INVESTORS’ RIGHTS AGREEMENT

INVESTORS’ RIGHTS AGREEMENT (this “Agreement”), dated as of February 2, 2009, by
and among Pipeline Data Inc., a Delaware corporation, with principal offices
located at 1515 Hancock Street, Suite 301, Quincy, MA 02169 (the “Company”), and
the undersigned buyers (each, a “Buyer” and, collectively, the “Buyers”).

WHEREAS:

A.        In connection with the Stock Purchase Agreement by and among the
parties hereto of even date herewith (the “Stock Purchase Agreement”), the
Company has agreed, upon the terms and subject to the conditions of the Stock
Purchase Agreement, to sell Series A Preferred Stock (the “Shares”) to the
Buyers;

B.        To induce the Buyers to execute and deliver the Stock Purchase
Agreement, contemporaneously with the execution of the Stock Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute (collectively, the “1933 Act”), and applicable
state securities laws, and other rights to the Buyers, with respect to the
Shares.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby agree as follows:

 

1.

DEFINITIONS.

As used in this Agreement, the following terms shall have the following
meanings:

a.         “1934 Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations hereunder, or any similar successor statutes.

b.          “Business Day” means any day other than Saturday, Sunday or any
other day on which commercial banks in the City of New York are authorized or
required by law to remain closed.

c.         “Effectiveness Deadline” means the Initial Effectiveness Deadline (as
defined in Section 2(a) hereto).

d.         “Filing Deadline” means the Initial Filing Deadline (as defined in
Section 2(a) hereof).

e.         “Initial Registration Statement” means a registration statement or
registration statements of the Company filed under the 1933 Act pursuant to
Section 2(a) hereof covering the Registrable Securities.

 

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f.         “Investor” means a Buyer or any transferee or assignee thereof to
whom a Buyer assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section 9 and such
a transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9.

g.         “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, a Governmental Entity or any other legal entity.

h.         “Register,” “registered,” and “registration” refer to a registration
effected by preparing and filing one or more Registration Statements in
compliance with the 1933 Act and pursuant to Rule 415 and the declaration or
ordering of effectiveness of such Registration Statement(s) by the SEC.

i.          “Registrable Securities” means (i) the Shares required to be issued
on the Closing Date (as defined in the Stock Purchase Agreement), and (ii) any
shares of Capital Stock of the Company issued or issuable with respect to such
Shares upon the conversion of the Shares or as a result of any stock split,
stock dividend, recapitalization, exchange or similar event or otherwise,
without regard to any limitations on issuance of the Shares (including, without
limitation, the shares of Series B Preferred for which the Shares may be
exchanged pursuant to the Stock Purchase Agreement); provided, however, that any
such securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the sale of such securities becomes effective under
the 1933 Act and such securities are disposed of in accordance with such
Registration Statement, (ii) such securities are sold in accordance with Rule
144 (as defined in Section 8) or (iii) such securities become transferable
without any restrictions in accordance with Rule 144(k) (or any successor
provision).

j.          “Registration Statement” means a registration statement or
registration statements of the Company filed under the 1933 Act covering
Registrable Securities.

k.         “Required Buyers” means Buyers that purchased at least one-half (1/2)
of the Shares at the Closing.

l.          “Rule 415” means Rule 415 under the 1933 Act or any successor rule
providing for offering securities on a continuous or delayed basis.

 

m.

“SEC” means the United States Securities and Exchange Commission.

n.         “Selling Expenses” means all underwriting discounts, selling
commissions, and stock transfer taxes applicable to the sale of Registrable
Securities, and fees and disbursements of counsel for any Investor, except for
the fees and disbursements of the Legal Counsel borne and paid by the Company as
provided in Section 5.

o.         “Trading Day” means any day on which the common stock of the Company
(the “Common Stock”) (or other security as applicable) is traded on the
Over-the-Counter Bulletin Board (or securities exchange or trading market) (the
“Principal Market;” provided, however, that, if after the date of this Agreement
the Common Stock is listed on a

 

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national securities exchange, the “Principal Market” shall mean such national
securities exchange); provided, however, that “Trading Day” shall not include
any day on which the Common Stock (or other security, as applicable) is
scheduled to trade, or actually trades on the Principal Market (or other
securities exchange or trading market) for less than 4.5 hours.

p.         “Weighted Average Price” means, for the Common Stock or any other
security as of any date, the volume-weighted average price for the Common Stock
or other security on the Principal Market (or, for any security other than the
Common Stock, the principal securities exchange or trading market for such
security) during the period beginning at 9:30 a.m., New York City Time (or such
other time as the Principal Market (or other securities exchange or trading
market, as applicable) publicly announces is the official open of trading), and
ending at 4:00 p.m., New York City Time (or such other time as the Principal
Market (or other securities exchange or trading market, as applicable) publicly
announces is the official close of trading), as reported by Bloomberg through
its “Volume at Price” functions, or, if the foregoing does not apply, the dollar
volume-weighted average price of the Common Stock or other security in the
over-the-counter market on the electronic bulletin board for the Common Stock or
other security during the period beginning at 9:30 a.m., New York City Time (or
such other time as such over-the-counter market publicly announces is the
official open of trading), and ending at 4:00 p.m., New York City Time (or such
other time as such over-the-counter market publicly announces is the official
close of trading), as reported by Bloomberg, or, if no volume-weighted average
price is reported for the Common Stock or other security by Bloomberg for such
hours, the average of the highest closing bid price and the lowest closing ask
price of any of the market makers for the Common Stock or other security as
reported in the “pink sheets” by the National Quotation Bureau, Inc. If the
Weighted Average Price cannot be calculated for the Common Stock or other
security on such date on any of the foregoing bases, the Weighted Average Price
of the Common Stock or other security on such date shall be the fair market
value as mutually determined by the Company and the Required Buyers. All
determinations of Weighted Average Price are to be appropriately adjusted for
any stock dividend, stock split, stock combination or other similar transaction
during any period during which the Weighted Average Price is being determined.

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Stock Purchase Agreement.

 

2.

REGISTRATION.

a.         Initial Mandatory Registration. The Company shall prepare, and, as
soon as practicable after (i) the completion of the filing of a proxy statement
pursuant to the applicable Securities Laws and resultant shareholder approval
(which shall include the approval of the Buyers) necessary to increase the
Company’s authorized shares and (ii) the acceptance by the Secretary of State of
Delaware of a Certificate of Amendment to the Certificate of Incorporation of
the Company, increasing the Company’s authorized shares as contemplated in the
Stock Purchase Agreement (the “Initial Filing Deadline”), file with the SEC a
Registration Statement (subject to Section 2(d) hereof) covering the resale of
by each of the Investors of all of the Registrable Securities issued or issuable
to such Investor. The Company shall use its best efforts to have the Initial
Registration Statement, covering the resale of the maximum amount of the
Registrable Securities as allowed by the SEC, declared effective by the SEC as
soon as practicable after the date of filing (the “Initial Effectiveness
Deadline”).

 

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b.         Allocation of Registrable Securities. In no event shall the Company
include any securities other than Registrable Securities in any Registration
Statement without the prior written consent of the Required Buyers; provided,
however, that notwithstanding anything to the contrary herein, the Company shall
be entitled to avail itself of Rule 429 under the Securities Act with respect to
any currently effective registration statement.

c.         Legal Counsel. Subject to Section 5 hereof, the Buyers shall have the
right to select one legal counsel to review and oversee any registration
pursuant to this Section 2 (“Legal Counsel”), which shall be Akerman Senterfitt
or such other counsel as thereafter designated by the Required Buyers. The
Company shall reasonably cooperate with Legal Counsel in performing the
Company’s obligations under this Agreement.

d.         Ineligibility for Form S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on Form S-1, Form SB-2 or another appropriate form reasonably
acceptable to the Required Buyers and (ii) undertake to register the Registrable
Securities on Form S-3 (by post-effective amendment to the existing Registration
Statement or otherwise) as soon as such form is available for such registration,
provided that the Company shall maintain the effectiveness of the existing
Registration Statement then in effect until such time as a Registration
Statement (or post-effective amendment) on Form S-3 covering the Registrable
Securities has been declared effective by the SEC.

 

e.

Notwithstanding anything to the contrary contained in this Agreement,

i.          the Company shall not be required under this Agreement to file or
amend a Registration Statement for any offering that would be deemed by the SEC
to constitute a primary offering of securities by the Company. In the event
that, as a result of the operation of the preceding sentence, the Company cannot
include all of the Registrable Securities in any Registration Statement, then
the Company shall include in the applicable Registration Statement the maximum
number of Registrable Securities that can be included therein without causing
the Registration Statement to be deemed to register a primary offering by the
Company, with the number of Registrable Securities included in such Registration
Statement to be allocated among the Investors in proportion to the total
Registrable Securities held by each Investor on the date that the applicable
Registration Statement is filed. With respect to any Registrable Securities that
are not included in the applicable Registration Statement (the “Excluded
Securities”), the Company shall include the Excluded Securities in a
subsequently filed Registration Statement (an “Additional Registration
Statement”) that is filed on the earliest possible date on which Excluded
Securities can be included in the Additional Registration Statement without the
Additional Registration Statement being deemed to register a primary offering of
securities by the Company (an “Additional Filing Date”); provided that if the
Company is advised by the SEC that the inclusion of all Excluded Securities in
the Additional Registration Statement would cause the Additional Registration
Statement to be deemed a registration of a primary offering by the Company, then
such Additional Registration Statement shall include only the maximum number of
Excluded Securities that could be included in such Registration Statement
without it being deemed to be a registration for a primary offering by the
Company. If all Excluded Securities cannot be registered on such Additional
Registration Statement, then the Company will be obligated to continue filing
Additional Registration Statements as soon as is permitted by

 

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the SEC to cover as many additional Excluded Securities as possible. The
Company’s obligations under this Agreement with respect to all Additional
Registration Statements shall be the same as its obligations for the original
Registration Statement, provided that the “Filing Date” for each such Additional
Registration Statement shall be the Additional Filing Date, and the “Initial
Effectiveness Deadline” for each such Additional Registration Statement shall be
delayed by the number of days that elapses between the Filing Date and
Additional Filing Date; and provided further that the “Filing Date” for each
Additional Registration Statement (if applicable) shall be the earliest possible
date on which Excluded Securities can be included in such Additional
Registration Statement without such Additional Registration Statement being
deemed to register a primary offering of securities by the Company (the
“Additional Filing Date”), and the “Initial Effectiveness Deadline” for such
Additional Registration Statement shall be delayed by the number of days that
elapses between the Filing Date for the original Registration Statement and such
Additional Filing Date. In the event that an Investor sells or otherwise
transfers any of such Investor’s Registrable Securities, each transferee shall
be allocated a pro rata portion of the then-remaining number of Registrable
Securities included in any Registration Statement for such transferor. To the
extent permitted under applicable SEC rules, procedures, or practices, any
shares of Common Stock included in a Registration Statement and which remain
allocated to any Person which ceases to hold any Registrable Securities covered
by such Registration Statement shall be allocated to the remaining Investors pro
rata based on the number of Registrable Securities then held by such Investors
which are covered by such Registration Statement; and

ii.        the Company shall not be responsible for any delays or limitations on
effectiveness that are the direct result of actions or omissions of the Buyers
or their agents, including but not limited to uncleared comments by the SEC
directly related to the Buyers.

f.         No Piggyback on Registrations. Subject to Section 2(b) above, neither
the Company nor any of its security holders (other than the Buyers in such
capacity pursuant hereto) may include securities of the Company in a
Registration Statement other than the Registrable Securities. The Company shall
not file any other resale registration statement until the Registration
Statements with respect to all Registrable Securities have been declared
effective by the SEC, provided, that this Section 2(g) shall not prohibit the
Company from filing amendments to Registration Statements already filed.

 

3.

RELATED OBLIGATIONS.

At such time as the Company is obligated to file a Registration Statement with
the SEC pursuant to Section 2(a) hereof, the Company will use its best efforts
to effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:

a.         Subject to Section 2(f), the Company shall promptly prepare and file
with the SEC a Registration Statement with respect to the applicable Registrable
Securities (but in no event later than the applicable Filing Deadline) and use
its best efforts to cause such Registration Statement relating to the
Registrable Securities to become effective as soon as practicable after such
filing (but in no event later than the applicable Effectiveness Deadline).
Promptly after such Registration Statement becomes effective, the Company will
file with the SEC the final

 

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prospectus included therein pursuant to Rule 424 (or successor thereto)
promulgated under the 1933 Act. Subject to the provisions of this Agreement, the
Company shall keep each Registration Statement effective pursuant to Rule 415 at
all times until the earlier of (i) the date as of which the Investors may sell
all of the Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or successor thereto) promulgated under the
1933 Act, as such rule may be amended from time to time, (ii) the date as of
which the Investors may sell all of such Registrable Securities without
restriction pursuant to Rule 144 without the requirement for compliance with
Rule 144(e), (f) or (h) (or successor thereto), as such rules may be amended
from time to time or (iii) the date on which the Investors have informed the
Company that the Investors shall have sold all the Registrable Securities
covered by such Registration Statement (the “Registration Period”). Such
Registration Statement (including any amendments or supplements thereto) and any
prospectuses (preliminary, final, summary or free writing) contained therein or
related thereto shall not at any time contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading. The term “best efforts” shall mean, among other
things, that the Company shall submit to the SEC, promptly after the Company
learns that no review of a particular Registration Statement will be made by the
staff of the SEC or that the staff of the SEC has no further comments on the
Registration Statement, as the case may be, a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
48 hours after the submission of such request.

b.         The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, as may be necessary to keep such Registration Statement effective at
all times during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-QSB, Form 10-KSB or any
analogous report under the 1934 Act, the Company shall have incorporated such
report by reference into such Registration Statement, if applicable, or shall
file such amendments or supplements with the SEC promptly after the 1934 Act
report is filed which created the requirement for the Company to amend or
supplement such Registration Statement.

c.         The Company shall (A) permit Legal Counsel to review and comment upon
(i) any Registration Statement at least five Business Days prior to its filing
with the SEC, and (ii) all prospectuses and all amendments and supplements to
all Registration Statements and prospectuses (except for Annual Reports on Form
10-K or 10-KSB, Quarterly Reports on Form 10-Q or 10-QSB, and Current Reports on
Form 8-K, and any similar or successor reports) at least a reasonable number of
days prior to their filing with the SEC, and (B) not file any Registration
Statement, prospectus, amendment or supplement described in the foregoing clause
(A) in a form to which Legal Counsel reasonably objects. The Company shall not
submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement

 

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thereto without providing prior written notice thereof to Legal Counsel and each
Investor. The Company shall furnish to Legal Counsel, upon request and without
charge, (i) promptly after the same is prepared and filed with the SEC, one copy
of any Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, and
all exhibits and (ii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto. The Company shall reasonably cooperate with
Legal Counsel in performing the Company’s obligations pursuant to this Section
3.

d.         The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, upon request and without
charge, (i) promptly after the same is prepared and filed with the SEC, at least
one copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference that have not been filed via EDGAR, all exhibits and each preliminary
prospectus, (ii) upon the effectiveness of any Registration Statement, at least
one copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto and (iii) such other documents, including
copies of any prospectus (preliminary, final, summary or free writing), as such
Investor may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such Investor.

e.         The Company shall use its best efforts to (i) register and qualify
the securities covered by such registration statement under such other
securities or blue-sky laws of such jurisdictions as shall be reasonable
requested by the Required Buyers; provided, the Company shall not be required to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act, (ii)
prepare and file in those jurisdictions, such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be reasonably
necessary to maintain such registrations and qualifications in effect at all
times during the Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (x) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(e) or (y) subject itself to general taxation in any such
jurisdiction or (z) consent to the service of process in any such jurisdiction.
The Company shall promptly notify Legal Counsel and each Investor who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or blue-sky laws of any
jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.

f.         The Company shall notify Legal Counsel and each Investor in writing
of the happening of any event, as promptly as practicable after becoming aware
of such event, as a result of which the prospectus included in, or relating to,
a Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (provided that in no event shall such
notice contain

 

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any material, nonpublic information), and promptly prepare and file with the SEC
a supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver at least one copy of such supplement or
amendment to Legal Counsel and each Investor. The Company shall also promptly
notify Legal Counsel and each Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel and each
Investor by facsimile on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information, and (iii)
of the Company’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.

g.         The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement, or
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify Legal Counsel and each Investor who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.

h.         At the reasonable request (in the context of the securities laws) of
any Investor, the Company shall make available for inspection during regular
business hours by (i) any Investor, (ii) Legal Counsel and (iii) one firm of
accountants or other agents retained by the Investors (collectively, the
“Inspectors”), all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector shall
agree to hold in strict confidence and shall not make any disclosure (except to
an Investor) or use of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release of such
Records is ordered pursuant to a final, non-appealable subpoena or order from a
court or government body of competent jurisdiction, or (c) the information in
such Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement of which the Inspector
has knowledge. Each Investor agrees that it shall, upon learning that disclosure
of such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement between
the Company and any Investor) shall be deemed to limit the Investors’ ability to
sell Registrable Securities in a manner that is otherwise consistent with
applicable laws and regulations.

i.          The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of

 

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such information is necessary to avoid or correct a misstatement or omission in
any Registration Statement, (iii) the release of such information is ordered
pursuant to a final, non-appealable subpoena or order from a court or
governmental body of competent jurisdiction, or (iv) such information has been
made generally available to the public other than by disclosure in violation of
this Agreement or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt written notice to such Investor and allow such Investor, at
the Investor’s expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.

j.          The Company shall use its best efforts to (i) cause all the
Registrable Securities covered by a Registration Statement to be listed or
approved for quotation on each securities exchange or trading market, including,
without limitation, the Over-the-Counter Bulletin Board, on which securities of
the same class or series issued by the Company are listed, or quoted and (ii)
without limiting the generality of the foregoing, arrange for at least two
market makers to register with the National Association of Securities Dealers,
Inc. (“NASD”) as such with respect to such Registrable Securities. The Company
shall pay all fees and expenses in connection with satisfying its obligation
under this Section 3(j).

k.         The Company shall cooperate with the Investors who hold Registrable
Securities being offered and sold and, to the extent applicable, facilitate the
timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant to a
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, as the Investors may reasonably request and
registered in such names as the Investors may request.

l.          The Company shall provide a transfer agent and registrar of all such
Registrable Securities not later than the effective date of the applicable
Registration Statement.

m.        The Company shall make generally available to its security holders as
soon as practical, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the 1933 Act) covering a 12-month period beginning not later than
the first day of the Company’s fiscal quarter next following the effective date
of a Registration Statement.

n.         The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.

o.         Promptly after a Registration Statement which covers applicable
Registrable Securities is declared effective by the SEC, 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 Investors
whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective by the
SEC in substantially the form attached hereto as Exhibit A, provided that if the
Company changes its transfer agent, it shall immediately deliver any previously
delivered notices under this Section 3(o) and any subsequent notices to such new
transfer agent.

 

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p.         The Company shall make such filings with the NASD (including
providing all required information and paying required fees thereto) as and when
reasonably requested by any Investors and make all other filings, obtain all
other approvals and take all other actions reasonably necessary to expedite and
facilitate disposition by the Investors of Registrable Securities pursuant to a
Registration Statement, including promptly responding to any comments received
from the NASD.

q.         The Company shall not register any of its securities for sale for its
own account (other than for issuance to employees, directors and consultants, of
the Company under an employee benefit plan or for issuance in a business
combination transaction) other than pursuant to a firm commitment underwritten
offering. Except pursuant to this Agreement, the Company shall not file any
Registration Statement (other than on Form S-8 or Form S-4) with the SEC prior
to the date that the Initial Registration Statement is declared effective by the
SEC.

 

4.

OBLIGATIONS OF THE INVESTORS.

a.         At least seven Business Days prior to the first anticipated filing
date of a Registration Statement and at least five Business Days prior to the
filing of any amendment or supplement to a Registration Statement, the Company
shall notify each Investor in writing of the information, if any, the Company
requires from each such Investor if such Investor elects to have any of such
Investor’s Registrable Securities included in such Registration Statement or,
with respect to an amendment or a supplement, if such Investor’s Registrable
Securities are included in such Registration Statement (each an “Information
Request”). Provided that the Company shall have complied with its obligations
set forth in the preceding sentence, it shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company, in response to an Information
Request, such information regarding itself, the Registrable Securities held by
it and the intended method of disposition of the Registrable Securities held by
it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.

b.         Each Investor, by such Investor’s acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor’s election to exclude all of such Investor’s Registrable
Securities from such Registration Statement in which case such Investor shall
not be entitled to any payment set forth in Section 2(e) with respect thereto.

c.         Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g)
hereof or the first sentence of Section 3(f) hereof, such Investor will promptly
discontinue disposition of Registrable Securities pursuant to any Registration
Statement(s) covering such Registrable Securities until such Investor’s receipt
of the copies of the supplemented or amended prospectus contemplated by Section
3(g) hereof or the first sentence of Section 3(f) hereof or receipt of notice
that no supplement or amendment is required. Notwithstanding anything to the
contrary, the Company shall cause its transfer agent to deliver unlegended
certificates for Registrable Securities to a

 

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transferee of an Investor in connection with any sale of Registrable Securities
with respect to which an Investor has entered into a contract for sale prior to
the Investor’s receipt of a notice from the Company of the happening of any
event of the kind described in Section 3(g) hereof or the first sentence of
Section 3(f) hereof and for which the Investor has not yet settled.

 

5.

EXPENSES OF REGISTRATION.

All reasonable expenses (excluding Selling Expenses) incurred in connection with
registrations, filings or qualifications pursuant to Section 2 and Section 3
hereof, shall be paid by the Company, including all registration, listing and
qualifications fees, printers and accounting fees, reasonable fees and
disbursements of counsel for the Company, and reasonable fees (not to exceed
$15,000) and disbursements of Legal Counsel for the Investors.

 

6.

INDEMNIFICATION.

In the event any Registrable Securities are included in a Registration Statement
under this Agreement:

a.         To the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend each Investor, the directors,
officers, partners, members, managers, employees, agents, representatives of,
and each Person, if any, who controls any Investor within the meaning of the
1933 Act or the 1934 Act (each, an “Indemnified Person”), against any losses,
claims, damages, liabilities, judgments, fines, penalties, charges, costs,
reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or
several, (collectively, “Claims”) incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation or appeal
taken from the foregoing by or before any court or governmental, administrative
or other regulatory agency, body or the SEC, whether pending or threatened,
whether or not an indemnified party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other “blue sky” laws of any jurisdiction
in which Registrable Securities are offered (“Blue Sky Filing”), or the omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final, summary or free writing prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading,
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any violation of this
Agreement by the Company (the matters in the foregoing clauses (i) through (iv)
being, collectively, “Violations”). Subject to Section 6(c) hereof, the Company
shall reimburse the Indemnified Persons, promptly as such expenses are incurred
and are due and payable, for any legal fees or other expenses reasonably
incurred by them in

 

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connection with investigating or defending any such Claim; provided, however,
that the Company shall not be required to pay the fees and expenses of more than
one legal counsel (in addition to local counsel) for all Investors.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a) and the agreement with respect to
contribution contained in Section 7: (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto if such prospectus was timely made
available by the Company pursuant to Section 3(d) hereof, (ii) shall not apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld, and (iii) shall not apply to a Claim that results from
the gross negligence or willful misconduct of the Indemnitee or from a cause of
action, suit or claim brought against an Indemnitee by such Indemnitee’s owners,
investors or Affiliates. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9 hereof.

b.         Each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a) hereof, the Company, each of its directors, each of its
officers who signs the Registration Statement, and each Person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act, legal
counsel and accountants for the Company, any underwriter (as defined in the
Securities Act), any other Investor in such registration statement, and any
controlling Person of any such underwriter or other holder (each an “Indemnified
Party”), against any Claim or Indemnified Damages to which any of them may
become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such
Claim or Indemnified Damages arise out of or are based upon any Violation, in
each case to the extent, and only to the extent, that such Violation occurs in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Investor expressly for use in connection with
such registration; and, subject to Section 6(c) hereof, such Investor will
reimburse any legal or other expenses reasonably incurred by an Indemnified
Party in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 hereof shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld; and provided, further, however, that the aggregate
liability of the Investor in connection with any Violation shall not exceed the
proceeds to such Investor as a result of the sale of Registrable Securities (net
of any Selling Expenses borne by such Investor) pursuant to the Registration
Statement giving rise to such action or claim for indemnification, except in the
case of fraud by such Investor.

c.         Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying

 

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party so desires, jointly with any other indemnifying party similarly noticed,
to assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Person or the Indemnified Party, as
the case may be. In any such proceeding, any Indemnified Person or Indemnified
Party may retain its own counsel, but, except as provided in the following
sentence, the fees and expenses of such counsel will be at the expense of such
Indemnified Person or Indemnified Party, as the case may be, unless (i) the
indemnifying party and the Indemnified Person or Indemnified Party, as
applicable, shall have mutually agreed to the retention of that counsel, (ii)
the indemnifying party does not assume the defense of such proceeding in a
timely manner or (iii) in the reasonable opinion of counsel retained by the
Indemnified Person or the Indemnified Party, as the case may be, the
representation by such counsel for the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Company, if it
is the Indemnifying Party, shall pay reasonable fees for only one separate legal
counsel (plus any local counsel) for the Investors, and such legal counsel shall
be selected by the Investors holding at least 1/2 in interest of the Registrable
Securities included in the Registration Statement to which the Claim relates.
The Indemnified Party or Indemnified Person shall cooperate with the
indemnifying party in connection with any negotiation or defense of any such
action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or Claim. The indemnifying party
shall keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other compromise with respect to
any pending or threatened action or claim in respect of which indemnification or
contribution may be or has been sought hereunder (whether or not the Indemnified
Party or Indemnified Person is an actual or potential party to such action or
claim) which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim or litigation and such
settlement shall not include any admission as to fault on the part of the
Indemnified Party. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is materially prejudiced in its
ability to defend such action. The failure to give written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party under this Section 6

d.         The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

 

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e.         The indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

f.         The obligations of the indemnifying party under this Section 6 shall
survive the completion of any offering of Registrable Securities in a
registration under Section 2 and Section 3 hereof and shall survive the
termination of this Agreement.

 

7.

CONTRIBUTION.

To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under
Section 6 to the fullest extent permitted by law; provided, however, that: (i)
no Person involved in the sale of Registrable Securities that is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to contribution from any
Person involved in such sale of Registrable Securities that was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited to an amount equal to the amount of proceeds
received by such seller from the sale of such Registrable Securities (net of any
Selling Expenses borne by such Investor) pursuant to the Registration Statement
giving rise to such action or claim for indemnification less the amount of any
damages that such seller has otherwise been required to pay in connection with
such sale.

 

8.

REPORTS UNDER THE 1934 ACT.

With a view to making available to the Investors the benefits of Rule 144
promulgated under the 1933 Act (“Rule 144”) or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration or pursuant to a
registration on From S-3, the Company agrees to:

a.         make and keep public information available, as those terms are
understood and defined in Rule 144;

b.         use its best efforts to file with the SEC in a timely manner (giving
effect to any extensions of time permitted by Rule 12b-25 under the 1934 Act)
all reports and other documents required of the Company under the 1934 Act at
any time the Company is subject to such requirements (it being understood that
nothing herein shall limit the Company’s obligations under Section 4(c) of the
Stock Purchase Agreement); and

c.         furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) to the extent accurate, a written
statement by the Company that it has complied with the reporting requirements of
Rule 144 and the 1934 Act, or that it qualifies as a registrant whose securities
may be resold pursuant to Form S-3 (at any time after the Company so qualifies)
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration or any other rule or
regulation of the SEC that permits

 

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the selling of any such securities without registration or pursuant to Form S03
(at any time after the Company so qualifies to use such form).

 

9.

ASSIGNMENT OF REGISTRATION RIGHTS.

Subject to compliance with applicable laws, the rights under this Agreement may
be assigned (but only with all related obligations) by an Investor to a
transferee of Registrable Securities if: (i) the Investor 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 transfer or
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) immediately
following such transfer or assignment the further disposition of such securities
by the transferee or assignee is restricted under the 1933 Act or applicable
state securities laws; (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this sentence, the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein; and (v) such transfer shall have been made in accordance with
the applicable requirements of the Stock Purchase Agreement. The terms and
conditions of this Agreement inure to the benefit of and are binding upon the
respective successors and permitted assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as otherwise expressly provided herein.

 

10.

AMENDMENT OF REGISTRATION RIGHTS.

Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Buyers. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement; provided, however, that any rights hereunder may be waived by
any party on such party’s own behalf, without the consent of any other party.

 

11.

RIGHT OF FIRST OFFER.

Subject to the terms and conditions specified in this Section 11, the Company
hereby grants to each Investor a right of first offer with respect to (i) future
sales by the Company of any of its Capital Stock and (ii) future incurrences of
Indebtedness (as defined in the Stock Purchase Agreement) by the Company. An
Investor shall be entitled to apportion the right of first offer hereby granted
it among itself and its partners and affiliates in such proportions as it deems
appropriate.

 

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Each time the Company proposes to offer any Capital Stock or incur any
Indebtedness, the Company shall first make an offering of such Capital Stock or
Indebtedness to each Investor in accordance with the following provisions:

a.         The Company shall deliver a notice in accordance with Section 12
(“Notice”) to the Investors stating (i) its bona fide intention to offer such
Capital Stock or incur such Indebtdness, as applicable, (ii) the number of
shares or securities of Capital Stock to be offered, or the amount of
Indebtedness to be incurred and (iii) the price and terms upon which it proposes
to offer such Capital Stock or incur such Indebtedness.

b.         By written notification received by the Company within twenty (20)
calendar days after the giving of Notice, each Investor may elect to purchase
or, with respect to Indebtedness, lend, at the price and on the terms specified
in the Notice, up to that portion of such Capital Stock or Indebtedness, as
applicable, that equals the proportion that the number of shares of Registrable
Securities issued and held by such Investor (assuming full conversion and
exercise of all convertible and exercisable securities then outstanding) bears
to the total number of shares of Common Stock of the Company then outstanding
(assuming full conversion and exercise of all convertible and exercisable
securities then outstanding). The Company shall promptly, in writing, inform
each Investor that elects to purchase all the Capital Stock, or lend all the
Indebtedness, available to it (a “Fully-Exercising Investor”) of any other
Investor’s failure to do likewise. During the ten (10) day period commencing
after such information is given, each Fully-Exercising Investor may elect to
purchase that portion of the Capital Stock, or lend that portion of
Indebtedness, for which Investors were entitled to subscribe, but which were not
subscribed for by the Investors, that is equal to the proportion that the number
of shares of Registrable Securities issued and held by such Fully-Exercising
Investor bears to the total number of shares of Common Stock of the Company then
outstanding (assuming full conversion and exercise of all convertible and
exercisable securities then outstanding).

c.         Subject to any other rights of Investor in the Company’s Amended and
Restated Certificate of Incorporation or otherwise (which such rights are not
intended to be limited in any way by the provisions contained herein), if all
Capital Stock, or Indebtedness (as applicable), that Investors are entitled to
obtain pursuant to section 11 are not elected to be obtained as provided in
subsection 11(b) hereof, the Company may, during the one hundred twenty (120)
day period following the expiration of the period provided in section 11(b)
hereof, offer the remaining unsubscribed portion of such Capital Stock or
Indebtedness to any person or persons at a price not less than that, and upon
terms no more favorable to the offeree than those, specified in the Notice. If
the Company does not enter into an agreement for the sale of the Capital Stock,
or to incur such Indebtedness, within such period, or if such agreement is not
consummated within ninety (90) days of the execution thereof, subject to
allowances for regulatory approvals, the right provided hereunder shall be
deemed to be revived and such Capital Stock and/or Indebtedness shall not be
offered unless first reoffered to the Investors in accordance herewith.

d.         The right of first offer with respect to the Capital Stock in this
Section 11 shall be all or nothing and shall not be applicable to (i) the
issuance or sale of shares of Common Stock (or options therefor) to employees,
directors, consultants and other service providers for the primary purpose of
soliciting or retaining their services pursuant to plans or agreements

 

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approved by the Company’s Board of Directors; (ii) the issuance of securities
pursuant to a bona fide, firmly underwritten public offering of shares of Common
Stock registered under the Act, at an offering price of at least $0.336 per
share (appropriately adjusted for any stock split, dividend, combination or
other recapitalization) and resulting in proceeds to the Company of at least
$100,000,000 in the aggregate, (iii) the issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities, or (iv) the
issuance of securities in connection with a bona fide business acquisition of or
by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise. The right of first offer with respect to
Indebtedness shall not apply with respect to Permitted Indebtedness (as defined
in the Stock Purchase Agreement).

e.         The covenants set forth in this Section 11 shall terminate and be of
no further force or effect upon the consummation of (i) the Company’s sale of
its Common Stock or other securities pursuant to Registration Statement under
the Act, at an offering price of at least $0.336 per share (appropriately
adjusted for any stock split, dividend, combination or the like) and resulting
in proceeds to the Company of at least $100,000,000 in the aggregate (other than
a registration statement relating either to the sale of securities to employees
of the Company pursuant to its stock option, stock purchase or similar plan or a
SEC Rule 145 transaction) or (ii) a Liquidation Event, as that term is defined
in the Company’s Amended and Restated Certificate of Incorporation (as amended
from time to time).

 

12.

MISCELLANEOUS.

a.         A Person is deemed to be a holder of Registrable Securities whenever
such Person owns or is deemed to own of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.

b.         Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

If to the Company:

Pipeline Data, Inc.

1515 Hancock Street

Suite 301

Quincy, MA 02169

Attention: Chief Executive Officer

Facsimile: 315-389-5333

 

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With a copy to (which copy shall not constitute notice):

Sheila G. Corvino, Esq.

811 Dorset West Road

Dorset, VT 05251

Facsimile: 802-867-2468

If to Legal Counsel:

Akerman Senterfitt

SunTrust International Center

One SE 3rd Avenue, 25th Floor

Miami, FL 33131

Attention: Jose Gordo, Esq.

Facsimile: 305-374-5095

 

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached to the Stock Purchase Agreement, with copies to such Buyer’s
representatives as set forth on the Schedule of Buyers, or, in the case of a
Buyer or other party named above, to such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party at least 5 days prior to
the effectiveness of such change.

If to an Investor (other than a Buyer), to such Investor at the address and/or
facsimile number reflected in the records of the Company.

Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a courier or overnight courier service shall be rebuttable evidence
of personal service, receipt by facsimile or deposit with a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively. Notwithstanding the foregoing, the Company or its
counsel may transmit versions of any Registration Statement (or any amendments
or supplements thereto) to Legal Counsel in satisfaction of its obligations
under Section 3(c) hereof to permit Legal Counsel to review such Registration
Statement (or amendment or supplement) prior to filing (and solely for such
purpose) by email to Jose.Gordo@akerman.com (or such other e-mail address as has
been provided for such purpose), provided that delivery and receipt of such
transmission shall be confirmed by electronic, telephonic or other means.

c.         Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

d.         All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the

 

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State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

e.         This Agreement and the other Transaction Documents constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement and the other Transaction Documents supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.

f.         Subject to the requirements of Section 9 hereof, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

g.         The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

h.         This Agreement and any amendments hereto may be executed and
delivered in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when counterparts have been signed by each
party hereto and delivered to the other parties hereto, it being understood that
all parties need not sign the same counterpart. In the event that any signature
to this Agreement or any amendment hereto is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create
a valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile or
“.pdf” signature page were an original thereof. At the request of any party each
other party shall promptly re-execute an original form of this Agreement or any
amendment hereto and deliver the same to the other party. No party hereto

 

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shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format
data file to deliver a signature to this Agreement or any amendment hereto or
the fact that such signature was transmitted or communicated through the use of
a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense
to the formation or enforceability of a contract, and each party hereto forever
waives any such defense.

i.          Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

j.          All consents and other determinations to be made by the Investors
pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by the Required Buyers. Any consent or other determination approved
by Investors as provided in the immediately preceding sentence shall be binding
on all Investors.

k.         The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent and no rules of strict
construction will be applied against any party.

l.          Each Buyer and each holder of the Registrable Securities shall have
all rights and remedies set forth in the Transaction Documents (as defined in
the Stock Purchase Agreement) and all rights and remedies that such Buyers and
holders have been granted at any time under any other agreement or contract and
all of the rights that such Buyers and holders have under any law. Any Person
having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security or
proving actual damages), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law.

m.        This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns and, to the extent provided in
Sections 6(a) and 6(b) hereof, each Investor, the directors, officers, partners,
members, managers, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the 1933 Act and the 1934
Act, and each of the Company’s directors, each of the Company’s officers who
signs the Registration Statement, and each Person, if any, who controls the
Company within the meaning of the 1933 Act and the 1934 Act, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

n.         The obligations of each Investor hereunder are several and not joint
with the obligations of any other Investor, and no provision of this Agreement
is intended to confer any obligations on any Investor vis-à-vis any other
Investor. Nothing contained herein, and no action taken by any Investor pursuant
hereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated herein.

 

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o.         Unless the context otherwise requires, (a) all references to
Sections, Schedules or Exhibits are to Sections, Schedules or Exhibits contained
in or attached to this Agreement, (b) each accounting term not otherwise defined
in this Agreement or the Stock Purchase Agreement has the meaning assigned to it
in accordance with GAAP, (c) words in the singular or plural include the
singular and plural and pronouns stated in either the masculine, the feminine or
neuter gender shall include the masculine, feminine and neuter, (d) the words
“hereof,” “herein” and words of similar effect shall reference this Agreement in
its entirety, and (e) the use of the word “including” in this Agreement shall be
by way of example rather than limitation.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have caused this Investors’ Rights Agreement to
be duly executed as of day and year first above written.

 

COMPANY:

 

PIPELINE DATA, INC.

 

By: /s/ MacAllister Smith

Name: MacAllister Smith

Title: Chief Executive Officer

 

BUYERS:

 

PIPELINE HOLDINGS, LLC,

a Delaware limited liability company

 

By its Manager:

 

COMVEST PIPELINE HOLDINGS, LLC,

a Delaware limited liability company

 

 

By:

COMVEST INVESTMENT PARTNERS III, L.P.,

its Sole Member

 

 

By:

ComVest Partners III, LLC,

 

its General Partner

 

 

 

By:/s/ Daniel Nenadovic

 

Name: Daniel Nenadovic

Title: Managing Director and Partner

Signature Page to Investors’ Rights Agreement

 

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EXHIBIT A

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

[TRANSFER AGENT]

Attn:

 

Re:

Pipeline Data, Inc.

Ladies and Gentlemen:

We are counsel to Pipeline Data, Inc., a Delaware corporation (the “Company”),
and have represented the Company in connection with that certain Stock Purchase
Agreement (the “Stock Purchase Agreement”) entered into by and among the Company
and the buyers named therein (collectively, the “Holders”), pursuant to which
the Company issued to the Holders Series A Convertible Preferred Stock of the
Company. Pursuant to the Stock Purchase Agreement, the Company also has entered
into an Investors’ Rights Agreement with the Holders (the “Investors’ Rights
Agreement”) pursuant to which the Company has registered the Registrable
Securities (as defined in the an Investors’ Rights Agreement), under the
Securities Act of 1933, as amended (the “1933 Act”). In connection with the
Company’s obligations under the an Investors’ Rights Agreement, on ____________
___, 200_, the Company filed a Registration Statement on Form [S-__] (File No.
333-_____________) (the “Registration Statement”) with the Securities and
Exchange Commission (the “SEC”) relating to the Registrable Securities which
names each of the 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,

 

[ISSUER’S COUNSEL]

 

 

By:

 

 

cc:

[LIST NAMES OF HOLDERS]

 

 

{M2718705;6}

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