printer-friendly

Sample Business Contracts

Registration Rights Agreement - Research Engineers Inc. and Bharat Manglani

Sponsored Links

                          REGISTRATION RIGHTS AGREEMENT



            This Registration  Rights Agreement,  dated as of September 14, 1999
(this "Agreement"),  between Research Engineers,  Inc., a Delaware  corporation,
with principal  executive  offices  located at 22700 Savi Ranch  Parkway,  Yorba
Linda,  CA 92887  (the  "Company"),  and Bharat  Manglani,  an  individual  (the
"Initial Holder").


            Whereas, upon the terms and subject to the conditions of the Amended
and Restated  Stock  Purchase  Agreement  dated  September  14, 1999,  among the
Company, Holder, NetGuru Systems, Inc. and NetGuru Consulting,  Inc. (the "Stock
Purchase  Agreement"),  the Company  shall issue to Holder  170,635  shares (the
"Shares") of the Company's  Common Stock,  $.01 par value per share (the "Common
Stock"); and


            Whereas,  to induce the  Initial  Holder to execute  and deliver the
Stock Purchase Agreement,  the Company has agreed to provide with respect to the
Common Stock issued thereunder certain  registration rights under the Securities
Act.


            Now,  Therefore,  in  consideration  of the  premises and the mutual
covenants  contained herein, the parties hereto,  intending to be legally bound,
hereby agree as follows:

            1.    Definitions.

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

                  (i)  "Affiliate,"  of any  specified  Person  means  any other
      Person who directly, or indirectly through one or more intermediaries,  is
      in control of, is controlled  by, or is under common  control  with,  such
      specified  Person.  For purposes of this  definition,  control of a Person
      means the power, directly or indirectly,  to direct or cause the direction
      of the  management  and  policies  of such  Person  whether  by  contract,
      securities,  ownership  or  otherwise;  and the  terms  "controlling"  and
      "controlled" have the respective meanings correlative to the foregoing.

                  (ii)   "Commission"   means  the   Securities   and   Exchange
      Commission.

                  (iii)  "Current  Market  Price"  on any date of  determination
      means the closing bid price of a share of the Common  Stock on such day as
      reported on the Nasdaq National Market ("Nasdaq"), or, if such security is
      not listed or admitted to trading on the Nasdaq, on the principal national
      security  exchange or quotation system on which such security is quoted or
      listed or admitted to trading,  or, if not quoted or listed or admitted to
      trading on any  national  securities  exchange or  quotation  system,  the
      closing bid price of such security on the  over-the-counter  market on the
      day in question as reported by the National Quotation Bureau Incorporated,
      or a similar generally accepted reporting service, or if not so available,
      in such manner as  furnished  by any Nasdaq  member  firm of the  National
      Association of Securities Dealers,  Inc. selected from time to time by the
      Board of Directors of the Company for that purpose,  or a price determined
      in good faith by the Board of  Directors  of the Company as being equal to
      the fair market value thereof, as the case may be.


                                       1
<PAGE>
                  (iv) "Exchange Act" means the Securities Exchange Act of 1934,
      as amended, and the rules and regulations of the Commission thereunder, or
      any similar successor statute.

                  (v)  "Holders"  means Bharat  Manglani and any  transferee  or
      assignee of  Registrable  Securities  who agrees to become bound by all of
      the terms and  provisions of this  Agreement in accordance  with Section 8
      hereof.

                  (vi) "Person" means any individual, partnership,  corporation,
      limited  liability  company,  joint  stock  company,  association,  trust,
      unincorporated  organization,  or a  government  or  agency  or  political
      subdivision thereof.

                  (vii)  "Prospectus" means the prospectus  (including,  without
      limitation,  any  preliminary  prospectus and any final  prospectus  filed
      pursuant to Rule 424(b) under the Securities Act, including any prospectus
      that discloses  information  previously omitted from a prospectus filed as
      part of an effective registration statement in reliance on Rule 430A under
      the Securities Act) included in the Registration  Statement, 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 by all other amendments and supplements to such
      prospectus,  including  all  material  incorporated  by  reference in such
      prospectus  and all documents  filed after the date of such  prospectus by
      the Company under the Exchange Act and incorporated by reference therein.

                  (viii) "Public  Offering"  means an offer  registered with the
      Commission and the appropriate state securities commissions by the Company
      of its Common Stock and made pursuant to the Securities Act.

                  (ix)  "Registrable  Securities"  means the  Shares;  provided,
      however,  that a share of Common  Stock  shall  cease to be a  Registrable
      Security for purposes of this  Agreement when it no longer is a Restricted
      Security.

                  (x) "Registration Statement" means a registration statement of
      the  Company  filed  on an  appropriate  form  under  the  Securities  Act
      providing for the registration of, and the sale on a continuous or delayed
      basis by the holders  of, all of the  Registrable  Securities  pursuant to
      Rule 415 under the  Securities  Act,  including the  Prospectus  contained
      therein and forming a part thereof,  any  amendments to such  registration
      statement and supplements to such  Prospectus,  and all exhibits and other
      material  incorporated  by reference in such  registration  statement  and
      Prospectus.

                  (xi)  "Restricted  Security"  means the Shares except any such
      share that (i) has been registered  pursuant to an effective  registration
      statement  under the Securities Act and sold in a manner  contemplated  by
      the  prospectus  included in such  registration  statement,  (ii) has been
      transferred in compliance with the resale provisions of Rule 144 under the
      Securities  Act (or any successor  provision  thereto) or is  transferable
      pursuant to  paragraph  (k) of Rule 144 under the  Securities  Act (or any
      successor provision thereto),  or (iii) otherwise has been transferred and
      a new share of Common Stock not subject to transfer restrictions under the
      Securities Act has been delivered by or on behalf of the Company.


                                       2
<PAGE>
                  (xii)  "Securities  Act" means the  Securities Act of 1933, as
      amended,  and the rules and regulations of the Commission  thereunder,  or
      any similar successor statute.

            (b) All  capitalized  terms  used and not  defined  herein  have the
respective meaning assigned to them in the Securities Purchase Agreement.

            2.    Registration.

            (a) Filing and Effectiveness of Registration Statement.  The Company
shall prepare and file with the Commission not later than 30 days after the date
hereof,  a  Registration  Statement  relating  to  the  offer  and  sale  of the
Registrable  Securities.  The  Company  shall use its best  efforts to cause the
Commission to declare such Registration Statement effective under the Securities
Act as  promptly  as  practicable  but not  later  than 150 days  after the date
hereof. At such time after the filing of the Registration  Statement pursuant to
this Section 2(a) as the Commission indicates, either orally or in writing, that
it has no further comments with respect to such  Registration  Statement or that
it  is  willing  to  entertain   appropriate   requests  for   acceleration   of
effectiveness of such Registration Statement, the Company shall promptly, and in
no event later than two business days after receipt of such  indication from the
Commission,  request that the  effectiveness of such  Registration  Statement be
accelerated  within 48 hours of the  Commission's  receipt of such request.  The
Holders  acknowledge and agree that the Company may include in the  Registration
Statement shares of Common Stock to be registered by the Company pursuant to (i)
that certain  Registration  Rights  Agreement of even date herewith  between the
Company  and The  Shaar  Fund,  L.P.  (the  "Shaar  Fund"),  (ii)  that  certain
Registration  Rights Agreement of even date herewith between the Company and The
Triton Private  Equities  Fund,  L.P. (the "Triton Fund") and (iii) that certain
Representative's Warrant Agreement dated as of July 31, 1996 between the Company
and  Cruttenden  Roth  Incorporated   ("Cruttenden  Roth")  (collectively,   the
"Third-Party  Registration  Rights  Agreements").  The Company  shall notify the
Holders by written  notice that such  Registration  Statement  has been declared
effective  by  the  Commission  within  24  hours  of  such  declaration  by the
Commission.

            (b) Eligibility for Use of Form S-3. The Company agrees that at such
time as it meets all the requirements for the use of Securities Act Registration
Statement on Form S-3 it shall file all reports and  information  required to be
filed  by it with the  Commission  in a timely  manner  and take all such  other
action so as to maintain such eligibility for the use of such form.

            (c) (i) If the Company  proposes to  register  any of its  warrants,
Common  Stock or any  other  shares  of common  stock of the  Company  under the
Securities  Act  (other  than  a  registration  (A)  on  Form  S-8 or S-4 or any
successor or similar forms,  (B) relating to Common Stock or any other shares of
common stock of the Company  issuable upon exercise of employee share options or
in connection with any employee benefit or similar plan of the Company or (C) in
connection  with a direct or  indirect  acquisition  by the  Company  of another



                                       3
<PAGE>
Person or any  transaction  with  respect  to which  Rule 145 (or any  successor
provision)  under the Securities  Act applies),  whether or not for sale for its
own account, it will each such time, give prompt written notice at least 20 days
prior to the anticipated  filing date of the registration  statement relating to
such  registration  to the  Holders,  which  notice  shall set  forth  each such
Holder's  rights  under  this  Section  2(c) and  shall  offer the  Holders  the
opportunity to include in such registration statement such number of Registrable
Securities as the Holders may request. Upon the written request of a Holder made
within 10 days after the receipt of notice from the Company (which request shall
specify the number of Registrable  Securities intended to be disposed of by such
Holder),  the Company will use its best efforts to effect the registration under
the Securities Act of all  Registrable  Securities  that the Company has been so
requested  to register by such  Holder,  to the extent  requisite  to permit the
disposition  of  the  Registrable  Securities  so  to be  registered;  provided,
however,  that if, at any time after giving  written  notice of its intention to
register any Registrable  Securities pursuant to this Section 2 and prior to the
effective  date of the  registration  statement  filed in  connection  with such
registration,  the Company  shall  determine for any reason not to register such
Registrable  Securities,  the Company  shall give written  notice to the Holders
and, thereupon,  shall be relieved of its obligation to register any Registrable
Securities in connection with such registration. The Company's obligations under
this Section 2(c) shall terminate on the date that the registration statement to
be  filed  in  accordance  with  Section  2(a)  is  declared  effective  by  the
Commission.

            (ii) If a  registration  pursuant to this  Section  2(c)  involves a
Public Offering and the managing  underwriter  thereof advises the Company that,
in its view,  the  number of shares of Common  Stock  that the  Company  and the
Holders  intend to include in such  registration  exceeds the largest  number of
shares of Common Stock that can be sold without having an adverse effect on such
Public Offering (the "Maximum Offering Size"),  the Company will include in such
registration, only that number of shares of Common Stock such that the number of
shares of Registrable Securities registered does not exceed the Maximum Offering
Size, with the difference  between the number of shares in the Maximum  Offering
Size and the number of shares to be issued by the Company to be allocated (after
including all shares to be issued and sold by the Company,  the Shaar Fund,  the
Triton Fund and Cruttenden Roth), first, among the Company,  the Shaar Fund, the
Triton Fund and Cruttenden  Roth pro rata on the basis of the relative number of
shares  of Common  Stock or  Warrants  (as  defined  in each of the  Third-Party
Registration Rights Agreements) offered for sale under such registration by each
of the Company, the Shaar Fund, the Triton Fund and Cruttenden Roth, and second,
to the Holders pro rata on the basis of the relative  number of shares of Common
Stock offered for sale under such registration by the Holders.

            If as a result of the proration provisions of this Section 2(c)(ii),
any Holder is not entitled to include all such  Registrable  Securities  in such
registration,  such  Holder may elect to  withdraw  its  request to include  any
Registrable  Securities  in such  registration.  With  respect to  registrations
pursuant to this Section 2(c), the number of securities  required to satisfy any
underwriters' over-allotment option shall be allocated on the basis set forth in
the first sentence of this Section 2(c)(ii).



                                       4
<PAGE>
            3.    Obligations of the Company.

            In connection with the  registration of the Registrable  Securities,
the Company shall:

            (a)  Promptly  (i)  prepare  and  file  with  the  Commission   such
amendments (including  post-effective  amendments) to the Registration Statement
and  supplements to the Prospectus as may be necessary to keep the  Registration
Statement  continuously  effective and in compliance  with the provisions of the
Securities  Act applicable  thereto so as to permit the Prospectus  forming part
thereof to be current  and  useable by Holders  for  resales of the  Registrable
Securities  for a period  of two years  from the date on which the  Registration
Statement is first declared  effective by the Commission (the "Effective  Time")
or such shorter period that will terminate when all the  Registrable  Securities
covered  by the  Registration  Statement  have been  sold  pursuant  thereto  in
accordance with the plan of distribution provided in the Prospectus, transferred
pursuant to Rule 144 under the  Securities  Act or  otherwise  transferred  in a
manner that  results in the delivery of new  securities  not subject to transfer
restrictions under the Securities Act (the "Registration  Period") and (ii) take
all  lawful  action  such that each of (A) the  Registration  Statement  and any
amendment  thereto  does  not,  when it  becomes  effective,  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,  not misleading and
(B) the Prospectus forming part of the Registration Statement, and any amendment
or  supplement  thereto,  does not at any time  during the  Registration  Period
include 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.
Notwithstanding the foregoing  provisions of this Section 3(a), the Company may,
during the Registration  Period,  suspend the use of the Prospectus for a period
not to exceed 60 days (whether or not consecutive) in any 12-month period if the
Board of Directors of the Company determines in good faith that because of valid
business  reasons,  including  pending  mergers  or other  business  combination
transactions, the planned acquisition or divestiture of assets, pending material
corporate  developments  and similar events,  it is in the best interests of the
Company to suspend such use, and prior to or  contemporaneously  with suspending
such  use  the  Company  provides  the  Holders  with  written  notice  of  such
suspension, which notice need not specify the nature of the event giving rise to
such  suspension.  At the end of any such suspension  period,  the Company shall
provide the Holders with written notice of the termination of such suspension;

            (b) During the  Registration  Period,  comply with the provisions of
the  Securities  Act with respect to the  Registrable  Securities of the Company
covered by the Registration Statement until such time as all of such Registrable
Securities  have been  disposed of in  accordance  with the intended  methods of
disposition  by any Holder as set forth in the  Prospectus  forming  part of the
Registration Statement;

            (c) (i) Prior to the filing with the Commission of any  Registration
Statement (including any amendments thereto) and the distribution or delivery of
any Prospectus  (including any  supplements  thereto),  provide (A) draft copies
thereof to the Holders and reflect in such  documents  all such  comments as the
Holders (and their counsel) reasonably may propose and (B) to the Holders a copy
of the accountant's consent letter to be included in the filing and (ii) furnish
to  each  of the  Holders  whose  Registrable  Securities  are  included  in the


                                       5
<PAGE>
Registration  Statement  and its legal counsel  identified  to the Company,  (A)
promptly  after the same is prepared  and publicly  distributed,  filed with the
Commission,  or received by the Company, one copy of the Registration Statement,
each Prospectus,  and each amendment or supplement thereto,  and (B) such number
of copies of the Prospectus and all amendments and supplements  thereto and such
other  documents,  as such Holder may reasonably  request in order to facilitate
the disposition of the Registrable Securities owned by such Holder;

            (d) (i) Register or qualify the  Registrable  Securities  covered by
the  Registration  Statement  under such  securities  or "blue sky" laws of such
jurisdictions as the Holders who hold a majority-in-interest  of the Registrable
Securities  being  offered  reasonably  request,  (ii)  prepare and file in such
jurisdictions  such  amendments   (including   post-effective   amendments)  and
supplements  to such  registrations  and  qualifications  as may be necessary to
maintain the effectiveness  thereof at all times during the Registration Period,
(iii) take all such other lawful  actions as may be  necessary to maintain  such
registrations and  qualifications in effect at all times during the Registration
Period,  and (iv) take all such other  lawful  actions  reasonably  necessary or
advisable to qualify the Registrable  Securities for sale in such jurisdictions;
provided,  however,  that  the  Company  shall  not be  required  in  connection
therewith  or as a  condition  thereto  to (A)  qualify  to do  business  in any
jurisdiction  where it would not  otherwise  be required to qualify but for this
Section 3(d), (B) subject itself to general taxation in any such jurisdiction or
(C) file a general consent to service of process in any such jurisdiction;

            (e) As promptly as  practicable  after becoming aware of such event,
notify each of the Holders of the occurrence of any event,  as a result of which
the  Prospectus  included  in the  Registration  Statement,  as then in  effect,
includes  an untrue  statement  of a material  fact or omits 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,  and
promptly  prepare an amendment to the  Registration  Statement and supplement to
the  Prospectus  to correct such untrue  statement  or  omission,  and deliver a
number of copies of such supplement and amendment to each of the Holders as such
Holder may reasonably request;

            (f) As promptly as  practicable  after becoming aware of such event,
notify each of the Holders who holds  Registrable  Securities being sold (or, in
the  event  of an  underwritten  offering,  the  managing  underwriters)  of the
issuance  by the  Commission  of any  stop  order  or  other  suspension  of the
effectiveness  of the Registration  Statement at the earliest  possible time and
take all lawful  action to effect the  withdrawal,  recession or removal of such
stop order or other suspension;

            (g) Cause all the Registrable Securities covered by the Registration
Statement  to be listed  on the  principal  national  securities  exchange,  and
included in an inter-dealer quotation system of a registered national securities
association, on or in which securities of the same class or series issued by the
Company are then listed or included;

            (h) Maintain a transfer agent and  registrar,  which may be a single
entity, for the Registrable  Securities not later than the effective date of the
Registration Statement;



                                       6
<PAGE>
            (i) Cooperate with the Holders who hold Registrable Securities being
offered to facilitate the timely  preparation and delivery of  certificates  for
the Registrable  Securities to be offered pursuant to the registration statement
and  enable  such  certificates  for the  Registrable  Securities  to be in such
denominations  or  amounts,  as the case may be, as the Holders  reasonably  may
request and  registered  in such names as the Holder may  request;  and,  within
three business days after a registration  statement  which includes  Registrable
Securities  is declared  effective  by the  Commission,  deliver and cause legal
counsel  selected  by the  Company  to  deliver  to the  transfer  agent for the
Registrable  Securities (with copies to the Holders whose Registrable Securities
are included in such registration  statement) an appropriate instruction and, to
the extent necessary, an opinion of such counsel;

            (j) Take all such  other  lawful  actions  reasonably  necessary  to
expedite and  facilitate  the  disposition  by the Holders of their  Registrable
Securities  in accordance  with the intended  methods  therefor  provided in the
Prospectus which are customary under the circumstances;

            (k) Make  generally  available  to its  security  holders as soon as
practicable,  but in any event not later  than  three (3)  months  after (i) the
effective  date (as  defined in Rule  158(c)  under the  Securities  Act) of the
Registration  Statement,  and (ii)  the  effective  date of each  post-effective
amendment  to the  Registration  Statement,  as the  case  may be,  an  earnings
statement of the Company and its  subsidiaries  complying  with Section 11(a) of
the  Securities Act and the rules and  regulations of the Commission  thereunder
(including, at the option of the Company, Rule 158);

            (1) In the event of an underwritten  offering,  promptly  include or
incorporate  in a  Prospectus  supplement  or  post-effective  amendment  to the
Registration  Statement such information as the managers reasonably agree should
be included therein and to which the Company does not reasonably object and make
all required filings of such Prospectus  supplement or post-effective  amendment
as soon as  practicable  after it is  notified  of the matters to be included or
incorporated in such Prospectus supplement or post-effective amendment;

            (m) (i) Make  reasonably  available for  inspection by Holders,  any
underwriter  participating  in any  disposition  pursuant  to  the  Registration
Statement, and any attorney,  accountant or other agent retained by such Holders
or any such  underwriter  all relevant  financial and other  records,  pertinent
corporate documents and properties of the Company and its subsidiaries, and (ii)
cause the Company's officers,  directors and employees to supply all information
reasonably  requested  by  such  Holders  or  any  such  underwriter,  attorney,
accountant or agent in connection with the Registration Statement, in each case,
as is customary for similar due diligence examinations;  provided, however, that
all records,  information  and documents  that are  designated in writing by the
Company, in good faith, as confidential,  proprietary or containing any material
nonpublic  information  shall be kept  confidential by such Holders and any such
underwriter,   attorney,   accountant  or  agent  (pursuant  to  an  appropriate
confidentiality  agreement in the case of any such holder or agent), unless such
disclosure is made  pursuant to judicial  process in a court  proceeding  (after
first giving the Company an opportunity  promptly to seek a protective  order or
otherwise  limit the scope of the  information  sought  to be  disclosed)  or is
required by law, or such records,  information or documents  become available to
the  public  generally  or  through  a  third  party  not  in  violation  of  an
accompanying obligation of confidentiality;  and provided, further, that, if the
foregoing  inspection and  information  gathering  would  otherwise  disrupt the
Company's  conduct of its business,  such inspection and  information  gathering
shall, to the maximum extent  possible,  be coordinated on behalf of the Holders
and the other parties entitled thereto by one firm of counsel designed by and on
behalf of the majority in interest of Holders and other parties;



                                       7
<PAGE>
            (n)  In  connection  with  any  underwritten  offering,   make  such
representations and warranties to the Holders participating in such underwritten
offering and to the managers,  in form,  substance and scope as are  customarily
made by the Company to underwriters in secondary underwritten offerings;

            (o) In connection with any underwritten offering, obtain opinions of
counsel  to the  Company  (which  counsel  and  opinions  (in  form,  scope  and
substance)  shall be reasonably  satisfactory to the managers)  addressed to the
underwriters,  covering  such  matters as are  customarily  covered in  opinions
requested in secondary  underwritten offerings (it being agreed that the matters
to be covered by such opinions shall include, without limitation, as of the date
of the opinion and as of the  Effective  Time of the  Registration  Statement or
most recent  post-effective  amendment thereto,  as the case may be, the absence
from the  Registration  Statement  and the  Prospectus,  including any documents
incorporated by reference therein,  of an untrue statement of a material fact or
the omission of a material  fact  required to be stated  therein or necessary to
make the  statements  therein  (in the case of the  Prospectus,  in light of the
circumstances  under which they were made) not misleading,  subject to customary
limitations);

            (p) In  connection  with any  underwritten  offering,  obtain  "cold
comfort" letters and updates thereof from the independent  public accountants of
the Company (and, if necessary,  from the independent  public accountants of any
subsidiary  of the Company or of any business  acquired by the Company,  in each
case for which  financial  statements and financial data are, or are required to
be,  included in the  Registration  Statement),  addressed  to each  underwriter
participating  in such  underwritten  offering (if such underwriter has provided
such letter,  representations  or documentation,  if any, required for such cold
comfort  letter to be so addressed),  in customary form and covering  matters of
the type  customarily  covered  in "cold  comfort"  letters in  connection  with
secondary underwritten offerings;

            (q) In  connection  with any  underwritten  offering,  deliver  such
documents and  certificates  as may be reasonably  required by the managers,  if
any; and

            (r) In  the  event  that  any  broker-dealer  registered  under  the
Exchange Act shall be an "Affiliate" (as defined in Rule 2729(b)(1) of the rules
and  regulations of the National  Association of Securities  Dealers,  Inc. (the
"NASD  Rules") (or any  successor  provision  thereto))  of the Company or has a
"conflict of interest" (as defined in Rule  2720(b)(7) of the NASD Rules (or any
successor   provision   thereto))  and  such  broker-dealer   shall  underwrite,
participate as a member of an underwriting  syndicate or selling group or assist
in the  distribution of any Registrable  Securities  covered by the Registration
Statement,  whether  as a  holder  of  such  Registrable  Securities  or  as  an
underwriter,  a  placement  or sales  agent or a broker  or  dealer  in  respect
thereof, or otherwise,  the Company shall assist such broker-dealer in complying
with the requirements of the NASD Rules, including,  without limitation,  by (A)
engaging a "qualified  independent  underwriter" (as defined in Rule 2720(b)(15)
of the NASD Rules (or any successor  provision  thereto)) to  participate in the
preparation  of  the  Registration   Statement   relating  to  such  Registrable
Securities,  to exercise usual standards of due diligence in respect thereof and
to recommend  the public  offering  price of such  Registrable  Securities,  (B)
indemnifying  such  qualified  independent  underwriter  to  the  extent  of the
indemnification of underwriters  provided in Section 5 hereof, and (C) providing
such  information  to such  broker-dealer  as may be  required in order for such
broker-dealer to comply with the requirements of the NASD Rules.



                                       8
<PAGE>
            4.    Obligations of the Holders.

            In connection with the  registration of the Registrable  Securities,
the Holders shall have the following obligations:

            (a) It shall be a  condition  precedent  to the  obligations  of the
Company to complete the registration  pursuant to this Agreement with respect to
the Registrable Securities of a particular Holder that such Holder shall furnish
to the Company such information  regarding  itself,  the Registrable  Securities
held by it and the intended method of disposition of the Registrable  Securities
held by it as shall be reasonably  required to effect the  registration  of such
Registrable  Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. As least seven days prior to
the first  anticipated  filing date of the Registration  Statement,  the Company
shall notify each Holder of the information the Company  requires from each such
Holder (the  "Requested  Information")  if such Holder elects to have any of its
Registrable Securities included in the Registration  Statement.  If at least two
business days prior to the anticipated  filing date the Company has not received
the Requested  Information from a Holder (a "Non-Responsive  Holder"),  then the
Company  may file  the  Registration  Statement  without  including  Registrable
Securities of such Non-Responsive  Holder and have no further obligations to the
Non-Responsive Holder;

            (b) Each  Holder by its  acceptance  of the  Registrable  Securities
agrees to cooperate  with the Company in  connection  with the  preparation  and
filing of the Registration Statement hereunder,  unless such Holder has notified
the  Company in  writing  of its  election  to  exclude  all of its  Registrable
Securities from the Registration Statement; and

            (c) Each Holder  agrees  that,  upon  receipt of any notice from the
Company of the  occurrence of any event of the kind described in Section 3(e) or
3(f), it shall immediately discontinue its disposition of Registrable Securities
pursuant to the  Registration  Statement  covering such  Registrable  Securities
until  such  Holder's  receipt  of the  copies of the  supplemented  or  amended
Prospectus contemplated by Section 3(e) and, if so directed by the Company, such
Holder  shall  deliver to the Company (at the expense of the Company) or destroy
(and deliver to the Company a  certificate  of  destruction)  all copies in such
Holder's  possession,  of the Prospectus  covering such  Registrable  Securities
current at the time of receipt of such notice.

            5.    Expenses of Registration.

            All expenses,  other than  underwriting  discounts and  commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Section 3, but including,  without limitation,  all registration,  listing,  and
qualifications fees, printing and engraving fees,  accounting fees, and the fees
and  disbursements  of counsel for the Company,  and the reasonable  fees of one
firm of counsel to the  holders of a majority  in  interest  of the  Registrable
Securities shall be borne by the Company.



                                       9
<PAGE>
            6.    Indemnification and Contribution.

            (a) The Company  shall  indemnify  and hold harmless each Holder and
each  underwriter,  if any,  which  facilitates  the  disposition of Registrable
Securities,  and each of their respective officers and directors and each person
who controls such Holder or underwriter  within the meaning of Section 15 of the
Securities  Act or  Section  20 of the  Exchange  Act (each  such  person  being
sometimes  hereinafter referred to as an "Indemnified  Person") from and against
any losses,  claims,  damages or  liabilities,  joint or several,  to which such
Indemnified  Person may become  subject under the  Securities  Act or otherwise,
insofar as such losses,  claims,  damages or liabilities  (or actions in respect
thereof)  arise out of or are based upon an untrue  statement or alleged  untrue
statement  of a material  fact  contained  in any  Registration  Statement or an
omission or alleged  omission to state  therein a material  fact  required to be
stated therein or necessary to make the statements therein,  not misleading,  or
arise out of or are based upon an untrue  statement or alleged untrue  statement
of a  material  fact  contained  in any  Prospectus  or an  omission  or alleged
omission  to state  therein a material  fact  required  to be stated  therein or
necessary  to make the  statements  therein,  in the light of the  circumstances
under which they were made,  not  misleading;  and the Company  hereby agrees to
reimburse such  Indemnified  Person for all reasonable  legal and other expenses
incurred by them in connection with  investigating  or defending any such action
or claim as and when such expenses are  incurred;  provided,  however,  that the
Company shall not be liable to any such  Indemnified  Person in any such case to
the extent that any such loss,  claim,  damage or liability  arises out of or is
based upon (i) an untrue  statement or alleged  untrue  statement made in, or an
omission or alleged omission from, such Registration  Statement or Prospectus in
reliance  upon and in  conformity  with  written  information  furnished  to the
Company by such Indemnified Person expressly for use therein or (ii) in the case
of the  occurrence of an event of the type specified in Section 3(e), the use by
the Indemnified Person of an outdated or defective  Prospectus after the Company
has provided to such  Indemnified  Person an updated  Prospectus  correcting the
untrue  statement or alleged  untrue  statement or omission or alleged  omission
giving rise to such loss, claim, damage or liability.

            (b)  Indemnification  by the Holders and  Underwriters.  Each Holder
agrees,  as a consequence of the inclusion of any of its Registrable  Securities
in a Registration Statement, and each underwriter, if any, which facilitates the
disposition  of  Registrable   Securities  shall  agree,  as  a  consequence  of
facilitating  such  disposition  of  Registrable  Securities,  severally and not
jointly,  to  (i)  indemnify  and  hold  harmless  the  Company,  its  directors
(including any person who, with his or her consent, is named in the Registration
Statement  as a director  nominee of the  Company),  its  officers  who sign any
Registration  Statement and each person, if any, who controls the Company within
the  meaning  of either  Section 15 of the  Securities  Act or Section 20 of the
Exchange Act,  against any losses,  claims,  damages or liabilities to which the
Company or such other persons may become  subject,  under the  Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect  thereof) arise out of or are based upon an untrue  statement or alleged
untrue statement of a material fact contained in such Registration  Statement or
Prospectus or arise out of or are based upon the omission or alleged omission to
state therein 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,  in the  case of the  Prospectus),  not  misleading,  in each  case to the
extent,  but only to the extent,  that such untrue  statement or alleged  untrue
statement  or omission  or alleged  omission  was made in  reliance  upon and in
conformity with written  information  furnished to the Company by such holder or
underwriter  expressly  for use therein;  provided,  however,  that no Holder or
underwriter  shall be liable under this Section 6(b) for any amount in excess of
the net proceeds paid to such Holder or underwriter in respect of shares sold by
it, and (ii) reimburse the Company for any legal or other  expenses  incurred by
the Company in  connection  with  investigating  or defending any such action or
claim as such expenses are incurred.



                                       10
<PAGE>
            (c) Notice of Claims, etc. Promptly after receipt by a party seeking
indemnification  pursuant to this Section 6 (an "Indemnified  Party") of written
notice of any  investigation,  claim,  proceeding  or other action in respect of
which  indemnification is being sought (each, a "Claim"),  the Indemnified Party
promptly  shall notify the party against whom  indemnification  pursuant to this
Section  6 is  being  sought  (the  "Indemnifying  Party")  of the  commencement
thereof;  but the omission to so notify the Indemnifying Party shall not relieve
it from any  liability  that it  otherwise  may have to the  Indemnified  Party,
except to the extent that the  Indemnifying  Party is materially  prejudiced and
forfeits  substantive  rights  and  defenses  by  reason  of  such  failure.  In
connection  with any  Claim as to which  both  the  Indemnifying  Party  and the
Indemnified  Party are  parties,  the  Indemnifying  Party  shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying  Party, the Indemnified  Party shall have the right to
employ  separate  legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees,  out-of-pocket  costs
and expenses of such  separate  legal counsel to the  Indemnified  Party if (and
only if): (x) the  Indemnifying  Party shall have agreed to pay such fees, costs
and  expenses,  (y) the  Indemnified  Party  and the  Indemnifying  Party  shall
reasonably have concluded that  representation  of the Indemnified  Party by the
Indemnifying  Party by the same legal  counsel would not be  appropriate  due to
actual or, as reasonably  determined by legal counsel to the Indemnified  Party,
potentially  differing  interests  between  such  parties in the  conduct of the
defense  of such  Claim,  or if there  may be legal  defenses  available  to the
Indemnified  Party that are in addition to or disparate from those  available to
the  Indemnifying  Party,  or (z) the  Indemnifying  Party  shall have failed to
employ legal counsel  reasonably  satisfactory to the Indemnified Party within a
reasonable period of time after notice of the commencement of such Claim. If the
Indemnified Party employs separate legal counsel in circumstances  other than as
described in clauses (x), (y) or (z) above, the fees, costs and expenses of such
legal counsel shall be borne  exclusively by the  Indemnified  Party.  Except as
provided above, the  Indemnifying  Party shall not, in connection with any Claim
in the same  jurisdiction,  be liable for the fees and expenses of more than one
firm of counsel for the  Indemnified  Party  (together  with  appropriate  local
counsel).  The Indemnified Party shall not, without the prior written consent of
the  Indemnifying  Party (which  consent  shall not  unreasonably  be withheld),
settle or compromise any Claim or consent to the entry of any judgment that does
not  include  an  unconditional  release  of the  Indemnifying  Party  from  all
liabilities with respect to such Claim or judgment.

            (d)  Contribution.  If the  indemnification  provided  for  in  this
Section 6 is  unavailable  to or  insufficient  to hold harmless an  Indemnified
Person  under  subsection  (a) or (b) above in  respect of any  losses,  claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each  Indemnifying  Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect  thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions which resulted in such losses,  claims, damages
or liabilities  (or actions in respect  thereof),  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 the untrue or alleged untrue statement of a material fact or omission or
alleged  omission to state a material  fact relates to  information  supplied by
such Indemnifying  Party or by such Indemnified Party, and the parties' relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such  statement or omission.  The parties hereto agree that it would not be just
and equitable if  contribution  pursuant to this Section 6(d) were determined by
pro rata allocation (even if the Holders or any underwriters were treated as one
entity for such  purpose) or by any other  method of  allocation  which does not
take account of the equitable  considerations  referred to in this Section 6(d).


                                       11
<PAGE>
The amount  paid or payable by an  Indemnified  Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
shall be  deemed  to  include  any legal or other  fees or  expenses  reasonably
incurred by such Indemnified Party in connection with investigating or defending
any such  action or  claim.  No person  guilty of  fraudulent  misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution   from  any  person   who  was  not   guilty  of  such   fraudulent
misrepresentation.  The obligations of the Holders and any  underwriters in this
Section 6(d) to contribute  shall be several in proportion to the  percentage of
Registrable  Securities registered or underwritten,  as the case may be, by them
and not joint.

            (e)  Notwithstanding  any other  provision  of this Section 6, in no
event  shall any (i) Holder be  required to  undertake  liability  to any person
under  this  Section 6 for any  amounts  in excess of the  dollar  amount of the
proceeds  to be  received  by  such  Holder  from  the  sale  of  such  Holder's
Registrable  Securities  (after  deducting any fees,  discounts and  commissions
applicable  thereto)  pursuant to any  Registration  Statement  under which such
Registrable  Securities  are to be registered  under the Securities Act and (ii)
underwriter be required to undertake  liability to any Person  hereunder for any
amounts in excess of the aggregate  discount,  commission or other  compensation
payable  to  such  underwriter  with  respect  to  the  Registrable   Securities
underwritten by it and distributed pursuant to the Registration Statement.

            (f) The  obligations of the Company under this Section 6 shall be in
addition  to  any  liability  which  the  Company  may  otherwise  have  to  any
Indemnified  Person and the  obligations  of any  Indemnified  Person under this
Section 6 shall be in addition to any liability  which such  Indemnified  Person
may otherwise have to the Company.  The remedies  provided in this Section 6 are
not exclusive and shall not limit any rights or remedies  which may otherwise be
available to an indemnified party at law or in equity.

            7.    Rule 144.

            With a view to making  available to the Holders the benefits of Rule
144 under the  Securities  Act or any other  similar rule or  regulation  of the
Commission  that may at any time  permit the Holders to sell  securities  of the
Company to the public without  registration  ("Rule 144"), the Company agrees to
use its best efforts to:

            (a)   comply  with the  provisions  of  paragraph  (c) (1) of Rule
144; and



                                       12
<PAGE>
            (b) file with the  Commission  in a timely  manner all  reports  and
other  documents  required to be filed by the Company  pursuant to Section 13 or
15(d) under the  Exchange  Act;  and, if at any time it is not  required to file
such reports but in the past had been required to or did file such  reports,  it
will,  upon the request of any  Holder,  make  available  other  information  as
required  by,  and so long as  necessary  to permit  sales of,  its  Registrable
Securities pursuant to Rule 144.

            8.    Assignment.

            The  rights  to have the  Company  register  Registrable  Securities
pursuant to this Agreement shall be automatically assigned by the Holders to any
permitted  transferee of all or any portion of such  securities only if: (a) the
Holder agrees in writing with the  transferee or assignee to assign such rights,
and a copy of such  agreement is  furnished  to the Company  within a reasonable
time after such  assignment,  (b) the Company is, within a reasonable time after
such transfer or  assignment,  furnished with written notice of (i) the name and
address of such  transferee or assignee and (ii) the securities  with respect to
which  such  registration   rights  are  being  transferred  or  assigned,   (c)
immediately following such transfer or assignment, the securities so transferred
or assigned to the transferee or assignee constitute Restricted Securities,  and
(d) at or before the time the Company  received the written notice  contemplated
by clause (b) of this sentence the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein.

            9.    Amendment and Waiver.

            Any provision of this  Agreement  may be amended and the  observance
thereof may be waived (either  generally or in a particular  instance and either
retroactively  or  prospectively),  only with the written consent of the Company
and Holders who hold a majority-in-interest of the Registrable  Securities.  Any
amendment or waiver  effected in accordance with this Section 9 shall be binding
upon each Holder and the Company.

            10.   Miscellaneous.

            (a) A person or entity shall be deemed to be a holder of Registrable
Securities  whenever  such  person or entity  owns of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or more  persons  or  entities  with  respect  to the  same
Registrable  Securities,  the Company shall act upon the basis of  instructions,
notice  or  election  received  from the  registered  owner of such  Registrable
Securities.

            (b) If, after the date hereof and prior to the Commission  declaring
the Registration  Statement to be filed pursuant to Section 2(a) effective under
the  Securities  Act, the Company grants to any Person any  registration  rights
with respect to any Company  securities  which are more  favorable to such other
Person than those provided in this Agreement,  then the Company  forthwith shall
grant  (by means of an  amendment  to this  Agreement  or  otherwise)  identical
registration rights to all Holders hereunder.



                                       13
<PAGE>
            (c) Except as may be otherwise  provided herein, any notice or other
communication  or delivery  required or permitted  hereunder shall be in writing
and shall be delivered personally or sent by certified mail, postage prepaid, or
by a nationally  recognized overnight courier service, and shall be deemed given
when so delivered  personally or by overnight  courier  service,  or, if mailed,
three days after the date of deposit in the United States mails, as follows:

<TABLE>
                  <S>   <C>

                  (i)   if to the Company, to:

                        Research Engineers, Inc.
                        22700 Savi Ranch Parkway
                        Yorba Linda, CA 92887
                        Attention: Chief Executive Officer
                        (714) 974-2500
                        (714) 974-4881 (Fax)

                        with a copy to:

                        Rutan & Tucker, LLP
                        611 Anton Boulevard
                        Suite 1400
                        Costa Mesa, CA  92626
                        Attention:  Gregg Amber, Esq.
                        (714) 641-3425
                        (714) 546-9035 (Fax)

                   (ii) if to the Initial Holder, to:

                        Bharat Manglani
                        82 Lexington Street
                        Weston, MA  02493
                        (781) 890-5990 (Fax)

                        with a copy to:

                        Gray Cary Ware & Friedenrich LLP
                        4365 Executive Drive
                        Suite 1600
                        San Diego, CA  92121-2189
                        Attention: Scott M. Stanton, Esq.
                        (619) 699-2700 x1493
                        (619) 677-1477 (Fax)
</TABLE>

                  (iii) if to any other  Holder,  at such address as such Holder
      shall have provided in writing to the Company.



                                       14
<PAGE>
The Company,  the Initial Holder or any Holder may change the foregoing  address
by notice given pursuant to this Section 10(c).

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

            (e)  This  Agreement   shall  be  governed  by  and  interpreted  in
accordance  with  the  laws of the  State  of  California.  Each of the  parties
consents to the jurisdiction of the federal courts whose districts encompass any
part of Orange County, California or the state courts of the State of California
sitting in Orange  County,  California  in connection  with any dispute  arising
under this Agreement and hereby waives,  to the maximum extent permitted by law,
any  objection  including any objection  based on forum non  conveniens,  to the
bringing of any such proceeding in such jurisdictions.

            (f) The remedies  provided in this  Agreement are cumulative and not
exclusive of any remedies provided by law. 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, and the parties
hereto shall use their best efforts to find and employ an  alternative  means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

            (g) This Agreement  supersedes all prior agreements and undertakings
among the parties hereto with respect to the subject matter hereof.

            (h) Subject to the requirements of Section 8 hereof,  this Agreement
shall inure to the benefit of and be binding upon the  successors and assigns of
each of the parties hereto.

            (i) All pronouns and any variations  thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.

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

            (k) The  Company  acknowledges  that any  failure by the  Company to
perform its obligations  under Section 3, or any delay in such performance could
result in direct damages to the Holders and the Company agrees that, in addition
to any other  liability  the Company  may have by reason of any such  failure or
delay, the Company shall be liable for all direct damages caused by such failure
or delay.

            (l) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall  constitute  one and
the same agreement.  A facsimile  transmission of this signed Agreement shall be
legal and binding on all parties hereto.



                                       15
<PAGE>
            In Witness  Whereof,  the parties  have caused this  Agreement to be
duly executed and delivered as of the date first above written.


                                       Research Engineers, Inc.


                                       By:
                                      Name:  Jyoti Chatterjee
                                     Title:  President



                                       Bharat Manglani


                                       16