REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of May 31,
1998, by and among COMPU-XXXX, INC., a corporation organized under the laws of
the State of Delaware (the "Company"), and the undersigned (together with
affiliates, the "Initial Investors").
WHEREAS:
A. In connection with the Securities Purchase Agreement of even date
herewith by and between the Company and the Initial Investors (the "Securities
Purchase Agreement"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Initial Investors (i)
Three Thousand Two Hundred Fifty (3,250) shares of its Series A Convertible
Preferred Stock (the "Preferred Stock") that are convertible into shares of the
Company's Common Stock, par value $.01 per share (the "Common Stock"), upon the
terms and subject to the limitations and conditions set forth in the Certificate
of Designations, Rights and Preferences with respect to such Preferred Stock
(the "Certificate of Designation"); and (ii) Three Hundred Twenty Seven Thousand
One Hundred Three (327,103) shares of Common Stock issued at the closing under
the Securities Purchase Agreement (the "Common Shares") and (iii) warrants to
acquire Ninety Thousand Two Hundred Seven (90,207) shares of Common Stock (the
"Warrants"); and
B. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises 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
Initial Investors hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investors" means the Initial Investors and any transferees
or assignees who agree to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
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(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement
or Statements in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act or any successor rule providing for
offering securities on a continuous basis ("Rule 415"), and the
declaration or ordering of effectiveness of such Registration
Statement by the United States Securities and Exchange Commission (the
"SEC").
(iii) "Registrable Securities" means the Conversion Shares, the
Common Shares and the Warrant Shares (including (A) any Conversion
Shares issuable with respect to the Damages Amount or with respect to
Conversion Default Payments under the Certificate of Designation or in
redemption of any Preferred Stock and (B) any Warrant Shares issuable
with respect to Exercise Default Payments under the Warrants) issued
or issuable with respect to the Preferred Stock and the Warrants, and
any shares of capital stock issued or issuable, from time to time
(with any adjustments), as a distribution on or in exchange for or
otherwise with respect to any of the foregoing.
(iv) "Registration Statement" means a registration statement of
the Company under the Securities Act.
b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare and, on or before
the seventy-fifth (75th) day following the Closing Date (the "Filing
Date"), file with the SEC a Registration Statement on Form S-3 (or, if Form
S-3 is not then available, on such form of Registration Statement as is
then available to effect a registration of the resale of all of the
Registrable Securities, subject to the consent of the Initial Investors (as
determined pursuant to Section 11(j) hereof)) covering the resale of at
least 1,624,740 Registrable Securities which Registration Statement, to the
extent allowable under the Securities Act and the Rules promulgated
thereunder (including Rule 416), shall state that such Registration
Statement also covers the resale of such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the
Preferred Stock (i) to prevent dilution resulting from stock splits, stock
dividends or similar transactions or (ii) by reason of reductions in the
Conversion Price of the Preferred Stock in accordance with the terms
thereof (including, but not limited to, the terms which cause the Variable
Conversion Price to decrease to the extent the Closing Bid Price of the
Common Stock decreases). The Registrable Securities initially set forth in
such Registration Statement shall be allocated to the Investors as set
forth in Section 11(k) hereof. The Registration Statement (and each
amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to (and subject to the approval
of) the Initial Investors and their counsel prior to its filing or other
submission.
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b. Underwritten Offering. If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an underwritten
offering, the Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering, with the consent of the
Initial Investors, shall have the right to select one legal counsel to
represent the Investors and an investment banker or bankers and manager or
managers to administer the offering, which investment banker or bankers or
manager or managers shall be reasonably satisfactory to the Company. In the
event that any Investors elect not to participate in such underwritten
offering, the Registration Statement covering all of the Registrable
Securities shall contain appropriate plans of distribution reasonably
satisfactory to the Investors participating in such underwritten offering
and the Investors electing not to participate in such underwritten offering
(including, without limitation, the ability of nonparticipating Investors
to sell from time to time and at any time during the effectiveness of such
Registration Statement).
c. Payments by the Company. The Company shall cause the Registration
Statement required to be filed pursuant to Section 2(a) hereof to become
effective as soon as practicable, but in no event later than the one
hundred and fiftieth (150th) day following the date hereof (the
"Registration Deadline"). If (i) (A) the Registration Statement required to
be filed by the Company pursuant to Section 2(a) hereof is not filed with
the SEC on or before the Filing Date or (B) any Registration Statement
required to be filed by the Company pursuant to Section 3(b) hereof is not
filed with the SEC within twenty (20) days after the applicable
Registration Trigger Date (as defined in Section 3(b) hereof), or (ii) (A)
the Registration Statement required to be filed by the Company pursuant to
Section 2(a) hereof is not declared effective by the SEC on or before the
Registration Deadline or (B) any Registration Statement required to be
filed by the Company pursuant to Section 3(b) hereof is not declared
effective by the SEC within sixty (60) days after the applicable
Registration Trigger Date, or (iii) if, subject to Section 3(c) hereof,
after any such Registration Statement has been declared effective by the
SEC, sales of all of the Registrable Securities (including any Registrable
Securities required to be registered pursuant to Section 3(b) hereof)
cannot be made pursuant to such Registration Statement (by reason of a stop
order or the Company's failure to update the Registration Statement or any
other reason outside the control of the Investors) or (iii) the Common
Stock is not listed or included for quotation on the American Stock
Exchange (the "AMEX"), the New York Stock Exchange (the "NYSE"), the Nasdaq
National Market ("NNM"), the Nasdaq SmallCap Market (the "SmallCap") or in
the over-the-counter market on the electronic bulletin board (the "Bulletin
Board") at any time after the initial Registration Deadline hereunder or
trading in the Common Stock on the AMEX, the NYSE, the NNM, the SmallCap or
the Bulletin Board, as applicable, is suspended for more than three
consecutive trading days, (iv) the Company fails to file a request for
acceleration of effectiveness of any Registration Statement required
hereunder within five days of receipt of notification from the SEC that the
SEC will not be reviewing such Registration Statement, or (v) the right of
an Investor to convert the Preferred Shares held by such Investor under the
Securities Purchase Agreement or Certificate of Designation is suspended
for any reason, then the Company will make payments to the Investors in
such amounts and at such times as shall be determined pursuant to this
Section 2(c) as partial relief for the damages to the Investors by reason
of any such delay in or reduction of their ability to sell the Registrable
Securities (which remedy shall not be exclusive of any other remedies
available at law or in equity). The Company shall pay to each Investor an
amount equal to the product of (i) the
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aggregate Purchase Price of the Preferred Stock, the Common Shares and
Warrants held by such Investor (including, without limitation, Preferred
Stock that has been converted into Conversion Shares and Warrants that have
been exercised for Warrant Shares then held by such Investor) (the
"Aggregate Share Price"), multiplied by (ii) twenty thousandths (.020), for
each thirty (30) day period (or portion thereof) (A) after the Filing Date
and prior to the date the Registration Statement required to be filed
pursuant to Section 2(a) hereof is filed with the SEC, (B) after the
twentieth (20th) day following a Registration Trigger Date and prior to the
date on which the Registration Statement required to be filed pursuant to
Section 3(b) hereof is filed with the SEC, (C) after the Registration
Deadline and prior to the date the Registration Statement required to be
filed pursuant to Section 2(a) hereof is declared effective by the SEC, (D)
after the sixtieth (60th) day following a Registration Trigger Date and
prior to the date the Registration Statement required to be filed pursuant
to Section 3(b) hereof is declared effective by the SEC, (E) during which
sales of any Registrable Securities cannot be made pursuant to any such
Registration Statement after the Registration Statement has been declared
effective, except during any Disclosure Delay Period (as hereinafter
defined), and (F) during which the Common Stock is not listed or included
for quotation on the NNM, SmallCap, NYSE or AMEX after the Registration
Deadline or suspended for more than three consecutive trading days;
provided, however, that there shall be excluded from each such period any
delays which are solely attributable to changes required by the Investors
in the Registration Statement with respect to information relating to the
Investors, including, without limitation, changes to the plan of
distribution. (For example, if the Registration Statement is not effective
by the Registration Deadline, the Company would pay $200 for each thirty
(30) day period thereafter with respect to each $10,000 of Aggregate Share
Price until the Registration Statement becomes effective) and, further
provided, however, that no amount shall be payable hereunder in the case of
any period referred to in subparagraph (A) above if the Registration
Statement is declared effective by the SEC on or before the Registration
Deadline. Such amounts shall be paid in cash or, at each Investor's option,
may be convertible into Common Stock at the "Conversion Price" (as defined
in the Certificate of Designation) then in effect. Any shares of Common
Stock issued upon conversion of such amounts shall be Registrable
Securities. If the Investor desires to convert the amounts due hereunder
into Registrable Securities it shall so notify the Company in writing
within two (2) business days after the date on which such amounts are first
payable in cash and such amounts shall be so convertible (pursuant to the
mechanics set forth under Article IV of the Certificate of Designation)
beginning on the last day upon which the cash amount would otherwise be due
in accordance with the following sentence. Payments of cash pursuant hereto
shall be made within five (5) days after the end of each period that gives
rise to such obligation, provided that, if any such period extends for more
than thirty (30) days, interim payments shall be made for each such thirty
(30) day period; provided, however, that any amount payable under
subparagraph (A) above shall not be payable prior to the Registration
Deadline and that, if any such amount is thereafter payable, it shall be
payable in accordance with the requirements of this paragraph.
d. Piggy-Back Registrations. If at any time prior to the expiration of
the Registration Period (as hereinafter defined) the Company shall file
with the SEC a Registration Statement relating to an offering for its own
account or the account of others under the Securities Act of any of its
equity securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or
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business or equity securities issuable in connection with stock option or
other employee benefit plans), the Company shall send to each Investor who
is entitled to registration rights under this Section 2(d) written notice
of such determination and, if within fifteen (15) days after the date of
such notice, such Investor shall so request in writing, the Company shall
include in such Registration Statement all or any part of the Registrable
Securities such Investor requests to be registered, except that if, in
connection with any underwritten public offering, the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because,
in such underwriter(s)' judgment, marketing or other factors dictate such
limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which such
Investor has requested inclusion hereunder as the underwriter shall permit
(limited to zero if necessary). Any exclusion of Registrable Securities
shall be made pro rata among the Investors seeking to include Registrable
Securities, in proportion to the number of Registrable Securities sought to
be included by such Investors; provided, however, that the Company shall
not exclude any Registrable Securities unless the Company has first
excluded all outstanding securities, the holders of which are not entitled
to inclusion of such securities in such Registration Statement or are not
entitled to pro rata inclusion with the Registrable Securities; and
provided, further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made
pro rata with holders of other securities having the right to include such
securities in the Registration Statement other than holders of securities
entitled to inclusion of their securities in such Registration Statement by
reason of demand registration rights. No right to registration of
Registrable Securities under this Section 2(d) shall be construed to limit
any registration required under Section 2(a) hereof. If an offering in
connection with which an Investor is entitled to registration under this
Section 2(d) is an underwritten offering, then each Investor whose
Registrable Securities are included in such Registration Statement shall,
unless otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Common Stock included in such
underwritten offering.
e. Eligibility for Form S-3. The Company represents and warrants that
it meets the requirements for the use of Form S-3 for registration of the
sale by the Initial Investors and any other Investor of the Registrable
Securities and the Company shall file all reports required to be filed by
the Company with the SEC in a timely manner so as to maintain such
eligibility for the use of Form S-3.
f. Rule 416. The Company and the Investors each acknowledge that an
indeterminate number of Registrable Securities shall be registered pursuant
to Rule 416 under the Securities Act so as to include in such Registration
Statement any and all Registrable Securities which may become issuable (i)
to prevent dilution resulting from stock splits, stock dividends or similar
transactions and (ii) by reason of reductions in the Conversion Price of
the Preferred Stock in accordance with the terms thereof, including, but
not limited to, the terms which cause the Variable Conversion Price to
decrease to the extent the Closing Bid Price of the Common Stock decreases
(collectively, the "Rule 416 Securities"). In this regard, the Company
agrees to take all steps necessary to ensure that all Registrable
Securities are registered pursuant to Rule 416 under
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the Securities Act in such Registration Statement and, absent guidance from
the SEC or other definitive authority to the contrary, the Company shall
affirmatively support and not take any action adverse to the position that
the Registration Statements filed hereunder cover all of the Rule 416
Securities. If the Company determines that the Registration Statements
filed hereunder do not cover all of the Rule 416 Securities, the Company
shall immediately provide to each Investor written notice (a "Rule 416
Notice") setting forth the basis for the Company's position and the
authority therefor. The Company acknowledges that the number of shares of
Common Stock initially included in such Registration Statement relating to
the Registrable Securities represents a good faith estimate of the maximum
number of shares issuable upon conversion of the Preferred Stock and
exercise of the Warrants.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare and file with the SEC the Registration
Statement required by Section 2(a) as soon as practicable after the date
hereof (but in no event later than the Filing Date) and shall cause such
Registration Statement relating to Registrable Securities to become
effective as soon as practicable after such filing (but in no event later
than the Registration Deadline), and keep the Registration Statement
effective pursuant to Rule 415 at all times, except during any Disclosure
Delay Period, until such date as is the earlier of (i) the date on which
all of the Registrable Securities have been sold and (ii) the date on which
all of the Registrable Securities (in the reasonable opinion of counsel to
the Initial Investors) may be immediately sold to the public without
registration or restriction pursuant to Rule 144(k) under the Securities
Act or any successor provision (the "Registration Period"), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein and all documents incorporated by reference
therein) 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.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration
Statement as may be necessary to keep the Registration Statement effective
at all times during the Registration Period, except during any Disclosure
Delay Period, and, during such period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement until such
time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in the Registration Statement. In the event
(i) the Company delivers a Rule 416 Notice to the Investors or the
Investors who hold a majority in interest of the Registrable Securities
shall reasonably determine, or the SEC shall state formally or informally,
that Rule 416 under the Securities Act does not permit a registration
statement to cover securities which may become issuable upon conversion or
exercise of convertible or exercisable securities by reason of reductions
in the conversion or exercise price of such securities and (ii) the number
of shares available under
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a Registration Statement filed pursuant to this Agreement is, for any three
(3) consecutive trading days (the last of such three (3) trading days being
the "Registration Trigger Date"), insufficient to cover one hundred
thirty-five percent (135%) of the Registrable Securities issued or issuable
upon conversion (without giving effect to any limitations on conversion
contained in Article IV.C of the Certificate of Designation) of the
Preferred Stock and exercise of the Warrants (without giving effect to any
limitations on exercise contained in Section 7 of the Warrants), the
Company shall amend such Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both,
so as to cover two hundred percent (200%) of the Registrable Securities
issued or issuable (without giving effect to any limitations on conversion
or exercise contained in the Certificate of Designation or the Warrants) as
of the Registration Trigger Date, in each case, as soon as practicable, but
in any event within twenty (20) days after the Registration Trigger Date
(based on the market price then in effect of the Common Stock and other
relevant factors on which the Company reasonably elects to rely). The
Company shall cause such amendment and/or new Registration Statement to
become effective as soon as practicable following the filing thereof. In
the event the Company fails to obtain the effectiveness of any such
Registration Statement within sixty (60) days after a Registration Trigger
Date, each Investor shall thereafter have the option, exercisable in whole
or in part at any time and from time to time by delivery of a written
notice to the Company (a "Mandatory Redemption Notice"), to require the
Company to purchase for cash, at an amount per share equal to the Mandatory
Redemption Amount (as defined in Article VIII.B of the Certificate of
Designation), a portion of the Investor's Preferred Stock such that the
total number of Registrable Securities included on the Registration
Statement for resale by such Investor exceeds 135% of the Registrable
Securities issued or issuable upon conversion (without giving effect to any
limitations on conversion contained in Article IV.C of the Certificate of
Designation) of such Investor's Preferred Stock and exercise of such
Investor's Warrants. If the Corporation fails to redeem any of such shares
within five (5) business days after its receipt of a Mandatory Redemption
Notice, then such Investor shall be entitled to the remedies provided in
Article VIII.C of the Certificate of Designation.
c. If, at any time prior to the expiration of the Registration Period
(as defined below), in the good faith reasonable judgment of the Company's
Board of Directors, the disposition of Registrable Securities would require
the premature disclosure of material non-public information which may
reasonably be expected to have an adverse effect on the Company, then the
Company shall not be required to maintain the effectiveness of or amend or
supplement the Registration Statement for a period (a "Disclosure Delay
Period") expiring upon the earlier to occur of (i) the date on which such
material information is disclosed to the public or ceases to be material or
(ii) subject to Section 3(d) hereof, up to forty-five (45) calendar days
after the date on which the Company provides a notice to the Investors
under Section 3(f) hereof stating that the failure to disclose such
non-public information causes the prospectus included in the Registration
Statement, as then in effect, to include an untrue statement of a material
fact or to omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. For the avoidance
of doubt, in no event shall a Disclosure Delay Period exceed forty-five
(45) calendar days.
d. The Company will give prompt written notice, in the manner
prescribed by Section 11 hereof, to the Investors of each Disclosure Delay
Period. Advance notice of the
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Disclosure Delay Period shall be given to the extent practicable. If
practicable, such notice shall estimate the duration of such Disclosure
Delay Period. Each Investor agrees that, upon receipt of such notice prior
to Investor's disposition of all such Registrable Securities, Investor will
forthwith discontinue disposition of such Registrable Securities pursuant
to the Registration Statement, and will not deliver any prospectus forming
a part thereof in connection with any sale of such Registrable Securities
until the expiration of such Disclosure Delay Period, provided, however,
that an Investor may complete the disposition of any Registrable Securities
which are the subject of a pending or outstanding conversion of shares of
Preferred Stock or exercise of Warrants. In addition, the provisions of
Section 2(c) hereof shall not apply to the Disclosure Delay Periods.
Notwithstanding anything in this Section 3 to the contrary, there shall not
be more than an aggregate of forty-five (45) calendar days in any twelve
(12) month period during which the Company is in a Disclosure Delay Period.
e. The Company shall furnish to each Investor whose Registrable
Securities are included for resale in the Registration Statement and its
legal counsel (i) promptly after the same is prepared and publicly
distributed, filed with the SEC, or received by the Company, one copy of
the Registration Statement and any amendment thereto, each preliminary
prospectus and prospectus and each amendment or supplement thereto, and, in
the case of the Registration Statement referred to in Section 2(a), each
letter written by or on behalf of the Company to the SEC or the staff of
the SEC (including, without limitation, any request to accelerate the
effectiveness of any Registration Statement or amendment thereto), and each
item of correspondence from the SEC or the staff of the SEC, in each case
relating to such Registration Statement (other than any portion, if any,
thereof which contains information for which the Company has sought
confidential treatment), (ii) on the date of effectiveness of the
Registration Statement or any amendment thereto, a notice stating that the
Registration Statement or amendment has been declared effective, and (iii)
such number of copies of a prospectus, including a preliminary prospectus,
and all amendments and supplements thereto and such other documents as such
Investor may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such Investor.
f. The Company shall use its best efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the United
States as each Investor who holds Registrable Securities being offered
reasonably requests, (ii) 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) take such other
actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and
(iv) 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 (a) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section
3(f), (b) subject itself to general taxation in any such jurisdiction, (c)
file a general consent to service of process in any such jurisdiction, (d)
provide any undertakings that cause the Company undue expense or burden, or
(e) make any change in its charter or bylaws, which in each case the Board
of
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Directors of the Company determines to be contrary to the best interests of
the Company and its stockholders.
g. In the event the Investors who hold a majority in interest of the
Registrable Securities being offered in an offering select underwriters for
the offering, the Company shall enter into and perform its obligations
under an underwriting agreement, in usual and customary form, including,
without limitation, customary indemnification and contribution obligations,
with the underwriters of such offering.
h. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor of the happening of any event, of which
the Company has knowledge, as a result of which the prospectus included in
the Registration Statement, 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,
and use its best efforts promptly to prepare a supplement or amendment to
the Registration Statement to correct such untrue statement or omission,
and deliver such number of copies of such supplement or amendment to each
Investor as such Investor may reasonably request.
i. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration
Statement, and, if such an order is issued, to obtain the withdrawal of
such order at the earliest practicable moment (including in each case by
amending or supplementing such Registration Statement) and to notify each
Investor who holds Registrable Securities being sold (or, in the event of
an underwritten offering, the managing underwriters) of the issuance of
such order and the resolution thereof (and if such Registration Statement
is supplemented or amended, deliver such number of copies of such
supplement or amendment to each Investor as such Investor may reasonably
request).
j. The Company shall permit a single firm of counsel designated by the
Initial Investors to review the Registration Statement and all amendments
and supplements thereto a reasonable period of time prior to their filing
with the SEC, and not file any document in a form to which such counsel
reasonably objects and will not request acceleration of the effectiveness
of any Registration Statement without prior notice to such counsel.
k. 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 the provisions of Rule 158 under the Securities 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 the Registration
Statement.
l. At the request of any Investor, the Company shall furnish, on the
date of effectiveness of the Registration Statement (i) an opinion, dated
as of such date, from counsel representing the Company addressed to the
Investors and in form, scope and substance as is customarily given in an
underwritten public offering and (ii) in the case of an underwriting, a
letter, dated such date, from the Company's independent certified public
accountants in form and substance
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as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the
underwriters, if any, and the Investors.
m. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition pursuant to
the Registration Statement, (iii) one firm of attorneys and one firm of
accountants or other agents retained by the Investors, and (iv) one firm of
attorneys retained by all such underwriters (collectively, the
"Inspectors") all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably deemed necessary by each Inspector to
enable each Inspector to exercise its due diligence responsibility, and
cause the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request for purposes of such
due diligence; provided, however, that each Inspector shall hold in
confidence and shall not make any disclosure (except to an Investor) of any
Record or other information which the Company determines in good faith to
be confidential, and of which determination the Inspectors are so notified,
unless (a) the disclosure of such Records is necessary to avoid or correct
a misstatement or omission in any Registration Statement, (b) the release
of such Records is ordered pursuant to a subpoena or other order from a
court or government body of competent jurisdiction, or (c) the information
in such Records has been made generally available to the public other than
by disclosure in violation of this or any other agreement. The Company
shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered
into confidentiality agreements (in form and substance satisfactory to the
Company) with the Company with respect thereto, substantially in the form
of this Section 3(m). Each Investor agrees that it shall, upon learning
that disclosure of such Records is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt notice
to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential. Nothing herein shall be deemed
to limit the Investors' ability to sell Registrable Securities in a manner
which is otherwise consistent with applicable laws and regulations.
n. 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 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,
(iii) the release of such information is ordered pursuant to a subpoena or
other order from a court or governmental body of competent jurisdiction,
(iv) such information has been made generally available to the public other
than by disclosure in violation of this or any other agreement, or (v) such
Investor consents to the form and content of any such disclosure. 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, give
prompt notice to such Investor prior to making such disclosure, and allow
the Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
10
o. The Company shall use its best efforts to promptly either (i) cause
all of the Registrable Securities covered by the Registration Statement for
resale to be listed on the NYSE or the AMEX or another national securities
exchange and on each additional national securities exchange on which
securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (ii) secure the designation
and quotation of all of the Registrable Securities covered by the
Registration Statement on the NNM or SmallCap and, without limiting the
generality of the foregoing, to arrange for or maintain at least two market
makers to register with the National Association of Securities Dealers,
Inc. ("NASD") as such with respect to such Registrable Securities.
p. The Company shall provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.
q. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or underwriters, if
any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates
to be in such denominations or amounts, as the case may be, as the managing
underwriter or underwriters, if any, or the Investors may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Investors may request, and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall cause legal counsel selected by the Company to deliver, to the
transfer agent for the Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement)
an opinion of such counsel in the form attached hereto as Exhibit 1 and/or
Exhibit 1A, as applicable.
r. At the request of any Investor, the Company shall prepare and file
with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in
connection with the Registration Statement as may be necessary in order to
change the plan of distribution set forth in such Registration Statement;
provided, however, that the Company shall only pay the costs and expenses
relating to three (3) such amendments or supplements, and the Investor
requesting any amendment or supplement in excess thereof shall pay the
reasonable costs and expenses relating to the preparation of such amendment
or supplement.
s. The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all
applicable rules and regulations of governmental authorities in connection
therewith (including, without limitation, the Securities Act and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated by the SEC.)
11
t. The Company shall take all such other actions as any Investor or
the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of the Registrable Securities.
u. From and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company
to include any of their securities in any Registration Statement under
Section 2(a) hereof or any amendment or supplement thereto under Section
3(b) hereof without the consent of the holders of a majority in interest of
the Registrable Securities.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. 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 registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may
reasonably request. At least five (5) business days prior to the first
anticipated filing date of the Registration Statement, the Company shall
notify each Investor of the information the Company requires from each such
Investor.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by
the Company in connection with the preparation and filing of the
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 the Registration Statement.
c. In the event Investors holding a majority in interest of the
Registrable Securities being offered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such
other actions as are reasonably required in order to expedite or facilitate
the disposition of the Registrable Securities, unless such Investor has
notified the Company in writing of such Investor's election not to
participate in such underwritten distribution.
d. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Sections
3(h) or 3(i), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering the
resale of such Registrable Securities until such Investor's receipt of the
copies of the
12
supplemented or amended prospectus contemplated by Sections 3(h) or 3(i)
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 in such Investor's
possession, of the prospectus covering such Registrable Securities current
at the time of receipt of such notice.
e. No Investor may participate in any underwritten distribution
hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting
arrangements in usual and customary form entered into by the Company, (ii)
completes, in a manner reasonably acceptable to the Company, and executes
all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of
all underwriting discounts and commissions and any expenses in excess of
those payable by the Company pursuant to Section 5 below.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 4, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, the
fees and disbursements of counsel for the Company and the fees and disbursements
contemplated by Section 3(m) hereof shall be borne by the Company. In addition,
the Company shall pay all of the Investors' costs and expenses (including legal
fees of one (1) firm or counsel) incurred in connection with the enforcement of
the rights of the Investors hereunder.
6. INDEMNIFICATION.
In the event any Registrable Securities are included for resale in a
Registration Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Investor who holds such Registrable
Securities, and (ii) the directors, officers, partners, members, employees,
agents and each person who controls any Investor within the meaning of
Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), if any, (each, an
"Indemnified Person"), against any joint or several losses, claims,
damages, liabilities or expenses (collectively, together with actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
whether commenced or threatened, in respect thereof, "Claims") to which any
of them may become subject insofar as such Claims arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to
state therein a material fact required to be stated 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 used prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if the
Company files any amendment thereof or supplement thereto with the SEC)
13
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,
or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any other applicable securities law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to the restrictions set forth in
Section 6(c) with respect to the number of legal counsel, the Company shall
reimburse the Investors and each other Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any reasonable 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 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 expressly
for use in the Registration Statement or any such amendment thereof or
supplement thereto; (ii) 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; and (iii)
with respect to any preliminary prospectus, shall not inure to the benefit
of any Indemnified Person 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, if such corrected
prospectus was timely made available by the Company pursuant to Section
3(e) hereof, and the Indemnified Person was promptly advised in writing not
to use the incorrect prospectus prior to the use giving rise to a Violation
and such Indemnified Person, notwithstanding such advice, used it. 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 hereof.
b. In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees severally and not jointly to
indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the Registration Statement, its employees, agents
and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and any
other stockholder selling securities pursuant to the Registration Statement
or any of its directors or officers or any person who controls such
stockholder within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an "Indemnified
Party"), against any Claim to which any of them may become subject, under
the Securities Act, the Exchange Act or otherwise, insofar as such Claim
arises out of or is based upon any Violation, 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 expressly for use in connection with such Registration Statement;
and subject to Section 6(c) such Investor will reimburse any legal or other
expenses (promptly as such expenses are incurred and are due and payable)
reasonably incurred by them in connection with investigating or defending
any such Claim; provided, however, that the indemnity agreement contained
in this Section 6(b) 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
14
unreasonably withheld; provided, further, however, that the Investor shall
be liable under this Agreement (including this Section 6(b) and Section 7)
for only that amount as does not exceed the net proceeds actually received
by such Investor as a result of the sale of Registrable Securities pursuant
to such Registration Statement. Such indemnity 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 hereof. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any preliminary prospectus
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, and the Indemnified Party failed to utilize such
corrected prospectus.
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any
indemnifying party under this Section 6, deliver to the indemnifying party
a written notice of the commencement thereof, 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 such
indemnifying party shall not be entitled to assume such defense and an
Indemnified Person or Indemnified Party shall have the right to retain its
own counsel with the fees and expenses to be paid by the indemnifying
party, 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 conflicts of interest between such
Indemnified Person or Indemnified Party and any other party represented by
such counsel in such proceeding or the actual or potential defendants in,
or targets of, any such action include both the Indemnified Person or the
Indemnified Party and the indemnifying party and any such Indemnified
Person or Indemnified Party reasonably determines that there may be legal
defenses available to such Indemnified Person or Indemnified Party which
are different from or in addition to those available to such indemnifying
party. The indemnifying party shall pay for only one separate legal counsel
for the Indemnified Persons or the Indemnified Parties, as applicable, and
such legal counsel shall be selected by Investors holding a
majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates (with the approval of the
Initial Investors if they hold Registrable Securities included in such
Registration Statement), if the Investors are entitled to indemnification
hereunder, or by the Company, if the Company is entitled to indemnification
hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action 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 actually prejudiced in its ability to
defend such action. 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 such expense, loss, damage or liability is
incurred and is due and payable.
15
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 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, (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation, and (iii) contribution (together with any
indemnification or other obligations under this Agreement) 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.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:
a. file with the SEC in a timely manner and make and keep available
all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject
to such requirements (it being understood that nothing herein shall limit
the Company's obligations under Section 4(c) of the Securities Purchase
Agreement) and the filing and availability of such reports and other
documents is required for the applicable provisions of Rule 144; and
b. furnish to each Investor so long as such Investor owns shares of
Preferred Stock, Warrants or Registrable Securities, promptly upon request,
(i) a written statement by the Company that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities under Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Investors hereunder, including the right to have the
Company register the resale of the Registrable Securities pursuant to this
Agreement, shall be automatically assignable by each Investor to any transferee
of all or any portion of the shares of Preferred Stock, the Warrants or the
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 after such assignment, (ii) the Company is furnished
with written notice of (a) the name and address of such transferee or assignee,
and (b) the securities with respect to which such registration rights are being
transferred
16
or assigned, (iii) following such transfer or assignment, the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act and applicable state securities laws, (iv) the transferee or
assignee agrees in writing for the benefit of the Company to be bound by all of
the provisions contained herein, and (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with written consent of the Company and
Investors who hold a majority in interest of the Registrable Securities;
provided, however, that no amendment hereto which restricts the ability of an
Investor to elect not to participate in an underwritten offering shall be
effective against any Investor which does not consent in writing to such
amendment; provided, further, however, that no consideration shall be paid to an
Investor by the Company in connection with an amendment hereto unless each
Investor similarly affected by such amendment receives a pro-rata amount of
consideration from the Company. Unless an Investor otherwise agrees, each
amendment hereto must similarly affect each Investor. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each Investor
and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
b. Any notices required or permitted to be given under the terms of
this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five (5) days after being placed in the
mail, if mailed, or upon receipt or refusal of receipt, if delivered
personally or by courier or confirmed telecopy, in each case addressed to a
party. The addresses for such communications shall be:
If to the Company:
COMPU-XXXX, INC.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
17
with a copy to:
Certilman Balin Xxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxx, Esq. and Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
and if to any Investor, at such address as such Investor shall have
provided in writing to the Company, or at such other address as each such
party furnishes by notice given in accordance with this Section 11(b).
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. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to
be performed in the State of Delaware. The Company irrevocably consents to
the jurisdiction of the United States federal courts and the state courts
located in the State of New York in any suit or proceeding based on or
arising under this Agreement and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in such courts. The
Company irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. The parties hereto agree that a
final non-appealable judgment in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
e. This Agreement, the Securities Purchase Agreement (including all
schedules and exhibits thereto) and the Warrants constitute the entire
agreement among the parties hereto with respect to the subject matter
hereof and thereof. This Agreement, the Securities Purchase Agreement and
the Warrants supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more 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 party hereto by facsimile
18
transmission of a copy of this Agreement bearing the signature of the party
so delivering this Agreement.
i. 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.
j. All consents, approvals and other determinations to be made by the
Investors or the Initial Investors pursuant to this Agreement shall be made
by the Investors or the Initial Investors holding a majority in interest of
the Registrable Securities (determined as if all shares of Preferred Stock
and Warrants then outstanding had been converted into or exercised for
Registrable Securities and by the inclusion of the Common Shares) held by
all Investors or Initial Investors, as the case may be.
k. The initial number of Registrable Securities included on any
Registration Statement and each increase (if any) to the number of
Registrable Securities included thereon shall be allocated pro rata among
the Investors based on the number of Registrable Securities held by each
Investor at the time of such establishment or increase, as the case may be.
In the event an Investor shall sell or otherwise transfer any of such
holder's Registrable Securities, each transferee shall be allocated a pro
rata portion of the number of Registrable Securities included on a
Registration Statement for such transferor. Any shares of Common Stock
included on a Registration Statement and which remain allocated to any
person or entity which does not hold any Registrable Securities shall be
allocated to the remaining Investors, pro rata based on the number of
shares of Registrable Securities then held by such Investors. For the
avoidance of doubt, the number of Registrable Securities held by any
Investor shall be determined as if all shares of Preferred Stock and
Warrants then outstanding were converted into or exercised for Registrable
Securities and by the inclusion of the Common Shares held by such Investor.
l. For purposes of this Agreement, the term "business day" means any
day other than a Saturday or Sunday or a day on which banking institutions
in the State of New York are authorized or obligated by law, regulation or
executive order to close.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
19
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPU-XXXX, INC.
By: /s/ Xxxx Xxxxxxxxxx
Name: Xxxx Xxxxxxxxxx
Its: Chief Executive Officer and
Chairman of the Board
INITIAL INVESTORS:
JNC OPPORTUNITY FUND LTD.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Its: Director
JNC STRATEGIC FUND LTD.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Its: Director
20
