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EXHIBIT 4.10.1
REGISTRATION RIGHTS AGREEMENT
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This Registration Rights Agreement (this "Agreement") is made and entered
into as of January 19, 2000, among Global Maintech Corporation, a Minnesota
corporation (the "Company"), and each of the Investors listed on Schedule 1
attached hereto. Each of the Investors listed on Schedule 1 attached hereto is
referred to herein as an "Investor" and are collectively referred to herein as
the "Investors."
This Agreement is being entered into pursuant to the Series D Convertible
Preferred Stock Purchase Agreement, dated as of the date hereof, by and among
the Company and the Investors (the "Purchase Agreement").
The Company and the Investors hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 3(m).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control
with such Person. For the purposes of this definition, "control," when used
with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies
of such Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms of "affiliated," "controlling" and
"controlled" have meanings correlative to the foregoing.
"Blackout Period" shall have the meaning set forth in Section 3(n).
"Board" shall have the meaning set forth in Section 3(n).
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the
state of New York generally are authorized or required by law or other
government actions to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, no par value.
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"Effectiveness Date" means with respect to the Registration Statement
the 90th day following the Closing Date.
"Effectiveness Period" shall have the meaning set forth in Section 2.
"Event" shall have the meaning set forth in Section 7(e).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Filing Date" means the 30th day following the Closing Date.
"Holder" or "Holders" means the holder or holders, as the case may be,
from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section 5(c).
"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"Preferred Stock" means the Series D Convertible Preferred Stock,
stated value $1,000 per share, of the Company issued to the Investors
pursuant to the Purchase Agreement.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such Prospectus.
"Registrable Securities" means (i) the New Common Shares, (ii) the
shares of Common Stock issuable upon conversion of the Preferred Stock (the
"Conversion Shares") and exercise of the Warrants (the "Warrant Shares"),
and upon any stock split, stock dividend, recapitalization or similar event
with respect to such Conversion Shares, Warrant Shares or Preferred Stock,
(iii) the shares of Common Stock issuable upon conversion of the Preferred
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Stock and the number of shares of Common Stock issued to the placement
agent in connection with the issuance of the Preferred Stock, the New
Common Shares and the Warrants to the Investors, (iv) the shares of Common
Stock issued upon any redemption of Preferred Stock pursuant to Section 8
of the Certificate of Designation and (v) any other dividend or other
distribution with respect to, conversion or exchange of, or in replacement
of, Registrable Securities; provided, however, that Registrable Securities
shall include (but not be limited to) a number of shares of Common Stock
equal to no less than the sum of (a) 200% of the maximum number of shares
of Common Stock which would be issuable upon conversion of the Preferred
Stock issued to the Investors and the placement agent and (b)100% of (1)
the maximum number of shares of Common Stock which would be issuable upon
exercise of the Warrants, (2) the number of New Common Shares issued to the
Investors and (3) the number of shares of Common Stock issued to the
placement agent in connection with the issuance of the Preferred Stock, the
New Common Shares and the Warrants to the Investors, assuming conversion of
the Preferred Stock and exercise of the Warrants occurred on the Closing
Date or the Filing Date, whichever date would result in the greater number
of Registrable Securities. Notwithstanding anything herein contained to the
contrary, such registered shares of Common Stock shall be allocated among
the Holders pro rata based on the total number of Registrable Securities
issued or issuable as of each date that a Registration Statement, as
amended, relating to the resale of the Registrable Securities is declared
effective by the Commission. Notwithstanding anything contained herein to
the contrary, if the actual number of shares of Common Stock issuable upon
conversion of the Preferred Stock and upon exercise of the Warrants exceeds
200% of the number of shares of Common Stock issuable upon conversion of
the Preferred Stock and 100% of the number of shares of Common Stock
issuable upon exercise of the Warrants based upon a computation as of the
Closing Date or the Filing Date, the term "Registrable Securities" shall be
deemed to include such additional shares of Common Stock.
"Registration Statement" means the registration statements and any
additional registration statements contemplated by Section 2, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
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"Special Counsel" means any special counsel to the Holders, for which
the Holders will be reimbursed by the Company pursuant to Section 4.
2. Shelf Registration.
On or prior to the Filing Date the Company shall prepare and file with the
Commission a "shelf" Registration Statement covering all Registrable Securities
for an offering to be made on a continuous basis pursuant to Rule 415. The
Registration Statement shall be on Form SB-2 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form SB-2, in
which case such registration shall be on another appropriate form in accordance
herewith). The Company shall (i) not permit any securities other than the
Registrable Securities and the securities listed on Schedule 2 attached hereto
to be included in the Registration Statement and (ii) cause the Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event prior to the Effectiveness
Date, and to keep such Registration Statement continuously effective under the
Securities Act until such date as is the earlier of (x) the date when all
Registrable Securities covered by such Registration Statement have been sold or
(y) the date on which the Registrable Securities may be sold without any
restriction pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter, addressed to the Company's transfer agent
to such effect (the "Effectiveness Period"). If an additional Registration
Statement is required to be filed because the actual number of shares of Common
Stock into which the Preferred Stock is convertible and the Warrants are
exercisable exceeds the number of shares of Common Stock initially registered in
respect of the Conversion Shares and the Warrant Shares based upon the
computation on the Closing Date or the Filing Date, the Company shall have
twenty (20) Business Days to file such additional Registration Statement after
receiving notice thereof from any of the Investors, and the Company shall cause
such additional Registration Statement to be declared effective by the
Commission as soon as possible, but in no event later than thirty (30) Business
Days after filing.
3. Registration Procedures.
In connection with the Company's registration obligations hereunder, the
Company shall:
(a) Prepare and file with the Commission on or prior to the Filing
Date, a Registration Statement on Form SB-2 (or if the Company is not then
eligible to register for resale the Registrable Securities on Form SB-2
such registration shall be on another appropriate form in accordance
herewith) in accordance with the method or methods of distribution thereof
as specified by the Holders (except if otherwise directed by the Holders),
and cause the Registration Statement to become effective and remain
effective as provided herein; provided, however, that not less than five
(5) Business Days prior to the filing of the Registration Statement or any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated therein by reference), the Company
shall (i) furnish to the Special Counsel on behalf of the Holders, copies
of all such documents proposed to be filed, which documents (other than
those incorporated by reference) will be subject to the review of such
Special Counsel, and (ii) at the request of any Holder cause its officers
and directors, counsel and independent certified
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public accountants to respond to such inquiries as shall be necessary, in
the reasonable opinion of counsel to the Company, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall
not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities or any Special Counsel shall reasonably object in
writing within three (3) Business Days of their receipt thereof.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may
be necessary to keep the Registration Statement continuously effective as
to the applicable Registrable Securities for the Effectiveness Period and
prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of
the Registrable Securities; (ii) cause the related Prospectus to be amended
or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424 (or any similar
provisions then in force) promulgated under the Securities Act; (iii)
respond as promptly as possible to any comments received from the
Commission with respect to the Registration Statement or any amendment
thereto and as promptly as possible provide the Holders true and complete
copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration
Statement during the applicable period in accordance with the intended
methods of disposition by the Holders thereof set forth in the Registration
Statement as so amended or in such Prospectus as so supplemented.
(c) Notify the Special Counsel on behalf of the Holders of Registrable
Securities to be sold as promptly as possible (and, in the case of (i)(A)
below, not less than five (5) Business Days prior to such filing) and (if
requested by any such Person) confirm such notice in writing no later than
one (1) Business Day following the day (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to the Registration
Statement is proposed to be filed; (B) when the Commission notifies the
Company whether there will be a "review" of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement
and (C) with respect to the Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the
Commission or any other Federal or state governmental authority for
amendments or supplements to the Registration Statement or Prospectus or
for additional information; (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (iv) if at any time any of the
representations and warranties of the Company contained in any agreement
contemplated hereby ceases to be true and correct in all material respects;
(v) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation
or threatening of any Proceeding for such purpose; and (vi) of the
occurrence of any event that makes any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the
Prospectus, as the case may be, it will not contain
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any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(d) The Company shall promptly furnish to Special Counsel, without
charge, (i) any correspondence from the Commission or the Commission's
staff to the Company or its representatives relating to any Registration
Statement and (ii) promptly after the same is prepared and filed with the
Commission, a copy of any written response to the correspondence received
from the Commission.
(e) Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of, (i) any order suspending the effectiveness of the
Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction, at the earliest practicable moment.
(f) If requested by the Holders of a majority in interest of the
Registrable Securities, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment to the Registration Statement such information
as the Company reasonably agrees should be included therein and (ii) make
all required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
(g) Furnish the Special Counsel, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the
extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with
the Commission.
(h) Promptly deliver to the Special Counsel, without charge, as many
copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement
thereto.
(i) Prior to any public offering of Registrable Securities, register
or qualify or cooperate with the selling Holders and any Special Counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any Holder requests in writing, to keep each such
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided,
however, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of process in any such
jurisdiction
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where it is not then so subject or subject the Company to any material tax
in any such jurisdiction where it is not then so subject.
(j) Cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold
pursuant to a Registration Statement, which certificates shall be free to
all restrictive legends and to enable such Registrable Securities to be in
such denominations and registered in such names as any Holder may request
at least two (2) Business Days prior to any sale of Registrable Securities.
(k) Upon the occurrence of any event contemplated by Section 3(c)(vi),
as promptly as possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to
the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(l) Request each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable Securities
as is required by law to be disclosed in the Registration Statement, and
the Company may exclude from such registration the Registrable Securities
of any such Holder who fails to furnish such information within a
reasonable time prior to the filing of each Registration Statement,
supplemented Prospectus and/or amended Registration Statement.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder
shall have the right to require (if such reference to such Holder by name
or otherwise is not required by the Securities Act or any similar federal
statute then in force) the deletion of the reference to such Holder in any
amendment or supplement to the Registration Statement filed or prepared
subsequent to the time that such reference ceases to be required.
Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has
received copies of the Prospectus as then amended or supplemented as
contemplated in Section 3(h) and notice from the Company that such
Registration Statement and any post-effective amendments thereto have
become effective as contemplated by Section 3(c) and (ii) it and its
officers, directors or Affiliates, if any, will comply with the prospectus
delivery requirements of the Securities Act as applicable to them in
connection with sales of Registrable Securities pursuant to the
Registration Statement.
Each Holder agrees by its acquisition of such Registrable Securities
that, upon receipt of a notice from the Company of the occurrence of any
event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v) or 3(c)(vi), such Holder will forthwith discontinue disposition of
such Registrable Securities under the Registration Statement until such
Holder's receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement contemplated by Section 3(k), or until it is
advised in writing (the "Advice") by the Company
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that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement.
(m) If (i) there is material non-public information regarding the
Company which the Company's Board of Directors (the "Board") reasonably
determines not to be in the Company's best interest to disclose and which
the Company is not otherwise required to disclose, or (ii) there is a
significant business opportunity (including, but not limited to, the
acquisition or disposition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or other similar
transaction) available to the Company which the Board reasonably determines
not to be in the Company's best interest to disclose and which the Company
would be required to disclose under the Registration Statement, then the
Company may postpone or suspend filing or effectiveness of a registration
statement for a period not to exceed 20 consecutive days, provided that the
Company may not postpone or suspend its obligation under this Section 3(m)
for more than 45 days in the aggregate during any 12 month period (each, a
"Blackout Period"); provided, however, that no such postponement or
suspension shall be permitted for consecutive 20 day periods, arising out
of the same set of facts, circumstances or transactions.
4. Registration Expenses
All fees and expenses incident to the performance of or compliance with
this Agreement by the Company shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with Nasdaq
and each other securities exchange or market on which Registrable Securities are
required hereunder to be listed, (B) with respect to filings required to be made
with the Commission, (C) with respect to filings required to be made with the
NASD and the NASD Regulation, Inc. and (D) with respect to filings to be made
under state securities or Blue Sky laws, (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
and of printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and Special Counsel for the Holders, in
the case of the Special Counsel, to a maximum amount of $10,000, and (v) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company's independent public accountants (including the
expenses of any comfort letters or costs associated with the delivery by
independent public accountants of a comfort letter or comfort letters). In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required hereunder.
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5. Indemnification
(a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder,
the officers, directors, agents, brokers (including brokers who offer and
sell Registrable Securities as principal as a result of a pledge or any
failure to perform under a margin call of Common Stock), investment
advisors and employees of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees
of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
reasonable attorneys' fees) and expenses (collectively, "Losses"), as
incurred, arising out of or relating to any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the
extent, but only to the extent, that such untrue statements or omissions
are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, which
information was reasonably relied on by the Company for use therein or to
the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed
and expressly approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto. The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding of which
the Company is aware in connection with the transactions contemplated by
this Agreement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of an Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Holders.
(b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, the directors, officers,
agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and
against all Losses, as incurred, arising solely out of or based solely upon
any untrue statement of a material fact contained in the Registration
Statement, any Prospectus, or any form of prospectus, or arising solely out
of or based solely upon any omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or supplement thereto, in the light of
the circumstances under which they were made) not misleading, to the
extent, but only to the extent, that such untrue statement or omission is
contained in or omitted from any information so furnished in writing by
such Holder to the Company specifically for inclusion in the Registration
Statement or such Prospectus and that such information was reasonably
relied upon by the Company for use in the Registration Statement, such
Prospectus or such form of prospectus or to the extent that such
information
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relates to such Holder or such Holder's proposed method of distribution of
Registrable Securities and was reviewed and approved in writing by such
Holder expressly for use in the Registration Statement, such Prospectus or
such form of Prospectus Supplement. Notwithstanding anything to the
contrary contained herein, the Holder shall be liable under this Section
5(b) for only that amount as does not exceed the net proceeds to such
Holder as a result of the sale of Registrable Securities pursuant to such
Registration Statement.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying Party) in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such
notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent
that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
in writing to pay such fees and expenses; or (2) the Indemnifying Party
shall have failed promptly to assume the defense of such Proceeding and to
employ counsel reasonably satisfactory to such Indemnified Party in any
such Proceeding; or (3) the named parties to any such Proceeding (including
any impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating
or preparing to defend such Proceeding in a manner not inconsistent with
this Section) shall be paid to the Indemnified Party, as incurred, within
ten (10) Business Days of written notice thereof to the Indemnifying Party
(regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified
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Party to undertake to reimburse all such fees and expenses to the extent it
is finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party because of a failure or refusal
of a governmental authority to enforce such indemnification in accordance
with its terms (by reason of public policy or otherwise), then each
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, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such
Losses 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 any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission of a material fact, has been taken or made by,
or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses
shall be deemed to include, subject to the limitations set forth in Section
5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms. Notwithstanding anything to the contrary
contained herein, the Holder shall be liable or required to contribute
under this Section 5(c) for only that amount as does not exceed the net
proceeds to such Holder as a result of the sale of Registrable Securities
pursuant to such Registration Statement.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 5
are in addition to any liability that the Indemnifying Parties may have to
the Indemnified Parties.
6. Rule 144.
As long as any Holder owns Preferred Shares, New Common Shares, Conversion
Shares, Warrants or Warrant Shares, the Company covenants to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as any Holder
owns Preferred Shares, New Common Shares, Conversion Shares, Warrants or Warrant
Shares, if the Company is not required to file reports pursuant to Section 13(a)
or 15(d) of the Exchange Act, it will prepare and furnish to the Holders and
make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly
11
<PAGE>
financial statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a) or
15(d) of the Exchange Act, as well as any other information required thereby, in
the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such Person to sell Conversion Shares and Warrant
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Securities Act,
including providing any legal opinions of counsel to the Company referred to in
the Purchase Agreement. Upon the request of any Holder, the Company shall
deliver to such Holder a written certification of a duly authorized officer as
to whether it has complied with such requirements.
7. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder,
of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary damages would
not provide adequate compensation for any losses incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect
of such breach, it shall waive the defense that a remedy at law would be
adequate.
(b) No Inconsistent Agreements. Except as listed on Schedule 2
attached hereto, the Company has not, as of the date hereof entered into
and currently in effect, nor shall the Company, on or after the date of
this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The Company
has not previously entered into any agreement currently in effect granting
any registration rights with respect to any of its securities to any
Person. Without limiting the generality of the foregoing, without the
written consent of the Holders of a majority of the then outstanding
Registrable Securities, the Company shall not grant to any Person the right
to request the Company to register any securities of the Company under the
Securities Act unless the rights so granted are subject in all respects to
the prior rights in full of the Holders set forth herein, and are not
otherwise in conflict with the provisions of this Agreement.
(c) No Piggyback on Registrations. Except as listed on Schedule 2
attached hereto, neither the Company nor any of its security holders (other
than the Holders in such capacity pursuant hereto) may include securities
of the Company in the Registration Statement, and the Company shall not
after the date hereof enter into any agreement providing such right to any
of its security holders, unless the right so granted is subject in all
respects to the prior rights in full of the Holders set forth herein, and
is not otherwise in conflict with the provisions of this Agreement.
12
<PAGE>
(d) Piggy-Back Registrations. If at any time when there is not an
effective Registration Statement covering (i) New Common Shares, (ii)
Conversion Shares or (iii) Warrant Shares, the Company shall determine to
prepare and file with the Commission a registration statement relating to
an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or
Form S-8 (each as promulgated under the Securities Act) or an equivalent
form relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Company
shall send to each holder of Registrable Securities written notice of such
determination and, if within thirty (30) days after receipt of such notice,
any such holder shall so request in writing (which request shall specify
the Registrable Securities intended to be disposed of by the Investors),
the Company will cause the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register
by the holder, to the extent requisite to permit the disposition of the
Registrable Securities so to be registered, provided that if at any time
after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the
Company may, at its election, give written notice of such determination to
such holder and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its
obligation to pay expenses in accordance with Section 4 hereof), and (ii)
in the case of a determination to delay registering, shall be permitted to
delay registering any Registrable Securities being registered pursuant to
this Section 7(d) for the same period as the delay in registering such
other securities. The Company shall include in such registration statement
all or any part of such Registrable Securities such holder requests to be
registered; provided, however, that the Company shall not be required to
register any Registrable Securities pursuant to this Section 7(d) that are
eligible for sale pursuant to Rule 144(k) of the Securities Act. In the
case of an underwritten public offering, if the managing underwriter(s) or
underwriter(s) should reasonably object to the inclusion of the Registrable
Securities in such registration statement, then if the Company after
consultation with the managing underwriter should reasonably determine that
the inclusion of such Registrable Securities, would materially adversely
affect the offering contemplated in such registration statement, and based
on such determination recommends inclusion in such registration statement
of fewer or none of the Registrable Securities of the Holders, then (x) the
number of Registrable Securities of the Holders included in such
registration statement shall be reduced pro-rata among such Holders (based
upon the number of Registrable Securities requested to be included in the
registration), if the Company after consultation with the underwriter(s)
recommends the inclusion of fewer Registrable Securities, or (y) none of
the Registrable Securities of the Holders shall be included in such
registration statement, if the Company after consultation with the
underwriter(s) recommends the inclusion of none of such Registrable
Securities; provided, however, that if securities are being offered for the
account of other persons or entities as well as the Company, such reduction
shall not represent a greater fraction of the number of Registrable
Securities intended to be offered by the Holders than the fraction of
similar reductions imposed on such other persons or entities (other than
the Company).
(e) Failure to File Registration Statement and Other Events. The
Company and the Investors agree that the Holders will suffer damages if the
Registration Statement is not
13
<PAGE>
filed on or prior to the Filing Date and not declared effective by the
Commission on or prior to the Effectiveness Date and maintained in the
manner contemplated herein during the Effectiveness Period or if certain
other events occur. The Company and the Holders further agree that it would
not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (i) the Registration Statement is not filed on or prior to
the Filing Date, or is not declared effective by the Commission on or prior
to the Effectiveness Date (or in the event an additional Registration
Statement is filed because the actual number of shares of Common Stock into
which the Preferred Stock is convertible and the Warrants are exercisable
exceeds the number of shares of Common Stock initially registered for such
conversion and exercise is not filed and declared effective within the time
periods set forth in Section 2(a)), or (ii) the Company fails to file with
the Commission a request for acceleration in accordance with Rule 12dl-2
promulgated under the Exchange Act within five (5) Business Days of the
date that the Company is notified (orally or in writing, whichever is
earlier) by the Commission that a Registration Statement will not be
"reviewed," or not subject to further review, or (iii) the Registration
Statement is filed with and declared effective by the Commission but
thereafter ceases to be effective as to all Registrable Securities at any
time prior to the expiration of the Effectiveness Period, without being
succeeded immediately by a subsequent Registration Statement filed with and
declared effective by the Commission, or (iv) trading in the Common Stock
shall be suspended or if the Common Stock is delisted from the Principal
Market for any reason for more than three (3) Business Days in the
aggregate, or (v) the conversion rights of the Holders are suspended for
any reason, including by the Company, or (vi) the Company breaches in a
material respect any covenant or other material term or condition to this
Agreement, the Certificate of Designation, the Purchase Agreement (other
than a representation or warranty contained therein) or any other
agreement, document, certificate or other instrument delivered in
connection with the transactions contemplated hereby and thereby, and such
breach continues for a period of thirty (30) days after written notice
thereof to the Company, or (vii) the Company has breached Section 3(m) of
this Agreement (any such failure or breach being referred to as an
"Event"), the Company shall pay as liquidated damages for such failure and
not as a penalty to each Holder an amount equal to 2% of such Holder's pro
rata share of the purchase price paid by all Holders for all shares of
Preferred Stock purchased and then outstanding pursuant to the Purchase
Agreement for the initial thirty (30) day period after the Event until the
applicable Event has been cured, which shall be pro rated for such periods
less than thirty (30) days, and 3% of such Holder's pro rata share of the
purchase price paid by all Holders for all shares of Preferred Stock
purchased and then outstanding pursuant to the Purchase Agreement for each
subsequent thirty (30) day period thereafter until the applicable Event has
been cured which shall be pro rated for such periods less than thirty (30)
days (the "Periodic Amount"). Payments to be made pursuant to this Section
7(e) shall be due and payable immediately upon demand in cash or as a
Dividend Payment (as defined in Section 2(a) of the Certificate of
Designations) at the option of such Holder. The parties agree that the
Periodic Amount represents a reasonable estimate on the part of the
parties, as of the date of this Agreement, of the amount of damages that
may be incurred by the Holders if the Registration Statement is not filed
on or prior to the Filing Date or has not been declared effective by the
Commission on or prior to the Effectiveness Date and maintained in the
manner contemplated herein during the Effectiveness Period or if any other
Event as described herein has occurred.
(f) Specific Enforcement, Consent to Jurisdiction.
14
<PAGE>
(i) The Company and the Investors acknowledge and agree that
irreparable damage would occur in the event that any of the provisions
of this Registration Rights Agreement or the Purchase Agreement were
not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches
of the provisions of this Registration Rights Agreement or the
Purchase Agreement and to enforce specifically the terms and
provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.
(ii) Each of the Company and the Investors (i) hereby irrevocably
submits to the jurisdiction of the United States District Court
sitting in the Southern District of New York for the purposes of any
suit, action or proceeding arising out of or relating to this
Agreement or the Purchase Agreement and (ii) hereby waives, and agrees
not to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum or
that the venue of the suit, action or proceeding is improper. Each of
the Company and the Investors consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this Section 7(f)
shall affect or limit any right to serve process in any other manner
permitted by law.
(g) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the same shall be in writing and signed by
the Company and each of the Holders. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance
with the provisions of the immediately preceding sentence.
(h) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified for notice prior to 5:00 p.m.,
eastern time, on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified for notice later than 5:00 p.m.,
eastern time, on any date and earlier than 11:59 p.m., eastern time, on
such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service or (iv) actual receipt by
the party to whom such notice is required to be given. The addresses for
such communications shall be with respect to each Holder at its address set
forth under its name on Schedule 1 attached hereto, or with respect to the
Company, addressed to:
15
<PAGE>
Global Maintech Corporation
7578 Market Place Drive
Eden Prairie, MN 55344
Attention: Chief Executive Officer
Facsimile: (612) 944-0400
Telephone: (612) 944-3311
or to such other address or addresses or facsimile number or numbers as any
such party may most recently have designated in writing to the other
parties hereto by such notice. Copies of notices to Holders shall be sent
to the addresses listed on Schedule 1 attached hereto. Copies of notices to
the Company shall be sent to Dorsey & Whitney LLP, Pillsbury Center South,
220 South Sixth Street, Minneapolis, MN 55402-1498, Attention: Ken Cutler,
Esq., Facsimile No.: (612) 340-8738. Copies of notices to any Holder shall
be sent to Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the
Americas, New York, New York 10036, Attention: Christopher S. Auguste,
Esq., Facsimile No.: (212) 704-6288.
(i) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of each Holder and its successors
and assigns. The Company may not assign this Agreement or any of its rights
or obligations hereunder without the prior written consent of each Holder.
Each Investor may assign its rights hereunder in the manner and to the
Persons as permitted under the Purchase Agreement.
(j) Assignment of Registration Rights. The rights of each Holder
hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement,
shall be automatically assignable by each Holder to any transferee of such
Holder of all or a portion of the shares of Preferred Stock, New Common
Shares, Warrants or the Registrable Securities if: (i) the Holder 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 after
such transfer or assignment, furnished with written notice of (a) the name
and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or
assigned, (iii) following such transfer or assignment the further
disposition of such securities by the transferee or assignees is restricted
under the Securities Act and applicable state securities laws, (iv) at or
before the time the Company receives the written notice contemplated by
clause (ii) of this Section, the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions of this Agreement,
and (v) such transfer shall have been made in accordance with the
applicable requirements of the Purchase Agreement. In addition, each Holder
shall have the right to assign its rights hereunder to any other Person
with the prior written consent of the Company, which consent shall not be
unreasonably withheld. The rights to assignment shall apply to the Holders
(and to subsequent) successors and assigns.
(k) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is
16
<PAGE>
delivered by facsimile transmission, such signature shall create a valid
binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
(l) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of law thereof.
(m) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
(n) Severability. If any term, provision, covenant or restriction of
this Agreement is held to be invalid, illegal, void or unenforceable in any
respect, the remainder of the terms, provisions, covenants and restrictions
set forth herein shall remain in full force and effect and shall in no way
be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed
the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void
or unenforceable.
(o) Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
(p) Shares Held by the Company and its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the
Company or its Affiliates (other than any Holder or transferees or
successors or assigns thereof if such Holder is deemed to be an Affiliate
solely by reason of its holdings of such Registrable Securities) shall not
be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
(q) Notice of Effectiveness. Within two (2) business days after the
Registration Statement which includes the Registrable Securities is ordered
effective by the Commission, the Company shall deliver, and shall cause
legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Holders whose Registrable
Securities are included in such Registration Statement) confirmation that
the Registration Statement has been declared effective by the Commission in
the form attached hereto as Exhibit A.
[Remainder of Page Intentionally Left Blank]
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.
GLOBAL MAINTECH CORPORATION
By:
-------------------------------------
Name:
Title:
ESQUIRE TRADE & FINANCE INC.
By:
-------------------------------------
Name:
Title:
AUSTINVEST ANSTALT BALZERS
By:
-------------------------------------
Name:
Title:
NESHER, INC.
By:
-------------------------------------
Name:
Title:
ASSANZON DEVELOPMENT CORPORATION
By:
-------------------------------------
Name:
Title:
AMRO INTERNATIONAL
By:
-------------------------------------
Name:
Title:
<PAGE>
GARROS, LTD.
By:
-------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attn: _____________
Re: Global Maintech Corporation
---------------------------
Ladies and Gentlemen:
We are counsel to Global Maintech Corporation, a Minnesota corporation (the
"Company"), and have represented the Company in connection with that certain
Series D Convertible Preferred Stock Purchase Agreement (the "Purchase
Agreement"), dated as of January 19, 2000, by and among the Company and the
purchasers named therein (collectively, the "Holders") pursuant to which the
Company issued to the Holders and the placement agent shares of its common
stock, no par value per share (the "Common Shares"), shares of its Series D
Convertible Preferred Stock (the "Preferred Shares") and issued warrants (the
"Warrants") to purchase shares of the Company's common stock, no par value per
share (the "Common Stock"). Pursuant to the Purchase Agreement, the Company has
also entered into a Registration Rights Agreement with the Holders (the
"Registration Rights Agreement"), dated as of January 19, 2000, pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement), including the
Common Shares and the shares of Common Stock issuable upon conversion of the
Preferred Shares and exercise of the Warrants, under the Securities Act of 1933,
as amended (the "1933 Act"). In connection with the Company's obligations under
the Registration Rights Agreement, on ________________, 1999, the Company filed
a Registration Statement on Form SB-2 (File No. 333-________) (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") relating to
the resale of the Registrable Securities which names each of the present Holders
as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
-----------------------------------------
cc: [LIST NAMES OF HOLDERS]
<PAGE>
SCHEDULE 1
----------
1. Esquire Trade & Finance Inc.
Trident Chambers
P.O. Box 2154
6342 Baar, Switzerland
Facsimile: 41-41-760-1031
Attention: Roland Winiger, Director
2. Austinvest Anstalt Balzers
Landstrasse 938
9494 Furstentums
Balzers, Liechtenstein
Attention: Dr. Walter Grill
Facsimile: 431-534-532-895
3. Nesher, Inc.
18 Peel Road
Douglas, Isle of Man
1M1-4L2 United Kingdom
Attention: David Grin
Facsimile: 01197236050756
4. Assanzon Development Corporation
3501 Bamboo Grove
76 Kennedy Road
Mid-levels, Hong Kong
Attention:
Facsimile:
5. Amro International
40 Ultra Finance
Grossmuenster Platz, No. 6
Zurich, Switzerland CH8022
Attention: Thomas Badian
Facsimile: (212) 214-0440
6. Garros, Ltd.
P.O. Box 146
Road Town, Tortola
British Virgin Islands
Attention: Giora Lavie
Facsimile: (011) 972-3-544-1870
<PAGE>
SCHEDULE 2
----------
1. Shares of common stock issuable upon conversion or exercise of 51,792
shares of Series B Convertible Preferred Stock and related warrants.
2. Shares of common stock issuable upon conversion or exercise of up to
$3,000,000 (stated value) of shares of Series F Convertible Preferred Stock
and related warrants, if any.
