REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, (the "Agreement") is entered into
as of January 14, 2000, by and among XXX-X.XXX INC., a New Jersey corporation
(the "Company"), with its principal office located at 0 Xxxx Xxxxxx, Xxxxxxxxx,
Xxx Xxxxxx 00000, ALPHANET SOLUTIONS, INC., a New Jersey corporation with its
principal office located at 0 Xxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxxxx 00000
("AlphaNet") and FALLEN ANGEL EQUITY FUND, L.P., a Delaware limited partnership,
with its principal office located at 000 Xxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000
("Fallen Angel") and XXXX X. XXXXXXXX, an individual residing at 000 Xxxxxxxx
Xxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 ("Xxxxxxxx," and together with AlphaNet and
Fallen Angel, the "Purchasers").
W I T N E S S E T H :
WHEREAS, in connection with the Securities Purchase Agreement dated
as of the date hereof, between the Purchasers and the Company (the "Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions of the Purchase Agreement, to issue and sell to the Purchasers (the
"Offering") 3,937,500 shares of the Company's Series A Convertible Participating
Preferred Shares (the "Preferred Shares"), convertible into shares of the
Company's Common Stock, par value $0.01 per share (the "Common Stock"). The
shares of Common Stock of the Company into which the Preferred Shares are
convertible are referred to herein as the "Common Shares;" and
WHEREAS, to induce the Purchasers to execute and deliver the Purchase
Agreement and to purchase the Preferred Shares, 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 with respect to the Common Shares;
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
Purchasers hereby agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
(a) "Purchasers" means the Purchasers and any transferee or
assignee of the Purchasers who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
(b) "Registrable Securities" means the Common Shares,
together with any shares of Common Stock which may be issued as a dividend or
other distribution and any additional shares of the Common Stock which may be
issued due to anti-dilution adjustments with respect to the Preferred Shares or
Common Shares, which are required to be included in a Registration Statement
pursuant to Section 2(a) below.
(c) "Registration Period" means the period between the date
of this Agreement and the earlier of (i) the date on which all of the
Registrable Securities have been sold, or (ii) the date on which all the
Registrable Securities (in the opinion of Purchasers' counsel) may be
immediately sold without registration pursuant to Rule 144(k) under the
Securities Act without being subject to any volume limitations.
(d) "Registration Statement" means a registration statement
filed with the Securities and Exchange Commission (the "SEC") under the
Securities Act and any subsequent Registration Statement filed to register
additional Registrable Securities.
(e) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a Registration
Statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of effectiveness of such
Registration Statement by the SEC.
2. Registration.
(a) Mandatory Registration. In the event that the holders
of no less than 30% of the Registrable Securities request (counting, for this
purpose, the number of Common Shares then issuable on conversion of Preferred
Shares or owned by the holders of Preferred Shares) that the Company file a
Registration Statement with the SEC registering the Registrable Securities for
resale for an aggregate amount of no less than $5 million (a "Registration
Request"), the Company shall use its best efforts to cause such shares to be
registered; provided, however, that the Company shall not be obligated to effect
any such registration prior to the earlier of (i) January 14, 2003 or (ii) six
months after the effective date of the Company's first Registration Statement
filed with the SEC relating to a public offering of the Common Stock (an "IPO").
To the extent allowable under the Securities Act (including Rule 416), the
Registration Statement shall include the Common Shares and such indeterminate
number of additional shares of the Common Stock as may become issuable upon
conversion of the Preferred Shares (i) to prevent dilution resulting from stock
splits, stock dividends or similar transactions, or (ii) by reason of changes in
the conversion price of the Preferred Shares in accordance with the terms
thereof. The number of shares of Common Stock initially included in such
Registration Statement shall be no less than 1 million Common Shares. The
Registration Statement (and each amendment or supplement thereto) shall be
provided to, and subject to the approval of, the Purchasers and their counsel,
such approval not to be unreasonably withheld or delayed. The Company shall use
its best efforts to cause such Registration Statement to be declared effective
by the SEC in a timely manner, but in no event later than 120 days after the
Company is notified of the Registration Request (the "Required Effective Date").
Such best efforts shall include, but not be limited to, promptly responding to
all comments received from the staff of the SEC. The Purchasers shall use
reasonable efforts to cause their counsel to provide any comments or approve of
any amendment to the Registration Statement within two business days of receipt.
Once declared effective by the SEC, the Company shall cause such Registration
Statement to remain effective throughout the Registration Period, and any
amendment of such Registration Statement that may be necessary shall not relieve
the Company of its obligation to cause the Registration Statement to remain
effective under this Agreement. A maximum of two Registration Requests may be
made by the Purchasers pursuant to this Section 2(a), and the Company shall not
be obligated under this Section 2(a) to comply with more than two such
Registration Requests.
(b) Grace Period After Registration. The Corporation will
not be obligated to effect any registration pursuant to Section 2(a) within
ninety (90) days after the effective date of a registration in which the holders
were entitled to include all of the Registrable Securities in a registration
statement pursuant to Section 2(e) hereof. The Corporation may postpone for up
to ninety (90) days the filing of a registration statement for a registration
pursuant to Section 2(a) if the Corporation has delivered to the holders of the
Registrable Securities a certificate signed by its Chief Executive Officer
stating that the Board of Directors has determined in its good faith judgment,
that the filing and completion of the such registration would be seriously
detrimental to the Corporation and its stockholders because such registration
might require premature public disclosure with respect to pending confidential
matters (the "Board Deferral Right"); provided, that (i) in such event the
holders requesting the registration will be entitled to withdraw such request
and, if such request is withdrawn, such registration will not count as a
registration hereunder and (ii) the Board may not exercise its Board Deferral
Right more than once in any twelve (12) month period.
(c) Holdback Agreements. Each holder of Registrable
Securities agrees (i) not to effect any public sale or distribution (including
sales pursuant to Rule 144) of the Registrable Securities during the seven (7)
days prior to and the ninety (90) day period beginning on the effective date of
the Registration Statement for an IPO, unless the underwriters managing such
offering otherwise agree and (ii) that all Registrable Securities which are
excluded from any other underwriting by reason of the underwriter's marketing
limitation and all other Registrable Securities not originally requested to be
included in an underwriting shall not be included in the registration for such
underwriting and shall be withheld from the market by the holders thereof for a
period not to exceed the period commencing seven (7) days prior to, and ending
ninety (90) days following, the effective date of such Registration Statement,
which the managing underwriter reasonably determines is necessary to effect the
underwritten public offering.
(d) Late Registration Payments. If the Registration
Statement required pursuant to Section 2(a) above has not been declared
effective by the Required Effective Date, the Company will make cash payments to
the Purchasers as partial compensation for such delay (the "Late Registration
Payments"). The Late Registration Payments will be equal to one percent (1.0%)
of the Purchase Price (as defined in, and adjusted in accordance with the terms
of, the Purchase Agreement and the terms of the Preferred Shares set forth in
the Company's Certificate of Incorporation) paid for the Preferred Shares for
each month following the Required Effective Date, continuing through the date
the Registration Statement is declared effective by the SEC. The Late
Registration Payments will be prorated on a daily basis for partial months and
will be paid to the Purchasers in cash within five (5) business days following
the earlier of: (i) the end of each month following the Required Effective Date,
or (ii) the effective date of the Registration Statement. Nothing herein shall
limit any Purchaser's right to pursue actual damages for the Company's failure
to file a Registration Statement or to have the Registration Statement declared
effective by the SEC on or prior to the Required Effective Date in accordance
with the terms of this Agreement.
(e) Piggyback Registrations. If, at any time prior to the
expiration of the Registration Period, the Company decides to register any of
its securities for its own account or for the account of others (excluding
registrations relating to equity securities to be issued solely in connection
with an acquisition of any entity or business or in connection with stock option
or other employee benefit plans), the Company will promptly give the Purchasers
written notice thereof, and will use its best efforts to include in such
registration all or any part of the Registrable Securities (excluding any
Registrable Securities previously included in a Registration Statement which has
become effective) so requested by such Purchasers (a "Piggyback Registration").
Each Purchaser's request for registration must be given to the Company in
writing within ten (10) days after receipt of the notice from the Company. If
the registration for which the Company gives notice is a public offering
involving an underwriting, the Company will so advise the Purchasers as part of
the above-described written notice. In such event, if the managing
underwriter(s) of the public offering 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, such limitation would be necessary to
effect an orderly public distribution, then the Company will be obligated to
include only such limited portion, if any, of the Registrable Securities with
respect to which such Purchasers have requested inclusion hereunder. Any
exclusion of Registrable Securities shall be made pro-rata among all holders of
the Company's securities seeking to include shares of Common Stock (including,
for purposes of this Section 2(e) holders of securities of the Company other
than the Registrable Securities who hold and are attempting to exercise
registration rights) in proportion to the number of shares of Common Stock
sought to be included by such holders; provided, however, that the Company will
not exclude any Registrable Securities unless the Company has first excluded all
outstanding securities the holders of which are not entitled by right to
inclusion of securities in such Registration Statement and that Registerable
Securities may not be reduced below 33% of the total securities offered by the
Company in such Registration Statement. No right to registration of Registrable
Securities under this Section 2(e) shall be construed to limit in any way the
registration required under Section 2(a) above. The obligations of the Company
under this Section 2(e) will expire upon the earlier of: (i) after the Company
has afforded to the Purchasers the opportunity for the Purchasers to exercise
registration rights under this Section 2(e) for two registrations; provided,
however, that any Purchaser who shall have had any Registrable Securities
excluded from any Registration Statement in accordance with this Section 2(e)
shall be entitled to include in any additional Registration Statement filed by
the Company the Registrable Securities so excluded; or (ii) when all of the
Registrable Securities held by any Purchaser may be sold by such Purchaser under
Rule 144(k) under the Securities Act without being subject to any volume
restrictions.
(f) Unlimited S-3 Registration Rights. In the event that
the Company becomes eligible to register shares with the SEC on a Form S-3
Registration Statement or similar form ("Form S-3"), the holders of no less than
30% of the then outstanding Registrable Securities may, on an unlimited number
of occasions (while the Company remains eligible to file on Form S-3), require
the Company to register at least $1 million worth of Registrable Securities on
Form S-3 (an "S-3 Registration").
3. Additional Obligations of the Company. In connection
with the registration of the Registrable Securities, the Company shall have the
following additional obligations:
(a) The Company shall keep each Registration Statement
required by Section 2(a) hereof effective pursuant to Rule 415 under the
Securities Act at all times during the Registration Period as defined in Section
1(c) above.
(b) The Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) filed by the Company
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. 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, and, during such period,
shall 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 sellers thereof as set forth in the Registration Statement. In the event the
number of shares of Common Stock included in a Registration Statement filed
pursuant to this Agreement (excluding Piggyback Registrations as provided for in
Section 2(e) above) is insufficient to cover all of the Registrable Securities,
the Company shall amend the Registration Statement and/or file a new
Registration Statement so as to cover all of the Registrable Securities as soon
as practicable, but in no event more than twenty (20) business days after the
Company first determines (or reasonably should have determined) the need
therefor. The Company shall use its best efforts to cause such amendment and/or
new Registration Statement to become effective as soon as practicable following
the filing thereof. The Late Registration Payment provisions of Section 2(d)
above shall become applicable with respect to the effectiveness of such
amendment and/or new Registration Statement on the sixtieth (60th) day following
the date the Company first determines (or reasonably should have determined) the
need for the amendment and/or new Registration Statement.
(c) The Company shall furnish to each Purchaser whose
Registrable Securities are included in the Registration Statement (i) promptly
after the Registration Statement 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 final prospectus and
each amendment or supplement thereto; and, in the case of the Registration
Statement required under Section 2(a) above, each letter written by or on behalf
of the Company to the SEC and each item of correspondence from the SEC, in each
case relating to such Registration Statement (other than any portion of any item
thereof which contains information for which the Company has sought confidential
treatment); and (ii) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto, and such
other documents as such Purchaser may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Purchaser.
(d) 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 as the
Purchasers reasonably request, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations 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.
Notwithstanding the foregoing provision, the Company shall not be required in
connection therewith or as a condition thereto to (i) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (ii) subject itself to general taxation in any such
jurisdiction, (iii) file a general consent to service of process in any such
jurisdiction, (iv) provide any undertakings that cause more than nominal expense
or burden to the Company, or (v) make any change in its charter or bylaws, which
in each case the Board of Directors of the Company determines to be contrary to
the best interests of the Company and its shareholders.
(e) In the event Purchasers who hold a majority in interest
of the Registrable Securities being offered in an offering in which no less than
50% of such offering is comprised of Registrable Securities select underwriters
for such 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
managing underwriter of such offering. If the Registration Statement required
pursuant to Section 2(a) is not then effective, the Company shall be responsible
for payment of the reasonable attorney fees and costs incurred by one law firm
selected by such Purchasers to represent their interests in the underwritten
offering.
(f) The Company shall notify each Purchaser who holds
Registrable Securities being sold pursuant to a Registration Statement of the
happening of any event of which the Company has knowledge as a result of which
(i) the prospectus included in the Registration Statement as then in effect
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
not misleading, or (ii) sales cannot be made pursuant to such Registration
Statement in compliance with the securities laws for any other reason (a
"Suspension Event"). The Company shall make such notification as promptly as
practicable after the Company becomes aware of such Suspension Event, shall
promptly use its best efforts to prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or omission, and shall
deliver a number of copies of such supplement or amendment to each Purchaser as
such Purchaser may reasonably request. If a Purchaser reasonably believes that a
Suspension Event is in effect, but has not received notice thereof from the
Company, such Purchaser may deliver a written request, setting forth in
reasonable detail the basis and source (including any individual) for such
belief, that the Company confirm that no Suspension Event is in effect. The
Company shall respond to any such request with a letter executed by an executive
officer of the Company stating that, in consultation with its counsel, the
Company has determined that a Suspension Event is or is not in effect, on or
before the third business day following receipt of such request. If the Company
fails to respond within such time period, a Suspension Event shall be deemed to
be in effect commencing retroactively as of the day that the Purchaser delivered
its request to the Company, and shall continue until the Purchaser is otherwise
notified by the Company. Notwithstanding the foregoing provision, the Company
shall not be required to maintain the effectiveness of the Registration
Statement or to amend or supplement the Registration Statement for a period (a
"Delay Period") beginning on the date of occurrence of the Suspension Event and
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, (ii) the date
on which the Company is able to comply with its disclosure obligations and SEC
requirements related thereto, or (iii) thirty (30) days after the occurrence of
the Suspension Event; provided, however, that there shall not be more than two
Delay Periods in any twelve (12) month period. In the event that the total
number of days in any Delay Period(s) within a twelve-month period exceeds
thirty (30) days, the Company shall extend the conversion date of the Preferred
Shares for a number of days equal to the total number of days in such Delay
Period(s). In the event that the number of days in all Delay Period(s) taken
together within a twelve-month period exceeds sixty (60) days, or in the event
that there are more than two Delay Periods in any twelve-month period,
regardless of the duration, the Company shall compensate the Purchasers for such
delay by making monthly cash payments, prorated on a daily basis, to each such
Purchaser of one percent (1.0%) of the Purchase Price (as defined in, and in
accordance with the terms of, the Purchase Agreement) paid for the Registrable
Shares still held by such Purchaser at such time for each month, continuing
through the date the Delay Period ceases (the "Delay Compensation"). The Delay
Compensation will begin to accrue on the sixty-first (61st) day falling within
one or more Suspension Events in any twelve-month period (or on the first day of
any Delay Period in excess of the first two Delay Periods) and will be payable
thirty days from that date and each thirty days thereafter until the
Registration Statement is brought effective.
(g) 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, shall use its best
efforts to obtain the withdrawal of such order at the earliest possible time and
to notify each Purchaser 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.
(h) The Company shall permit counsel designated by the
Purchasers who hold Registrable Securities being sold pursuant to such
registration to review the Registration Statement and all amendments and
supplements thereto (as well as all requests for acceleration or effectiveness
thereof) a reasonable period of time prior to their filing with the SEC, and
shall not file any document in a form to which such counsel reasonably objects.
(i) 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 a 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 following the effective date of the Registration Statement.
(j) At the request of any Purchaser who holds Registrable
Securities being sold pursuant to such registration, the Company shall furnish
on the date that Registrable Securities are delivered to an underwriter for sale
in connection with the Registration Statement (i) a letter, dated such date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed, if permitted by the
then applicable rules or the American Institute of Certified Public Accountants,
to the Purchasers; and (ii) an opinion, dated such date, from counsel
representing the Company for purposes of such Registration Statement, in form
and substance as is customarily given in an underwritten public offering,
addressed to the underwriters and Purchasers.
(k) The Company shall make available for inspection by any
Purchaser whose Registrable Securities are being sold pursuant to such
registration, any underwriter participating in any disposition pursuant to the
Registration Statement, and any attorney, accountant or other agent retained by
any such Purchaser or underwriter (collectively, the "Inspectors"), all
pertinent financial and other records, pertinent corporate documents and
properties of the Company (collectively, the "Records"), as shall be reasonably
necessary 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 a Purchaser) of any Records or other
information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (i) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement, (ii) the release of such Records is ordered pursuant
to a subpoena or other order from a court or government body of competent
jurisdiction, or is reasonably necessary in connection with litigation or other
legal process, or (iii) 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(k). Each Purchaser 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 the Company's 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 any Purchaser's ability to sell Registrable Securities in a manner which
is otherwise consistent with applicable laws and regulations.
(l) The Company shall hold in confidence and shall not make
any disclosure of information concerning a Purchaser provided to the Company
pursuant hereto 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, or is reasonably necessary in connection with litigation or other
legal process, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such information
concerning a Purchaser is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Purchaser and allow such Purchaser, at its expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information.
(m) The Company shall use its best efforts either to (i)
cause all the Registrable Securities covered by the Registration Statement to be
listed on Nasdaq (as defined below), the AMEX or the NYSE if similar securities
issued by the Company are then listed, and on each additional national
securities exchange on which similar securities 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 market, or (ii) secure designation of all
the Registrable Securities covered by the Registration Statement as a National
Association of Securities Dealers Automated Quotations System ("Nasdaq")
"national market system security" within the meaning of Rule 11Aa2-1 of the SEC
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the quotation of the Registrable Securities on the Nasdaq National Market System
or the Nasdaq SmallCap Market or, if, despite the Company's best efforts to
satisfy the preceding clause (i) or (ii), the Company is unsuccessful in
satisfying the preceding clause (i) or (ii), to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities.
(n) The Company shall provide for a transfer agent and
registrar for the Registrable Securities, which may be a single entity,
effective no later than ten (10) days before the filing of any Registration
Statement on behalf of the Company, and the Company shall deliver the
instructions to the transfer agent, substantially in the form of Exhibit A
annexed hereto (the "Instructions to the Transfer Agent"), to the transfer agent
within five days following the appointment of the transfer agent (as provided in
Section 3(o) below).
(o) The Company shall cooperate with the Purchasers who
hold Registrable Securities being sold 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 sold pursuant to the Registration Statement and enable
certificates to be in such denominations or amounts as the case may be, and
registered in such names as the managing underwriter or underwriters, if any, or
the Purchasers may reasonably request; and, within five 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 Purchasers whose Registrable Securities are
included in such Registration Statement) the Instructions to the Transfer Agent,
instructing the transfer agent to issue new stock certificates without a legend
and an opinion of such counsel that the Common Shares have been registered.
(p) The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Purchaser of the
Registrable Securities pursuant to the Registration Statement.
4. Obligations of the Purchasers. In connection with the registration
of the Registrable Securities, the Purchasers shall have the following
obligations:
(a) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Agreement with respect to each
Purchaser that such Purchaser shall furnish to the Company such information
regarding itself, the number of Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required by the rules of the SEC to effect the registration of the
Registrable Securities. At least ten (10) business days prior to the first
anticipated filing date of the Registration Statement, the Company shall notify
each Purchaser of the information the Company requires from each such Purchaser
(the "Requested Information") if such Purchaser elects to have any of such
Purchaser's Registrable Securities included in the Registration Statement. If
within ten (10) business days of such notice the Company has not received the
Requested Information from a Purchaser (a "Non-Responsive Purchaser"), then the
Company may file the Registration Statement without including Registrable
Securities of such Non-Responsive Purchaser.
(b) Each Purchaser, by such Purchaser'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 Purchaser has notified the Company
in writing of such Purchaser's election to exclude all of such Purchaser's
Registrable Securities from the Registration Statement.
(c) In the event Purchasers holding a majority in interest
of the Registrable Securities being registered determine to engage the services
of an underwriter, each Purchaser agrees to enter into and perform such
Purchaser'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 Purchaser has notified
the Company in writing of such Purchaser's election to exclude all of such
Purchaser's Registrable Securities from the Registration Statement.
(d) Each Purchaser agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
3(f) or 3(g), such Purchaser will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Purchaser's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or order
contemplated by Section 3(g) and, if so directed by the Company, such Purchaser
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
Purchaser's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
(e) No Purchaser may participate in any underwritten
registration hereunder unless such Purchaser (i) agrees to sell such Purchaser's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Purchasers entitled hereunder to approve such arrangements, (ii)
completes 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 other fees and expenses of
investment bankers and any manager or managers of such underwriting and legal
expenses of the underwriter applicable with respect to its Registrable
Securities, in each case to the extent not payable by the Company pursuant to
the terms of this Agreement.
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 3,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company, and the reasonable fees and disbursements of one counsel selected
by the Purchasers pursuant to Section 3(e) hereof, shall be borne by the
Company.
6. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Purchaser who holds such Registrable
Securities, the directors, if any, of such Purchaser, the officers, if any, of
such Purchaser, each person, if any, who controls any Purchaser within the
meaning of the Securities Act or the Exchange Act, any underwriter (as defined
in the Securities Act) for the Purchasers, the directors, if any, of such
underwriter and the officers, if any, of such underwriter, and each person, if
any, who controls any such underwriter within the meaning of the Securities Act
or the Exchange Act (each, an "Indemnified Person"), against any losses, claims,
damages, expenses or liabilities (joint or several) (collectively "Claims") to
which any of them become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if 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) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act or any state securities law or any rule or regulation (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 Purchasers and each such
underwriter or controlling person, promptly as such expenses are incurred and
are due and payable, for any legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (A) shall not apply to a Claim by any
Indemnified Person or Underwriter for such Indemnified Person arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified Person or
underwriter for such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (B) with respect to any preliminary prospectus
shall not inure to the benefit of any such person from whom the person asserting
any such Claim purchased the Registrable Securities that are the subject thereof
(or to the benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if a
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; and (C) 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. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Persons and shall survive the transfer of the Registrable
Securities by the Purchasers pursuant to Section 9.
(b) In connection with any Registration Statement in which
a Purchaser is participating, each such Purchaser agrees to indemnify and hold
harmless, 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, each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act, any underwriter 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 or
underwriter 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 Purchaser expressly for use in
connection with such Registration Statement, and such Purchaser will promptly
reimburse any legal or other expenses 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 Purchaser, which consent shall not be unreasonably
withheld; provided further, however, that the Purchasers shall be liable under
this Section 6(b) for only that amount of a Claim as does not exceed the net
proceeds to such Purchaser 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 Purchasers pursuant to Section 9. 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.
(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 such 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 parties; provided, however, that 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 differing interests
between such Indemnified Person or Indemnified Party and other party represented
by such counsel in such proceeding. The Company shall pay for only one separate
legal counsel for the Purchasers; such legal counsel shall be selected by the
Purchasers holding a majority in interest of the Registrable Securities. 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 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.
7. Contribution. To the extent any indemnification provided for
herein 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 seller of Registrable Securities
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 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 Purchasers 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
Purchasers 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
Exchange Act so long as the Company remains subject to such requirements and the
filing and availability of such reports and other documents is required for the
applicable provisions of Rule 144;
(b) Furnish to each Purchaser so long as the Company is not
subject to Section 13 or 15(d) of the Exchange Act, such other information
necessary for compliance with Rule 144(c)(2) of the Exchange Act; and
(c) Furnish to each Purchaser so long as such Purchaser
holds Registrable Securities, promptly upon request, (i) a written statement by
the Company that it has complied with the reporting requirements of Rule 144 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
Purchasers to sell such securities pursuant to Rule 144 without registration.
9. Assignment of Registration Rights. The rights to have the Company
register Registrable Securities pursuant to this Agreement may be assigned or
otherwise transferred by a Purchaser to (a) any affiliate of such Purchaser, (b)
any family member or trust for the benefit of any individual Purchaser, or (c)
any transferee who acquires no less than 50,000 shares of Registrable Securities
(collectively, "Permitted Transferrees"), provided that (i) the Purchaser agrees
in writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time prior to such transfer
or assignment, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being transferred 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) at or before the time the Company received the
written notice contemplated by clause (ii) of this sentence, the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein, (v) such transfer shall have been made in accordance with the
applicable requirements of the Purchase Agreement, and (vi) such transferee
shall be an "accredited investor" as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act.
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 the
written consent of the Company and Purchasers who hold a majority interest of
the Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Purchaser and the Company.
11. Miscellaneous.
(a) Conflicting Instructions. 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) Notices. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by certified or registered mail
(with return receipt requested) or delivered personally or by courier (including
a nationally recognized overnight delivery service) or by facsimile
transmission. Any notice so given shall be deemed effective three days after
being deposited in the U.S. Mail, or upon receipt if delivered personally or by
courier or facsimile transmission, in each case addressed to a party at the
following address or such other address as each such party furnishes to the
other in accordance with this Section 11(b):
If to the Company:
xxx-x.xxx inc.
0 Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxx X. Baseman, President and CEO
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
With a copy to:
Smith, Stratton, Wise, Xxxxx & Xxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
If to AlphaNet:
AlphaNet Solutions, Inc.
0 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxx, Esq., Senior VP,
Secretary and General Counsel
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
With a copy to:
Pitney, Xxxxxx, Xxxx & Xxxxx LLP
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
If to Fallen Angel:
Fallen Angel Equity Fund, L.P.
c/o Fallen Angel Capital LLC
000 Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxx Xxxxx
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
With a copy to:
Pitney, Xxxxxx, Xxxx & Xxxxx LLP
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
If to Xxxxxxxx:
Xxxx X. Xxxxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Each party shall provide notice to the other party of any change in address.
(c) Waiver. 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) Governing Law: Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New Jersey
other than the conflict laws. The parties hereto irrevocably consent to the
jurisdiction of the United States federal courts in New Jersey and state courts
located in the County of Xxxxxx in the State of New Jersey, in any suit or
proceeding based on or arising under this Agreement or the transactions
contemplated hereby and irrevocably agree that all claims in respect of such
suit or proceeding may be determined in such courts. The Company and each
Purchaser irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding in such forum. The Company and each
Purchaser further agrees that service of process upon the Company or such
Purchaser, as applicable, mailed by the first class mail in accordance with
Section 11(b) shall be deemed in every respect effective service of process upon
the Company or such Purchaser in any suit or proceeding arising hereunder.
Nothing herein shall affect any Purchaser's right to serve process in any other
manner permitted by law. 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.
The parties hereto irrevocably waive any right to trial by jury under applicable
law.
(e) Severability. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
hereof.
(f) Entire Agreement. This Agreement and the Purchase
Agreement (including all schedules and exhibits thereto) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement supersedes all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof.
(g) Successors and Assigns. 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.
(h) Use of Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require.
(i) Headings. The headings and subheadings in the Agreement
are for convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(j) Counterparts. 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 transmission, and
facsimile signatures shall be binding on the parties hereto.
(k) Further Acts. 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.
(l) Remedies. No provision of this Agreement providing for
any remedy to any party shall limit any remedy which would otherwise be
available to such Purchaser at law or in equity. Nothing in this Agreement shall
limit any rights a Purchaser may have with any applicable federal or state
securities laws with respect to the investment contemplated hereby. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Purchaser. Accordingly, the Company and the Purchasers
acknowledge that the remedy at law for a breach of their respective obligations
under this Agreement will be inadequate and that, in the event of a breach or
threatened breach by the Company or the Purchasers, respectively, of the
provisions of this Agreement, that a Purchaser or the Company, respectively,
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate compliance, without the necessity
of showing economic loss and without any bond or other security being required.
(m) Consents. All consents and other determinations to be
made by the Purchasers pursuant to this Agreement shall be made by Purchasers
holding a majority of the Registrable Securities, determined as if all shares of
Preferred Stock of the Company issued in the offering had been converted into or
exercised for Registrable Securities.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first above
written.
XXX-X.XXX INC.
By: /s/ Xxx Xxxxxxx
-------------------------------
Name: Xxx Xxxxxxx
Title: President & CEO
PURCHASERS:
/s/ Xxxx X. Xxxxxxxx
-------------------------------
Xxxx X. Xxxxxxxx
ALPHANET SOLUTIONS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and CEO
FALLEN ANGEL EQUITY FUND, L.P.
By: /s/ Xxx Xxxxx
-------------------------------
Name: Xxx Xxxxx
Title: Limited Partner
Exhibit A
TRANSFER AGENT INSTRUCTIONS
________ __, 2000
[Transfer Agent]
[Street Address]
[City, State, Zip]
Reference is made to that certain Securities Purchase Agreement,
dated as of January 14, 2000 (the "Purchase Agreement"), by and among xxx-x.xxx
inc., a New Jersey corporation (the "Company"), and each of AlphaNet Solutions,
Inc., Fallen Angel Equity Fund, L.P. and Xxxx X. Xxxxxxxx (collectively, the
"Holders"), pursuant to which the Company is issuing to the Holders shares of
the Company's Series A Convertible Participating Preferred Shares, Par Value
$0.01 per share (the "Preferred Shares"). This letter shall serve as our
irrevocable authorization and direction to you (provided that you are the
transfer agent of the Company at such time) to issue up to ___________ shares of
the Company's common stock, par value $0.01 per share (the "Common Stock") upon
conversion of the Preferred Shares (the "Conversion Shares") to or upon the
order of a Holder from time to time upon:
1. Surrender to you by the Company of a properly completed and duly
executed Conversion Notice, in the form attached hereto as Exhibit A,
and delivery to the Company of certificates representing Preferred
Shares being converted (or an indemnification undertaking with
respect to such shares in the case of their loss, theft or
destruction);
AND
2. Written confirmation from counsel to the Company that a
registration statement covering resales of the Conversion Shares has
been declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended.
Certificates representing the Conversion Shares shall not bear any
legend restricting transfer of the Conversion Shares thereby and should not be
subject to any stop-transfer restriction; provided, however, that if the
Conversion Shares are not registered for resale under the Securities Act of
1933, as amended, or otherwise may not be sold pursuant to Rule 144, then the
certificates for Conversion Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE
OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS."
and, provided, further that the Company may from time to time notify you to
place stop-transfer restrictions on the certificates for the Conversion Shares
in the event a registration statement covering the Conversion Shares is subject
to amendment.
Please be advised that the Holders are relying upon this letter as an
inducement to enter into the Purchase Agreement and, accordingly, each Holder is
a third party beneficiary to these instructions.
Should you have any questions concerning this matter, please contact
me at 000-000-0000.
Very truly yours,
XXX-X.XXX INC.
By: _____________________________________
Xxx X. Baseman, President
ACKNOWLEDGED AND AGREED:
[TRANSFER AGENT]
By: ____________________________________
Name: __________________________________
Title: _________________________________
Date: __________________________________
Exhibit A
NOTICE OF CONVERSION
To: xxx-x.xxx inc.
0 Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telecopy: (000) 000-0000
Attention: President
The undersigned hereby irrevocably elects to convert _____ Preferred Shares (the
"Conversion"), into ______ shares of Common Stock ("Common Shares") of xxx-x.xxx
inc. (the "Company") according to the conditions set forth in the Certificate of
Amendment of the Certificate of Incorporation of the Company (the "Certificate
of Amendment") as of the date written below. If securities are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. No fee will be charged to the
holder for any conversion except for transfer taxes, if any. A copy of the
certificate evidencing the shares being converted is attached hereto (or
evidence of loss, theft or destruction thereof).
The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable to the undersigned upon conversion of the
Preferred Shares shall be made pursuant to registration of the Common Shares
under the Securities Act of 1933, as amended (the "Act") or pursuant to an
exemption from registration under the Act.
In the event of partial conversion, please reissue an appropriate certificate(s)
for the Preferred Shares which shall not have been converted.
Effective Date of Conversion: ___________________
Applicable Conversion Price: ___________________
Amount of Accrued and Unpaid Dividends to be Converted, if any:
__________________
Amount of Illiquidity Payments to be Converted, if any: ____________________
Amount of Delay Compensation to be Converted, if any: ___________________
Amount of Delisting Payments to be Converted, if any: ____________________
Number of Common Shares to be Issued: ___________________
Issue Common Shares in the Name of: ___________________
Signature:
Name:
Address:
* The Company is not required to issue Common Shares until the original
Preferred Share certificates (or evidence of loss, theft or destruction thereof)
to be converted are received by the Company or its transfer agent. The Company
shall issue and deliver Common Shares to the holder not later than the later of
(a) three (3) business days following receipt of this Notice of Conversion and
(b) the date of surrender of the Preferred Share certificates or evidence of
loss, theft, or destruction thereof).
AGREED TO BY XXX-X.XXX INC.
--------------------------------------
By: Name:
Title:
