Document:

Exhibit
4.1

 

THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is made as of the 29th
day of March, 2004, by and between Omtool, Ltd., a Delaware corporation (the
“Company”), and the investors listed on the Schedule of Investors attached
hereto as Exhibit A (each an “Investor” and collectively, the
“Investors”).

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to sell to the Investors, and the
Investors desire to purchase from the Company, 300,000 shares (the “Shares”) of
common stock, par value $.01 per share (the “Common Stock”), at a price of
$12.00 per share, for a total purchase price of $3,600,000 pursuant to the
provisions of this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:

 

1.                                       Purchase
and Sale of Common Stock.

 

1.1                                 Issuance
and Sale of Common Stock. Subject to the terms and conditions of this
Agreement, each Investor agrees, severally and not jointly, to purchase at the
Closing (as defined below), and the Company agrees to sell and issue to each
Investor, that number of Shares of Common Stock set forth opposite such
Investor’s name on Exhibit A attached hereto at a purchase price of
$12.00 per share (the “Per Share Price”). 
The aggregate purchase price (the “Purchase Price”) to be paid by the
Investors to the Company to acquire the Common Stock shall be $3,600,000.

 

1.2                                 Closing.

 

(a)                                  The
purchase and sale of the Common Stock (the “Closing”) shall take place at the
offices of Broadband Capital Management LLC, 805 Third Avenue, New York, New
York 10022 at 10:00 a.m., on March 30, 2004, or at such other time
and place as the Company and the Investors mutually agree upon orally or in
writing.

 

(b)                                 At
the Closing, the Company shall deliver to the Investors, share certificates
representing the Shares, against payment of the Purchase Price by wire transfer
to the Company.

 

2.                                       Representations
and Warranties of the Company.  The
Company hereby represents and warrants to the Investors, except as set forth on
a Schedule of Exceptions to Representations and Warranties attached hereto
as Exhibit B (the “Schedule of Exceptions”), the following:

 

2.1                                 Subsidiaries.  The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity except as disclosed in the SEC Reports
(as hereinafter defined) (each, a “Subsidiary” and collectively, the
“Subsidiaries”).  Unless the context
requires otherwise, all references herein to the “Company” shall refer to the
Company and its Subsidiaries. The Company is not a party to any joint venture,
partnership, or similar arrangement.

 

2.2                                 Organization,
Good Standing, and Qualification. 
The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to carry on its business as now conducted.  The Subsidiaries are duly organized in their
respective jurisdictions of organization, validly existing and in good standing
in

 

 

such respective jurisdictions and each has the power and authority to
carry on its respective business as now conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure so to qualify would have a Material Adverse Effect (as
hereafter defined).

 

2.3                                 Capitalization.   The number of authorized, issued and outstanding
capital stock of the Company is set forth in Exhibit B.  Except as disclosed in Exhibit B, no
securities of the Company or any Subsidiary are entitled to preemptive or
similar rights, nor is any holder of securities of the Company or any Subsidiary
entitled to preemptive or similar rights arising out of any agreement or
understanding with the Company or any Subsidiary by virtue of any of the
Transaction Documents (defined hereinafter). 
Except as disclosed in Exhibit B, there are no outstanding options,
warrants, script rights to subscribe to, calls or commitments to issue, or
securities, except as a result of the purchase and sale of the Shares, or
rights or obligations convertible into or exchangeable for, or giving any
Person (as defined below) any right to subscribe for or acquire, any shares of
Common Stock, or contracts, commitments, understandings, or arrangements by
which the Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or exchangeable
into shares of Common Stock.  Except as
contemplated in the Registration Rights Agreement and as disclosed in Exhibit
B, the Company has not granted or agreed to grant any registration rights,
including piggyback rights, to any person or entity.

 

2.4                                 Authorization.  All corporate action on the part of the
Company necessary for the authorization, execution, and delivery of this
Agreement and the Registration Rights Agreement (as hereafter defined)
(collectively, the “Transaction Documents”), the performance of all obligations
of the Company hereunder and thereunder and the authorization, issuance and
delivery of the Shares, has been taken or will be taken prior to the Closing,
and the Transaction Documents constitute valid and legally binding obligations
of the Company, enforceable in accordance with their respective terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of creditors’
rights generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies, and
(iii) to the extent the indemnification provisions contained in the
Transaction Documents may be limited by applicable federal or state laws.

 

2.5                                 Valid
Issuance of Common Stock. The Common Stock being purchased by the Investors
hereunder, when issued, sold, and delivered in accordance with the terms hereof
for the consideration provided for herein, will be duly and validly issued,
fully paid and nonassessable, and, based in part upon the representations of
the Investors in this Agreement, will be issued in compliance with all
applicable federal and state securities laws.

 

2.6                                 Filings,
Consents and Approvals.  Assuming
the accuracy of the representations and warranties made by the Investors in
Section 3 hereof, neither the Company nor any Subsidiary is required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction
Documents, other than (i) a proper Form D in accordance with Regulation D
promulgated under the Securities Act of 1933, as amended (the “Act”), and
applicable Blue Sky filings, (ii) such matters contemplated by the Registration
Rights Agreement, (iii) a Notification Form: 
Listing of Additional Shares and (iv) in all other cases where the
failure to obtain such consent, waiver, authorization or order, or to give such
notice or make such filing or registration could not have or result in,
individually or in the aggregate, a material adverse effect (financial or otherwise)
on the business, property, assets or liabilities of the Company and its
Subsidiaries taken as a whole (“Material Adverse Effect”).

 

2.7                                 Litigation.  There is no action, suit, proceeding, claim
or investigation pending

 

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or, to the knowledge of the Company, currently threatened against the
Company which questions the validity of the Transaction Documents, or the right
of the Company to enter into any of them, or to consummate the transactions contemplated
hereby or thereby, or which would reasonably be expected to result, either
individually or in the aggregate, in any material adverse change (financial or
otherwise) in the business, property, assets or liabilities of the Company, nor
is the Company aware that there is any basis for the foregoing.  The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment, or decree of any court or
government agency or instrumentality specifically naming the Company.

 

2.8                                 Patents
and Trademarks.  The Company has
sufficient title and ownership of, or has otherwise acquired rights with
respect to, all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, inventions, proprietary rights, and processes
necessary for its business as now conducted without, to the Company’s
knowledge, any conflict with or infringement of the rights of others.  The Company has not received any
communications alleging that the Company has violated or, by conducting its business
would violate any of the patents, trademarks, service marks, trade names,
copyrights, or trade secrets, or other proprietary rights of any other person
or entity which the Company believes will result in a Material Adverse Effect.  The Company is not aware that any of its
employees or officers are obligated under any contract (including licenses,
covenants, or commitments of any nature) or other agreement, or subject to any
judgment, decree, or order of any court or administrative agency, that would
interfere with the use of such employee’s or officer’s commercially reasonable
efforts to promote the interests of the Company or that would conflict with the
Company’s business as conducted. 
Neither the carrying on of the Company’s business by the employees of
the Company, nor the conduct of the Company’s business, will, to the Company’s
knowledge, conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, any contract, covenant, or
instrument under which any of such employees or officers are now obligated.

 

2.9                                 Compliance
with Other Instruments.  The Company
is not in violation or default of any provisions of its Amended and Restated
Certificate of Incorporation or Amended and Restated By-laws or, to its
knowledge, of any instrument, judgment, order, writ, decree, mortgage,
indenture, lease, license or contract to which it is a party or by which it is
bound or, to its knowledge, of any provision of federal, state, or local
statute, rule, or regulation applicable to the Company, except as would not
reasonably be expected, singly or in the aggregate, to have a Material Adverse
Effect.  The execution, delivery, and
performance of the Transaction Documents and the consummation of the
transactions contemplated thereby will not result in any such violation or be
in conflict with or constitute, with or without the passage of time and giving
of notice, either a default under any such provision, instrument, judgment,
order, writ, decree or contract, or an event which results in the creation of
any lien, charge, or encumbrance upon any assets of the Company or the
suspension, revocation, impairment, forfeiture, or nonrenewal of any material
permit, license, authorization, or approval applicable to the Company, its business
or operations, or any of its assets or properties, except as would not
reasonably be expected, singly or in the aggregate, to have a Material Adverse
Effect.

 

2.10                           Permits.  The Company has all material governmental
franchises, permits, licenses, and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which would
reasonably be expected to have a Material Adverse Effect and believes it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted. 
The Company is not in default in any material respect under any of such
franchises, permits, licenses, or other similar authority.

 

2.11                           Compliance
with Laws.  The conduct of business
by the Company and each Subsidiary as presently and proposed to be conducted is
not subject to continuing oversight, supervision, regulation or examination by
any governmental official or body of the United States or any other

 

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jurisdiction wherein the Company or any Subsidiary conducts or proposes
to conduct such business, except such regulation as is applicable to commercial
enterprises generally.  Except as set
forth in the Disclosure Materials, neither the Company nor any of the
Subsidiaries has received any notice of any violation of or noncompliance with,
any federal, state, local or foreign laws, ordinances, regulations and orders
(including, without limitation, those relating to environmental protection, occupational
safety and health, federal securities laws, equal employment opportunity,
consumer protection, credit reporting, “truth-in-lending”, and warranties and
trade practices) applicable to its business or to the business of any
Subsidiary, the violation of, or noncompliance with, which would have a
Material Adverse Effect, and the Company knows of no facts or set of
circumstances which would reasonably be expected to give rise to such a notice.

 

2.12                           Disclosure.  This Agreement, and any other statements or
certificates made or delivered in connection herewith or therewith, when taken
together with the Disclosure Materials (as defined below), do not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements herein or therein not misleading.

 

2.13                           Title
to Property and Assets.  The Company
owns its property and assets free and clear of all mortgages, liens, loans,
pledges, security interests, claims, equitable interests, charges, and
encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair the Company’s ownership or use
of such property or assets.  With
respect to the property and assets it leases, the Company is in compliance in
all material respects with such leases and, to its knowledge, holds a valid
leasehold interest free of any liens, claims, or encumbrances.

 

2.14                           Insurance.  The Company has in full force and effect
fire and casualty insurance policies, with extended coverage, sufficient in
amount (subject to reasonable deductibles) to allow it to replace any of its
properties that might be damaged or destroyed, and the Company has insurance
against other hazards, risks, and liabilities to persons and property to the
extent and in the manner customary for companies in similar businesses
similarly situated.

 

2.15                           SEC
Reports; Financial Statements.  The
Company has filed all reports required to be filed by it under the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two
years preceding the date hereof (or such shorter period as the Company was
required by law to file such material) (the foregoing materials being
collectively referred to herein as the “SEC Reports” and, together with the
Schedule of Exceptions to this Agreement, the “Disclosure Materials”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  All material agreements
to which the Company is a party or to which the property or assets of the
Company are subject have been filed as exhibits to the SEC Reports to the
extent required.  The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments and the absence of certain footnotes.  Except as set forth on Exhibit B or except as 

 

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specifically disclosed in the Disclosure Materials, since
December 31, 2003  (a) there
has been no event, occurrence or development that has had or that could
reasonably be expected to have or result in a Material Adverse Effect, (b) the
Company has not incurred any material liabilities (contingent or otherwise)
other than (x) liabilities incurred in the ordinary course of business
consistent with past practice and (y) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (c) the Company has not altered
its method of accounting or the identity of its auditors and (d) the Company has
not declared or made any payment or distribution of cash or other property to
its stockholders (other than in compliance with existing Company stock or stock
option plans) with respect to its capital stock, or purchased or redeemed or
except as disclosed to the Investors, made or intends to make any agreements to
purchase or redeem) any shares of its capital stock.  Additionally, since the adoption of the Sarbanes-Oxley Act of
2002 (the “New Act”), the Company has complied in all material respects with the
laws, rules and regulation under the New Act.

 

2.16                           No
Conflict of Interest.  Except as
otherwise disclosed in the Disclosure Materials, the Company is not indebted in
excess of $25,000, directly or indirectly, to any of its executive officers or
directors other than in connection with expenses or advances of expenses
incurred in the ordinary course of business or relocation expenses of executive
officers and directors, nor is the Company contemplating such indebtedness as
of the date of this Agreement.  Except
as otherwise disclosed in the Disclosure Materials and except for transactions
on an arms length basis, none of said executive officers or directors is
directly or indirectly indebted in excess of $25,000 to the Company or to the
Company’s knowledge have any direct or indirect ownership interest in any firm
or corporation with which the Company is affiliated or with which the Company
has a business relationship or any firm or corporation which competes with the
Company, nor is the Company contemplating such indebtedness as of the date of
this Agreement, except that executive officers and directors may own stock in
publicly traded companies (not in excess of 1% of the outstanding capital stock
thereof) which may be affiliated, have a business relationship or compete with
the Company.

 

2.17                           S-3
Eligibility.  The Company is
currently eligible to register the resale of its common stock in a secondary
offering on a registration statement on Form S-3 under the Securities Act.

 

2.18                           Nasdaq
Listing.  The Company’s Common Stock
is registered pursuant to Section 12(g) of the Exchange Act and is listed
on the Nasdaq SmallCap Market and the Company has taken no action designed to,
or likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the Nasdaq Small Cap
Market, nor has the Company received, nor has it any reason to believe it will
receive, any notification that the Securities and Exchange Commission or Nasdaq
is currently contemplating terminating such registration or listing.

 

2.19                           Tax
Reporting.  The Company has made or
filed all federal, state and foreign income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject and which
are due (unless and only to the extent that the Company has set aside on its
books provisions reasonably adequate for the payment of all unpaid and
unreported taxes or has obtained an extension of the deadline for such filing)
and has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply.  To the Company’s
knowledge, there are no unpaid taxes in any material amount claimed to be due
by the taxing authority of any jurisdiction. 
The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any

 

5

 

foreign, federal, statue or local tax. 
To the Company’s knowledge, none of the Company’s tax returns is
presently being audited by any taxing authority.

 

3.                                       Representations
and Warranties of the Investors. 
Each of the Investors, severally and not jointly, hereby represents and
warrants that:

 

3.1                                 Authorization.  The execution of the Transaction Documents
to which such Investor is a party and the consummation of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of such Investor and that the Transaction Documents to which such Investor
is a party have been duly executed and delivered and constitute valid and
legally binding obligations of the Investor enforceable in accordance with
their terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors’ rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.

 

3.2                                 Purchase
Entirely for Own Account.  The
Common Stock to be purchased by the Investor will be acquired for investment
for the Investor’s own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof, and such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same.  Such Investor
does not have any contract, undertaking, agreement, or arrangement with any
person to sell, transfer, or grant participation to any person with respect to
any of the Shares.  The Investor
represents that it has full power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby.

 

3.3                                 Disclosure
of Information.  The Investor
acknowledges that it has received all the information that it has requested
relating to the Company and the purchase of the Common Stock.  The Investor further represents that it has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Common Stock.  The foregoing, however, does not limit or
modify the representations and warranties of the Company in Section 2 of
this Agreement or the right of the Investor to rely thereon.

 

3.4                                 Accredited
Investor.  The Investor is an
“accredited investor” within the meaning of Rule 501 of Regulation D of
the Securities and Exchange Commission (the “SEC”), as presently in effect and
the Investor is also knowledgeable, sophisticated and experienced in making,
and is qualified to make decisions with respect to the transactions
contemplated hereby.

 

3.5                                 Restricted
Securities.  Investor understands
that the Common Stock that it is purchasing is characterized as “restricted
securities” under the federal securities laws inasmuch as it is being acquired
from the Company in a transaction not involving a public offering, and that
under such laws and applicable regulations such securities may be resold
without registration under the Act, only in certain limited circumstances.  In this connection, the Investor represents
that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.

 

3.6                                 Legends.  It is understood that the certificates
evidencing the Common Stock shall bear a legend, reading substantially as
follows:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE
SECURITIES LAWS OF ANY STATE AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AS SET FORTH IN THIS CERTIFICATE.  THE
SECURITIES REPRESENTED

 

6

 

HEREBY MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED,
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT THE
PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.”

 

3.7                                 Confidential
Information.  At all times during
the Company’s offering of the Shares, the Investor has maintained in confidence
all non-public information regarding the Company received by the Investor from
the Company or its agents, has not traded in the Company’s securities on the
basis of any non-public information.

 

3.8                                 Agent
Appointment.  The Investor hereby
appoints Broadband Capital Management LLC to act as its agent on its behalf for
the limited purposes described in the Registration Rights Agreement.

 

3.9                                 Investor
Questionnaire.  The Investor
covenants to execute and deliver to the Company at or promptly following the
Closing an investor questionnaire supplied by the Company to facilitate the
registration of the Shares pursuant to the Registration Rights Agreement and
the information contained therein shall be true and correct.  

 

4.                                       Conditions
of the Investors’ Obligations at Closing. 
The obligations of the Investors under subsection 1.1(a) of this
Agreement is subject to the fulfillment on or before the Closing of each of the
following conditions:

 

4.1                                 Representations
and Warranties.  The representations
and warranties of the Company contained in Section 2 hereof shall be true
on and as of the Closing with the same effect as though such representations
and warranties had been made on and as of the date of such Closing.

 

4.2                                 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.

 

4.3                                 Compliance
Certificate.  The President of the
Company shall deliver to the Investors, at the Closing, a certificate
certifying that the conditions specified in Sections 4.1  and
4.2  have
been fulfilled.

 

4.4                                 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 Investors and counsel to the Investors, and they
shall have received all such counterpart original and certified or other copies
of such documents as they may reasonably request.

 

4.5                                 Opinion
of Company Counsel.  The Investors
shall have received from Testa Hurwitz & Thibeault, LLP an opinion, dated
as of the Closing, substantially in form attached hereto as Exhibit C.

 

4.6                                 Good
Standing Certificates.  The Company
shall have delivered to the Investors, dated as of a date within five (5)
business days of the Closing, a certificate issued by the Secretary of

 

7

 

State of Delaware to the effect that it is legally existing and in good
standing.

 

4.7                                 Secretary’s
Certificate.  The Company shall have
delivered to the Investors a certificate executed by the Secretary of the
Company dated as of the Closing certifying the resolutions adopted by the
Company’s Board of Directors relating to the transactions contemplated by this
Agreement.

 

4.8                                 Delivery
of Common Stock. The Company shall have delivered the Common Stock to the
Investors, as specified in Section 1.

 

4.9                                 Registration
Rights Agreement.  The Company and
the Investors, excluding the Investors listed on Exhibit E (the
“Excluded Investors”), shall have entered into a registration rights agreement
dated of even date herewith, a form of which is attached hereto as Exhibit D
(the “Registration Rights Agreement”).

 

4.10                           Other
Payments.  Concurrent with the
Closing, the Company shall issue the Broadband Compensation (as such term is
defined in Section 7.7 hereto).

 

5.                                       Conditions
of the Company’s Obligations at Closing. 
The obligations of the Company to the Investors under this Agreement is
subject to the fulfillment on or before any Closing of each of the following
conditions by the Investors:

 

5.1                                 Representations
and Warranties.  The representations
and warranties of the Investors contained in Section 3 shall be true on
and as of such Closing with the same effect as though such representations and
warranties had been made on and as of such Closing.

 

5.2                                 Payment
of Purchase Price.  The Investors
shall have delivered the purchase price specified in Section 1.2.

 

5.3                                 Registration
Rights Agreement.  The Company and
the Investors, other than the Excluded Investors, shall have entered into the
Registration Rights Agreement.

 

6.                                       Indemnification.  The Company agrees to indemnify and hold
harmless each of the Investors and their respective affiliates against any
investigations, proceedings, claims or actions and for any expenses, damages,
liabilities or losses (joint or several) that arise out of or are based upon
any breach of any representation, warranty, agreement, obligation or covenant
of the Company contained herein.

 

7.                                       Miscellaneous.

 

7.1                                 Survival
of Representations and Warranties. 
All of the representations and warranties made herein shall survive the
execution and delivery of this Agreement for a period of eighteen (18) months
following the Closing and be of no further force or effect as of such date,
except that the representations and warranties set forth in Sections 2.3, 2.4
and 2.6 shall survive forever and shall not terminate.  The Investors are entitled to rely, and the
parties hereby acknowledge that the Investors have so relied, upon the truth,
accuracy and completeness of each of the representations and warranties of the
Company contained herein, irrespective of any independent investigation made by
Investors.  The Company is entitled to
rely, and the parties hereby acknowledge that the Company has so relied, upon
the truth, accuracy and completeness of each of the representations and
warranties of the Investors contained herein, irrespective of any independent
investigation made by the Company.

 

8

 

7.2                                 Successors
and Assigns.  Except as otherwise
provided in this Agreement, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement; provided, however,
that the right of the Investors to purchase the Shares shall not be assignable
without the prior written consent of the Company.  Notwithstanding the foregoing but subject to compliance with
applicable securities laws, the parties agree that following the Closing, the
Investors may assign their rights and obligations under this Agreement to any
of their affiliates or to any successors to the Investors or such affiliates.

 

7.3                                 Governing
Law.  This Agreement shall be
governed by and construed under the laws of the State of New York as applied to
agreements among New York residents entered into and to be performed entirely
within New York. The Company (1) agrees that any legal suit, action or
proceeding arising out of or relating to this Agreement shall be instituted
exclusively in New York State Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York, (2) waives
any objection which the Company may have now or hereafter to the venue of any
such suit, action or proceeding, and (3) irrevocably consents to the
jurisdiction of the New York State Supreme Court, County of New York, and the
United States District Court for the Southern District of New York in any such
suit, action or proceeding.  The Company
further agrees to accept and acknowledge service of any and all process which
may be served in any such suit, action or proceeding in the New York State
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York and agrees that service of process upon the
Company mailed by certified mail to the Company’s address shall be deemed in
every respect effective service of process upon the Company, in any such suit,
action or proceeding.  THE PARTIES
HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR
AGREEMENT CONTEMPLATED HEREBY.

 

7.4                                 Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.

 

7.5                                 Titles
and Subtitles.  The titles and
subtitles used in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.

 

7.6                                 Notices.  Unless otherwise provided, any notice,
authorization, request or demand required or permitted to be given under this
Agreement shall be given in writing and shall be deemed effectively given upon
personal delivery to the party to be notified or three (3) days following
deposit with the United States Post Office, by registered or certified mail,
postage prepaid, or two days after it is sent by an overnight delivery service,
or when sent by facsimile with machine confirmation of delivery addressed as
follows:

 

If to the Investors to
such address as is set forth on Exhibit A annexed hereto

If to Company, to:

 

Omtool, Ltd.

8A Industrial Way

Salem, NH 03079

Telecopier No.: 603-890-1925

Attention: Chairman

 

9

 

With a copy to:

 

Testa Hurwitz & Thibeault, LLP

125 High Street

Boston, MA 02110

Telecopier No.:
617-248-7100

Attention:  John A. Meltaus, Esq.

 

Any party may change its address for such communications by giving
notice thereof to the other parties in conformity with this Section.

 

7.7                                 Finder’s
Fee.  Each party represents that it
neither is nor will be obligated for any finders’ or brokers’ fee or commission
in connection with this transaction; provided, however, that the Company is
obligated to pay certain compensation upon consummation of the transactions
contemplated hereby to Broadband Capital Management LLC (“Broadband
Compensation”) pursuant to that certain engagement agreement dated
March 26, 2004.  The Broadband
Compensation shall consist of the issuance of 25,500 shares of Common Stock
(“Advisor Stock”) and warrants to purchase 25,500 shares of Common Stock at an
exercise price of $12.00 per share (“Advisor Warrants”).

 

7.8                                 Transaction
Expenses; Enforcement of Transaction Documents.  The Company and each Investor shall pay their respective costs
and expenses incurred with respect to the negotiation, execution, delivery
and performance of this Agreement. 
If any action at law or in equity is necessary to enforce or interpret
the terms of the Transaction Documents, the prevailing party shall be entitled
to reasonable attorney’s fees, costs, and necessary disbursements in addition
to any other relief to which such party may be entitled.

 

7.9                                 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 Investors holding a majority of the Shares; provided, however, that
this Agreement may not be amended and the observance of any term hereunder may
not be waived with respect to any Investor without the written consent of such
Investor unless such amendment or waiver applies to all Investors in the same
fashion.  Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding, each
future holder of all such securities, and the Company.

 

7.10                           Severability.  If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.

 

7.11                           Entire
Agreement.  This Agreement and the
documents referred to herein constitute the entire agreement among the parties
and no party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.

 

7.12                           Independent
Nature of Investors’ Obligations and Rights.  The obligations of each Investor under any Transaction Document
are several and not joint with the obligations of any other Investor, and no
Investor shall be responsible in any way for the performance of the obligations
of any other Investor under any Transaction Document.  Nothing contained herein or in any Transaction Document, and no
action taken by any Investor pursuant thereto, shall be deemed to constitute
the

 

10

 

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 by the Transaction Document.  Each Investor shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose.  Each Investor has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents.

 

7.13                           Excluded
Investors.  Notwithstanding anything
to the contrary set forth in the Transaction Documents, neither the Excluded
Investors (nor any and all of their direct or indirect assigns (including
without limitation affiliated assignees), successors (including without
limitation successors to affiliated assignees), heirs, executors,
administrators, or transferees), nor any of the Shares acquired hereunder by
the Excluded Investors shall be entitled to the benefits of the Registration
Rights Agreement, nor any other registration rights or related notice rights,
nor the benefit of any representation, warranty, condition, covenant,
obligation or legal opinion provided hereunder or in connection herewith or the
transactions contemplated hereby, to the extent relating to the Registration
Rights Agreement or the matters contemplated thereby.

 

11

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

 

	
  OMTOOL, LTD.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Robert Voelk

  	
   

  
	
   

  	
  Name:

  	
  Robert Voelk

  
	
   

  	
  Title:

  	
  President

  
				

 

 

	
  “INVESTORS”

  
	
   

  
	
  The Doug Levine 2002
  Qualified Annuity Trust

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Doug Levine

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Doug Levine

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  DKR Sound Shore Strategic Holding Fund Ltd.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Barbara Burger

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Barbara Burger

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Alternate Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  DKR Sound Shore Oasis Holding Fund Ltd.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Barbara Burger

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Barbara Burger

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Alternate Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Fraydon Manocherian

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Fraydon Manocherian

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Fraydon Manocherian

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Self

  	
   

  
					

 

SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT

 

 

	
  /s/ Michael Rapoport

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Michael Rapoport

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Jeffrey Meshel

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Jeffrey Meshel

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Corsair Capital
  Partners, L.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jay Petschet

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Jay Petschet

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Managing Member of G.P.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Corsair Capital
  Partners 700, L.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jay Petschet

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Jay Petschet

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Managing Member of G.P.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Corsair Capital
  Investors, Ltd.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jay Petschet

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Jay Petschet

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Managing Member of I.M.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Alexander Enterprise
  Holdings Corp.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jared Bluestein

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Jared Bluestein

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Director

  	
   

  
					

 

 

	
  Selwyn Partners LP

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Victor M. Dandridges

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Victor M. Dandridges

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  General Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  The FM Grandchildren’s
  Trust

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Greg Mandcherian

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Greg Mandcherian

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Trinad Capital LP

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Robert Ellin

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Robert Ellin

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Managing Member

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Kabuki Partners ADP,
  G.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Greg Mandcherian

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Greg Mandcherian

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Leviticus Partners L.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Adam M. Hutt

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Adam M. Hutt

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  President, AMH Equity, The General

  Partner of Leviticus Partners LP

  	
   

  
								

 

 

EXHIBIT
A

 

SCHEDULE OF
INVESTORS

 

	
  Investor

  Name and Address

  	
   

  	
  Number of

  Shares

  of Common

  Stock Purchased

  	
   

  	
  Per Share

  Purchase Price

  	
   

  	
  Portion of

  Purchase Price

  Payable

  	
   

  
	
  The Doug Levine 2002 Qualified Annuity
  Trust

  2760 North Bay Road

  Miami Beach, FL 33140

  	
   

  	
  41,667

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  500,004.00

  	
   

  
	
  DKR Soundshore Strategic Holding Fund Ltd.

  c/o DKR Management Company Ind.

  1281 East Main Street

  Stamford, CT 06902

  	
   

  	
  6,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  72,000.00

  	
   

  
	
  DKR Soundshore Oasis Holding Fund Ltd.

  c/o DKR Management Company Ind.

  1281 East Main Street

  Stamford, CT 06902

  	
   

  	
  34,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  408,000.00

  	
   

  
	
  Fraydon Manocherian

  46 Westchester Avenue

  Pound Ridge, NY 10576

  	
   

  	
  20,833

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  249,996.00

  	
   

  
	
  Michael Rapoport

  c/o Broadband Capital Management LLC

  New York, NY 10022

  	
   

  	
  25,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  300,000.00

  	
   

  
	
  Jeffrey Meshel

  Mercury Capital

  317 Madison Avenue

  New York, NY 10017

  	
   

  	
  10,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  120,000.00

  	
   

  
	
  Corsair Capital Investors Ltd.

  350 Madison Avenue

  New York, NY 10017

  	
   

  	
  4,500

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  54,000.00

  	
   

  
	
  Corsair Capital Partners 700 L.P.

  350 Madison Avenue

  New York, NY 10017

  	
   

  	
  1,500

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  18,000.00

  	
   

  
	
  Corsair Capital Partners, L.P.

  350 Madison Avenue

  New York, NY 10017

  	
   

  	
  34,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  408,000.00

  	
   

  
	
  Alexander Enterprise Holdings Corp.

  801 Brickness Avenue

  Suite 2580

  Miami, FL 33131

  	
   

  	
  20,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  240,000.00

  	
   

  
	
  Selwyn Partners LP

  315 Old Ivy Way, Suite 302

  Charlottesville, VA 22903

  	
   

  	
  10,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  120,000.00

  	
   

  
	
  The FM Grandchildren’s Trust

  46 Westchester Avenue

  Pond Ridge, NY 10576

  	
   

  	
  12,500

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  150,000.00

  	
   

  
	
  Trinad Capital LP

  153 E. 53rd Street, 48th Floor

  New York, NY 10022

  	
   

  	
  10,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  120,000.00

  	
   

  
	
  Kaburi Partners ADP, G.P.

  46 Westchester Avenue

  Pound Ridge, NY 10576

  	
   

  	
  50,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  600,000.00

  	
   

  
	
  Leviticus Partners LP

  30 Park Avenue, Suite 12F

  New York, NY 10016

  	
   

  	
  20,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  240,000.00

  	
   

  
	
  TOTAL

  	
   

  	
  300,000

  	
   

  	
   

  	
   

  	
  $

  	
  3,600,000.00

  	
   

  

 

 

EXHIBIT
B

 

SCHEDULE OF
EXCEPTIONS

 

2.3                                 Capitalization.

 

As of the date hereof, the authorized capital stock of the Company
consists of 2,000,000 shares of preferred stock, $.01 par value, and 35,000,000
shares of common stock, $.01 par value.

 

As of March 29, 2004, there were 1,757,546 shares of common stock
issued and outstanding, 108,189 shares of common stock held in treasury, and no
shares of preferred stock issued and outstanding.

 

As of March 29, 2004, options to purchase approximately 240,158
shares of common stock were outstanding under the Company’s stock and stock
option plans.

 

The Company has agreed to issue 25,500 shares of common stock and a
warrant to purchase 25,500 shares of common stock to Broadband Capital
Management LLC.

 

The Company has granted certain registration rights pursuant to the
Series B Preferred Stock Purchase Agreement dated as of July 22, 1996.

 

The Company’s board of directors has authorized a two-for-one stock
split in the form of a stock dividend on the common stock.

 

 

EXHIBIT
C

 

FORM
OF LEGAL OPINION

 

 

EXHIBIT
D

 

REGISTRATION
RIGHTS AGREEMENT

 

 

EXHIBIT
E

 

EXCLUDED
INVESTORS

 

Jeffrey Meshel

 

Michael RappExhibit
4.2

 

REGISTRATION
RIGHTS AGREEMENT

 

This Registration
Rights Agreement  (this “Agreement”) is made and entered into as of
March 30, 2004, by and among Omtool, Ltd., a Delaware corporation (the “Company”),
the purchasers who are signatories hereto (each such purchaser, a “Purchaser”
and collectively, the “Purchasers”), and Broadband Capital
Management, LLC (the “Holder Agent”).

 

WHEREAS, pursuant
to that certain Stock Purchase Agreement among the Purchasers and the Company
(the “Stock
Purchase Agreement”), the Company has agreed, upon the terms and
subject to the conditions of the Stock Purchase Agreement to issue and sell to
the Purchasers 265,000 shares of the Company’s Common Stock and to issue to the
Holder Agent up to 25,500 shares of the Company’s Common Stock (“Holder Agent
Stock”) and warrants to purchase up to 25,500 shares of the
Company’s Common Stock (“Holder Agent Warrants”);

 

WHEREAS, to induce
the Purchasers to execute and deliver the Stock Purchase Agreement, the Company
has agreed to provide certain registration rights with respect to the Common
Stock on the terms and conditions provided herein; and

 

WHEREAS, the
Company has also agreed to provide certain registration rights with respect to
the Holder Agent Stock and Holder Agent Warrant Shares on the terms and
conditions provided herein.

 

NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                       Definitions. 
Capitalized terms used and not otherwise defined herein that are defined
in the Stock Purchase Agreement shall have the meanings given such terms in the
Stock Purchase Agreement.  As used in
this Agreement, the following terms shall have the following meanings:

 

“Advice”
shall have the meaning set forth in Section 6(d).

 

“Closing”
means the Closing as defined in the Stock Purchase Agreement.

 

“Commission”
means the Securities and Exchange Commission.

 

“Common Stock”
means the common stock of the Company, $.01 par value per share.

 

“Effectiveness
Date” means, with respect to the initial Registration Statement
required to be filed hereunder, the earlier of (a) the 120th
day following the Closing, and (b) the tenth Trading Day following the
date on which the Company is notified by the Commission that the Registration
Statement will not be reviewed or is no longer subject to further review and
comments.

 

“Effectiveness
Period” shall have the meaning set forth in Section 2(a).

 

“Event”
shall have the meaning set fort in Section 2(b).

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

“Filing Date”
means, with respect to the Registration Statement required to be filed
hereunder, the 30th day following the Closing.

 

“Holder”
or “Holders”
means the holder or holders, as the case may be, from time to time of
Registrable Securities.

 

 

“Holder Agent”
means Broadband Capital Management, LLC, 805 Third Avenue, New York, NY 10022,
which shall act as the agent of all Holders for purposes set forth herein.

 

“Holder Agent Stock” as defined in the Preamble.

 

“Holder Agent Warrants” as defined in the Preamble.

 

“Holder Agent Warrant Shares” means the shares of Common Stock
issuable to Holder Agent upon exercise of the Holder Agent Warrants.

 

“Indemnified
Party” shall have the meaning set forth in Section 5(c).

 

“Indemnifying
Party” shall have the meaning set forth in Section 5(c).

 

“Losses”
shall have the meaning set forth in Section 5(a).

 

 “Proceeding” means an action, claim, suit,
investigation or proceeding (including, without limitation, an investigation or
partial proceeding, such as a deposition), whether commenced or threatened.

 

“Prospectus”
means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

“Purchaser
Shares” means the shares of Common Stock issued to the Purchasers
pursuant to the Stock Purchase Agreement (for purposes of clarity, Purchaser
Shares does not include the shares of Common Stock issued to the Excluded
Investors pursuant to the Stock Purchase Agreement).

 

“Registrable
Securities” means all of the Shares, together with any shares of
Common Stock issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the foregoing.

 

“Registration
Statement” means the registration statement required to be filed
hereunder, including (in each case) the Prospectus, amendments and supplements
to the registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in the registration statement.

 

“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.

 

“Rule 415”
means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.

 

2

 

“Rule 424”
means Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Shares”
means the Purchaser Shares, the Holder Agent Stock and the Holder Agent Warrant
Shares.

 

“Trading Day”
means a day in which the United States securities markets are open for trading.

 

2.                                       Registration.

 

(a)                                  On or prior to the Filing Date, the
Company shall prepare and file with the Commission the Registration Statement
covering the resale of all of the Registrable Securities for an offering to be
made on a continuous basis pursuant to Rule 415.  The Registration Statement required hereunder shall be on Form
S-3 (except if the Company is not then eligible to register for resale its
common stock on Form S-3, in which case the Registration Statement shall be on
another appropriate form in accordance herewith).  Subject to the terms of this Agreement, the Company shall use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event not later than the Effectiveness Date, and,
shall use its commercially reasonable efforts to maintain the Registration
Statement current and effective under the Securities Act until the earlier of
(i) March 30, 2006, (ii) the date when all Purchaser Shares covered
by the Registration Statement have been sold or may be sold within the volume
restrictions set forth in Rule 144(e) in any three month period or
(iii) such times as all Purchaser Shares have been sold pursuant to a
Registration Statement (the “Effectiveness Period”).

 

(b)                                 Notwithstanding anything contained
herein, if: (i) a Registration Statement is not filed on or prior to the
Filing Date, or (ii) a Registration Statement filed or required to be
filed hereunder is not declared effective by the Commission on or before the
Effectiveness Date, or (iii) after a Registration Statement is first
declared effective by the Commission, it ceases for any reason to remain
continuously effective as to all Purchaser Shares for which it is required to
be effective, or the Holders are not permitted to utilize the Prospectus
therein to resell such Purchaser Shares, for in any such case 15 consecutive
Trading Days but no more than an aggregate of 60 calendar days during any
12-month period (which need not be consecutive Trading Days) (any such failure
or breach being referred to as an “Event,” and for purposes of clause
(i) or (ii) the date on which such Event occurs, or for purposes of
clause (iii) the date on which such 15- or 60-day period, as applicable,
is exceeded being referred to as “Event Date”), then in addition to any other
rights the Holders may have hereunder or under applicable law: (x) on each
such Event Date the Company shall pay to each Holder an amount in cash, as
liquidated damages and not as a penalty, equal to 1.0% of the aggregate
purchase price paid by such Holder pursuant to the Stock Purchase Agreement for
any Registrable Securities then held by such Holder; and (y) on each
monthly anniversary of each such Event Date (if the applicable Event shall not
have been cured by such date) until the applicable Event is cured, the Company
shall pay to each Holder an amount in cash, as liquidated damages and not as a
penalty, equal to 1.0% of the aggregate purchase price paid by such Holder
pursuant to the Stock Purchase Agreement for any Registrable Securities then
held by such Holder; provided that in no event shall the aggregate amount of
cash required to be paid as liquidated damages pursuant to this
Section 2(b) exceed 14% of the aggregate purchase price paid by the Holders
in the event that the Registration Statement is filed on or prior to the Filing
Date or 17% of the aggregate purchase price paid in the event that the
Registration Statement is not filed on or prior to the Filing Date. If the
Company fails to pay any liquidated damages pursuant to this Section in
full within seven days after the date payable, the Company will pay interest
thereon at a rate of 18% per annum (or such lesser

 

3

 

maximum amount that is permitted to be paid by applicable law) to the
Holder, accruing daily from the date such liquidated damages are due until such
amounts, plus all such interest thereon, are paid in full.  The liquidated damages pursuant to the terms
hereof shall apply on a daily pro-rata basis for any portion of a month prior
to the cure of an Event.  The remedies
of the Holder’s for the Company’s breaches contained in this Section 2(b)
shall be subject to and limited by the liquidated damages provisions of this
Section.  The Company’s obligation to
pay liquidated damages for an Event set forth (x) in subsection (i) above
shall be subject to the timely receipt by the Company of an investor
questionnaire that is referenced in the Stock Purchase Agreement and (y) in
subsection (ii) or (iii) above shall be subject to the timely receipt of
all reasonably necessary information from Holders which the Company shall
request in writing to the Holders.

 

(c)                                  The Holders will promptly furnish the
Company in writing all information reasonably requested by the Company for use
in connection with the preparation of the Registration Statement (and any
amendments and supplements thereto) and in obtaining and maintaining the
effectiveness of the Registration Statement.

 

3.                                       Registration Procedures

 

In connection with
the Company’s registration obligations hereunder, the Company shall:

 

(a)                                  Not less than three business days prior
to the filing of the Registration Statement or any related Prospectus or any
amendment or supplement thereto, the Company shall, upon request
(i) furnish to the Holder Agent copies of all such documents proposed to
be filed (including documents incorporated or deemed incorporated by reference
to the extent requested by the Holder Agent) which documents will be subject to
the review of the Holder Agent, if any, and (ii) cause its officers and
directors, counsel and independent certified public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of respective
counsel.  The Company shall not file the
Registration Statement or any such Prospectus or any amendments or supplements
thereto in the event that an objection, which shall be reasonable and made in
good faith, to such filing is made by the Holder Agent, provided that the
Company is notified of such objection in writing no later than three Trading
Days after the Holder Agent have been so furnished copies of such documents.

 

(b)                                 Use commercial reasonable efforts to
(i)  prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement current and effective as to the applicable Registrable Securities for
the Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto and, upon request, provide the Holder Agent true and complete copies of
all correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of
the Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.

 

(c)                                  Notify the Holder Agent as promptly as
reasonably possible and (if requested by the Holder Agent) confirm such notice
in writing promptly following the day (i) when a Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed;

 

4

 

and (ii) when the Commission notifies the Company whether there
will be a “review” of the Registration Statement and whenever the Commission
comments in writing on the Registration Statement (the Company shall upon
request provide true and complete copies thereof and all written responses
thereto to the Holder Agent.

 

(d)                                 Notify the Holder Agent and the Holders
as promptly as reasonably possible and (if requested by the Holder Agent or any
such Holder) confirm such notice in writing promptly following the day (i) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any
other Federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to
the Registration Statement or Prospectus or for additional information; (iii) of
the issuance by the Commission or any other Federal or state governmental
authority of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation
of any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

 

(e)                                  Use commercially reasonable efforts to
avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order
suspending the effectiveness of the Registration Statement at the earliest
practicable moment or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as promptly as practicable.

 

(f)                                    Furnish to each Holder, without charge,
at least one conformed copy of the Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference to the extent
requested by such Holder, and all exhibits to the extent requested by such Holder
(including those previously furnished or incorporated by reference) promptly
after the filing of such documents with the Commission.

 

(g)                                 Subject to the terms of
Section 4(ii), promptly deliver to each Holder, without charge, as many
copies of the Prospectus or Prospectuses (including each form of prospectus)
and each amendment or supplement thereto as such Holder may reasonably request
in connection with resales by the Holder of Registrable Securities.  Subject to the terms of this Agreement, the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto, except after the giving on any applicable
notice pursuant to Section 3(c) and/or 3(d).

 

(h)                                 Prior to any resale of Registrable
Securities by a Holder, use its commercially reasonable efforts to register or
qualify or cooperate with the selling Holders in connection with the
registration or qualification (or exemption from the registration or
qualification) of such Registrable Securities for the resale by the Holder
under the securities or Blue Sky laws of such jurisdictions within the United
States as any Holder reasonably requests in writing and as reasonably
acceptable to the Company, to keep each registration or qualification (or
exemption therefrom) effective during the

 

5

 

Effectiveness Period and to do any and all other acts or things
reasonably necessary to enable the disposition in such jurisdictions of the
Registrable Securities covered by the Registration Statement; provided, that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, consent to service of process
in any jurisdiction in which it has not so consented, subject the Company to
any material tax in any such jurisdiction where it is not then so subject or
file a general consent to service of process in any such jurisdiction.

 

(i)                                     If requested by the Holders, cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a purchaser
pursuant to the Registration Statement, which certificates shall be free, to
the extent permitted by the Securities Act and the Stock Purchase Agreement, of
all restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any such Holders may
request.

 

(j)                                     Upon the occurrence of any event
contemplated by Section 3(d), as promptly as reasonably possible, prepare
a supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. If the Company notifies the Holder
Agent and the Holders in accordance with clauses (ii) through (v) of
Section 3(d) above to suspend the use of any Prospectus until the
requisite changes to such Prospectus have been made, then the Holders shall
suspend use of such Prospectus.  The Company
will use its best efforts to ensure that the use of the Prospectus may be
resumed as promptly as is practicable. 
The Company shall be entitled to exercise its right under this
Section 3(j) to suspend the availability of a Registration Statement
and Prospectus, subject to the payment of liquidated damages pursuant to
Section 2(b) as set forth in such section.

 

(k)                                  Comply with all applicable rules and
regulations of the Commission.

 

(l)                                     The Company may require each Holder to
furnish to the Company a certified statement as to the number of shares of
Common Stock beneficially owned by such Holder and, if required by the
Commission, the person thereof that has voting and dispositive control over
such Common Stock. During any periods that the Company is unable to meet its
obligations hereunder with respect to the registration of the Registrable
Securities solely because any Holder fails to furnish such information within
three Trading Days of the Company’s request, any liquidated damages that are
accruing at such time shall be tolled and any Event that may otherwise occur
solely because of such delay shall be suspended, until three Trading Days after
such information is delivered to the Company.

 

4.                                       Registration Expenses. 
All fees and expenses incident to the performance of or compliance with
this Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to the Registration Statement.  The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration
and filing fees (including, without limitation, fees and expenses (A) with
respect to filings required to be made by the Company with the trading market
on which the Common Stock is then listed for trading, and (B) in
compliance by the Company with applicable state securities or Blue Sky laws),
(ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of copying the
Prospectuses (it being acknowledged that the Company shall not be required to
print the Prospectuses), (iii) messenger, telephone and delivery expenses
of the Company, (iv) fees and disbursements of counsel for the Company,
(v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees

 

6

 

and expenses of all other persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement.  In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.

 

5.                                       Indemnification

 

(a)                                  Indemnification by the Company. 
The Company shall, notwithstanding any termination of this Agreement,
indemnify and hold harmless each Holder, the officers, directors, agents and
employees of each of them, each person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of each such
controlling person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”),
as determined by a court of competent jurisdiction in a final judgment not
subject to appeal or review arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of Prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (i) such untrue statements or omissions or alleged untrue statements
or omissions are based upon information regarding such Holder furnished in
writing to the Company by such Holder for use therein, or to the extent that
such information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities or (ii) in the case of an
occurrence of an event of the type specified in Section 3(d)(ii)-(v), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the prospectus is outdated or defective
and prior to the receipt by such Holder of the Advice contemplated in
Section 6(d).  The Company shall
notify the Holders promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.

 

(b)                                 Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
persons, to the fullest extent permitted by applicable law, from and against
any and all Losses, arising out of or based upon: (x) such Holder’s
failure to comply with the Prospectus delivery requirements of the Securities
Act or (y) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus, or any form of
Prospectus, or in any amendment or supplement thereto or in any preliminary
Prospectus, or arising out of or based upon any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading (i) to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
so furnished in writing by such Holder to the Company specifically for
inclusion in the Registration Statement or such Prospectus or (ii) to the
extent that (1) such untrue statements or omissions are based upon
information regarding such Holder furnished in writing to the Company by such
Holder for use specifically therein, or to the extent that such information
relates to such Holder or such Holder’s proposed method of distribution of
Registrable Securities or (2) in the case of an occurrence of an event of
the type specified in Section 3(d)(ii)-(v), the use by such Holder of an
outdated or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the receipt
by

 

7

 

such Holder of the Advice contemplated in Section 6(d).  In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.

 

(c)                                  Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall have the right to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have prejudiced the Indemnifying Party.

 

An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties unless:  (1) the Indemnifying Party has agreed
in writing to pay such fees and expenses; (2) the Indemnifying Party shall
have failed promptly to assume the defense of such Proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof and the reasonable
fees and expenses of one separate counsel shall be at the expense of the
Indemnifying Party).  The Indemnifying
Party shall not be liable for any settlement of any such Proceeding effected
without its written consent, which consent for all Indemnified Parties shall
not be unreasonably withheld.  No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

 

Subject to the
terms of this Agreement, all reasonable fees and expenses of the Indemnified
Party (including reasonable fees and expenses to the extent incurred in
connection with defending such Proceeding in a manner not inconsistent with
this Section) shall be paid to the Indemnified Party, as incurred, within ten
Trading Days of written notice thereof to the Indemnifying Party; provided,
that the Indemnified Party shall promptly reimburse the Indemnifying Party for
that portion of such fees and expenses applicable to such actions for which
such Indemnified Party is not entitled to indemnification hereunder, determined
based upon the relative faults of the parties.

 

(d)                                 Contribution. 
If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable
considerations.  The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to 

 

8

 

information supplied by, such Indemnifying Party or Indemnified Party,
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission.  The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the limitations set
forth in this Agreement, any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party
in accordance with its terms.

 

The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 5(d) were determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.  Notwithstanding the provisions of this
Section 5(d), no Holder shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the proceeds actually received by
such Holder from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, except in the case of fraud by such Holder.

 

The indemnity and
contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

 

5A.                             Rule
144 Reporting.  With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell Purchaser Shares without registration , for a period of
two years from the Closing, the Company agrees to use its commercially
reasonable efforts to:

 

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

 

(b) file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act; and

 

(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144, (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 in availing any Holder of any rule
or regulation of the SEC which permits the selling of any such securities
without registration.

 

6.                                       Miscellaneous

 

(a)                                  Remedies.  In the event
of a breach by the Company or by a Holder, of any of their obligations under
this Agreement, each Holder or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement.  The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of
any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.

 

(b)                                 No Piggyback on Registrations. 
Except as consented to by the Holder Agent, neither the Company nor any
of its security holders (other than the Holders in such capacity pursuant

 

9

 

hereto) may include securities of the Company in a Registration
Statement filed pursuant to this Agreement other than the Registrable
Securities. The Company shall not file any other registration statement other
than a registration statement on Form S-4 or Form S-8 until after the
Effectiveness Date.

 

(c)                                  Compliance.  Each Holder
covenants and agrees that it will comply with the Prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement and shall only
sell or distribute Shares in those jurisdictions in which such Holder is
authorized to do so.

 

(d)                                 Discontinued Disposition. 
Each Holder agrees by its acquisition of such Registrable Securities
that, upon receipt of a notice from the Company of the occurrence of any event
of the kind described in Section 3(c) and/or 3(d), such Holder will
forthwith discontinue disposition of such Registrable Securities under the Registration
Statement until such Holder’s receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement or until it is advised in
writing (the “Advice”) by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.  The Company may provide appropriate stop
orders to enforce the provisions of this Section 6(d).

 

(e)                                  Piggy Back Registrations. 
If at any time during the Effectiveness Period there is not an effective
Registration Statement covering all of the Purchaser Shares and the Company
shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities, other than on Form
S-4 or Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in
connection with the stock option or other employee benefit plans, then the
Company shall send to the Holder Agent a written notice of such determination
and, if within 15 days after the date of such notice, any Holder shall so
request in writing delivered to the Company, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights; provided, that, the Company
shall not be required to register any Registrable Securities pursuant to this
Section 6(e) that have been sold or may be sold within the volume
restrictions set forth in Rule 144(e) in any three month period or that are the
subject of a then effective Registration Statement

 

(f)                                    Amendments and Waivers. 
The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the same
shall be in writing and signed by the Company and the Holders of a majority of
the then outstanding Registrable Securities (or Holder Agent, as applicable).
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of certain Holders and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of all of the Registrable
Securities to which such waiver or consent relates.

 

(g)                                 Notices.  Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be made in accordance with the provisions of the Stock
Purchase Agreement.

 

(h)                                 Successors and Assigns. 
This Agreement and all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
(including without limitation transferees of any Registrable Securities),
whether so expressed or not, provided, however, that the registration rights

 

10

 

conferred herein shall only inure to the benefit of a transferee of
such Shares if such transferee is a partner, shareholder or affiliate of an
original party hereto.

 

(i)                                     Execution and Counterparts. 
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same agreement.  In the event that any signature is delivered
by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.

 

(j)                                     Governing Law.  
This Agreement shall be governed by and construed under the laws of the
State of New York as applied to agreements among New York residents
entered into and to be performed entirely within New York.  The Company (1) agrees that any legal
suit, action or proceeding arising out of or relating to this Agreement shall
be instituted exclusively in New York State Supreme Court, County of
New York, or in the United States District Court for the Southern District
of New York, (2) waives any objection which the Company may have now
or hereafter to the venue of any such suit, action or proceeding, and
(3) irrevocably consents to the jurisdiction of the New York State
Supreme Court, County of New York, and the United States District Court
for the Southern District of New York in any such suit, action or
proceeding.  The Company further agrees
to accept and acknowledge service of any and all process which may be served in
any such suit, action or proceeding in the New York State Supreme Court,
County of New York, or in the United States District Court for the
Southern District of New York and agrees that service of process upon the
Company mailed by certified mail to the Company’s address shall be deemed in
every respect effective service of process upon the Company, in any such suit,
action or proceeding.  THE PARTIES
HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR
AGREEMENT CONTEMPLATED HEREBY.

 

(k)                                  Cumulative Remedies. 
Subject to the liquidated damages provisions of Section 2(b), the
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.

 

(l)                                     Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.  It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.

 

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

 

(n)                                 Independent Nature of Purchasers’
Obligations and Rights.  The obligations of each
Purchaser hereunder are several and not joint with the obligations of any other
Purchaser hereunder, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser hereunder.  Nothing contained herein or in any other
agreement or document delivered at any closing, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement.  Each Purchaser shall be
entitled to protect and enforce its rights, including without limitation the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.

 

11

 

IN WITNESS WHEREOF, the parties have executed
this Registration Rights Agreement as of the date first written above.

 

	
   

  	
  OMTOOL, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Voelk

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert Voelk

  
	
   

  	
   

  	
  Title:

  	
  President

  
					

 

[SIGNATURE PAGE OF
PURCHASERS FOLLOWS]

 

 

[SIGNATURE PAGE OF PURCHASERS TO RRA]

 

	
   

  	
  [PURCHASER]

  
	
   

  	
  The Doug Levine 2002
  Qualified Annuity Trust

  
	
   

  	
  By:

  	
  /s/ Doug Levine

  
	
   

  	
   

  	
  Name:  Doug Levine

  
	
   

  	
   

  	
  Title:  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  [PURCHASER]

  
	
   

  	
  DKR Sound hore
  Strategic Holding Fund Ltd.

  
	
   

  	
  By:

  	
  /s/ Barbara Burger

  
	
   

  	
   

  	
  Name:  Barbara Burger

  
	
   

  	
   

  	
  Title:  Alternate Director

  
	
   

  	
   

  	
   

  
	
   

  	
  [PURCHASER]

  
	
   

  	
  DKR Sound Shore Oasis
  Holding Fund Ltd.

  
	
   

  	
  By:

  	
  /s/ Barbara Burger

  
	
   

  	
   

  	
  Name:  Barbara Burger

  
	
   

  	
   

  	
  Title:  Alternate Director

  
	
   

  	
   

  	
   

  
	
   

  	
  [PURCHASER]

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Fraydon Manocherian

  
	
   

  	
   

  	
  Name:  Fraydon Manocherian

  
	
   

  	
   

  	
  Title:  Self

  
	
   

  	
   

  
	
   

  	
  [PURCHASER]

  
	
   

  	
  Corsair Capital
  Investors, Ltd.

  
	
   

  	
  By:

  	
  /s/ Jay Petschel

  
	
   

  	
   

  	
  Name:  Jay Petschel

  
	
   

  	
   

  	
  Title:  Managing Member of I.M.

  
	
   

  	
   

  	
   

  
	
   

  	
  [PURCHASER]

  
	
   

  	
  Corsair Capital
  Partners 700, L.P.

  
	
   

  	
  By:

  	
  /s/ Jay Petschel

  
	
   

  	
   

  	
  Name:  Jay Petschel

  
	
   

  	
   

  	
  Title:  Managing Member of G.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  [PURCHASER]

  
	
   

  	
  Corsair Capital
  Partners, L.P.

  
	
   

  	
  By:

  	
  /s/ Jay Petschel

  
	
   

  	
   

  	
  Name:  Jay Petschel

  
	
   

  	
   

  	
  Title:  Managing Member of G.P.

  
	
   

  	
   

  
	
   

  	
  [PURCHASER]

  
	
   

  	
  Alexander Enterprise
  Holdings Corp.

  
	
   

  	
  By:

  	
  /s/ Jared Bluestein

  
	
   

  	
   

  	
  Name:  Jared Bluestein

  
	
   

  	
   

  	
  Title:  Director

  

 

 

	
   

  	
  [PURCHASER]

  
	
   

  	
  Selwyn Partners LP

  
	
   

  	
  By:

  	
  /s/ Victor M. Dandriges

  
	
   

  	
   

  	
  Name:  Victor M. Dandriges

  
	
   

  	
   

  	
  Title:  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  [PURCHASER]

  
	
   

  	
  The FM Grandchildren’s
  Trust

  
	
   

  	
  By:

  	
  /s/ Greg Manocherian

  
	
   

  	
   

  	
  Name:  Greg Manocherian

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  
	
   

  	
  [PURCHASER]

  
	
   

  	
  Trinad Capital LP

  
	
   

  	
  By:

  	
  /s/Robert Ellin

  
	
   

  	
   

  	
  Name:  Robert Ellin

  
	
   

  	
   

  	
  Title:  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  [PURCHASER]

  
	
   

  	
  Kabuki Partners ADP,
  G.P.

  
	
   

  	
  By:

  	
  /s/ Greg Manocherian

  
	
   

  	
   

  	
  Name:  Greg Manocherian

  
	
   

  	
   

  	
  Title:  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  [PURCHASER]

  
	
   

  	
  Leviticus Partners LP

  
	
   

  	
  By:

  	
  /s/Adam M. Hutt

  
	
   

  	
   

  	
  Name:  Adam M. Hutt

  
	
   

  	
   

  	
  Title: 
  President AMH Equity, GP of Leviticus

  Partners LP

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}]]