REGISTRATION AGREEMENT
This Registration Agreement (this "Agreement") is by and among SYNERGX
SYSTEMS INC. (the "Company"), a Delaware corporation, and those registered
owners listed on the Schedule A attached hereto and made a part hereof (each, a
"Registered Owner"). The Company and the Registered Owner agree as follows:
1. SCOPE AND PURPOSE. This Agreement applies to the shares of the Company's
common stock, $.001 par value (the "Common Stock") that are owned by, or
issuable to, the Registered Owner, as detailed on Schedule A on and after the
effective date of this Agreement (collectively, the "Shares".
2. TERM. This Agreement is for a term beginning on its execution date and ending
on the earlier of the following: (a) the last date on which a Registered Owner
holds any Shares; or (b) the date when all the Shares can be publicly sold in a
block transaction in compliance with the volume limitations of SEC Rule 144,
promulgated by the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended (the "Securities Act"), or without
restriction pursuant to paragraph (k) of Rule 144.
3. REGISTRATION. The Company has authorized a registration of Common Stock under
the Securities Act on Form X-0, X-0, or S-3 or any registration form available
to a "small business issuer," as that term is defined in SEC Rule 405 (or any
registration form promulgated by the SEC in substitution of one of those forms),
and it shall use reasonable efforts to include in that registration any of the
Shares that the Registered Owner elects to register for public sale, to the
extent permitted by section 5 and the applicable registration form. Attached
hereto is a Letter of Instruction for the THE Registered Owners to elect whether
to include its Shares in such Registration Statement. If the Company receives
from the Registered Owner a written request within 20 days after its notice to
the Registered Owner, the Company shall use reasonable efforts to include in its
registration the number of Shares specified in the Registered Owner's
registration request.
The Company is not required to include any of the Shares in a registration
that covers any of the following: (A) securities other than the Common Stock;
(B) Common Stock proposed to be issued in exchange for assets or securities of
another corporation; (C) Common Stock to be issued pursuant to a transaction
registered on Form S-4 (or any registration form promulgated by the SEC in
substitution for that form); or (D) a stock option, stock bonus, stock purchase,
or other employee benefit or compensation plan or securities issued or issuable
pursuant to any such plan.
At any time after giving written notice of its intention to register shares
of Common Stock and before the effective date of the registration statement
filed in connection with the registration, the Company may, by written notice to
the Registered Owner, elect to postpone the registration or elect not to
register the shares of Common Stock and be relieved of its obligation to
register the Shares.
4. CONDITIONS TO REGISTRATION. The Company's obligations under this Agreement to
register any Shares owned by the Registered Owner are subject to the following
conditions:
(a) The minimum number of Shares that the Registered Owner who is entitled
to registration may include in a registration is the of the Shares owned by the
Registered Owner;
(b) There is no maximum number of Shares that the Registered Owner and all
other holders of registration rights are entitled to include in a registration;
(c) The Registered Owner must provide to the Company all information, and
take all action, as the Company reasonably requests with reasonable advance
notice, to enable it to comply with any applicable law or regulation or to
prepare the registration statement that will cover the Shares that will be
included in the registration;
(d) Before the filing of a registration statement pertaining to the
registration, the Registered Owner must deliver to the Company an agreement
containing the following agreements and representations:
(i) All sales of the Shares included in the registration will be made
in a manner contemplated by the SEC's General Instructions for use of the
applicable registration statement form;
(ii) The Registered Owner promptly shall notify the Company in writing
when all the Shares included in the registration have been sold, and, if
any of them are not sold before the 91st day after the effective date of
the registration statement, the Registered Owner promptly shall notify the
Company of the number of Shares sold during the three-month period
following the effective date of the registration and during each ensuing
three-month period, until all the Shares included in the registration have
been sold;
(iii) The Registered Owner shall pay all sales commissions,
underwriting discounts, and fees and expenses of its legal counsel
pertaining to the public offering of the Shares included in the
registration;
(iv) If during the effectiveness of the registration statement for the
registration, the Company notifies the Registered Owner of the occurrence
of any intervening event that, in the opinion of the Company's legal
counsel, causes the prospectus included in the registration statement not
to comply with the Securities Act, the Registered Owner, promptly after
receipt of the Company's notice, shall cease making any offers, sales, or
other dispositions of the Shares included in the registration until the
Registered Owner receives from the Company copies of a new, amended, or
supplemented prospectus complying with the Securities Act, and if so
directed by the Company, deliver to the Company all copies of the most
recent prospectus covering such Shares at the time of receipt of such
notice; and
(v) If the Company is selling any Common Stock pursuant to the
registration, the Registered Owner shall sell those Shares that are
included in the registration on the same terms (including the method of
distribution) as those on which the other shares of Common Stock included
in the registration will be offered and sold;
(e) The Registered Owner must have duly authorized, executed, and delivered
to the Company (i) an irrevocable power of attorney naming an attorney-in-fact
specified by the Company for the purpose of entering into and carrying out the
underwriting agreement and acting for the Registered Owner in all matters in
connection therewith, (ii) a custody agreement depositing the Shares in custody
in negotiable form for the purpose of delivery pursuant to the underwriting
agreement and containing other and usual provisions, and (iii) an agreement to
the effect that the Registered Owner will not take any action that might
reasonably be expected to cause or result in the manipulation of the price of
any security to facilitate the sale of Shares pursuant to the registration
statement; and
(f) The inclusion of the Shares in the registration must not violate any
provisions of the Securities Act, any rules or regulations promulgated under the
Securities Act, or any contractual obligation of the Company.
5. ADDITIONAL COVENANTS OF COMPANY. The Company shall:
(a) Use reasonable efforts to keep the registration statement current and
effective until the earlier of (i) the date when the Company receives notice
from the Registered Owner that all the Shares included in the registration
statement have been sold, or, (ii) the 90th day following the later of (A) the
date when the SEC declares the registration statement effective, or (B) the date
when the Registered Owner is permitted by the managing underwriter of the
registered offering to begin selling any of the Shares included in the
registration; and the Company shall take all action that is necessary or
appropriate to obtain, maintain, and continue the effectiveness of the
registration statement during the foregoing period, including the filing of all
post-effective amendments to the registration statement or supplements of the
prospectus; provided that the Company may amend the registration statement to
withdraw unsold Shares following the foregoing period, subject to applicable SEC
rules and regulations;
(b) Furnish to the Registered Owner, without charge, the following: (i) two
manually signed copies of the registration statement and each amendment to it,
including all exhibits, documents, and financial statements filed with them or
incorporated by reference in them; (ii) that number of conformed copies of the
registration statement and each amendment to it, including all financial
statements but excluding all exhibits and other documents filed with them or
incorporated by reference in them, as the Registered Owner may reasonably
request; and (iii) promptly after the filing of the registration statement, and
thereafter from time to time during the period when a prospectus is required to
be delivered under the Securities Act, as many copies of each preliminary,
definitive, and amended or supplemented prospectus as the Registered Owner may
reasonably request;
(c) Promptly notify the Registered Owner in writing of the following: (i)
the date when the registration statement or any post-effective amendment to it
becomes effective, and the date when any amendment to the registration statement
or supplement to a prospectus is filed with the SEC; (ii) any request or
suggestion by the SEC staff for any amendment to the registration statement or
supplement to the prospectus or for additional information, including the nature
and substance of the SEC's request or suggestion; (iii) the issuance by the SEC
of a stop order suspending the effectiveness of the registration statement or
the initiation of any proceedings for that purpose; (iv) the suspension of
qualification of any Shares for sale in any jurisdiction or the initiation of
any proceedings for that purpose; and (v) the Company's intention to file an
amendment to the registration statement, or a supplement to any prospectus, that
differs from the prospectus on file when the regis tration statement became
effective and including documents deemed to be incorporated by reference into a
prospectus;
(d) Use reasonable efforts to prevent the SEC from issuing a stop order
suspending the effectiveness of the registration statement or, if a stop order
is issued, to obtain the withdrawal of it at the earliest possible moment;
(e) To the extent requested by the Registered Owner, take all reasonable
action necessary to qualify any Shares included in the registration for offer
and sale under the "Blue Sky" or securities laws of those states of the United
States of America that the Registered Owner reasonably (in light of the
Registered Owner's plan of distribution) designates in writing to the Company
and maintain those qualifications in effect for so long as is required for the
distribution of the Shares included in the registration, except that the Company
is not required to (i) qualify to transact business as a foreign corporation in
any state in which it has not then so qualified, (ii) subject itself to taxation
in any such jurisdiction, or (iii) consent to general service of process in any
such jurisdiction; and
(f) Otherwise use reasonable efforts to comply with all applicable rules
and regulations of the SEC, and if so required by the Securities Act, generally
make available to the Company's security holders as soon as practicable, but not
later than 60 days after the close of the period covered thereby, an earnings
statement (in form complying with the provisions of section 11(a) of the
Securities Act), which need not be certified by independent public accountants
unless required by the Securities Act or the rules and regulations under the
Securities Act, covering a twelve-month period beginning not later than the
first day of the Compa ny's fiscal quarter next following the effective date of
the registration statement.
The Company will not be liable for the failure of any registration to
become effective, provided that the Company complies with the foregoing
obligations.
6. PAYMENT OF EXPENSES. Except for those expenses expressly required by this
Agreement to be paid by the Company, the Registered Owners shall pay, on a
pro-rata basis, all costs and expenses incident to every registration of any
Shares under this Agreement, including the following: the registration fees of
the SEC; the premium for any indemnity insurance policy with respect to the
offering subject to registration; the expenses of qualifying any Shares for sale
under the "Blue Sky" or securities laws of any state, including filing fees and
legal fees and costs pertaining to the qualification and the preparation of any
Blue Sky Survey or Memorandum; the fees and expenses of the Company's legal
counsel and independent public accountants in connection with the registration;
the cost of preparing, printing, and delivering the registration statement, all
related prospectuses, and all amendments and supplements to the registration
statement or any prospectus; and all other costs and expenses of obtaining and
maintaining the effectiveness of the registration statement. The foregoing
expenses do not include any the fee of the National Association of Securities
Dealers, Inc. attributable to the Shares, for which the Company will be
responsible.
7. INDEMNIFICATION. In connection with the registration of any Shares under the
Securities Act pursuant to this Agreement, the Registered Owner (to the extent
of the aggregate offering price of those Shares registered for the Registered
Owner in the registration) shall indemnify and hold harmless the Company (and
every person who controls the Company within the meaning of section 15 of the
Securities Act) from and against all cost, loss, claims, damage, expense, and
liability to which any of them becomes subject under the Securities Act or any
state securities laws (including fines, interest, penalties, amounts paid in
settlement, and costs reasonably incurred in investigating, defending, and
settling any claim), to the extent that they arise out of, or are based on, the
actions or inactions or dealings of any broker or dealer on behalf of the
Registered Owner, or any untrue statement or alleged untrue statement of a
material fact contained in the registration statement (or any amendment to it),
or any prospectus (or any amendment or supplement to it), that relates to the
sale of any Shares, or the omission or alleged omission therefrom of 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, but
only if the untrue statement or alleged untrue statement, or the omission or
alleged omission, was made in reliance upon, and in conformity with, information
furnished to the Company in writing by the Registered Owner expressly for use in
the registration statement (or any amendment to it) or any related prospectus
(or any amendment or supplement to it).
The Company shall indemnify and hold harmless the Registered Owner (and
every person who controls the Registered Owner within the meaning of section 15
of the Securities Act) against any and all costs, loss, claims, damage, expense,
and liability to which any of them becomes subject under the Securities Act or
any state securities laws (including fines, interest, penalties, amounts paid in
settlement, and costs reasonably incurred in investigating, defending, and
settling any claim) to the extent that they arise out of, or are based on, any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement (or any amendment to it), or any prospectus (or any
amendment or supplement to it), that relates to the sale of any Shares, or the
omission or alleged omission therefrom of 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, except for an untrue
statement or omission, or an alleged untrue statement or omission, that was
included in the registration statement (or any amendment to it) or in any
prospectus (or any amendment or supplement to it) in reliance on, and in
conformity with, written information furnished to the Company by the Registered
Owner expressly for use in the registration statement (or any amendment to it)
or any related prospectus (or any amendment or supplement to it).
Each indemnified party promptly shall notify each indemnifying party of any
claim asserted or action commenced against it that is subject to the
indemnification provisions of this section, but failure to so notify an
indemnifying party will not relieve the indemnifying party from any liability
pursuant to these indemnity provisions or otherwise, unless the failure
materially prejudices the rights or obligations of the indemnifying party.
Without limiting what might be materially prejudicial to an indemnifying party,
the failure of an indemnified party to notify an indemnifying party of a lawsuit
within ten days after the date when the indemnified party is served with a copy
of the complaint, petition, or other pleading asserting the indemnifiable claim
will be considered materially prejudicial to the rights and obligations of any
indemnifying party who was not also served with a copy of the complaint,
petition, or other pleading asserting the indemnifiable claim.
The indemnifying party may participate at its own expense in the defense,
or, if the indemnifying party so elects within a reasonable time, the
indemnifying party may assume the defense, of any action commenced against the
indemnified party that is the subject of indemnification under this section. If
the indemnifying party elects to assume the defense of any indemnified action,
the indemnified party, and each controlling person who is a defendant in the
action, will be entitled to employ separate counsel and participate in the
defense of the action at its own expense.
An indemnified party shall not settle an indemnified claim or action
without the prior written consent of the indemnifying party and the indemnifying
party will not be liable for any settlement made without its consent. The
indemnifying party shall notify the indemnified party whether or not it will
consent to a proposed settlement within ten days after it receives from the
indemnified party notice of the proposed settlement, summarizing all the terms
and conditions of settlement. The indemnifying party's failure to notify the
indemnified party within that ten-day period whether or not it consents to the
proposed settlement will constitute its consent to the proposed settlement.
This indemnity does not apply to any untrue statement or omission, or any
alleged untrue statement or omission that was made in a preliminary prospectus
but remedied or eliminated in the final prospectus (including any amendment or
supplement to it), if a copy of the definitive prospectus (including any
amendment or supplement to it) was delivered to the person asserting the claim
at or before the time required by the Securities Act and the delivery of the
definitive prospectus (including any amendment or supplement to it) constitutes
a defense to the claim asserted by the person. This indemnity further does not
apply to the extent that any such loss, claim, damage, expense or liability
results from the fact that a current copy of the prospectus (as amended or
supplemented) was not sent or given to the person asserting any such loss,
claim, damage, expense or liability at or prior to the written confirmation of
the sale of the Shares concerned to such person if it is determined that the
Company has provided such prospectus and it was the responsibility of the
Registered Owner to provide the person with a current copy of the prospectus (as
amended or supplemented) and the current copy of the prospectus would have cured
the defect giving rise to such loss, claim, damage, expense, or liability.
8. PARTICIPATION IN PUBLIC OFFERING. No person may participate in any
underwritten public offering hereunder unless such person (i) agrees to sell
such person's securities on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of those underwriting arrangements and these registration rights.
9. GOVERNING LAW; REMEDIES. The validity, interpretation, construction, and
enforcement of this Agreement are governed by the laws of the State of New York
and the federal laws of the United States of America, excluding the laws of
those jurisdictions pertaining to resolution of conflicts with laws of other
jurisdictions. The proper, exclusive, and convenient venue for all legal
proceedings arising out of this Agreement is New York County, New York, and the
Company and the Registered Owner waive any defense, whether asserted by motion
or pleading, that New York County, New York, is an improper or inconvenient
venue. The Company and the Registered Owner consent to the personal jurisdiction
of the state and federal courts in New York, New York, with respect to any
litigation arising out of this Agreement.
10. NOTICES. Every notice, consent, demand, approval, and request required or
permitted by this Agreement will be valid only if it is in writing, delivered
personally or by telex, telecopy, telegram, commercial courier, or first class,
postage prepaid United States mail (whether or not certified or registered and
regardless of whether a return receipt is received by the sender), and addressed
by the sender to the party who is the intended recipient at its address most
recently designated to the other party by notice given in accordance with this
section. A validly given notice, consent, demand, approval, or request will be
effective on the earlier of its receipt, if delivered personally or by telex,
telecopy, telegram, or commercial courier, or the third day after it is
postmarked by the United States Postal Service, if it is delivered by United
States mail. Each party promptly shall notify the other parties of any change in
its principal mailing address.
11. EXECUTION; EFFECTIVE DATE. The parties may execute this Agreement in
counterparts. Each executed counterpart will constitute an original document,
and all of them, together, will constitute the same agreement. This Agreement
will become effective when each party has executed and delivered a counterpart
to every other party.
12. MISCELLANEOUS. The headings preceding the text of the sections of this
Agreement are solely for convenient reference and neither constitute a part of
this Agreement nor affect its meaning, interpretation, or effect. Unless
otherwise expressly indicated, all references in this Agreement to a section are
to a section of this Agreement. Whenever possible, each provision of this
Agreement should be construed and interpreted so that it is valid and
enforceable under applicable law. However, if a provision in this Agreement is
held by a court to be invalid or unenforceable under applicable law, that
provision will be deemed separable from the remaining provisions of this
Agreement and will not affect the validity, interpretation, or effect of other
provisions of this Agreement or the application of that provision to
circumstances in which it is valid and enforceable. When any provision of this
Agreement requires or prohibits action to be taken by a person, the provision
applies regardless of whether the action is taken directly or indirectly by the
person. Nothing in this Agreement, whether express or implied, is intended or
should be construed to confer upon, or to grant to, any person, except the
parties to this Agreement, any right, remedy, or claim under or because of
either this Agreement or any provision of it. This Agreement records the final,
complete, and exclusive understandings among the parties regarding the subject
matter of this Agreement and supersedes any prior or contemporaneous agreement,
understanding, or representation, oral or written, by any of them. The
registration rights granted pursuant to this Agreement are not assignable by the
Registered Owner. A waiver, amendment, discharge, extension, termination, or
modification of this Agreement will be valid and effective only if it is in
writing and signed by both the parties to this Agreement. A written waiver of a
right, remedy, or obligation under any provision of this Agreement will not
constitute a waiver of the provision itself, a waiver of any succeeding right,
remedy, or obligation under the provision, or a waiver of any other right,
remedy, or obligation under this Agreement.
IN WITNESS WHEREOF, the Undersigned has executed this Registration
Agreement this ____ day of May, 2003.
SYNERGX SYSTEMS INC
By: _____________________________________
