EXHIBIT 10.60
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of the 28th
day of December, 2000, by and between NETWORK COMPUTING SERVICES, INC., a
Delaware corporation (the "COMPANY"), and XX. XXXXXXXX X. XXXXX, an individual
(the "HOLDER").
ARTICLE I
BACKGROUND
WHEREAS, the Holder of certain Convertible Preferred shares converted into,
and Warrants to purchase, Common Stock, par value $.001 per share ("STOCK") of
the Company; and
WHEREAS, the parties desire to provide for the registration of the shares
of Stock issuable or issued to the Holder upon conversion of the Convertible
Preferred Shares on exercise of the Warrants.
ARTICLE II
DEFINITIONS
SECTION 2.1 DEFINITIONS. For purposes of this Agreement, the following
capitalized terms have the respective meanings set forth below:
(a) The term "Form S-3" means such form under the Securities Act as in
effect on the date hereof or any successor form under the Securities Act.
(b) The term "GAAP" means U.S. generally accepted accounting principles
consistently applied.
(c) The term "EQUITY EQUIVALENTS" means warrants, options or other rights
to purchase Stock, or any debt, shares or other securities convertible into or
exchangeable for Stock.
(d) The term "HOLDER" means any person, including Xx. Xxxxxxxx X. Xxxxx.,
owning or having the right to acquire Registrable Securities or any assignee
thereof in accordance with this Agreement.
(e) The term "REGISTER," "REGISTERED," and "REGISTRATION" refers to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.
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(f) The term "REGISTRABLE SECURITIES" means (i) the shares of Stock
issuable or issued upon conversion of the Note, and (ii) any other Securities
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, the shares of Stock listed in
clause (i) above. Notwithstanding the foregoing, Stock or other securities shall
only be treated as Registrable Securities if and so long as they have not been
(A) effectively registered under the Securities Act and sold or distributed to
any Person pursuant to an effective registration statement covering it, or (B)
sold in a transaction exempt from the registration and prospectus delivery
requirement of the Securities Act so that all transfer restrictions, and
restrictive legends with respect thereto, if any, axe removed upon the
consummation of such sale.
(g) The number of shares of "REGISTRABLE SECURITIES THEN OUTSTANDING"
shall be the number of shares of Stock that are Registrable Securities which are
then issued and outstanding, plus those which are issuable pursuant to then
exercisable or convertible securities.
(h) The term "REGISTRATION EXPENSES " MEANS all expenses incident to the
Company's performance of or compliance with ARTICLE 3 including, without
limitation, all registration and filing fees; all fees and expenses of complying
with securities or blue sky laws; all printing expenses; the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits required by or
incident to such performance and compliance; and the reasonable fees and
disbursements of one counsel for the Holder.
(i) The term "SEC" means the Securities and Exchange Commission.
(j) The term "SELLING EXPENSES" means all underwriting discounts, selling
commissions and transfer taxes applicable to the sale of Registrable Securities.
ARTICLE III
REGISTRATION RIGHTS
SECTION 3.1. DEMAND REGISTRATION.
(a) If at any time after conversion of the Convertible Preferred Shares,
or exercise of the Warrants, the Company receives a written request from the
Holder that the Company file a registration statement under the Securities Act
covering the registration of all or a portion of the Registrable Securities of
the Holder then outstanding, then the Company shall as soon as practicable
effect such registration of the Registrable Securities of the Holder. Such
obligation shall include, without limitation, the execution of an undertaking to
file post-effective amendments and to effect appropriate registrations or
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with exemptive regulations
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issued under the Securities Act and any other governmental requirements or
regulations.
(b) If the Holder intends to use an underwriter to distribute the
Registrable Securities covered by its request, it shall so advise the Company in
its request. In such event, the Holder shall (together with the Company) enter
into an underwriting agreement with an underwriter selected by the Holder,
subject to the approval of the Company which shall not be unreasonably withheld.
The Company shall not register any other securities in connection with any such
demand registration, other than for its own account. Notwithstanding any other
provision of this subsection, if the underwriter advises the Holder and the
Company in writing that marketing factors require a limitation of the number of
shares to be included in the underwriting, then shares, if any, other than
Registrable Securities shall first be excluded from such registration to the
extent required by such underwriting limitation. If the number of shares of
Registrable Securities so excluded exceeds twenty percent (20%) of the number of
shares of Registrable Securities which the Holder has requested be included in
such registration, then the Holder shall be entitled either (i) to require that
the registration be deferred for such period of time as the Holder, the Company
and the underwriter may mutually agree upon, but in no event for more than
ninety (90) days from delivery of a written notice of the Holder to the Company
requesting such delay, or (ii) to withdraw the registration request, in which
case it shall not count as a demand registration for purposes of the limitation
in SECTION 3.1(d). The Company shall not effect a sale of any securities of the
Company similar to the Registrable Securities being offered in the underwritten
offering, or convertible or exercisable for Registrable Securities during the
period commencing ten (10) days prior to and ending one hundred twenty (120)
days after the effective date of the applicable registration statement.
(c) Notwithstanding the foregoing, if the Company shall furnish to the
Holder, a certificate signed by the President or Chief Executive Officer of the
Company stating that in the good faith judgment of the board of directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer such filing for a period not more than ninety (90) days after
receipt of the request of the Holder; PROVIDED, HOWEVER, that the Company may
not utilize this right more than once.
(d) The Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to SECTION 3.1(a) AFTER the Company has
effected two demand registrations and each such registration has been declared
or ordered effective and kept effective for at least one hundred twenty (120)
days. Notwithstanding the immediately preceding sentence or the provisions of
SECTION 3.1(b), a registration will not count as a demand registration under
SECTION 3.1(a) unless the Holder was able to sell a minimum of seventy-five
(75%) of the shares sought to be registered in such registration.
SECTION 3.2. COMPANY REGISTRATION. If at any time the Company proposes to
register any of
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its securities under the Securities Act, whether or not for sale for its own
account, on a form and in a manner which would permit registration of its shares
for sale to the public under the Securities Act (other than a registration
statement relating either to the sale of securities to employees of the Company
pursuant to a stock option, stock purchase or similar plan, an offering or sale
of securities pursuant to a Form S-4 (or successor form) registration statement,
or an SEC Rule 145 transaction), it will each such time give prompt written
notice to the Holder of its intention to do so, describing such securities and
specifying the form and manner and the other relevant facts involved in such
proposed registration, and upon the written request of the Holder delivered to
the Company within thirty (30) days after the giving of any such notice, the
Company will effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the Holder to
the extent required to permit the disposition (in accordance with the intended
methods thereof as aforesaid). The Company will use its commercially reasonable
efforts to cause the Registrable Securities as to which registration shall have
been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
required to permit the sale or other disposition by the Holder of such
Registrable Securities so registered. If any registration pursuant to this
SECTION 3.2 shall be, in whole or in part, an underwritten public offering of
securities, then the number of Registrable Securities to be included in such an
underwriting may be reduced by the Company if and to the extent that the
managing underwriter or underwriters shall be of the opinion that such inclusion
would adversely affect the marketing, success or offering price of such offering
as follows: first, all shares held by other persons requesting inclusion in such
offering shall be reduced pro rata among such persons according to the number of
shares requested by each such person to be registered, then all shares held by
the Holder shall be reduced, and finally, shares to be sold by the Company shall
be reduced.
SECTION 3.3 FORM S-3 REGISTRATION. IF, at a time when Form S-3 (or any
comparable successor form) is available for the registration of Registrable
Securities and the Company is eligible to use Form S-3 (or such successor form)
for such registration, the Company shall receive from the Holder a written
request that the Company effect a registration on Form S-3 (or such successor
form) of any of the Holder's Registrable Securities, the Company will promptly
give written notice of the proposed registration to the Holder and, as soon as
practicable, effect such registration and all such related qualifications and
compliances as may be reasonably requested and as would permit or facilitate the
sale and distribution of all Registered Securities as are specified in such
request. The rights of the Holder to request registration under this SECTION 3.3
shall be in addition to all other registration rights in this Agreement. The
Company shall have no obligation to effect a registration under SECTION 3.3 more
than three times.
SECTION 3.4. REGISTRATION EXPENSES. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
SECTIONS 3.1, 3.2 AND 3.3 shall be borne by the Company; and all Selling
Expenses shall be borne by the Holder and any other holders of the securities so
registered pro rata on the basis of the number of their shares so registered.
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SECTION 3.5. REGISTRATION PROCEDURES.
(a) When the Company is required to effect the registration of any
Registrable Securities under the Securities Act as provided in this ARTICLE 3,
the Company shall as expeditiously as possible:
(i) prepare and file with the SEC a registration statement on the
appropriate form with respect to such Registrable Securities and use
its best efforts to cause such registration statement to become
effective as promptly as practicable, and upon the request of the
Holder, keep such registration statement effective for at leastone
hundred twenty (120) days;
(ii) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by
such registration statement until the earlier of: (a) such time as all
of such Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the Holder set forth in
such registration statement; or (b) the expiration of one hundred and
twenty (120) days after such registration statement becomes effective;
(iii) furnish to the Holder such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies
of the prospectus included in such registration statement (including
each preliminary prospectus and any summary prospectus), in conformity
with the requirements of the Securities Act, such documents
incorporated by reference in such registration statement or
prospectus, and such other documents, as the Holder may reasonably
request;
(iv) use its best efforts to register and qualify all securities
covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably
request, and do any and all other acts and things which may be
necessary or advisable to enable the Holder to consummate the
disposition in such jurisdictions of its Registrable Securities
covered by such registration statement, except that the Company shall
not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is
not so qualified, or to subject itself to taxation in any such
jurisdiction, or to consent to general service of process in any such
jurisdiction;
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(v) furnish to the Holder a signed counterpart, addressed to the
seller, of (A) an pinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated the date
of the closing under the underwriting agreement), and (B) a "cold
comfort" letter signed by the independent public accountants who have
certified the Company's financial statements included in such
registration statement, covering substantially the same matters with
respect to such registration statement(and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and its
accountants' letters delivered to underwriters in underwritten public
offerings of securities and, in the case of the accountants' letter,
such other financial matters, as the Holder may reasonably request;
(vi) in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering;
(vii) immediately notify the Holder, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing, and at the request of the Holder prepare and furnish a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not
include an 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 in the light of the circumstances
then existing; and
(viii) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than
eighteen months, beginning with the first month of the first fiscal
quarter after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act.
The Company may require the Holder, when any registration is being effected with
respect to any of the Holder's Registrable Securities, to furnish the Company
such information regarding the Holder and the distribution of the securities as
the Company may from time to time request
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in writing for inclusion in the applicable registration statement as required by
law or by the SEC in connection therewith.
SECTION 3.6. PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give the Holder and any
underwriter, if any, and their counsel and accountants, a reasonable opportunity
to participate in the preparation of such registration statement and other
documents related thereto, and will give them reasonable access to books and
records and personnel such as is reasonably necessary to facilitate preparation
of such documents and filing.
SECTION 3.7. FURNISH INFORMATION. It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this ARTICLE 3 with
respect to the Registrable Securities of the Holder that the Holder shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of the Holder's Registrable
Securities.
SECTION 3.8. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this ARTICLE 3:
(a) The Company will indemnify and hold harmless the Holder, its directors
and officers, and each other person, if any, who controls the Holder within the
meaning or the Securities Act, against any losses, claims, damages, liabilities
and expenses (including reasonable legal fees and expenses and costs of
investigation), joint or several, to which the Holder or any such director or
officer or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions or proceedings in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such securities were registered under
the Securities Act, any preliminary prospectus, final prospectus or summary
prospectus included therein, or any amendment or supplement thereto, or any
document incorporated by reference therein, or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse the Holder, and each such director, officer, and controlling person
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding; PROVIDED THAT the Company shall not be liable to such an indemnified
person in any such case to the extent (but only to the extent) that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus summary prospectus, amendment
or supplement or any documents incorporated by reference in any of the above in
reliance upon and in conformity with written information furnished by such
indemnified person to the Company and designated by such person to be
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for use therein. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Holder or any such director,
officer, or controlling person and shall survive the transfer of such securities
by the Holder.
(b) To the extent permitted by law, the Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the registration statement and each other person, if any, who controls the
Company within the meaning of the Securities Act, with respect to any statement
in or omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment or
supplement thereto or any documents incorporated by reference in any of the
above, if such statement or omission was made solely in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by the Holder specifically stating that it is for
inclusion in such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling person and
shall survive the transfer of such securities by the Holder; PROVIDED, HOWEVER,
that the Holder's liability hereunder shall not exceed the aggregate net
offering proceeds received by the Holder.
(c) If the indemnification provided for in this SECTION 3.8 is unavailable
or insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages, liabilities, expenses or action in respect thereof referred to
herein, then the indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities, expenses or actions in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand, and the
indemnified party on the other, in connection with the statement or omissions
which resulted in such losses, claims, damages, liabilities, expenses or actions
as well as any other relevant equitable considerations, including the failure to
give the notice required hereunder. The relative fault of the indemnifying party
and the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Holder agree that it would not be just and equitable if contributions
pursuant to this SECTION 3.8(c) were determined by PRO RATA allocation or by any
other method of allocation which did not take account of the equitable
considerations referred to above. The amount paid or payable to an indemnified
party as a result of the losses, claims, damages, liabilities or action in
respect thereof, referred to above, shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
contribution provisions of this SECTION 3.8, in no event shall the amount
contributed by the Holder exceed the aggregate net offering proceeds received by
such seller from the sale of such shares. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
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(d) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in the
preceding subdivisions of this SECTION 3.8, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; PROVIDED, THAT
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this SECTION 3.8. In case any such action is brought against an
indemnified party, the indemnifying party shall be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified, to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof; PROVIDED, HOWEVER, that if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action or proceeding or that there may
be legal defenses available to such indemnified party or parties different from
or in addition to those available to the indemnifying party or parties, then
counsel for the indemnified party or parties shall be entitled to conduct the
defense to the extent reasonably determined by such counsel to be necessary to
protect the interests of the indemnified party or parties (and the indemnifying
party or parties shall bear the reasonable legal and other expenses incurred in
connection therewith). No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a full and final release from all liability in respect to such claim or
litigation.
SECTION 3.9. RULE 144 AND 144A. The Company will file the reports required
to be filed by it under the Securities Act and the Securities Exchange Act of
1934 (the "EXCHANGE ACT') (or, if the Company is not required to file such
reports, will, upon the request of the Holder, make publicly available other
information necessary to comply with Rule 144(c) and Rule 144A, as applicable),
and will take such further action as the Holder may reasonably request, all to
the extent required from time to time to enable the Holder to sell shares of the
Company without registration under the Securities Act within the limitation of
the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of the Holder, the Company will
deliver to the Holder (i) a verified, written statement of the President or
Chief Financial Officer as to whether it has complied with such requirements;
(ii) if applicable, a copy of the most recent annual or quarterly report of the
Company; and (iii) such other reports and documents as the Holder may reasonably
request to avail itself of Rule 144, 144A or any other rule or regulation of the
SEC allowing the Holder to sell its shares of the Company without registration.
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ARTICLE IV
GENERAL
SECTION 4.1. AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term 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 Holder.
SECTION 4.2. NOTICES. Except as otherwise provided in this Agreement,
notices and other communications under this Agreement shall be in writing and
shall be delivered, or mailed by first-class mail, postage prepaid, addressed,
if to the Holder, to the attention of Xxxxxxxx Xxxxx, addressed in the manner
set forth beneath the Holder's signature below or at such address, or to the
attention of such other officer, as the Holder shall have furnished to the
Company in writing a notice properly given hereunder or, if to the Company, to
the attention of its Secretary, addressed in the manner set forth beneath the
Company's signature below, or at such other address, or to the attention of such
other officer, as the Company shall have furnished to the Holder in a notice
properly given hereunder.
SECTION 4.3. ADJUSTMENTS. This Agreement shall apply to any shares of Stock
issued to the Holder with respect to, upon exercise or conversion of, or in
exchange for, any Registrable Securities, held by the Holder, by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise,
except for shares of capital stock which have been distributed by the Holder to
the pursuant to a registration statement or Rule 144 (or any successor
provision) under the Securities Act.
SECTION 4.4. MISCELLANEOUS.
(a) This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the parties hereto,
whether so expressed or not.
(b) This Agreement, together with the Note, embodies the entire agreement
and understanding between the Holder and the Company and supersedes all prior
agreements and understandings relating to the subject matter hereof.
(c) Terms used but not defined in this Agreement shall have the meaning
assigned to such terms in the Note.
(d) The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.
(e) This Agreement may be executed in two or more counterparts (including
by facsimile),
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each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(f) Time is of the essence under this Agreement.
(g) This Agreement shall be governed by and construed under the internal
laws of the State of Delaware without giving effect to conflicts of laws.
Whenever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized corporate
officers as of the date first written above.
NETWORK COMPUTING DEVICES, INC.
By:
Print Name: Xxxxxxx X. Xxxxx
Title: President and CEO
Attest:
Print Name: Xxxxxxx X. Xxxxxx
Title: CFO
Address for notices:
000 Xxxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
HOLDER:
Xx. Xxxxxxxx Xxxxx
Address for notices:
Xxxxxxxxxxxxxxxx 00
XX-0000 Xxxxxxxx
Xxxxxxxxxxx
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