INVESTOR RIGHTS AGREEMENT
 
This Investor Rights Agreement (this “Agreement”) is made and entered into as of
September 13, 2011 among NetSol Technologies, Inc., a Nevada corporation (the
“Company”), and each of the purchasers executing this Agreement (collectively,
the “Purchasers”).
 
This Agreement is being entered into pursuant to the Convertible Note and
Warrant Purchase Agreement, dated as of the date hereof, by and among the
Company and the Purchasers (the “Purchase Agreement”).
 
The Company and the Purchasers 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, par value $0.001 per share.
 
“Effectiveness Period” shall have the meaning set forth in Section 2.
 
“Event” shall have the meaning set forth in Section 8(e).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Holder” or “Holders” means the holder or holders, as the case may be, from time
to
 
 
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time of Registrable Securities, including without limitation the Purchasers and
their assignees.
 
“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.
 
“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 any 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 such
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 (a) the Conversion Shares and the Warrant Shares
(without regard to any limitations on beneficial ownership or issuance contained
in the  Notes or Warrants) or other securities issued or issuable to each
Purchaser or its transferee or designee (i) upon conversion or exchange of the
Notes and/or as interest on the Notes (including without limitation any and all
shares of Common Stock issued upon purchase of any Notes by the Company), or
upon exercise of the Warrants, or (ii) upon any distribution with respect to,
any exchange for or any replacement of such Notes or Warrants, or (iii) upon any
conversion, exercise or exchange of any securities issued in connection with any
such distribution, exchange or replacement; (b) securities issued or issuable
upon any stock split, stock dividend, recapitalization or similar event with
respect to the foregoing; and (c) any other security issued as a dividend or
other distribution with respect to, in exchange for, in replacement or
redemption of, or in reduction of the liquidation value of, any of the
securities referred to in the preceding clauses; provided, however, that such
securities shall cease to be Registrable Securities when such securities have
been sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction or when such securities may be
sold without any restriction pursuant to Rule 144(d)(1)(ii) as determined by the
counsel to the Company pursuant to a written opinion letter, addressed to the
Company's transfer agent to such effect as described in Section 2 of this
Agreement.
 
“Registration Statement” means the registration statements and any additional
registration statements contemplated by Section 2, including (in each case) the
Prospectus,
 
 
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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.
 
“Special Counsel” means Peter J. Weisman, P.C.
 
2.           Piggy-Back Registrations. If at any time when there is not an
effective Registration Statement covering all of the Registrable Securities, 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 its then
equivalents 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, then the Company
shall send to each Holder of Registrable Securities written notice of such
determination and, if within seven (7) Business 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 Holder), 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 required 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 8(d) for the
same period as the delay in registering such other securities. The
 
 
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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 8(d) that are eligible for sale pursuant to Rule
144(d)(1)(ii) 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).  The Company shall 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 all Registrable
Securities may be sold without any restriction pursuant to Rule 144(d)(1)(ii) 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”).
 
3.           Registration Procedures.
 
In connection with the Company's registration obligations hereunder, the Company
shall:
 
(a)           Include in any Registration Statement a Plan of Distribution
substantially in the form of Exhibit A attached hereto with respect to the
Holders selling Registrable Securities. Not less than three (3) Business Days
prior to the filing of the Registration Statement or any related Prospectus or
any amendment or supplement thereto, the Company shall (i) furnish to the
Special Counsel, 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 public accountants to
respond to such inquiries as shall be necessary, in the reasonable opinion of
counsel to such Holders, 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 the Special
Counsel shall reasonably object in writing within three (3) Business Days after
their receipt thereof, unless
 
 
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counsel to the Company determines in writing that such objection is without
merit.
 
(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 to the extent
any Registrable Securities are not included in such Registration Statement for
reasons other than the failure of the Holder to comply with Section 3(m) hereof,
shall prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all
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, and in no event later than 10 Business Days, 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 Holders of Registrable Securities to be sold and the
Special Counsel as promptly as possible (A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed (but in no event in the case of this subparagraph (A), less than
three (3) Business Days prior to date of such filing); (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 (which notice shall
be delivered to the Purchasers and Special Counsel on the same day as such
effectiveness), and after the effectiveness thereof: (i) 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; (ii) 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;
(iii) 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 (iv) if the financial
statements included in the Registration Statement become ineligible for
inclusion therein or 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 any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
 
 
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necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Without limitation to any remedies
to which the Holders may be entitled under this Agreement, if any of the events
described in clauses (i) through (iv) of Section 3(c)(C) occurs, the Company
shall use its best efforts to respond to and correct the event.
 
(d)           Use its best efforts to avoid the issuance of, or, if issued, use
best efforts to 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.
 
(e)           If requested by any Holder of 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; provided, however, that the
Company shall not be required to take any action pursuant to this Section 3(e)
that would, in the written opinion of counsel for the Company (addressed to the
Special Counsel), violate applicable law.
 
(f)           Furnish to each Holder and the Special Counsel, without charge, at
least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, 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.
 
(g)           Promptly deliver to each Holder and 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.
 
(h)           Prior to any public offering of Registrable Securities, use its
best efforts to register or qualify or cooperate with the selling Holders and
the 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 jurisdiction where it is
 
 
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not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
 
(i)           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 the
extent permitted by applicable law and the Purchase Agreement, of 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. In connection
therewith, the Company shall promptly after the effectiveness of the
Registration Statement (but no later than one day thereafter) cause an opinion
of counsel to be delivered to and maintained with its transfer agent, together
with any other authorizations, certificates and directions required by the
transfer agent, which authorize and direct the transfer agent to issue such
Registrable Securities without legend upon sale by the Holder of such shares of
Registrable Securities under the Registration Statement.
 
(j)           Upon the occurrence of any event contemplated by Section
3(c)(C)(iii) or (iv), 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.
 
(k)           Cause all Registrable Securities relating to such Registration
Statement to be listed on the New York Stock Exchange, the American Stock
Exchange, the Nasdaq Stock Market, or the OTC.BB (the “Exchange”).
 
(l)           Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 3-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.
 
(m)           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 or the Commission to be disclosed in the Registration Statement,
and the Company may exclude from such registration the Registrable Securities of
any such Holder who fails (i) to furnish such information or (ii) to agree to
furnish, upon request, such additional information regarding such Holder as may
later be required by law to be disclosed, in each case, 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
 
 
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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 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)(i), 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(n), 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(j), or until it is advised in writing (the “Advice”) by the Company
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.
 
(n)           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(n) for more than 30 days in the aggregate during
any 12 month period (each, a “Blackout Period”).
 
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 each
other securities exchange, quotation system or market on which Registrable
Securities are required hereunder to be listed, (B) with respect to filings
required to be made with the Commission, and (C) in compliance with state
securities or Blue Sky laws (including, without limitation, fees and
disbursements of Special Counsel in connection with Blue Sky qualifications of
the Registrable Securities and determination of the eligibility of the
Registrable Securities for investment under the laws of such jurisdictions as
the Holders of a majority of Registrable Securities may designate)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing or photocopying
prospectuses), (iii) messenger, telephone and delivery expenses, (iv)
 
 
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Securities Act liability insurance, if the Company so desires such insurance,
(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, in the case of an underwritten offering, the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters) and legal counsel, and (vi) fees and
expenses of the Special Counsel in connection with any Registration Statement
hereunder. 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.
 
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 or incorporated by reference 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 amendment 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 (i) 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 (x) such Holder 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
or (y) such Holder's proposed method of distribution of Registrable Securities
as set forth in Exhibit A (or as such Holder otherwise informs the Company in
writing); or (ii) in the case of an occurrence of an event of the type described
in Section 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(n), the use by a Holder of an
outdated or defective Prospectus after the delivery to the Holder of written
notice from the Company that the Prospectus is outdated or defective and prior
to the receipt by such Holder of the Advice contemplated in Section 3(m). The
Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the
 
 
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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 (as defined in
Section 5(c) to this Agreement) 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, its 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 and 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 in any amendment or supplement thereto, 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 (i) 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 in any amendment or
supplement thereto, or to the extent that such information relates to (x) such
Holder 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 or (y) such Holder's
proposed method of distribution of Registrable Securities as set forth in
Exhibit A (or as such Holder otherwise informs the Company in writing) or (ii)
in the case of an occurrence of an event of the type described in Section
3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(n), the use by a Holder of an outdated or
defective Prospectus after the delivery to the Holder of written notice from the
Company that the Prospectus is outdated or defective and prior to the receipt by
such Holder of the Advice contemplated in Section 3(m); provided, however, that
the indemnity agreement contained in this Section 5(b) shall not apply to
amounts paid in settlement of any Losses if such settlement is effected without
the prior written consent of the Holder, which consent shall not be unreasonably
withheld. 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
reasonable 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
 
 
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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 in writing (with a copy to the Indemnifying Party) 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 reasonable 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 and does not impose any monetary
or other obligation or restriction on the Indemnified Party.
 
All reasonable 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, which notice
shall be delivered no more frequently than on a monthly basis (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 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
 
 
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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 required to contribute under this Section 5(d) 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 are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties. The indemnity and contribution agreements herein are in
addition to and not in diminution or limitation of any indemnification
provisions under the Purchase Agreement.
 
6.           Rule 144.
 
As long as any Holder owns any Notes, 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 any Notes, 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 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
compliance with the provisions of the Purchase Agreement relating to the
transfer of the Conversion Shares and Warrant Shares. Upon the request of any
Holder, the Company shall deliver to such Holder a written certification of a
 
 
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duly authorized officer as to whether it has complied with such requirements.
 
7.           Covenants of Purchasers.
 
In connection with the Registration Statement, each of the Purchasers covenants
as follows:
 
(a) Unless and until such Purchaser has provided written notice to the Company
to the contrary, all sales of Registrable Securities by such Purchaser shall be
made without payment of underwriting discounts or commissions except for the
usual and customary commission paid to brokers or dealers.
 
(b) Such Purchaser shall advise the Company of any arrangement with a broker or
dealer for the sale of such Purchaser’s Registrable Securities through a block
trade, special offering, exchange or secondary distribution or a principal
purchase by a broker or dealer, and the details of such transaction.
 
(c) Such Purchaser shall comply with all prospectus delivery requirements with
respect to sales of the Registrable Securities to the extent required by the
Securities Act and other applicable law.
 
(d) Such Purchaser shall report to the Company, upon written request of the
Company, whether all Registrable Securities held by such Purchaser have been
sold or otherwise transferred.
 
8.           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 otherwise disclosed in the
Purchase Agreement, neither the Company nor any of its subsidiaries is a party
to an agreement currently in effect, nor shall the Company or any of its
subsidiaries, 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.
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.
 
 
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(c)           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 form and substance reasonably
acceptable to the holders of Registrable Securities.
 
(d)           [Intentionally Left Blank.]
 
(e)           Failure to File Registration Statement and Other Events.  The
Company and the Holders agree that the Holders will suffer damages if the
Registration Statement is not filed and maintained in the manner contemplated
herein during the Effectiveness Period.  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 Company fails to include Registrable
Securities in a registration statement filed with the Commission under the
Securities Act to the extent required in accordance herewith, or (ii) 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 promptly by a subsequent Registration Statement filed with the
Commission, except as otherwise permitted by this Agreement, including pursuant
to Section 3(n), or (iii) trading in the Common Stock shall be suspended or if
the Common Stock is delisted from any securities exchange, quotation system or
market on which Registrable Securities are required hereunder to be listed (each
an “Exchange”), without immediately being listed on any other Exchange, for any
reason for more than one (1) Business Day, other than pursuant to Section 3(n),
or (iv) the conversion or redemption rights of the Holders, or the exercise
rights of the Holders under the Warrants, are suspended for any reason without
the consent of the particular Holder, or (v) the Company has breached Section
3(n) of this Agreement (any such failure or breach being referred to as an
“Event”), the Company shall pay in cash as liquidated damages for such failure
and not as a penalty to each Holder an amount equal to one and one-half percent
(1.5%) of such Holder's Purchase Price paid by such Holder pursuant to the
Purchase Agreement for the initial thirty (30) day period (or portion thereof)
until the applicable Event has been cured, and one and one-half percent (1.5%)
of such Holder's Purchase Price paid by such Holder pursuant to the Purchase
Agreement for each subsequent thirty (30) day period (or portion thereof) until
the applicable Event has been cured (the “Periodic Amount”).  Payments to be
made pursuant to this Section 8(e) shall be due and payable immediately upon
demand in immediately available cash funds.  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 in connection with such Event.  Notwithstanding the foregoing, the
Company shall remain obligated to cure the breach or correct the condition that
caused the Event, and the Holder shall have the right to take any action
necessary or desirable to enforce such obligation.
 
 
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(f)           Specific Enforcement, Consent to Jurisdiction.
 
(i)           The Company and the Holders acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this 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
Agreement and to enforce specifically the terms and provisions hereof, 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 Holders (i) hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts located in
New York City, New York for the purposes of any suit, action or proceeding
arising out of or relating to this 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 Holders 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 8(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 the Holders of at least 75% of the Registrable Securities. 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 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., New York City time, on
a Business Day, (ii) the next Business Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Business Day or later than 5:00
p.m., New York City time, on any date and earlier than 11:59 p.m., New York City
time, on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service such as Federal Express
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:
 
 
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Netsol Technologies, Inc.
23901 Calabasas Road,
Suite 2072
Calabasas, CA 91302
Attention:  General Counsel
Facsimile No.:  (818) 222-9197

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 any Holder shall be sent to the addresses
set forth on the signature page of such Holder to the Purchase Agreement.
 
(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;
provided, that the Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of each Holder; and
provided, further, that each Holder 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 Notes or 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 8(j),
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. The
rights to assignment shall apply to the Holders (and to subsequent) successors
and assigns.
 
The Company may require, as a condition of allowing such assignment in
connection with a transfer of Notes, Warrants or Registrable Securities (i) that
the Holder or transferee of all or a portion of the Notes, Warrants or the
Registrable Securities as the case may be, furnish to the Company a written
opinion of counsel that is reasonably acceptable to the Company to the effect
that such transfer may be made without registration under the Securities Act,
(ii) that the Holder or transferee execute and deliver to the Company an
investment letter in form and substance acceptable to the Company and (iii) that
the
 
 
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transferee be an “accredited investor” as defined in Rule 501(a) promulgated
under the Securities Act.
 
(k)           Counterparts; Facsimile. 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 delivered by electronic image or
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 electronic image or 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 by a court of competent jurisdiction 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)           Registrable Securities 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)           Obligations of Purchasers. The Company acknowledges that the
obligations of each Purchaser under this Agreement, are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement.  The decision of each Purchaser to enter into to
this Agreement has been made by such Purchaser independently of any other
Purchaser.  The Company further acknowledges that nothing contained in this
Agreement,
 
 
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and no action taken by any Purchaser pursuant hereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated hereby.  Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.
 
The Company has elected to provide all Purchasers with the same terms and
Agreement for the convenience of the Company and not because it was required or
requested to do so by the Purchasers.  The Company acknowledges that such
procedure with respect to this Agreement in no way creates a presumption that
the Purchasers are in any way acting in concert or as a group with respect to
this Agreement or the transactions contemplated hereby or thereby.
 
[signature page follows]
 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Investor Rights
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.
 
COMPANY:

NETSOL TECHNOLOGIES, INC.

By: /s/ Najeeb Ghauri
_____________________________
Name: Najeeb Ghauri
Title: Chief Executive Officer

 
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PURCHASERS:

THE TAIL WIND FUND LTD.
By:           CIM INVESTMENT MANAGEMENT, LTD.,
as investment manager

By:  /s/ Dan Nye
Dan Nye

SOLOMON STRATEGIC HOLDINGS, INC.

By:  /s/ Andrew P. Mackellar
Andrew P. Mackellar, Director

 

[Omnibus NetSol Technologies, Inc. Investor Rights Agreement Signature Page]

 
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EXHIBIT A

PLAN OF DISTRIBUTION

We are registering the shares of common stock on behalf of the selling security
holders. Sales of shares may be made by selling security holders, including
their respective donees, transferees, pledgees or other successors-in-interest
directly to purchasers or to or through underwriters, broker-dealers or through
agents. Sales may be made from time to time on the Nasdaq Capital Market, any
other exchange or market upon which our shares may trade in the future, in the
over-the-counter market or otherwise, at market prices prevailing at the time of
sale, at prices related to market prices, or at negotiated or fixed prices. The
shares may be sold by one or more of, or a combination of, the following:
 
-
a block trade in which the broker-dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction (including crosses in which the same broker acts
as agent for both sides of the transaction);

 
-
purchases by a broker-dealer as principal and resale by such broker-dealer,
including resales for its account, pursuant to this prospectus;

 
-
ordinary brokerage transactions and transactions in which the broker solicits
purchases;

 
-
through options, swaps or derivatives;

 
-
in privately negotiated transactions;

 
-
in making short sales entered into after the date of this prospectus or in
transactions to cover such short sales; and

 
-
put or call option transactions relating to the shares.

 
The selling security holders may effect these transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. These broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling security holders and/or
the purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The selling security
holders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their securities.
 
The selling security holders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, the broker-dealers or other financial institutions may engage in
short sales of the shares or of securities convertible into or exchangeable for
the shares in the course of hedging positions they assume with the
 
 
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selling security holders. The selling security holders may also enter into
options or other transactions with broker-dealers or other financial
institutions which require the delivery of shares offered by this prospectus to
those broker-dealers or other financial institutions. The broker-dealer or other
financial institution may then resell the shares pursuant to this prospectus (as
amended or supplemented, if required by applicable law, to reflect those
transactions).
 
The selling security holders and any broker-dealers that act in connection with
the sale of shares may be deemed to be “underwriters” within the meaning of
Section 2(11) of the Securities Act of 1933, and any commissions received by
broker-dealers or any profit on the resale of the shares sold by them while
acting as principals may be deemed to be underwriting discounts or commissions
under the Securities Act. The selling security holders may agree to indemnify
any agent, dealer or broker-dealer that participates in transactions involving
sales of the shares against liabilities, including liabilities arising under the
Securities Act. We have agreed to indemnify each of the selling security holders
and each selling security holder has agreed, severally and not jointly, to
indemnify us against some liabilities in connection with the offering of the
shares, including liabilities arising under the Securities Act.
 
The selling security holders will be subject to the prospectus delivery
requirements of the Securities Act. We have informed the selling security
holders that the anti-manipulative provisions of Regulation M promulgated under
the Securities Exchange Act of 1934 may apply to their sales in the market.
 
Selling security holders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act, provided
they meet the criteria and conform to the requirements of Rule 144.
 
Upon being notified by a selling security holder that a material arrangement has
been entered into with a broker-dealer for the sale of shares through a block
trade, special offering, exchange distribution or secondary distribution or a
purchase by a broker or dealer, we will file a supplement to this prospectus, if
required pursuant to Rule 424(b) under the Securities Act, disclosing:
 
-
the name of each such selling security holder and of the participating
broker-dealer(s);

 
-
the number of shares involved;

 
-
the initial price at which the shares were sold;

 
-
the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;

 
-
that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and

 
-
other facts material to the transactions.

 
 
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In addition, if required under applicable law or the rules or regulations of the
Commission, we will file a supplement to this prospectus when a selling security
holder notifies us that a donee or pledgee intends to sell more than 500 shares
of common stock.
 
We are paying all expenses and fees in connection with the registration of the
shares. The selling security holders will bear all brokerage or underwriting
discounts or commissions paid to broker-dealers in connection with the sale of
the shares.
 
 
 
 
 
 
 
 
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