any written information furnished to us
by the selling securityholder specifically for use in this prospectus, in
accordance with the related registration rights agreements, or we may be
entitled to contribution.

 

Once sold under the registration statement, of which this prospectus forms a
part, the shares of common stock will be freely tradable in the hands of persons
other than our affiliates.

 

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