REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made this 11th day of
October, 1996, by ACCENT COLOR SCIENCES, INC., a Connecticut corporation (the
"Company") for the benefit of each Purchaser (individually a "Purchaser" and
collectively, the "Purchasers") entering into a Common Stock Purchase Agreement
(the "Purchase Agreement") with the Company of even date herewith.
BACKGROUND
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Pursuant to the Note Purchase Agreement, the Company has offered for sale
$3,450,000 Discounted Notes (the "Notes') with 15,000 Warrants to purchase
Common Stock (the "Warrants"). In order to induce the Purchasers to purchase the
Notes, the Company has agreed to provide the registration rights set forth in
this Agreement.
1. Securities Laws Representations and Covenants of Purchaser.
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This Agreement is made for the benefit of the Purchasers in reliance upon each
Purchaser's representations to the Company, contained in Section 4 of the Common
Stock Purchase Agreement.
2. Registration Rights.
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2.1 Certain Definitions. As used in this Agreement, the following
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terms shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
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Commission or any other federal agency at the time
administering the Securities Act.
(b) "Common Stock" shall mean the common stock, no par value, of
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the Company.
(c) "Form S-1, Form SB-I, Form S-2, Form SB-2 and Form S-3"
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shall mean Form S-1, Form SB-1, Form S-2, Form SB-2 or Form
S-3, respectively, promulgated by the Commission or any
substantially similar form then in effect.
(d) The terms "Register", "Registered" and "Registration" refer
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to a registration effected by preparing and filing a
Registration Statement in compliance with the Securities
Act, and the declaration or ordering of the effectiveness of
such Registration Statement.
(e) "Registrable Securities" shall mean the Shares so long as
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such shares are ineligible for sale under subparagraph (k)
of Rule 144.
(f) "Registration Expenses" shall mean all expenses incurred by
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the Company in complying with Section 2, including, without
limitation, all federal and state registration,
qualification and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and
expenses, the expense of any special audits incident to or
required by any such Registration and the reasonable fees
and disbursements of counsel for the Selling Shareholders,
as selling shareholders.
(g) "Registration Statement" shall mean Form S-1, Form SB-1,
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Form S-2, Form SB-2 or Form S-3, whichever is applicable.
(h) "Restriction Termination Date" shall mean, with respect to
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any Registrable Securities, the earliest of (i) the date
that such Registrable Securities shall have been Registered
and sold or otherwise disposed of in accordance with the
intended method of distribution by the seller or sellers
thereof set forth in the Registration Statement covering
such securities or transferred in compliance with Rule 144,
and (ii) the date that an opinion of counsel to the Company
containing reasonable assumptions (which opinion shall be
subject to the reasonable approval of counsel to any
affected Purchaser) shall have been rendered to the effect
that the legend referred to in Section 4.3(b) of the Common
Stock Purchase Agreement can be properly removed and such
legend shall have been removed.
(i) "Rule 144" shall mean Rule 144 promulgated by the Commission
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pursuant to the Securities Act.
(j) "Purchasers" shall mean, collectively, the Purchasers, their
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assignees and transferees, and individually, a Purchaser and
any transferee or assignee of such Purchaser.
(k) "Securities Act" shall mean the Securities Act of 1933, as
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amended.
(l) "Selling Expenses" shall mean all underwriting discounts and
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selling commissions applicable to the sale of Registrable
Securities pursuant to this Agreement.
(m) "Selling Shareholders" shall mean a holder of Registrable
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Securities who requests Registration under Section 2 herein.
(n) "Shares" shall mean the Common Stock issuable to the
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Purchasers pursuant to the Warrants.
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Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Common Stock Purchase Agreement.
2.2 Required Registration. If the Company shall be requested by
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holders of at least a majority of the Outstanding Shares to
effect the Registration of Registrable Securities, then the
Company shall promptly give written notice of such proposed
Registration to all holders of Shares, and thereupon the Company
shall promptly use its best efforts to effect the Registration of
the Registrable Securities that the Company has been requested to
Register for disposition as described in the request of such
holders of Shares and in any response received from any of the
holders of Shares within ten (10) days or such longer period as
shall be set forth in the notice, after the giving of the written
notice by the Company; provided, however, that the Company shall
not be obligated to effect any Registration except in accordance
with the following provisions:
(a) The Company shall not be obligated to file and cause to
become effective more than one (1) registration statement in
which Registrable Securities are Registered pursuant to this
Section 2.2.
(b) Notwithstanding the foregoing, the Company may include in
each such Registration requested pursuant to this Section
2.2 any authorized but unissued shares of Common Stock (or
authorized treasury shares) for sale by the Company or any
issued and outstanding shares of Common Stock for sale by
others, provided, however, that, if the number of shares of
Common Stock so included pursuant to this clause (b) exceeds
the number of Registrable Securities requested by the
holders of Shares requesting such Registration, then such
Registration shall be deemed to be a Registration in
accordance,with and pursuant to Section 2.3; and provided
further, however, that the inclusion of such previously
authorized but unissued shares of Common Stock by the
Company or issued and outstanding shares of Common Stock by
others in such Registration shall not prevent the holders of
Shares requesting such Registration from registering the
entire number of Registrable Securities requested by them.
(c) The Company shall not be required to file a registration
statement pursuant to this Section 2: (i) within twelve
months after October 11, 1996, (ii) within six (6) months
after any other registration by the Company (other than
under "Excluded Forms," as defined in Section 2.3 (a) below)
or (iii) for six (6) months after the request for
registration under this Section 2.2 if the Company is then
engaged in negotiations regarding a material transaction
which has not otherwise been publicly disclosed, or such
shorter period ending on the date,
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whichever first occurs, that such transaction is publicly
disclosed, abandoned or consummated.
(d) The registration rights granted pursuant to this section
shall have no force or effect until the earlier of the
Company has completed its initial public offering (the
"IPO") under the Securities Act or otherwise become
obligated to file periodic or other reports pursuant to
Section 13 of the 0000 Xxx.
2.3 Piggyback Registration
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(a) Each time that the Company proposes to Register a public
offering solely of its Common Stock, other than pursuant to
a Registration Statement on Form S-4 or Form S-8 or similar
or successor forms (collectively, "Excluded Forms"), the
Company shall promptly give written notice of such proposed
Registration to all holders of Shares, which shall offer
such holders the right to request inclusion of any
Registrable Securities in the proposed Registration,
provided that such right shall not be exercisable in
connection with the IPO, or prior to the earlier of (i)
October 11, 1997 or six (6) months following the IPO.
(b) Each holder of Shares shall have ten (10) days or such
longer period as shall be set forth in the notice from the
receipt of such notice to deliver to the Company a written
request specifying the number of shares of Registrable
Securities such holder intends to sell and the holder's
intended plan of disposition.
(c) In the event that the proposed Registration by the Company
is, in whole or in part, an underwritten public offering of
securities of the Company, any request under Section 2.3(b)
may specify that the Registrable Securities be included in
the underwriting on the same terms and conditions as the
shares of Common Stock, if any, otherwise being sold through
underwriters under such Registration.
(d) Upon receipt of a written request pursuant to Section
2.3(b), the Company shall promptly use its best efforts to
cause all such Registrable Securities to be Registered, to
the extent required to permit sale or disposition as set
forth in the written request.
(e) Notwithstanding the foregoing, if the managing underwriter
of an underwritten public offering, determines and advises
in writing that the inclusion of all Registrable Securities
proposed to be included in the underwritten public offering,
together with any other issued and
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outstanding shares of Common Stock proposed to be included
therein by holders other than the holders of Registrable
Securities (such other shares hereinafter collectively
referred to as the "Other Shares"), would interfere with the
successful marketing of the securities proposed to be
included in the underwritten public offering, then the
number of such shares to be included in such underwritten
public offering shall be reduced, and shares shall be
excluded from such underwritten public offering in a number
deemed necessary by such managing underwriter, first by
excluding shares held by the directors, officers, employees
and founders of the Company, and then, to the extent
necessary, by excluding Registrable Securities participating
in such underwritten public offering, pro rata, based on the
number of shares of Registrable Securities each such holder
proposed to include.
(f) All Shares that are not included in the underwritten public
offering shall be withheld from the market by the holders
thereof for a period, not to exceed 6 months following a
public offering, that the managing underwriter reasonably
determines as necessary in order to effect the underwritten
public offering. The holders of such Shares shall execute
such documentation as the managing underwriter reasonably
requests to evidence this lock-up.
2.4 Preparation and Filing. If and whenever the Company is under an
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obligation pursuant to the provisions of this Section 2 to use its
best efforts to effect the Registration of any Registrable Securities,
the Company shall, as expeditiously as practicable:
(a) prepare and file with the Commission a Registration
Statement with respect to such Registrable Securities and
use its best efforts to cause such Registration Statement to
become and remain effective in accordance with Section
2.4(b) hereof, keeping each Selling Shareholder advised as
to the initiation, progress and completion of the
Registration;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statements and the
prospectus used in connection therewith as may be necessary
to keep such Registration Statement effective for nine
months and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all
Registrable Securities covered by such registration
statement;
(c) furnish to each Selling Shareholder such number of copies of
any summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements
of the Securities Act,
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and such other documents as such Selling Shareholder may
reasonably request in order to facilitate the public sale or
other disposition of such Registrable Securities;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as each
Selling Shareholder shall reasonably request and do any and
all other acts or things which may be necessary or advisable
to enable such holder to consummate the public sale or other
disposition in such jurisdictions of such Registrable
Securities; provided, however, that the Company shall not be
required to consent to general service of process, qualify
to do business as a foreign corporation where it would not
be otherwise required to qualify or submit to liability for
state or local taxes where it is not liable for such taxes;
and
(e) at any time when a prospectus covered by such Registration
Statement is required to be delivered under the Securities
Act within the appropriate period mentioned in Section
2.3(b) hereof, notify each Selling Shareholder of the
happening of any event as a result of which the prospectus
included in such Registration, 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 in the light of
the circumstances then existing and, at the request of such
seller, prepare, file and furnish to such seller 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 shares, 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 statement therein
not misleading in the light of the circumstances then
existing.
2.5 Expenses. The Company shall pay all Registration Expenses incurred by
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the Company in complying with this Section 2; provided, however, that
all underwriting discounts and selling commissions applicable to the
Registrable Securities covered by registrations effected pursuant to
Section 2.2 hereof shall be borne by the seller or sellers thereof, in
proportion to the number of Registrable Securities sold by such seller
or sellers.
2.6 Information Furnished by Purchaser. It shall be a condition precedent
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to the Company's obligations under this Agreement as to any Selling
Shareholder that each Selling Shareholder furnish to the Company in
writing such information regarding such Selling Shareholder and the
distribution proposed by such Selling Shareholder
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as the Company may reasonably request.
2.7 Indemnification.
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2.7.1 Company's Indemnification of Purchasers. The Company shall
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indemnify each Selling Shareholder, each of its officers,
directors and constituent partners, and each person controlling
such Selling Shareholder, and each underwriter thereof, if any,
and each of its officers, directors, constituent partners, and
each person who controls such underwriter, against all claims,
losses, damages or liabilities (or actions in respect thereof)
suffered or incurred by any of them, to the extent such claims,
losses, damages or liabilities arise out of or are based upon
any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus or any related
Registration Statement incident to any such Registration, or
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, or any violation by the
Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to
actions or inaction required of the Company in connection with
any such Registration; and the Company will reimburse each such
Selling Shareholder, each such underwriter, each of their
officers, directors and constituent partners and each person
who controls any such Selling Shareholder or underwriter, for
any legal and any other expenses as reasonably incurred in
connection with investigating or defending any such claim,
loss, damage, liability or action; provided, however, that the
indemnity contained in this Section 2.7.1 shall not apply to
amounts paid in settlement of any such claim, loss, damage,
liability or action if settlement is effected without the
consent of the Company (such consent shall not unreasonably be
withheld); and provided, however, that the Company will not be
liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based
upon any untrue statement or omission based upon written
information furnished to the Company by such Selling
Shareholder, underwriter, controlling person or other
indemnified person and stated to be for use in connection with
the offering of securities of the Company.
2.7.2 Selling Shareholder's Indemnification of Company. Each Selling
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Shareholder shall indemnify the Company, each of its directors
and officers, each underwriter, if any, of the Company's
Registrable Securities covered by a Registration Statement each
person who controls the Company or such underwriter within the
meaning of the Securities Act and each other Selling
Shareholder, each of its officers, directors and constituent
partners and each person controlling such other Selling
Shareholder, against all claims, losses, damages and
liabilities (or actions in respect thereof) suffered or
incurred by any of them and arising out of or based upon any
untrue statement (or alleged untrue statement) of a material
fact contained in such Registration Statement
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or related prospectus, or 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, or any
violation by such Selling Shareholder of any rule or regulation
promulgated under the Securities Act applicable to such Selling
Shareholder and relating to actions or inaction required of
such Selling Shareholder in connection with the Registration of
the Registrable Securities pursuant to such Registration
Statement; and will reimburse the Company, such other Selling
Shareholders, such directors, officers, partners, persons,
underwriters and controlling persons for any legal and any
other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage,
liability or action; such indemnification and reimbursement
shall be to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such Registration Statement or
prospectus in reliance upon and in conformity with written
information furnished to the Company by such Selling
Shareholder and stated to be specifically for use in connection
with the offering of Registrable Securities.
2.7.3 Indemnification Procedure. Promptly after receipt by an
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indemnified party under this Section 2.7 of notice of the
commencement of any action which may give rise to a claim for
indemnification hereunder, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying
party under this Section 2.7, notify the indemnifying party in
writing of the commencement thereof and generally summarize
such action. The indemnifying party shall have the right to
participate in and to assume the defense of such claim, and
shall be entitled to select counsel for the defense of such
claim with the approval of any parties entitled to
indemnification, which approval shall not be unreasonably
withheld. Notwithstanding the foregoing, the parties entitled
to indemnification shall have the right to employ separate
counsel (reasonably satisfactory to the indemnifying party) to
participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified
parties unless the named parties to such action or proceedings
'include both the indemnifying party and the indemnified
parties and the indemnifying party or such indemnified parties
shall have been advised by counsel that there are one or more
legal defenses available to the indemnified parties which are
different from or additional to those available to the
indemnifying party (in which case, if the indemnified parties
notify the indemnifying party in writing that they elect to
employ separate counsel at the reasonable expense of the
indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action or proceeding on
behalf of the indemnified parties, it being understood,
however, that the indemnifying party shall not, in connection
with any such action or proceeding or separate or substantially
similar or related action or proceeding in the same
jurisdiction arising out of the same general allegations
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or circumstances, be liable for the reasonable fees and
expenses of more than one separate counsel at any time for
all indemnified parties, which counsel shall be designated
in writing by the Purchasers of a majority of the
Registrable Securities).
2.7.4 Contribution. If the indemnification provided for in this
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Section 2.7 from an indemnifying party is unavailable to an
indemnified party hereunder in respect to any losses,
claims, damages, liabilities or expenses referred to herein,
then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such
losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault
of the Indemnifying party and indemnified party in
connection with the statements or omissions which result in
such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by such
indemnifying party or indemnified party and the parties'
relative intent, knowledge, access to information supplied
by such indemnifying party or indemnified party and
opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result
of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action, suit,
proceeding or claim.
3. Covenants of the Company.
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The Company agrees to:
(a) Notify the holders of Registrable Securities included in a
Registration Statement of the issuance by the Commission of
any stop order suspending the effectiveness of such
Registration Statement or the initiation of any proceedings
for that purpose. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the
earliest possible time.
(b) If the Common Stock is then listed on a national securities
exchange, use its best efforts to cause the Registrable
Securities to be listed on such exchange. If the Common Stock
is not then listed on a national securities exchange, use its
best efforts to facilitate the reporting of the Registrable
Securities on NASDAQ.
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(c) Take all other reasonable actions necessary to expedite and
facilitate disposition of the Registrable Securities by the
holders thereof pursuant to the Registration Statement.
(d) With a view to making available to the holders of Registrable
Securities the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission
that may at any time permit the Purchasers to sell securities of
the Company to the public without registration, the Company,
after it has become obligated to file periodic or other reports
pursuant to Section 13 of the 1934 Act agrees to:
(i) make and keep public information available, as those
terms are understood and defined in Rule 144, at all
times after 90 days after the effective date of the first
Registration Statement filed by the Company for the
offering of its securities to the general public;
(ii) file with the Commission in a timely manner all reports
and other documents required of the Company under the
Securities Act and the Securities and Exchange Act of
1934 (the "1934 Act"); and
(iii) furnish to each holder of Shares, so long as such holder
of Shares owns any Shares, forthwith upon written request
(a) a written statement by the Company that it has
complied with the reporting requirements of Rule 144 (at
any time after 90 days after the effective date of the
first registration statement filed by the Company), the
Securities Act and the 1934 Act (at any time after it has
become subject to such reporting requirements), (b) 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 (c) such other information as may be
reasonably requested and as is publicly available in
availing the holders of Shares of any rule or regulation
of the Commission which permits the selling of any such
securities without registration.
(e) Prior to the filing of the Registration Statement or any
amendment thereto (whether pre-effective or post-effective), and
prior to the filing of any prospectus or prospectus supplement
related thereto, the Company will provide each Selling
Shareholder with copies of all pages thereto, if any, which
reference such Selling Shareholder.
4. Miscellaneous.
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(a) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when
personally delivered or sent by registered mail, return receipt
requested, addressed (i) if to the Company, at
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Accent Color Sciences, Inc., 000 Xxxxxxxxxxx Xxxxx, Xxxx
Xxxxxxxx, XX 00000 and (ii) if to a Purchaser, at the address set
forth in his Subscription Agreement, or at such other address as
each such party furnishes by notice given in accordance with this
Section 4(a);
(b) 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, will not operate as a waiver thereof. No waiver
will be effective unless and until it is in writing and signed by
the party giving the waiver;
(c) This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of Connecticut
as such laws are applied by Connecticut courts to agreements
entered into and to be performed in Connecticut by and between
residents of Connecticut. In the event that any provision of
this Agreement is invalid or unenforceable under any applicable
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,
(d) This Agreement may not be assigned by the Purchaser other than to
the purchaser or transferee of more than 50% of the Purchaser's
Shares;
(e) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and may
be amended only by a writing executed by the Company and the
holders of a majority in interest of the Registrable Securities;
and
(f) This Agreement may be executed in two or more counterparts, each
of which when so executed and delivered shall be deemed to be an
original and all of which together shall be deemed to be one and
the same Agreement.
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IN WITNESS WHEREOF, the Company has executed this Agreement for the
benefit of the Purchasers by its duly authorized officer as of the date first
above written.
ACCENT COLOR SCIENCES, INC.
By:
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Xxxxxx X. Xxxxxxxx, President
and Chief Executive Officer
Agreed and Accepted this
day of 1996
By:
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Name:
Title:
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