Document:

Series A SPA

RECOM MANAGEMENT SYSTEMS INC.

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Common Stock Purchase Agreement

This Common Stock Purchase Agreement (the “Agreement”) is made as of March 31, 2005 by and between Recom Managed Systems, Inc., a Delaware corporation (the “Company”), and the purchaser listed on the schedule attached hereto as Schedule A  (the “Schedule of Purchasers”).  The persons or entities listed thereon are hereinafter referred to collectively as the “Purchasers” and individually as a “Purchaser.”  Each Purchaser shall sign his or her individual Agreement for purposes of protection, clarification and privacy.

Whereas, after performing due diligence as they desire, the Purchasers desire to purchase, and the Company agrees to sell, shares of the Company’s Common Stock pursuant to the terms and conditions of this Agreement; 

Whereas the Company acknowledges that it has disclosed publicly, either through press releases or via its SEC filings, all material information related to its product development, operations, and financial condition; 

Whereas, the Company acknowledges that Purchasers may be acting individually or as nominee of another party;

Whereas, Purchasers acknowledge that if they are acting on behalf of a third party they will comply with all applicable federal and state securities laws;   

Now, therefore, in consideration of the mutual promises contained herein and made pursuant hereto, and good and available consideration, receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:

SECTION 1

Authorization and Sale of the Shares

1.1

Authorization.  As of the Closing (as defined below), the Company will have authorized the sale and issuance of no more than 3,125,000 shares of its Common Stock (the “Common Shares”) pursuant to this Agreement at a price per share of $3.20, for total possible proceeds to the Company of $10,000,000.00.  The Purchasers are not obligated to pay any brokers or finders hereunder.  The Company may close this financing for an amount less than $10,000,000.00 at the Company’s discretion.

1.2

Agreement to Purchase and Sell.  Subject to the terms and conditions hereof and in reliance upon the representations, warranties and agreements contained herein, the Company hereby agrees to issue and sell to the Purchaser, and Purchaser hereby agrees to purchase from the Company, at the Closing (as defined below), the total amount of shares of the Company’s Common Stock as set forth opposite the Purchaser’s name on Schedule A, at a purchase price equal to $3.20 per share.  The Company reserves the right to accept or reject any investor at its sole and absolute discretion.

1445801.3

1.3  Warrant.  Simultaneously (or as soon as practicable thereafter) with the issuance of the Common Stock as provided for herein, Company agrees to issue to each Purchaser a Warrant to purchase from Company at a price equal to $1.60 per share as detailed in Section 1.2 herein in substantially the form attached as Schedule B hereto (the “Warrant”).   The Company agrees to take all corporate and shareholder actions necessary to authorize and approve the proper number shares of Common Stock into which such warrants will be converted.

1.4

Use of Proceeds from Sale of Stock.  The net proceeds from the sale of the Common Shares issued by the Company shall be used for general corporate purposes, including working capital.

1.5  Immediate Registration.  Concurrently herewith, the Company shall issue to the Purchasers immediate registration rights for the Common Shares issued hereby, and for the Warrant issued hereby, pursuant to a Grant of Registration Rights executed concurrently herewith. 

SECTION 2

Closing

2.1

The Closing.  The purchase and sale of the Common Shares hereunder shall be officially held at the Company’s corporate headquarters in Studio City, California on March 31, 2005 at noon or at such other time and place as shall be mutually agreed upon by the Company and the Purchasers (which time and place are referred to as the “Closing”).  In lieu of appearing personally, the Purchaser may at its discretion appear telephonically, through wire transfer, or through the United States mails.  At the Closing or no later than five (5) business days from the Closing, the Company will deliver to the Purchaser a certificate representing the number of Common Shares that such Purchaser has agreed to purchase hereunder as shown on Schedule A against delivery to the Company by such Purchaser of the full purchase price of such Common Shares, paid by (i) a check payable to the Company’s order, or (ii) such other method as the Company may choose at its sole discretion.  

SECTION 3

Representations and Warranties of the Company

The Company hereby represents and warrants to each Purchaser that the statements in the following paragraphs of this Section 3 are all true and correct:

3.1

Organization, Good Standing; Certificate and Bylaws.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  

3.2

Capitalization  The capitalization of the Company consists of a total of one hundred million authorized shares of common stock (the “Common Stock”).

3.3

Authorization.  All corporate action on the part of the Company, its directors and shareholders necessary for the authorization, execution, delivery and performance by the Company of this Agreement, and for the authorization, issuance, reservation for issuance and delivery of the Common Shares has been taken or 

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1445801.3

will be taken prior to the Closing.  This Agreement is valid and binding obligations of the Company, enforceable in accordance with their terms, subject to laws of general application relating to bankruptcy, insolvency, and the relief of debtors and other laws of general application affecting enforcement of creditors’ rights generally, rules of law governing specific performance, injunctive relief or other equitable remedies, and limitations of public policy.

3.4

Valid Issuance of Stock. 

(a)

The Common Shares, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration provided for herein, will be duly and validly issued, fully paid and nonassessable.  

(b)

Based in part on the representations made by the Purchasers in Section 4 hereof, the Common Shares and (assuming no change in applicable law and no unlawful distribution of the Common Shares by the Purchasers or other parties) will be issued in compliance in all material respects with the registration and prospectus delivery requirements of the U.S. Securities Act of 1933, as amended, (the “1933 Act”) and the registration and qualification requirements of the securities laws of the State of California.   

3.5

Governmental Consents .  No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except for: (i) the filing of a Notice of Transaction pursuant to Section 25102(f) of the California Corporate Securities Law of 1968, as amended, and the rules thereunder, which filing will be effected by the Company within the time prescribed by law; and (ii) such other qualifications or filings under the 1933 Act and the regulations thereunder and all other applicable securities laws as may be required in connection with the transactions contemplated by this Agreement.

SECTION 4

Investment Representations and Covenants of the Purchasers

Each Purchaser hereby represents and warrants to, and agrees with, the Company, severally and not jointly, that:

4.1

Authorization.  This Agreement constitutes such Purchaser’s valid and legally binding obligation, enforceable in accordance with its terms except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) the effect of rules of law governing the availability of equitable remedies.  Each Purchaser represents that such Purchaser has full power and authority to enter into this Agreement.

4.2

Investment Experience.  Such Purchaser understands that the purchase of the Common Shares involves substantial risk.  Such Purchaser (i) has experience as an investor in securities of companies in the development stage and acknowledges that such Purchaser is able to fend for itself, can bear the economic risk of such Purchaser’s investment in the Common Shares (including the risk of total loss) and has such knowledge and experience in financial or business matters that such Purchaser is capable of evaluating the merits and risks of this investment in the Common Shares and protecting its own interests in connection with 

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this investment, and/or (ii) has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables such Purchaser to be aware of the character, business acumen and financial circumstances of such persons.

4.3

Accredited Purchaser Status.  Purchaser is an “accredited investor” within the meaning of Regulation D promulgated under the 1933 Act.

4.4

Restricted Securities.  Such Purchaser understands that the Common Shares have not been registered under the 1933 Act, and are being offered and sold pursuant to an exemption from registration contained in the 1933 Act based in part upon the representations of such Purchaser contained herein.  Such Purchaser understands that the Common Shares are characterized as “restricted securities” under the 1933 Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under the 1933 Act and applicable regulations thereunder such securities may be resold without registration under the 1933 Act only in certain limited circumstances.  In this connection, such Purchaser represents that such Purchaser is familiar with Rule 144 of the U.S. Securities and Exchange Commission, as presently in effect, and understands the resale limitations imposed thereby and by the 1933 Act.  

4.5

Legends .  It is understood that the certificates evidencing the Common Shares will bear the legends set forth below:

The securities represented hereby have not been registered under the securities act of 1933, as amended (The “Act”), or under the securities laws of certain states.  These securities are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the act and the applicable state securities laws, pursuant to registration or exemption therefrom.  Investors should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time.  The issuer of these securities may require an opinion of counsel in form and substance reasonably satisfactory to the issuer to the effect that any proposed transfer or resale is in compliance with the act and any applicable state securities laws.  The securities represented hereby may also be subject to additional restrictions on transfer pursuant to a stock purchase agreement, investor rights agreement and/or co-sale agreement between the company and the original purchaser of such securities, copies of which are on file at the offices of the company.

4.6

Residency .  The residency of Purchaser (or, in the case of a partnership or corporation, such entity’s principal place of business) is correctly set forth on Schedule A.

SECTION 5

Conditions to Closing of the Purchasers

The obligations of each Purchaser under this Agreement are subject to the fulfillment or waiver, on or before the Closing, of each of the following conditions, which consent may be given by written, oral or telephone communication to the Company, or its counsel:

5.1

Representations and Warranties True .  Each of the representations and warranties of the Company contained in Section 3 and the recitals shall be true and correct on and as of the Closing with the 

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same effect as though such representations and warranties had been made on and as of the date of the Closing.

5.2

Performance .  The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing and shall have obtained all approvals, consents and qualifications necessary to complete the purchase and sale described herein.

5.3

Securities Exemptions .  The offer and sale of Common Shares to the Purchasers pursuant to this Agreement shall be exempt from the registration requirements of the 1933 Act, the qualification requirements of the Law and the registration and/or qualification requirements of all other applicable state securities laws.

5.4

Proceedings and Documents.  All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to each Purchaser.

SECTION 6

Conditions to Closing of the Company

The obligations of the Company to the Purchaser under this Agreement are subject to the fulfillment or waiver on or before the Closing of each of the following conditions by such Purchaser:

6.1

Representations and Warranties .  The representations and warranties of such Purchaser contained in Section 4 shall be true and correct on the date of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing.

6.2

Payment of Purchase Price .  Each Purchaser shall have delivered to the Company its name, address and residency (or place of incorporation or formation) on Schedule A in accordance with the provisions of Section 2.

6.3

Securities Exemptions .  The offer and sale of the Securities to the Purchasers pursuant to this Agreement shall be exempt from the registration requirements of the 1933 Act, the qualifications requirements of the Law and the registration and/or qualification requirements of all other applicable state securities laws.

6.4

Proceedings and Documents .  All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Company.

SECTION 7

Miscellaneous

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7.1

Survival of Warranties .  The representations, warranties and covenants of the Company and the Purchasers contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of any of the Purchasers, their counsel or the Company, as the case may be.

7.2

Governing Law; Consent to Jurisdiction .  This Agreement shall be governed by and construed under the internal laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California, without reference to principles of conflict of laws or choice of laws.  The parties to this Agreement hereby consent to the exclusive jurisdiction and venue of the American Arbitration Association, in Los Angeles, California, for purposes of any action arising out of or relating to this Agreement, and agree that service of process in any such action may be made in the manner provided in this Agreement for delivery of notices.

7.3

Successors and Assigns .  Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. 

7.4

Amendments and Waivers .  Any term of this Agreement may be amended and the observance of any term of this Agreement 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 Purchaser.  Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any Common Shares at the time outstanding, each future holder of such securities, and the Company; provided, however, that New Purchasers may become parties to this Agreement in accordance with Section 2.2 without any amendment of this Agreement or any consent or approval of any Purchaser.

7.5

Notices, etc.  All notices and other communications required or permitted hereunder shall be in writing,, addressed (a) if to Purchaser, as indicated on the Schedule of Purchasers, or at such other address as Purchaser shall have furnished to the Company in writing, or (b) if to the Company, at its address set forth at the end of this Agreement or at such other address as the Company shall have furnished to the Purchasers and each such other holder in writing.

7.6

Severability . In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

7.7

Titles and Subtitles .  The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

7.8

Entire Agreement .  This Agreement (including all exhibits hereto) constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. 

7.9

Counterparts .  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

In Witness Whereof, the undersigned has executed this Common Stock Purchase Agreement as of the date set forth above.

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1445801.3

RECOM MANAGED SYSTEMS, INC.

/s/ Rodney Hildebrandt

By:  Rodney Hildebrandt

(Secretary and Chief Operating Officer)

PURCHASER:

Trellus Partners, LP

350 Madison Avenue – 9th Floor

NY, NY 10017

By:  

/s/ Adam Usdan

Title:  

Schedule A

Schedule of Purchasers

	Name, Address and Residency

 of Purchaser

	Accredited Investor

	Number of Shares

	Amount of Investment

	Form of Consideration

	

	Y

	1,562,500

	$5,000,000.00

	Cash

	 	 	 	

	 
	 	 	 	

	 
	 	 	 	

	 
	 	 	 	

	 
	 	 	 	

	 
	 	 	 	

	 
	 	 	 	

	 
	 	 	 	

	 
	 	 	 	

	 
	 	 	 	

	 
	 

	 	1,562,500

	 $5,000,000.00                      

	 

Schedule B

Form of Warrant

See Warrant To Be Executed Concurrently Herewith

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1445801.3REGISTRATION RIGHTS

GRANT OF IMMEDIATE REGISTRATION RIGHTS

Recom Managed Systems, Inc. hereby grants to the Subscriber the following immediate registration rights. 

1. Definitions. 

Capitalized terms used herein without definition shall have the respective meanings given such terms as set forth in the Stock Purchase Agreement between Recom Managed Systems, Inc. and the investor signatory thereto executed concurrently herewith (the "Subscription Agreement").  As used herein, the following terms shall have the following meanings: 

Business Day: Any day other than a day on which banks are authorized or required to be closed in the State of New York. 

Commission: The United States Securities and Exchange Commission. 

Common Stock: The common stock, par value $.001 per share, of the Company. 

Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. 

Holder or Holders: Any holder of the Registrable Securities. 

Person: Any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or other agency or political subdivision thereof. 

Prospectus: The prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses 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 or deemed to be incorporated by reference in such prospectus. 

Registrable Securities: (i) The shares of Common Stock (a) issuable upon conversion of the 2005-Private Financing-Warrant-One-March 31, 2005 and (b) issuable upon exercise of the Warrants, until such time as (1) a Registration Statement covering such Registrable Securities has been declared effective by the Commission and such Registrable Securities have been disposed of pursuant to such effective Registration Statement or (2) such Registrable Securities are saleable pursuant to Rule 144 (or any similar provision then in force) under the Securities Act, whichever is earlier. 

Registration Statement: Any registration statement of the Company that covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statements, including post effective amendments, all exhibits, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

Securities Act: The Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. 

1995-Private-Financing-Common Stock: The Common Stock issued on the date hereof to the Subscriber pursuant to the Company’s 1995 private placement. 

Warrants: The 2005-Private Financing-Warrant-One-March 31, 2005 issued on the date hereof pursuant to the Company’s 1995 private placement. 

2. Registration Rights. 

(a) Required Registration. The Company shall use its best efforts as soon as reasonably practicable (but in no event less than 20 days following the closing of the financing represented by the purchase of stock and issuance of warrants consummated concurrently herewith) to prepare and file with the Commission a Registration Statement covering the resale of all Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form SB-2 (except if the Company is not then eligible to register for resale the Registrable Securities on Form SB-2, in which case such registration shall be on another appropriate form, except if otherwise directed by the Holders). The Company shall use its best efforts to cause such Registration Statement be declared effective under the Securities Act as soon as is practicable following its filing, and shall use its best efforts to keep such Registration Statement continuously effective under the Securities Act until the date which is seven (7) years after the termination of the offering (the "Effectiveness Period"). In the event that the Company does not file such Registration Statement by the Target Effective Date, the exercise price of the Warrants will be reduced from $1.60 to $1.20. 

(b) Demand Registration. In addition to the rights afforded the Holders in Section 2(a) above, at any time following the closing of the financing represented by the purchase of stock and issuance of warrants consummated concurrently herewith, the Holder may request that the Company effect the registration under the Securities Act of all or part of such Registrable Securities on Form SB-2 or any similar long-form registration or, if available, on Form S-2 or S-3 or any similar short-form registration (the registration requested pursuant to this Section 2(b) is referred to herein as the "Demand Registration"). The Demand Registration request shall specify the approximate number of Registrable Securities requested to be registered, and may at the election of the requisite Holders specify the intended method or methods of disposition thereof (which may include, without limitation, a "shelf" offering pursuant to Rule 415 under the Securities Act, or an underwritten offering). The Company shall immediately, but not later than 20 days after receipt of such demand, comply with the demand and file such Registration Statement as is legally appropriate.  The Holders shall be entitled to request one Demand Registration during the Effectiveness Period.  A registration will not count as a permitted Demand Registration unless and until it has become effective, or, if it has become so effective, the offering of Registrable Securities pursuant to such registration is terminated, suspended or interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court. The Company will use its best efforts to keep such Registration Statement continuously effective under the Securities Act during the Effectiveness Period or until all Registrable Securities are sold. 

(d) Holdback Agreements. If any registration of Registrable Securities shall be in connection with an underwritten public offering, each Holder agrees not to effect any public sale or distribution, including any sale pursuant to Rule 144 under the Securities Act, of any Registrable Securities, and not to effect any such public sale or distribution of any other equity security of the Company or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case, other than as part of such underwritten public offering) during the thirty (30) days prior to, and during the ninety (90) day period beginning on, the effective date of such Registration Statement (except as part of such registration). 

(e) Exceptions. Notwithstanding the foregoing, the Company may delay the registration of Registrable Securities upon the occurrence of any of the following: 

(i) The Company shall have previously entered into an agreement or letter of intent contemplating an underwritten public offering on a firm commitment basis of Common Stock or securities convertible into or exchangeable for Common Stock and the managing underwriter of such proposed public offering advises the Company in writing that in its opinion such proposed underwritten offering would be materially and adversely affected by a concurrent registered offering of Registrable Securities (such opinion to state the reasons therefor); 

(ii) During the two (2) month period immediately preceding such request, the Company shall have entered into an agreement or letter of intent, which has not expired or otherwise terminated, contemplating a material business acquisition by the Company or its subsidiaries whether by way of merger, consolidation, acquisition of assets, acquisition of securities or otherwise; 

(iii) The Company is in possession of material nonpublic information that the Company would be required to disclose in the Registration Statement and that is not, but for the registration, otherwise required to be disclosed at the time of such registration, the disclosure of which, in its good faith judgment, would have a material adverse effect on the business, operations, prospects or competitive position of the Company; 

(iv) The Company shall receive the written opinion of the managing underwriter of the underwritten public offering pursuant to which Common Stock has been registered within the three (3) month period prior to the receipt of a registration request that the registration of additional Common Stock will materially and adversely affect the market for the Common Stock (such opinion to state the reasons therefor); or 

(v) At the time of receipt of a registration request, the Company is engaged, or its board of directors has adopted by resolution a plan to engage, in any program for the purchase of Common Stock or securities convertible into or exchangeable for Common Stock and, in the opinion of counsel, reasonably satisfactory to the requesting Holders, the distribution of the Common Stock to be registered would cause such purchase to be in violation of Regulation M promulgated under the Exchange Act. 

(f) Period of Delay. If an event described in clauses (i) through (iv) of Section 2(e) shall occur, the Company may, by written notice to the Holder, delay the filing of a Registration Statement with respect to the Registrable Securities to be covered thereby for a period of time not exceeding one hundred twenty (120) days. If an event described in clause (v) of Section 2(e) shall occur, the filing of a Registration Statement with respect to the Registrable Securities to be covered thereby shall be delayed until the first date that the Registrable Securities to be covered thereby can be sold without violation of Regulation M of the Exchange Act. 

3. Registration Procedures. 

In connection with the registration obligations of the Company pursuant to the terms and conditions of this Agreement, the Company shall: 

(a) prior to filing a Registration Statement or Prospectus or any amendments or supplements thereto, including documents incorporated by reference after the initial filing of the Registration Statement, the Company will furnish to the Holder covered by such Registration Statement (the "Selling Holder"), Holders' Counsel and the underwriters, if any, draft copies of all such documents proposed to be filed at least three (3) Business Days prior thereto, which documents will be subject to the review of such Holder’s Counsel and the underwriters, if any, and the Company will not, unless required by law, file any Registration Statement or amendment thereto or any Prospectus or any supplement thereto (including such documents incorporated by reference) to which the Selling Holder (the "Objecting Party") shall object, pursuant to notice given to the Company prior to the filing of such amendment or supplement (the "Objection Notice"). The Objection Notice shall set forth the objections and the specific areas in the draft documents where such objections arise. The Company shall have five (5) Business Days after receipt of the Objection Notice to correct such deficiencies to the satisfaction of the Objecting Party, and will notify the Selling Holder of any stop order issued or threatened by the Commission in connection therewith and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered; 

(b) as promptly as practicable prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep such Registration Statement effective for the period required pursuant to Section 2; cause the Prospectus to be supplemented by any required Prospectus supplement, and, as so supplemented, to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act applicable to it with respect to the disposition of all Registrable Securities covered by such Registration Statement during the applicable period in accordance with the intended methods of disposition by the Selling Holders set forth in such Registration Statement or supplement to the Prospectus; 

(c) as promptly as practicable furnish to any Selling Holder and the underwriters, if any, without charge, such number or conformed copies of such Registration Statement and any post-effective amendment thereto and such number of copies of the Prospectus (including each preliminary Prospectus) and any amendments or supplements thereto, and any documents incorporated by reference therein, as such Selling Holder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities being sold by such Selling Holder (it being understood that the Company consents to the use of the Prospectus and any amendment or supplement thereto by each Selling Holder and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto); provided, that before filing a Registration Statement or Prospectus relating to the Registrable Securities or any amendments or supplements thereto, the Company will furnish to Holders' Counsel copies of all documents proposed to be filed at least three (3) Business Days prior to the filing thereof, which documents will be subject to the review of such counsel; 

(d) on or prior to the date on which the Registration Statement is declared effective, register or qualify such Registrable Securities under such other securities or "blue sky" laws of such jurisdictions as any Selling Holder, Holders' Counsel or underwriter reasonably requests and do any and all other acts and things which may be necessary or advisable to enable such Selling Holder to consummate the disposition in such jurisdictions of such Registrable Securities owned by such Selling Holder; keep each such registration or qualification (or exemption therefrom) effective during the period which the Registration Statement is required to be kept effective; and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the applicable Registration Statement; provided that the Company shall not be required to (i) qualify to do business as a foreign corporation or as a broker-dealer in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject; 

(e) cause the Registrable Securities covered by such Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Selling Holders to consummate the disposition of such Registrable Securities; 

(f) as promptly as practicable notify the Holder, Holder’s Counsel and any underwriter and (if requested by any such Person) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or for additional information to be included in any Registration Statement or Prospectus or otherwise, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement or the initiation or threatening of any proceedings for that purpose, (iv) of the issuance by any state securities commission or other regulatory authority of any order suspending the qualification or exemption from qualification of any of the Registrable Securities under state securities or "blue sky" laws or the initiation of any proceedings for that purpose and (v) of the happening of any event which makes any statement made in a Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated by reference therein untrue or which requires the making of any changes in such Registration Statement, Prospectus or documents so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and, as promptly as practicable thereafter, prepare and file with the Commission and furnish a supplement or amendment to such Prospectus so that, as thereafter deliverable to the purchasers of such Registrable Securities, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 

(g) make generally available to the Holders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act no later than thirty (30) days after the end of the 12-month period beginning with the first day of the Company's first fiscal quarter commencing after the effective date of a Registration Statement; 

(h) use its reasonable efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement, and, if one is issued, to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment; 

(i) as promptly as practicable after filing with the Commission of any document which is incorporated by reference into a Registration Statement, deliver a copy of such document to Holders' Counsel; 

(j) cooperate with the Selling Holder and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates (which shall not bear any restrictive legends and shall be in a form eligible for deposit with the Depository Trust Company) representing securities sold under such Registration Statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or underwriters, if any, or such Selling Holders may request and make available prior to the effectiveness of such Registration Statement a supply of such certificates; 

Each Selling Holder, upon receipt of any notice from the Company of the happening of any event of the kind described in subsection (f) of this Section 3, shall forthwith discontinue disposition of the Registrable Securities until such Selling Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by subsection (f) of this Section 2 or until it is advised in writing (the "Advice") by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the Prospectus, and, if so directed by the Company, such Selling Holder will, or will request the managing underwriter or underwriters, if any, to, deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Selling Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event that the Company shall give any such notice, the time periods for which a Registration Statement is required to be kept effective pursuant to Section 2 hereof shall be extended by the number of days during the period from and including the date of the giving of such notice to and including the date when each Selling Holder shall have received (i) the copies of the supplemented or amended Prospectus contemplated by Section 2(f) or (ii) the Advice.

4. Registration Expenses. 

(a) All expenses incident to the Company's performance of, or compliance with, the provisions hereof, including without limitation, all Commission and securities exchange or NASD registration and filing fees, fees and expenses of compliance with securities or "blue sky" laws (including fees and disbursements of counsel in connection with "blue sky" qualifications of the Registrable Securities), printing expenses, messenger and delivery expenses, internal expenses (including, without limitation, all salaries and expenses of the Company's officers and employees performing legal or accounting duties), fees and expenses incurred in connection with the listing of the securities to be registered, if any, on each securities exchange on which similar securities issued by the Company are then listed, fees and disbursements of counsel for the Company and its independent certified public accountants (including the expense of any special audit or "cold comfort" letters required by, or incident to, such performance), Securities Act liability insurance (if the Company elects to obtain such insurance), reasonable fees and expenses of any special experts retained by the Company in connection with such registration, fees and expenses of other Persons retained by the Company in connection with each registration hereunder (but not including the fees and expense of legal counsel retained by a Holder or Holders, or any underwriting fees, discounts or commissions attributable to the sale of Registrable Securities) are herein called "Registration Expenses." 

(b) The Company will pay all Registration Expenses in connection with each Registration Statement filed pursuant to Section 2 except as otherwise set forth therein. All expenses to be borne by the Holders in connection with any Registration Statement filed pursuant toSection 2 (including, without limitation, all underwriting fees, discounts or commissions attributable to such sale of Registrable Securities) shall be borne by the participating Holders pro rata in relation to the number of Units of Registrable Securities to be registered by each Holder. 

5. Indemnification; Contribution. 

(a) Indemnification by the Company. The Company agrees to indemnity and hold harmless, to the full extent permitted by law, the Holder, its officers, directors and each Person who controls such Holder (within the meaning of the Securities Act), and any agent or investment adviser thereof, against all losses, claims, damages, liabilities and expenses (including reasonable attorneys' fees and costs of investigation) arising out of or based upon any untrue or alleged untrue statement of material fact contained in any Registration Statement, any amendment or supplement thereto, any Prospectus or preliminary Prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same arise out of or are based upon any such untrue statement or omission based upon information with respect to such Holder furnished in writing to the Company by or on behalf of such Holder expressly for use therein; provided that, in the event that the Prospectus shall have been amended or supplemented and copies thereof as so amended or supplemented, shall have been furnished to a Holder prior to the confirmation of any sales of Registrable Securities, such indemnity with respect to the Prospectus shall not inure to the benefit of such Holder if the Person asserting such loss, claim, damage or liability and who purchased the Registrable Securities from such holder did not, at or prior to the confirmation of the sale of the Registrable Securities to such Person, receive a copy of the Prospectus as so amended or supplemented and the untrue statement or omission of a material fact contained in the Prospectus was corrected in the Prospectus as so amended or supplemented. 

(b) Indemnification by Holders of Registrable Securities. In connection with any Registration Statement in which the Holder is participating, the Holder will furnish to the Company in writing such information with respect to the name and address of such Holder and such other information as may be reasonably required for use in connection with any such Registration Statement or Prospectus and agrees to indemnity, to the full extent permitted by law, the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue statement of a material fact in the Registration Statement or Prospectus or any amendment thereof or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue or alleged untrue statement relates to any information with respect to such Holder so furnished in writing by such Holder specifically for inclusion in any Prospectus or Registration Statement; provided, however, that such Holder shall not be liable in any such case to the extent that prior to the filing of any such Registration Statement or Prospectus or amendment thereof or supplement thereto, such Holder has furnished in writing to the Company information expressly for use in such Registration Statement or Prospectus or any amendment thereof or supplement thereto which corrected or made not misleading information previously furnished to the Company. In no event shall the liability of any Selling Holder hereunder be greater in amount than the dollar amount of the proceeds received by such Selling Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. 

(c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder agrees to give prompt written notice to the indemnifying party after the receipt by such Person of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which such Person will claim indemnification or contribution pursuant to the provisions hereof and, unless in the judgment of counsel of such indemnified party a conflict of interest may exist between such indemnified party and the indemnifying party with respect to such claim, permit the indemnifying party to assume the defense of such claim. Whether or not such defense is assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it will not be obligated to pay the fees and expenses of more than one counsel (plus such local counsel, if any, as may be reasonably required in other jurisdictions) with respect to such claim, unless in the judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels. For the purposes of this Section 5(c), the term "conflict of interest" shall mean that there are one or more legal defenses available to the indemnified party that are different from or additional to those available to the indemnifying party or such other indemnified parties, as applicable, which different or additional defenses make joint representation inappropriate. 

(d) Contribution. If the indemnification from the indemnifying party provided for in this Section 5 is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 5(c), any reasonable legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. 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. 

(e) If indemnification is available under this Section 5, the indemnifying parties shall indemnity each indemnified party to the full extent provided in Sections 5(a) and (b) without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration provided for in this Section 5. 

6. Transfer of Rights. 

The rights to cause the Company to register Registrable Securities granted pursuant to the provisions hereof may be transferred or assigned by any Holder to a transferee or assignee; provided; however, that the transferee or assignee of such rights assumes the obligations of such transferor or assignor, as the case may be, hereunder. 

7. Amendment 

Except as otherwise provided herein, the provisions hereof may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of at least a majority of the aggregate number of the Registrable Securities then outstanding.

8.  Notices

All notices and other communications required or permitted hereunder shall be in writing,, addressed (a) if to Purchaser, as indicated on the Schedule of Purchasers, or at such other address as Purchaser shall have furnished to the Company in writing, or (b) if to the Company, at its address set forth at the end of this Agreement or at such other address as the Company shall have furnished to the Purchasers and each such other holder in writing.

9.  Severability

In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

10.  Titles and Subtitles

The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

11.  Entire Agreement

This Agreement (including all exhibits hereto) constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof.

12.   Counterparts

This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

[Remainder of Page Intentionally Left Blank]

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In Witness Whereof, the undersigned has executed this Grant of Immediate Registration Rights as of the date set forth above.

RECOM MANAGED SYSTEMS, INC.

/s/ Rodney Hildebrandt

By:  Rodney Hildebrandt

(Secretary and Chief Operating Officer)

Owner of Registration Rights (Subscriber):

Company Name:

Trellus Partners, LP

Company Address:

350 Madison Avenue – 9th Floor

NY, NY 10017

______________________ 

______________________ 

Company Telephone:

______________________ 

Company Fax:

______________________

Signature of Holder:

/s/ Adam Usdan

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