Exhibit 10.02

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT, dated as of August 15, 2005 (this
“Agreement”), is made by and among Sonus Pharmaceuticals, Inc., a Delaware
corporation, with headquarters located at 22026 20th Avenue S.E., Bothell,
Washington  98021 (the “Company”), and the investors named on the signature
pages hereto (the “Initial Investors”).

 

RECITALS:

 

A.                                   In connection with the Securities Purchase
Agreement dated August 15, 2005 between the Initial Investors and the Company
(the “Purchase Agreement”), the Company has agreed, upon the terms and subject
to the conditions of the Purchase Agreement, to issue and sell to the Initial
Investors 4,651,869 shares of the Company’s Common Stock (the “Common Shares”)
and warrants to purchase up to 3,023,719 shares of the Company’s Common Stock,
subject to adjustment (the “Warrants” and, collectively with the Common Shares,
the “Securities”).

 

B.                                     In order to induce the Initial Investors
to execute and deliver the Purchase Agreement, the Company has agreed to provide
certain registration rights under the Securities Act and applicable state
securities laws with respect to the Securities.

 

In consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Initial Investors hereby agree as
follows:

 

ARTICLE I
DEFINITIONS

 

Capitalized terms used and not otherwise defined herein have the respective
meanings given them set forth in the Purchase Agreement.  In addition, as used
in this Agreement, the following terms have the following meanings:

 

1.1                                 “CLOSING DATE” MEANS THE DATE ON WHICH THE
PURCHASE OF THE SECURITIES IS CONSUMMATED PURSUANT TO THE PURCHASE AGREEMENT.

 

1.2                                 “COMMON SHARES” MEANS THE SHARES OF COMMON
STOCK SOLD PURSUANT TO THE PURCHASE AGREEMENT.

 

1.3                                 “INVESTORS” MEANS THE INITIAL INVESTORS AND
ANY OF THEIR TRANSFEREES OR ASSIGNEES WHO AGREE TO BECOME BOUND BY THE
PROVISIONS OF THIS AGREEMENT IN ACCORDANCE WITH ARTICLE IX HEREOF.

 

1.4                                 “REGISTRABLE SECURITIES” MEANS THE COMMON
SHARES AND THE WARRANT SHARES, AND ANY SHARES OF CAPITAL STOCK ISSUED OR
ISSUABLE FROM TIME TO TIME (WITH ANY ADJUSTMENTS) IN EXCHANGE FOR OR OTHERWISE
WITH RESPECT TO THE COMMON SHARES OR WARRANT SHARES (INCLUDING SHARES ISSUED
PURSUANT TO SECTION 2.2 HEREOF).

 

1.5                                 “REGISTRATION PERIOD” MEANS THE PERIOD
BETWEEN THE DATE OF THIS AGREEMENT AND THE EARLIER OF (I) THE DATE ON WHICH (X)
ALL OF THE REGISTRABLE SECURITIES HAVE BEEN SOLD BY THE INVESTORS PURSUANT TO
THE REGISTRATION STATEMENT AND (Y) ARE FREELY TRADABLE UNDER THE SECURITIES ACT
(EXCEPT

 

--------------------------------------------------------------------------------

 

THAT THIS CLAUSE (Y) SHALL NOT APPLY WITH RESPECT TO SHARES SOLD TO AFFILIATES)
AND NO FURTHER REGISTRABLE SECURITIES MAY BE ISSUED IN THE FUTURE, (II) THE
SECOND ANNIVERSARY OF THE LAST DATE ON WHICH WARRANT SHARES ARE PURCHASED UNDER
ANY THEN-OUTSTANDING WARRANTS, OR (III) THE DATE ON WHICH ALL THE REGISTRABLE
SECURITIES MAY BE IMMEDIATELY SOLD BY THE INVESTORS WITHOUT REGISTRATION AND
WITHOUT RESTRICTION AS TO THE NUMBER OF REGISTRABLE SECURITIES TO BE SOLD,
PURSUANT TO RULE 144 OR OTHERWISE.

 

1.6                                 “REGISTRATION STATEMENT” MEANS A
REGISTRATION STATEMENT OF THE COMPANY FILED UNDER THE SECURITIES ACT.

 

1.7                                 THE TERMS “REGISTER,” “REGISTERED,” AND
“REGISTRATION” REFER TO A REGISTRATION EFFECTED BY PREPARING AND FILING A
REGISTRATION STATEMENT OR STATEMENTS IN COMPLIANCE WITH THE SECURITIES ACT AND
PURSUANT TO RULE 415 AND THE DECLARATION OR ORDERING OF EFFECTIVENESS OF SUCH
REGISTRATION STATEMENT BY THE SEC.

 

1.8                                 “RULE 415” MEANS RULE 415 UNDER THE
SECURITIES ACT, OR ANY SUCCESSOR RULE PROVIDING FOR OFFERING SECURITIES ON A
CONTINUOUS BASIS, AND APPLICABLE RULES AND REGULATIONS THEREUNDER.

 

1.9                                 “SECURITIES” MEANS THE COMMON SHARES AND THE
WARRANTS SOLD PURSUANT TO THE PURCHASE AGREEMENT.

 

1.10                           “WARRANTS” MEANS THE WARRANTS TO PURCHASE SHARES
OF THE COMPANY’S COMMON STOCK, INCLUDING THE CONTINGENT WARRANTS, SOLD PURSUANT
TO THE PURCHASE AGREEMENT.

 

1.11                           “WARRANT SHARES” MEANS THE SHARES OF THE
COMPANY’S COMMON STOCK, INCLUDING THE CONTINGENT WARRANT SHARES, THAT MAY BE
PURCHASED UPON EXERCISE OF THE WARRANTS.

 

ARTICLE II
REGISTRATION

 

2.1                                 MANDATORY REGISTRATION.  THE COMPANY WILL
USE BEST EFFORTS TO FILE WITH THE SEC A REGISTRATION STATEMENT ON FORM S-3
REGISTERING ALL OF THE REGISTRABLE SECURITIES, OTHER THAN THE CONTINGENT WARRANT
SHARES, FOR RESALE WITHIN 20 DAYS AFTER THE CLOSING DATE UNDER THE PURCHASE
AGREEMENT.  IF FORM S-3 IS NOT AVAILABLE AT THAT TIME, THEN THE COMPANY WILL
FILE A REGISTRATION STATEMENT ON SUCH FORM AS IS THEN AVAILABLE TO EFFECT A
REGISTRATION OF ALL OF THE REGISTRABLE SECURITIES, OTHER THAN THE CONTINGENT
WARRANT SHARES, SUBJECT TO THE CONSENT OF THE INVESTORS, WHICH CONSENT WILL NOT
BE UNREASONABLY WITHHELD.  IN THE EVENT CONTINGENT WARRANTS ARE ISSUED UNDER THE
PURCHASE AGREEMENT, THE COMPANY WILL USE BEST EFFORTS TO FILE WITH THE SEC A
REGISTRATION STATEMENT ON FORM S-3 REGISTERING ALL OF THE CONTINGENT WARRANT
SHARES FOR RESALE WITHIN 20 DAYS AFTER THE TRIGGER DATE.  IF FORM S-3 IS NOT
AVAILABLE AT THAT TIME, THEN THE COMPANY WILL FILE A REGISTRATION STATEMENT ON
SUCH FORM AS IS THEN AVAILABLE TO EFFECT A REGISTRATION OF ALL OF THE CONTINGENT
WARRANT SHARES, SUBJECT TO THE CONSENT OF THE INVESTORS, WHICH CONSENT WILL NOT
BE UNREASONABLY WITHHELD.

 

2.2                                 EFFECTIVENESS OF THE REGISTRATION
STATEMENT.  THE COMPANY WILL USE ITS BEST EFFORTS TO CAUSE EACH REGISTRATION
STATEMENT TO BE DECLARED EFFECTIVE BY THE SEC AS SOON AS PRACTICABLE AFTER
FILING, AND IN ANY EVENT NO LATER THAN THE 90TH DAY AFTER (I) THE CLOSING DATE,
OR (II) WITH RESPECT TO THE REGISTRATION STATEMENT FOR THE CONTINGENT WARRANT
SHARES, THE TRIGGER DATE (AS APPLICABLE, THE “REQUIRED EFFECTIVE DATE”). 
HOWEVER, SO LONG AS THE COMPANY FILED THE APPLICABLE REGISTRATION STATEMENT
WITHIN 20 DAYS AFTER (I) THE CLOSING DATE, OR (II) WITH RESPECT TO THE
REGISTRATION STATEMENT

 

2

--------------------------------------------------------------------------------

 

FOR THE CONTINGENT WARRANT SHARES, THE TRIGGER DATE, (A) IF THE SEC TAKES THE
POSITION THAT REGISTRATION OF THE RESALE OF THE REGISTRABLE SECURITIES BY THE
INVESTORS IS NOT AVAILABLE UNDER APPLICABLE LAWS, RULES AND REGULATION AND THAT
THE COMPANY MUST REGISTER THE OFFERING OF THE REGISTRABLE SECURITIES AS A
PRIMARY OFFERING BY THE COMPANY, OR (B) IF A REGISTRATION STATEMENT RECEIVES SEC
REVIEW, THEN THE REQUIRED EFFECTIVE DATE WILL BE THE 120TH DAY AFTER THE
(I) CLOSING DATE, OR (II) WITH RESPECT TO THE REGISTRATION STATEMENT FOR THE
CONTINGENT WARRANT SHARES, THE TRIGGER DATE.  IN THE CASE OF AN SEC RESPONSE
DESCRIBED IN CLAUSE (A), THE COMPANY WILL, WITHIN 40 BUSINESS DAYS AFTER THE
DATE THE COMPANY RECEIVES SUCH SEC RESPONSE, FILE A REGISTRATION STATEMENT AS A
PRIMARY OFFERING.  THE COMPANY’S BEST EFFORTS WILL INCLUDE, BUT NOT BE LIMITED
TO, PROMPTLY RESPONDING TO ALL COMMENTS RECEIVED FROM THE STAFF OF THE SEC.  IF
THE COMPANY RECEIVES NOTIFICATION FROM THE SEC THAT ANY REGISTRATION STATEMENT
WILL RECEIVE NO ACTION OR REVIEW FROM THE SEC, THEN THE COMPANY WILL FILE WITH
THE SEC A REQUEST FOR ACCELERATION IN ACCORDANCE WITH RULE 461 PROMULGATED UNDER
THE SECURITIES ACT AND CAUSE SUCH REGISTRATION STATEMENT TO BECOME EFFECTIVE
WITHIN FIVE BUSINESS DAYS AFTER SUCH SEC NOTIFICATION.  ONCE A REGISTRATION
STATEMENT IS DECLARED EFFECTIVE BY THE SEC, THE COMPANY WILL CAUSE SUCH
REGISTRATION STATEMENT TO REMAIN EFFECTIVE THROUGHOUT THE REGISTRATION PERIOD,
EXCEPT AS PERMITTED UNDER SECTION 3.  ON THE DATE OF EACH MONTHLY ANNIVERSARY OF
THE DATE ON WHICH ANY BREACH OF SECTION 2.1 OR THIS SECTION 2.2 FIRST OCCURS
(INCLUDING FAILURE TO FILE A REGISTRATION STATEMENT OR TO CAUSE A REGISTRATION
STATEMENT TO BE DECLARED EFFECTIVE WITHIN THE TIME PERIODS SET FORTH HEREIN)
UNTIL THE APPLICABLE DEFAULT IS CURED (EACH A “PAYMENT DATE”), THE COMPANY SHALL
PAY TO EACH INVESTOR AS DAMAGES 1.5% OF THE PURCHASE PRICE PAID BY SUCH INVESTOR
PURSUANT TO THE PURCHASE AGREEMENT.  SUCH PAYMENT SHALL BE THE SOLE REMEDY TO
THE INVESTORS FOR THE COMPANY’S DEFAULT OF SECTION 2.1 OR THIS SECTION 2.2 AND
SHALL BE PAID IN CASH ON THE APPLICABLE PAYMENT DATE IN ACCORDANCE WITH PAYMENT
INSTRUCTIONS PROVIDED BY EACH INVESTOR.  IF THE COMPANY FAILS TO PAY ANY
LIQUIDATED DAMAGES PURSUANT TO THIS SECTION 2.2 IN FULL WITHIN SEVEN DAYS AFTER
THE DATE PAYABLE, THE COMPANY WILL PAY INTEREST THEREON AT A RATE OF 10% PER
ANNUM (OR SUCH LESSER MAXIMUM AMOUNT THAT IS PERMITTED TO BE PAID BY APPLICABLE
LAW) TO EACH INVESTOR, ACCRUING DAILY FROM THE DATE SUCH LIQUIDATED DAMAGES ARE
DUE UNTIL SUCH AMOUNTS, PLUS ALL SUCH INTEREST THEREON, ARE PAID IN FULL.

 

2.3                                 PIGGYBACK REGISTRATIONS.

 

(A)                                  IF, AT ANY TIME PRIOR TO THE EXPIRATION OF
THE REGISTRATION PERIOD, A REGISTRATION STATEMENT CONTEMPLATED IN SECTION 2.1
ABOVE IS NOT DECLARED EFFECTIVE WITH RESPECT TO ALL OF THE REGISTRABLE
SECURITIES TO WHICH IT APPLIES AND THE COMPANY DECIDES TO REGISTER ANY OF ITS
SECURITIES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF OTHERS, THEN THE COMPANY
WILL PROMPTLY GIVE THE INVESTORS WRITTEN NOTICE THEREOF AND WILL USE ITS BEST
EFFORTS TO INCLUDE IN SUCH REGISTRATION ALL OR ANY PART OF THE REGISTRABLE
SECURITIES REQUESTED BY SUCH INVESTORS TO BE INCLUDED THEREIN (EXCLUDING ANY
REGISTRABLE SECURITIES PREVIOUSLY INCLUDED IN A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE AND HAS NOT BEEN WITHDRAWN).  THIS REQUIREMENT DOES NOT
APPLY TO COMPANY REGISTRATIONS ON FORM S-4 OR S-8 OR THEIR EQUIVALENTS RELATING
TO EQUITY SECURITIES TO BE ISSUED SOLELY IN CONNECTION WITH AN ACQUISITION OF
ANY ENTITY OR BUSINESS OR EQUITY SECURITIES ISSUABLE IN CONNECTION WITH STOCK
OPTION OR OTHER EMPLOYEE BENEFIT PLANS.  EACH INVESTOR MUST GIVE ITS REQUEST FOR
REGISTRATION UNDER THIS PARAGRAPH TO THE COMPANY IN WRITING WITHIN 15 DAYS AFTER
RECEIPT FROM THE COMPANY OF NOTICE OF SUCH PENDING REGISTRATION.  IF THE
REGISTRATION FOR WHICH THE COMPANY GIVES NOTICE IS A PUBLIC OFFERING INVOLVING
AN UNDERWRITING, THE COMPANY WILL SO ADVISE THE INVESTORS AS PART OF THE
ABOVE-DESCRIBED WRITTEN NOTICE.  IN THAT EVENT, IF THE MANAGING UNDERWRITER(S)
OF THE PUBLIC OFFERING IMPOSE A LIMITATION ON THE NUMBER OF SHARES OF COMMON
STOCK THAT MAY BE INCLUDED IN THE REGISTRATION STATEMENT BECAUSE, IN SUCH
UNDERWRITER(S)’ JUDGMENT, SUCH LIMITATION WOULD BE NECESSARY TO EFFECT AN
ORDERLY PUBLIC DISTRIBUTION, THEN THE COMPANY WILL BE OBLIGATED TO INCLUDE ONLY
SUCH LIMITED PORTION, IF ANY, OF THE REGISTRABLE

 

3

--------------------------------------------------------------------------------

 

SECURITIES WITH RESPECT TO WHICH SUCH INVESTORS HAVE REQUESTED INCLUSION
HEREUNDER.  ANY EXCLUSION OF REGISTRABLE SECURITIES WILL BE MADE PRO RATA AMONG
ALL HOLDERS OF THE COMPANY’S SECURITIES SEEKING TO INCLUDE SHARES OF COMMON
STOCK IN PROPORTION TO THE NUMBER OF SHARES OF COMMON STOCK SOUGHT TO BE
INCLUDED BY THOSE HOLDERS.  HOWEVER, THE COMPANY WILL NOT EXCLUDE ANY
REGISTRABLE SECURITIES UNLESS THE COMPANY HAS FIRST EXCLUDED ALL OUTSTANDING
SECURITIES THE HOLDERS OF WHICH ARE NOT ENTITLED BY RIGHT TO INCLUSION OF SUCH
SECURITIES IN SUCH REGISTRATION STATEMENT OR ARE NOT ENTITLED PRO RATA INCLUSION
WITH THE REGISTRABLE SECURITIES.  NO REGISTRATION RIGHTS THAT LIMIT OR
SUBORDINATE THE RIGHTS OF THE INVESTORS TO REGISTER THE REGISTRABLE SECURITIES
WILL BE GRANTED BY THE COMPANY UNTIL ONE OR MORE REGISTRATION STATEMENTS
COVERING ALL OF THE REGISTRABLE SECURITIES HAVE BECOME EFFECTIVE.

 

(B)                                 NO RIGHT TO REGISTRATION OF REGISTRABLE
SECURITIES UNDER THIS SECTION 2.3 LIMITS IN ANY WAY THE REGISTRATION REQUIRED
UNDER SECTION 2.1 ABOVE.  THE OBLIGATIONS OF THE COMPANY UNDER THIS SECTION 2.3
EXPIRE UPON THE EARLIER OF (I) THE EFFECTIVENESS OF THE REGISTRATION STATEMENTS
FILED PURSUANT TO SECTION 2.1 ABOVE, (II) AFTER THE COMPANY HAS AFFORDED THE
OPPORTUNITY FOR THE INVESTORS TO EXERCISE REGISTRATION RIGHTS UNDER THIS
SECTION 2.3 FOR TWO REGISTRATIONS (PROVIDED, HOWEVER, THAT ANY INVESTOR THAT HAS
HAD ANY REGISTRABLE SECURITIES EXCLUDED FROM ANY REGISTRATION STATEMENT IN
ACCORDANCE WITH THIS SECTION 2.3 MAY INCLUDE IN ANY ADDITIONAL REGISTRATION
STATEMENT FILED BY THE COMPANY THE REGISTRABLE SECURITIES SO EXCLUDED),
(III) WHEN ALL OF THE REGISTRABLE SECURITIES HELD BY ANY INVESTOR MAY BE SOLD BY
SUCH INVESTOR UNDER RULE 144 WITHOUT BEING SUBJECT TO ANY VOLUME RESTRICTIONS,
OR (IV) THE SECOND ANNIVERSARY OF THE LAST DATE ON WHICH WARRANT SHARES ARE
PURCHASED UNDER ANY THEN OUTSTANDING WARRANTS.

 

2.4                                 ELIGIBILITY TO USE FORM S-3.  THE COMPANY
REPRESENTS AND WARRANTS THAT IT MEETS THE REQUIREMENTS FOR THE USE OF FORM S-3
FOR REGISTRATION OF THE SALE BY THE INVESTORS OF THE REGISTRABLE SECURITIES. 
THE COMPANY WILL FILE ALL REPORTS REQUIRED TO BE FILED BY THE COMPANY WITH THE
SEC IN A TIMELY MANNER SO AS TO PRESERVE ITS ELIGIBILITY FOR THE USE OF
FORM S-3.

 

2.5                                 SALES BY THE COMPANY.  IN NO EVENT WILL THE
COMPANY SELL SHARES OF COMMON STOCK FOR ITS OWN ACCOUNT PURSUANT TO A
REGISTRATION STATEMENT DECLARED EFFECTIVE BY THE SEC PRIOR TO THE DATE THAT THE
REGISTRATION STATEMENT REGISTERING ALL OF THE REGISTRABLE SECURITIES, OTHER THAN
THE CONTINGENT WARRANT SHARES, HAS BEEN DECLARED EFFECTIVE BY THE SEC.

 

ARTICLE III
ADDITIONAL OBLIGATIONS OF THE COMPANY

 

3.1                                 CONTINUED EFFECTIVENESS OF REGISTRATION
STATEMENT.  SUBJECT TO THE LIMITATIONS SET FORTH IN SECTION 3.6, THE COMPANY
WILL KEEP EACH REGISTRATION STATEMENT COVERING THE REGISTRABLE SECURITIES
EFFECTIVE UNDER RULE 415 AT ALL TIMES DURING THE REGISTRATION PERIOD.  IN THE
EVENT THAT THE NUMBER OF SHARES AVAILABLE UNDER A REGISTRATION STATEMENT FILED
PURSUANT TO THIS AGREEMENT IS INSUFFICIENT TO COVER ALL OF THE REGISTRABLE
SECURITIES ISSUED, THE COMPANY WILL (IF PERMITTED) AMEND THE REGISTRATION
STATEMENT OR FILE A NEW REGISTRATION STATEMENT (ON THE SHORT FORM AVAILABLE
THEREFOR, IF APPLICABLE), OR BOTH, SO AS TO COVER ALL OF THE REGISTRABLE
SECURITIES.  THE COMPANY WILL FILE SUCH AMENDMENT OR NEW REGISTRATION STATEMENT
AS SOON AS PRACTICABLE, BUT IN NO EVENT LATER THAN 20 BUSINESS DAYS AFTER THE
NECESSITY THEREFOR ARISES (BASED UPON THE MARKET PRICE OF THE COMMON STOCK AND
OTHER RELEVANT FACTORS ON WHICH THE COMPANY REASONABLY ELECTS TO RELY).  THE
COMPANY WILL USE ITS BEST EFFORTS TO CAUSE SUCH AMENDMENT OR NEW REGISTRATION
STATEMENT TO BECOME EFFECTIVE AS SOON AS IS PRACTICABLE AFTER THE FILING
THEREOF, BUT IN NO EVENT LATER THAN 90 DAYS AFTER THE DATE ON WHICH THE COMPANY
REASONABLY FIRST DETERMINES THE NEED THEREFOR.

 

4

--------------------------------------------------------------------------------

 

3.2                                 ACCURACY OF REGISTRATION STATEMENT.  ANY
REGISTRATION STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO AND
PROSPECTUSES CONTAINED THEREIN) FILED BY THE COMPANY COVERING REGISTRABLE
SECURITIES WILL NOT CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO
STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN, OR NECESSARY TO MAKE THE
STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES IN WHICH THEY WERE MADE, NOT
MISLEADING.  THE COMPANY WILL PREPARE AND FILE WITH THE SEC SUCH AMENDMENTS
(INCLUDING POST-EFFECTIVE AMENDMENTS) AND SUPPLEMENTS TO THE REGISTRATION
STATEMENT AND THE PROSPECTUS USED IN CONNECTION WITH THE REGISTRATION STATEMENT
AS MAY BE NECESSARY TO PERMIT SALES PURSUANT TO THE REGISTRATION STATEMENT AT
ALL TIMES DURING THE REGISTRATION PERIOD, AND, DURING SUCH PERIOD, WILL COMPLY
WITH THE PROVISIONS OF THE SECURITIES ACT WITH RESPECT TO THE DISPOSITION OF ALL
REGISTRABLE SECURITIES OF THE COMPANY COVERED BY THE REGISTRATION STATEMENT
UNTIL THE TERMINATION OF THE REGISTRATION PERIOD, OR IF EARLIER, UNTIL SUCH TIME
AS ALL OF SUCH REGISTRABLE SECURITIES HAVE BEEN DISPOSED OF IN ACCORDANCE WITH
THE INTENDED METHODS OF DISPOSITION BY THE SELLER OR SELLERS THEREOF AS SET
FORTH IN THE REGISTRATION STATEMENT.

 

3.3                                 FURNISHING DOCUMENTATION.  THE COMPANY WILL
FURNISH TO EACH INVESTOR WHOSE REGISTRABLE SECURITIES ARE INCLUDED IN A
REGISTRATION STATEMENT, OR TO ITS LEGAL COUNSEL, (A) PROMPTLY AFTER SUCH
DOCUMENT IS FILED WITH THE SEC, ONE COPY OF ANY REGISTRATION STATEMENT FILED
PURSUANT TO THIS AGREEMENT AND ANY AMENDMENTS THERETO, EACH PRELIMINARY
PROSPECTUS AND FINAL PROSPECTUS AND EACH AMENDMENT OR SUPPLEMENT THERETO; AND
(B) A NUMBER OF COPIES OF A PROSPECTUS, INCLUDING A PRELIMINARY PROSPECTUS, AND
ALL AMENDMENTS AND SUPPLEMENTS THERETO, AND SUCH OTHER DOCUMENTS AS THE INVESTOR
MAY REASONABLY REQUEST IN ORDER TO FACILITATE THE DISPOSITION OF THE REGISTRABLE
SECURITIES OWNED BY THE INVESTOR.  THE COMPANY WILL PROMPTLY NOTIFY BY FACSIMILE
OR EMAIL EACH INVESTOR WHOSE REGISTRABLE SECURITIES ARE INCLUDED IN ANY
REGISTRATION STATEMENT OF THE EFFECTIVENESS OF THE REGISTRATION STATEMENT AND
ANY POST-EFFECTIVE AMENDMENT.

 

3.4                                 ADDITIONAL OBLIGATIONS.  THE COMPANY WILL
USE ITS BEST EFFORTS TO (A) REGISTER AND QUALIFY THE REGISTRABLE SECURITIES
COVERED BY A REGISTRATION STATEMENT UNDER SUCH OTHER SECURITIES OR BLUE SKY LAWS
OF SUCH JURISDICTIONS AS EACH INVESTOR WHO HOLDS (OR HAS THE RIGHT TO HOLD)
REGISTRABLE SECURITIES BEING OFFERED REASONABLY REQUESTS, (B) PREPARE AND FILE
IN THOSE JURISDICTIONS ANY AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) AND
SUPPLEMENTS TO SUCH REGISTRATIONS AND QUALIFICATIONS AS MAY BE NECESSARY TO
MAINTAIN THEIR EFFECTIVENESS DURING THE REGISTRATION PERIOD, (C) TAKE ANY OTHER
ACTIONS NECESSARY TO MAINTAIN SUCH REGISTRATIONS AND QUALIFICATIONS IN EFFECT AT
ALL TIMES DURING THE REGISTRATION PERIOD, AND (D) TAKE ANY OTHER ACTIONS
REASONABLY NECESSARY OR ADVISABLE TO QUALIFY THE REGISTRABLE SECURITIES FOR SALE
IN SUCH JURISDICTIONS.  NOTWITHSTANDING THE FOREGOING, THE COMPANY IS NOT
REQUIRED, IN CONNECTION WITH SUCH OBLIGATIONS, TO (I) QUALIFY TO DO BUSINESS IN
ANY JURISDICTION WHERE IT WOULD NOT OTHERWISE BE REQUIRED TO QUALIFY BUT FOR
THIS SECTION 3.4, (II) SUBJECT ITSELF TO GENERAL TAXATION IN ANY SUCH
JURISDICTION, (III) FILE A GENERAL CONSENT TO SERVICE OF PROCESS IN ANY SUCH
JURISDICTION, (IV) PROVIDE ANY UNDERTAKINGS THAT CAUSE MATERIAL EXPENSE OR
MATERIAL BURDEN TO THE COMPANY, OR (V) MAKE ANY CHANGE IN ITS CHARTER OR BYLAWS,
WHICH IN EACH CASE THE BOARD OF DIRECTORS OF THE COMPANY DETERMINES TO BE
CONTRARY TO THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS.

 

3.5                                 UNDERWRITTEN OFFERINGS.  IF THE INVESTORS
WHO HOLD A MAJORITY IN INTEREST OF THE REGISTRABLE SECURITIES BEING OFFERED IN
AN OFFERING PURSUANT TO A REGISTRATION STATEMENT OR ANY AMENDMENT OR SUPPLEMENT
THERETO UNDER THIS AGREEMENT SELECT UNDERWRITERS REASONABLY ACCEPTABLE TO THE
COMPANY FOR SUCH OFFERING, THE COMPANY WILL ENTER INTO AND PERFORM ITS
OBLIGATIONS UNDER AN UNDERWRITING AGREEMENT IN USUAL AND CUSTOMARY FORM
INCLUDING, WITHOUT LIMITATION, CUSTOMARY INDEMNIFICATION AND CONTRIBUTION
OBLIGATIONS, WITH THE MANAGING UNDERWRITER OF SUCH OFFERING.

 

5

--------------------------------------------------------------------------------

 

3.6                                 SUSPENSION OF REGISTRATION.

 

(A)                                  THE COMPANY WILL NOTIFY (BY TELEPHONE AND
ALSO BY FACSIMILE AND REPUTABLE OVERNIGHT COURIER) EACH INVESTOR WHO HOLDS
REGISTRABLE SECURITIES BEING SOLD PURSUANT TO A REGISTRATION STATEMENT OF THE
HAPPENING OF ANY EVENT OF WHICH THE COMPANY HAS KNOWLEDGE 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.  THE
COMPANY WILL MAKE SUCH NOTIFICATION AS PROMPTLY AS PRACTICABLE (BUT IN NO EVENT
MORE THAN TWO BUSINESS DAYS) AFTER THE COMPANY BECOMES AWARE OF THE EVENT, WILL
PROMPTLY (BUT IN NO EVENT MORE THAN TEN BUSINESS DAYS) PREPARE AND FILE A
SUPPLEMENT OR AMENDMENT TO THE REGISTRATION STATEMENT TO CORRECT SUCH UNTRUE
STATEMENT OR OMISSION, AND WILL DELIVER A NUMBER OF COPIES OF SUCH SUPPLEMENT OR
AMENDMENT TO EACH INVESTOR AS SUCH INVESTOR MAY REASONABLY REQUEST.

 

(B)                                 NOTWITHSTANDING THE OBLIGATIONS UNDER
SECTION 3.6(A), IF IN THE GOOD FAITH JUDGMENT OF THE COMPANY, FOLLOWING
CONSULTATION WITH LEGAL COUNSEL, IT WOULD BE DETRIMENTAL TO THE COMPANY AND ITS
STOCKHOLDERS FOR RESALES OF REGISTRABLE SECURITIES TO BE MADE PURSUANT TO THE
REGISTRATION STATEMENT DUE TO THE EXISTENCE OF A MATERIAL DEVELOPMENT OR
POTENTIAL MATERIAL DEVELOPMENT INVOLVING THE COMPANY WHICH THE COMPANY WOULD BE
OBLIGATED TO DISCLOSE IN THE REGISTRATION STATEMENT, BUT WHICH DISCLOSURE WOULD
BE PREMATURE OR OTHERWISE INADVISABLE AT SUCH TIME OR WOULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT UPON THE COMPANY AND ITS
STOCKHOLDERS, THE COMPANY WILL HAVE THE RIGHT TO SUSPEND THE USE OF THE
REGISTRATION STATEMENT FOR A PERIOD OF NOT MORE THAN THIRTY (30) DAYS, PROVIDED,
HOWEVER, THAT THE COMPANY MAY SO DEFER OR SUSPEND THE USE OF THE REGISTRATION
STATEMENT NO MORE THAN ONE TIME IN ANY TWELVE-MONTH PERIOD.

 

(C)                                  SUBJECT TO THE COMPANY’S RIGHTS UNDER THIS
SECTION 3, THE COMPANY WILL USE ITS BEST EFFORTS TO PREVENT THE ISSUANCE OF ANY
STOP ORDER OR OTHER SUSPENSION OF EFFECTIVENESS OF A REGISTRATION STATEMENT AND,
IF SUCH AN ORDER IS ISSUED, WILL USE ITS BEST EFFORTS TO OBTAIN THE WITHDRAWAL
OF SUCH ORDER AT THE EARLIEST POSSIBLE TIME AND TO NOTIFY EACH INVESTOR THAT
HOLDS REGISTRABLE SECURITIES BEING SOLD (OR, IN THE EVENT OF AN UNDERWRITTEN
OFFERING, THE MANAGING UNDERWRITERS) OF THE ISSUANCE OF SUCH ORDER AND THE
RESOLUTION THEREOF.

 

(D)                                 NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN OR IN THE PURCHASE AGREEMENT, IF THE USE OF THE REGISTRATION
STATEMENT IS SUSPENDED BY THE COMPANY, THE COMPANY WILL PROMPTLY (BUT IN NO
EVENT MORE THAN TWO BUSINESS DAYS) GIVE NOTICE OF THE SUSPENSION TO ALL
INVESTORS WHOSE SECURITIES ARE COVERED BY THE REGISTRATION STATEMENT, AND WILL
PROMPTLY (BUT IN NO EVENT MORE THAN TWO BUSINESS DAYS) NOTIFY EACH SUCH INVESTOR
AS SOON AS THE USE OF THE REGISTRATION STATEMENT MAY BE RESUMED. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE PURCHASE
AGREEMENT, THE COMPANY WILL CAUSE THE TRANSFER AGENT TO DELIVER UNLEGENDED
SHARES OF COMMON STOCK TO A TRANSFEREE OF AN INVESTOR IN ACCORDANCE WITH THE
TERMS OF THE PURCHASE AGREEMENT IN CONNECTION WITH ANY SALE OF REGISTRABLE
SECURITIES WITH RESPECT TO WHICH SUCH INVESTOR HAS ENTERED INTO A CONTRACT FOR
SALE PRIOR TO RECEIPT OF NOTICE OF SUCH SUSPENSION AND FOR WHICH SUCH INVESTOR
HAS NOT YET SETTLED, UNLESS OTHERWISE PROHIBITED BY LAW.

 

3.7                                 REVIEW BY THE INVESTORS.  THE COMPANY WILL
PERMIT A SINGLE FIRM OF LEGAL COUNSEL, DESIGNATED BY THE INVESTORS WHO HOLD A
MAJORITY IN INTEREST OF THE REGISTRABLE SECURITIES BEING SOLD PURSUANT TO A
REGISTRATION STATEMENT (“INVESTOR’S COUNSEL”), TO REVIEW THE REGISTRATION
STATEMENT AND ALL AMENDMENTS AND SUPPLEMENTS THERETO (AS WELL AS ALL REQUESTS
FOR ACCELERATION OR EFFECTIVENESS THEREOF) A REASONABLE AMOUNT OF TIME (NOT TO
EXCEED THREE (3) DAYS) PRIOR TO THEIR FILING WITH THE SEC,

 

6

--------------------------------------------------------------------------------

 

AND WILL NOT FILE ANY DOCUMENT IN A FORM TO WHICH SUCH COUNSEL REASONABLY
OBJECTS, UNLESS OTHERWISE REQUIRED BY LAW IN THE OPINION OF THE COMPANY’S
COUNSEL.  THE SECTIONS OF ANY SUCH REGISTRATION STATEMENT INCLUDING INFORMATION
WITH RESPECT TO THE INVESTORS, THE INVESTORS’ BENEFICIAL OWNERSHIP OF SECURITIES
OF THE COMPANY OR THE INVESTORS’ INTENDED METHOD OF DISPOSITION OF REGISTRABLE
SECURITIES MUST CONFORM TO THE INFORMATION PROVIDED TO THE COMPANY BY EACH OF
THE INVESTORS OR INVESTORS COUNSEL.

 

3.8                                 COMFORT LETTER; LEGAL OPINION.  AT THE
REQUEST OF THE INVESTORS WHO HOLD A MAJORITY IN INTEREST OF THE REGISTRABLE
SECURITIES BEING SOLD PURSUANT TO A REGISTRATION STATEMENT, AND ON THE DATE THAT
REGISTRABLE SECURITIES ARE DELIVERED TO AN UNDERWRITER FOR SALE IN CONNECTION
WITH THE REGISTRATION STATEMENT, THE COMPANY WILL FURNISH TO THE INVESTORS AND
THE UNDERWRITERS (I) A LETTER, DATED SUCH DATE, FROM THE COMPANY’S INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS, IN FORM AND SUBSTANCE AS IS CUSTOMARILY GIVEN BY
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO UNDERWRITERS IN AN UNDERWRITTEN
PUBLIC OFFERING, ADDRESSED TO THE UNDERWRITERS; AND (II) AN OPINION, DATED SUCH
DATE, FROM COUNSEL REPRESENTING THE COMPANY FOR PURPOSES OF THE REGISTRATION
STATEMENT, IN FORM AND SUBSTANCE AS IS CUSTOMARILY GIVEN IN AN UNDERWRITTEN
PUBLIC OFFERING, ADDRESSED TO THE UNDERWRITERS AND INVESTORS.

 

3.9                                 DUE DILIGENCE; CONFIDENTIALITY.

 

(A)                                  THE COMPANY WILL MAKE AVAILABLE FOR
INSPECTION BY ANY INVESTOR WHOSE REGISTRABLE SECURITIES ARE BEING SOLD PURSUANT
TO A REGISTRATION STATEMENT, ANY UNDERWRITER PARTICIPATING IN ANY DISPOSITION
PURSUANT TO THE REGISTRATION STATEMENT, AND ANY ATTORNEY, ACCOUNTANT OR OTHER
AGENT RETAINED BY ANY SUCH INVESTOR OR UNDERWRITER (COLLECTIVELY, THE
“INSPECTORS”), ALL PERTINENT FINANCIAL AND OTHER RECORDS, PERTINENT CORPORATE
DOCUMENTS AND PROPERTIES OF THE COMPANY (COLLECTIVELY, THE “RECORDS”), AS EACH
INSPECTOR REASONABLY DEEMS NECESSARY TO ENABLE THE INSPECTOR TO EXERCISE ITS DUE
DILIGENCE RESPONSIBILITY.  THE COMPANY WILL CAUSE ITS OFFICERS, DIRECTORS AND
EMPLOYEES TO SUPPLY ALL INFORMATION THAT ANY INSPECTOR MAY REASONABLY REQUEST
FOR PURPOSES OF PERFORMING SUCH DUE DILIGENCE.

 

(B)                                 EACH INSPECTOR WILL HOLD IN CONFIDENCE, AND
WILL NOT MAKE ANY DISCLOSURE (EXCEPT TO AN INVESTOR) OF, ANY RECORDS OR OTHER
INFORMATION THAT THE COMPANY DETERMINES IN GOOD FAITH TO BE CONFIDENTIAL, AND OF
WHICH DETERMINATION THE INSPECTORS ARE SO NOTIFIED, UNLESS (I) THE DISCLOSURE OF
SUCH RECORDS IS NECESSARY TO AVOID OR CORRECT A MISSTATEMENT OR OMISSION IN ANY
REGISTRATION STATEMENT, (II) THE RELEASE OF SUCH RECORDS IS ORDERED PURSUANT TO
A SUBPOENA OR OTHER ORDER FROM A COURT OR GOVERNMENT BODY OF COMPETENT
JURISDICTION, (III) THE INFORMATION IN SUCH RECORDS HAS BEEN MADE GENERALLY
AVAILABLE TO THE PUBLIC OTHER THAN BY DISCLOSURE IN VIOLATION OF THIS OR ANY
OTHER AGREEMENT (TO THE KNOWLEDGE OF THE RELEVANT INSPECTOR), (IV) THE RECORDS
OR OTHER INFORMATION WAS DEVELOPED INDEPENDENTLY BY AN INSPECTOR WITHOUT BREACH
OF THIS AGREEMENT, (V) THE INFORMATION WAS KNOWN TO THE INSPECTOR BEFORE RECEIPT
OF SUCH INFORMATION FROM THE COMPANY, OR (VI) THE INFORMATION WAS DISCLOSED TO
THE INSPECTOR BY A THIRD PARTY WITHOUT RESTRICTION.  THE COMPANY IS NOT REQUIRED
TO DISCLOSE ANY CONFIDENTIAL INFORMATION IN THE RECORDS TO ANY INSPECTOR UNLESS
AND UNTIL SUCH INSPECTOR HAS ENTERED INTO A CONFIDENTIALITY AGREEMENT (IN FORM
AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY) WITH THE COMPANY WITH
RESPECT THERETO, SUBSTANTIALLY IN THE SUBSTANCE OF THIS SECTION 3.9(B).  EACH
INVESTOR WILL, UPON LEARNING THAT DISCLOSURE OF RECORDS CONTAINING CONFIDENTIAL
INFORMATION IS SOUGHT IN OR BY A COURT OR GOVERNMENTAL BODY OF COMPETENT
JURISDICTION OR THROUGH OTHER MEANS, GIVE PROMPT NOTICE TO THE COMPANY AND ALLOW
THE COMPANY, AT THE COMPANY’S EXPENSE, TO UNDERTAKE APPROPRIATE ACTION TO
PREVENT DISCLOSURE OF, OR TO OBTAIN A PROTECTIVE ORDER FOR, THE RECORDS DEEMED
CONFIDENTIAL.  NOTHING HEREIN WILL BE DEEMED TO LIMIT THE INVESTOR’S ABILITY TO
SELL REGISTRABLE SECURITIES IN A MANNER THAT IS OTHERWISE CONSISTENT WITH
APPLICABLE LAWS AND REGULATIONS.

 

7

--------------------------------------------------------------------------------

 

(C)                                  THE COMPANY WILL HOLD IN CONFIDENCE, AND
WILL NOT MAKE ANY DISCLOSURE OF, INFORMATION CONCERNING AN INVESTOR PROVIDED TO
THE COMPANY UNDER THIS AGREEMENT UNLESS (I) DISCLOSURE OF SUCH INFORMATION IS
NECESSARY TO COMPLY WITH FEDERAL OR STATE SECURITIES LAWS, (II) THE DISCLOSURE
OF SUCH INFORMATION IS NECESSARY TO AVOID OR CORRECT A MISSTATEMENT OR OMISSION
IN ANY REGISTRATION STATEMENT, (III) THE RELEASE OF SUCH INFORMATION IS ORDERED
PURSUANT TO A SUBPOENA OR OTHER ORDER FROM A COURT OR GOVERNMENTAL BODY OF
COMPETENT JURISDICTION, (IV) SUCH INFORMATION HAS BEEN MADE GENERALLY AVAILABLE
TO THE PUBLIC OTHER THAN BY DISCLOSURE IN VIOLATION OF THIS AGREEMENT OR ANY
OTHER AGREEMENT, (V) THE INFORMATION WAS DISCLOSED TO THE COMPANY BY A THIRD
PARTY WITHOUT RESTRICTION OR (VI) SUCH INVESTOR CONSENTS TO THE FORM AND CONTENT
OF ANY SUCH DISCLOSURE.  IF THE COMPANY LEARNS THAT DISCLOSURE OF SUCH
INFORMATION CONCERNING AN INVESTOR IS SOUGHT IN OR BY A COURT OR GOVERNMENTAL
BODY OF COMPETENT JURISDICTION OR THROUGH OTHER MEANS, THE COMPANY WILL GIVE
PROMPT NOTICE TO SUCH INVESTOR PRIOR TO MAKING SUCH DISCLOSURE AND ALLOW SUCH
INVESTOR, AT ITS EXPENSE, TO UNDERTAKE APPROPRIATE ACTION TO PREVENT DISCLOSURE
OF, OR TO OBTAIN A PROTECTIVE ORDER FOR, SUCH INFORMATION.

 

3.10                           LISTING.  THE COMPANY WILL (I) CAUSE ALL OF THE
REGISTRABLE SECURITIES COVERED BY EACH REGISTRATION STATEMENT TO BE LISTED ON
EACH NATIONAL SECURITIES EXCHANGE ON WHICH SECURITIES OF THE SAME CLASS OR
SERIES ISSUED BY THE COMPANY ARE THEN LISTED, IF ANY, IF THE LISTING OF SUCH
REGISTRABLE SECURITIES IS THEN PERMITTED UNDER THE RULES OF SUCH EXCHANGE, OR
(II) TO THE EXTENT THE SECURITIES OF THE SAME CLASS OR SERIES ARE NOT THEN
LISTED ON A NATIONAL SECURITIES EXCHANGE, SECURE THE DESIGNATION AND QUOTATION
OF ALL OF THE REGISTRABLE SECURITIES COVERED BY EACH REGISTRATION STATEMENT ON
NASDAQ.

 

3.11                           TRANSFER AGENT; REGISTRAR.  THE COMPANY WILL
PROVIDE 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.

 

3.12                           SHARE CERTIFICATES.  THE COMPANY WILL COOPERATE
WITH THE INVESTORS WHO HOLD REGISTRABLE SECURITIES BEING SOLD AND WITH THE
MANAGING UNDERWRITER(S), IF ANY, TO FACILITATE THE TIMELY PREPARATION AND
DELIVERY OF CERTIFICATES (NOT BEARING ANY RESTRICTIVE LEGENDS) REPRESENTING
REGISTRABLE SECURITIES TO BE OFFERED PURSUANT TO A REGISTRATION STATEMENT AND
WILL ENABLE SUCH CERTIFICATES TO BE IN SUCH DENOMINATIONS OR AMOUNTS AS THE CASE
MAY BE, AND REGISTERED IN SUCH NAMES AS THE INVESTORS OR THE MANAGING
UNDERWRITER(S), IF ANY, MAY REASONABLY REQUEST, ALL IN ACCORDANCE WITH ARTICLE V
OF THE PURCHASE AGREEMENT.

 

3.13                           PLAN OF DISTRIBUTION.  AT THE REQUEST OF THE
INVESTORS HOLDING A MAJORITY IN INTEREST OF THE REGISTRABLE SECURITIES
REGISTERED PURSUANT TO A REGISTRATION STATEMENT, THE COMPANY WILL PROMPTLY
PREPARE AND FILE WITH THE SEC SUCH AMENDMENTS (INCLUDING POST-EFFECTIVE
AMENDMENTS) AND SUPPLEMENTS TO THE REGISTRATION STATEMENT, AND THE PROSPECTUS
USED IN CONNECTION WITH THE REGISTRATION STATEMENT, AS MAY BE NECESSARY IN ORDER
TO CHANGE THE PLAN OF DISTRIBUTION SET FORTH IN SUCH REGISTRATION STATEMENT.

 

3.14                           SECURITIES LAWS COMPLIANCE.  THE COMPANY WILL
COMPLY WITH ALL APPLICABLE LAWS RELATED TO ANY REGISTRATION STATEMENT RELATING
TO THE OFFER AND SALE OF REGISTRABLE SECURITIES AND WITH ALL APPLICABLE
RULES AND REGULATIONS OF GOVERNMENTAL AUTHORITIES IN CONNECTION THEREWITH
(INCLUDING, WITHOUT LIMITATION, THE SECURITIES ACT, THE EXCHANGE ACT AND THE
RULES AND REGULATIONS PROMULGATED BY THE SEC).

 

8

--------------------------------------------------------------------------------

 

3.15                           FURTHER ASSURANCES.  THE COMPANY WILL TAKE ALL
OTHER REASONABLE ACTIONS AS ANY INVESTOR OR THE UNDERWRITERS, IF ANY, MAY
REASONABLY REQUEST TO EXPEDITE AND FACILITATE DISPOSITION BY SUCH INVESTOR OF
THE REGISTRABLE SECURITIES PURSUANT TO THE REGISTRATION STATEMENT.

 

ARTICLE IV
OBLIGATIONS OF THE INVESTORS

 

4.1                                 INVESTOR INFORMATION.  AS A CONDITION TO THE
OBLIGATIONS OF THE COMPANY TO COMPLETE ANY REGISTRATION PURSUANT TO THIS
AGREEMENT WITH RESPECT TO THE REGISTRABLE SECURITIES OF EACH INVESTOR, SUCH
INVESTOR WILL 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 IS REASONABLY REQUIRED BY THE COMPANY TO
EFFECT THE REGISTRATION OF THE REGISTRABLE SECURITIES.  AT LEAST 10 BUSINESS
DAYS PRIOR TO THE FIRST ANTICIPATED FILING DATE OF A REGISTRATION STATEMENT FOR
ANY REGISTRATION UNDER THIS AGREEMENT, THE COMPANY WILL NOTIFY EACH INVESTOR OF
THE INFORMATION THE COMPANY REQUIRES FROM THAT INVESTOR IF THE INVESTOR ELECTS
TO HAVE ANY OF ITS REGISTRABLE SECURITIES INCLUDED IN THE REGISTRATION STATEMENT
OTHER THAN INFORMATION CONTAINED IN THE INVESTOR QUESTIONNAIRE ATTACHED HERETO
AS ANNEX A, WHICH SHALL BE COMPLETED AND DELIVERED TO THE COMPANY NO LATER THAN
FIVE (5) DAYS AFTER THE CLOSING DATE.  IF, WITHIN THREE BUSINESS DAYS PRIOR TO
THE FILING DATE, THE COMPANY HAS NOT RECEIVED THE REQUESTED INFORMATION FROM AN
INVESTOR, THEN THE COMPANY SHALL CALL THE INVESTOR TO NOTIFY THE INVESTOR ORALLY
THAT THE COMPANY MAY EXCLUDE SUCH INVESTOR’S REGISTRABLE SECURITIES AND THE
COMPANY MAY FILE THE REGISTRATION STATEMENT WITHOUT INCLUDING REGISTRABLE
SECURITIES OF THAT INVESTOR.

 

4.2                                 FURTHER ASSURANCES.  EACH INVESTOR WILL
COOPERATE WITH THE COMPANY, AS REASONABLY REQUESTED BY THE COMPANY, IN
CONNECTION WITH THE PREPARATION AND FILING OF ANY REGISTRATION STATEMENT
HEREUNDER, UNLESS SUCH INVESTOR HAS NOTIFIED THE COMPANY IN WRITING OF SUCH
INVESTOR’S ELECTION TO EXCLUDE ALL OF SUCH INVESTOR’S REGISTRABLE SECURITIES
FROM THE REGISTRATION STATEMENT.

 

4.3                                 SUSPENSION OF SALES.  UPON RECEIPT OF ANY
NOTICE FROM THE COMPANY OF THE HAPPENING OF ANY EVENT OF THE KIND DESCRIBED IN
SECTION 3.6, EACH INVESTOR WILL IMMEDIATELY DISCONTINUE DISPOSITION OF
REGISTRABLE SECURITIES PURSUANT TO THE REGISTRATION STATEMENT COVERING SUCH
REGISTRABLE SECURITIES UNTIL IT RECEIVES COPIES OF THE SUPPLEMENTED OR AMENDED
PROSPECTUS CONTEMPLATED BY SECTION 3.6.  IF SO DIRECTED BY THE COMPANY, EACH
INVESTOR WILL DELIVER TO THE COMPANY (AT THE EXPENSE OF THE COMPANY) OR DESTROY
(AND DELIVER TO THE COMPANY A CERTIFICATE OF DESTRUCTION) ALL COPIES IN THE
INVESTOR’S POSSESSION (OTHER THAN A LIMITED NUMBER OF FILE COPIES) OF THE
PROSPECTUS COVERING SUCH REGISTRABLE SECURITIES THAT IS CURRENT AT THE TIME OF
RECEIPT OF SUCH NOTICE.

 

4.4                                 UNDERWRITTEN OFFERINGS.

 

(A)                                  IF INVESTORS HOLDING A MAJORITY IN INTEREST
OF THE REGISTRABLE SECURITIES BEING REGISTERED (WITH THE APPROVAL OF THE INITIAL
INVESTORS) DETERMINE TO ENGAGE THE SERVICES OF AN UNDERWRITER, EACH INVESTOR
WILL ENTER INTO AND PERFORM SUCH INVESTOR’S OBLIGATIONS UNDER AN UNDERWRITING
AGREEMENT, IN USUAL AND CUSTOMARY FORM, INCLUDING, WITHOUT LIMITATION, CUSTOMARY
INDEMNIFICATION AND CONTRIBUTION OBLIGATIONS, WITH THE MANAGING UNDERWRITER OF
SUCH OFFERING, AND WILL TAKE SUCH OTHER ACTIONS AS ARE REASONABLY REQUIRED IN
ORDER TO EXPEDITE OR FACILITATE THE DISPOSITION OF THE REGISTRABLE SECURITIES,
UNLESS SUCH INVESTOR HAS NOTIFIED THE COMPANY IN WRITING OF SUCH INVESTOR’S
ELECTION TO EXCLUDE ALL OF ITS REGISTRABLE SECURITIES FROM SUCH REGISTRATION
STATEMENT.

 

9

--------------------------------------------------------------------------------

 

(B)                                 WITHOUT LIMITING ANY INVESTOR’S RIGHTS UNDER
SECTION 2.1 HEREOF, NO INVESTOR MAY PARTICIPATE IN ANY UNDERWRITTEN DISTRIBUTION
HEREUNDER UNLESS SUCH INVESTOR (A) AGREES TO SELL SUCH INVESTOR’S REGISTRABLE
SECURITIES ON THE BASIS PROVIDED IN ANY UNDERWRITING ARRANGEMENTS APPROVED BY
THE INVESTORS ENTITLED HEREUNDER TO APPROVE SUCH ARRANGEMENTS, (B) COMPLETES AND
EXECUTES ALL QUESTIONNAIRES, POWERS OF ATTORNEY, INDEMNITIES, UNDERWRITING
AGREEMENTS AND OTHER DOCUMENTS REASONABLY REQUIRED UNDER THE TERMS OF SUCH
UNDERWRITING ARRANGEMENTS, AND (C) AGREES TO PAY ITS PRO RATA SHARE OF ALL
UNDERWRITING DISCOUNTS AND COMMISSIONS APPLICABLE WITH RESPECT TO ITS
REGISTRABLE SECURITIES.

 

ARTICLE V
EXPENSES OF REGISTRATION

 

The Company will bear all expenses, other than underwriting discounts and
commissions, and transfer taxes, if any, incurred in connection with
registrations, filings or qualifications pursuant to Articles II and III of this
Agreement, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, the fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements of one firm
of legal counsel selected by the Initial Investors pursuant to Section 3.7
hereof.

 

ARTICLE VI
INDEMNIFICATION

 

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

 

6.1                                 TO THE EXTENT PERMITTED BY LAW, THE COMPANY
WILL INDEMNIFY, DEFEND AND HOLD HARMLESS EACH INVESTOR THAT HOLDS SUCH
REGISTRABLE SECURITIES, AND AGENTS, EMPLOYEES, ATTORNEYS, ACCOUNTANTS,
UNDERWRITERS (AS DEFINED IN THE SECURITIES ACT) FOR SUCH INVESTORS AND ANY
DIRECTORS OR OFFICERS OF SUCH INVESTOR OR SUCH UNDERWRITER AND ANY PERSON WHO
CONTROLS SUCH INVESTOR OR SUCH UNDERWRITER WITHIN THE MEANING OF THE SECURITIES
ACT OR THE EXCHANGE ACT (EACH, AN “INVESTOR INDEMNIFIED PERSON”) AGAINST ANY
LOSSES, CLAIMS, DAMAGES, EXPENSES OR LIABILITIES (COLLECTIVELY, AND TOGETHER
WITH ACTIONS, PROCEEDINGS OR INQUIRIES BY ANY REGULATORY OR SELF-REGULATORY
ORGANIZATION, WHETHER COMMENCED OR THREATENED IN RESPECT THEREOF, “CLAIMS”) TO
WHICH ANY OF THEM BECOME SUBJECT UNDER THE SECURITIES ACT, THE EXCHANGE ACT OR
OTHERWISE, INSOFAR AS SUCH CLAIMS ARISE OUT OF OR ARE BASED UPON ANY OF THE
FOLLOWING STATEMENTS, OMISSIONS OR VIOLATIONS IN A REGISTRATION STATEMENT FILED
PURSUANT TO THIS AGREEMENT, ANY POST-EFFECTIVE AMENDMENT THEREOF OR ANY
PROSPECTUS INCLUDED THEREIN:  (A) ANY UNTRUE STATEMENT OR ALLEGED UNTRUE
STATEMENT OF A MATERIAL FACT CONTAINED IN THE REGISTRATION STATEMENT OR ANY
POST-EFFECTIVE AMENDMENT THEREOF OR THE OMISSION OR ALLEGED OMISSION TO STATE
THEREIN A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE
STATEMENTS THEREIN NOT MISLEADING, (B) ANY UNTRUE STATEMENT OR ALLEGED UNTRUE
STATEMENT OF A MATERIAL FACT CONTAINED IN THE PROSPECTUS OR ANY PRELIMINARY
PROSPECTUS (AS IT MAY BE AMENDED OR SUPPLEMENTED) OR THE OMISSION OR ALLEGED
OMISSION TO STATE THEREIN ANY MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS
MADE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THE STATEMENTS THEREIN
WERE MADE, NOT MISLEADING, OR (C) ANY VIOLATION OR ALLEGED VIOLATION BY THE
COMPANY OF THE SECURITIES ACT, THE EXCHANGE ACT OR ANY OTHER LAW, INCLUDING
WITHOUT LIMITATION ANY STATE SECURITIES LAW OR ANY RULE OR REGULATION THEREUNDER
(THE MATTERS IN THE FOREGOING CLAUSES (A) THROUGH (C) BEING, COLLECTIVELY,
“VIOLATIONS”).  SUBJECT TO THE RESTRICTIONS SET FORTH IN SECTION 6.4 WITH
RESPECT TO THE NUMBER OF LEGAL COUNSEL, THE COMPANY WILL REIMBURSE THE INVESTORS
AND EACH SUCH ATTORNEY, ACCOUNTANT, UNDERWRITER OR CONTROLLING PERSON AND EACH
SUCH OTHER INVESTOR INDEMNIFIED PERSON, PROMPTLY AS SUCH EXPENSES

 

10

--------------------------------------------------------------------------------

 

ARE INCURRED AND ARE DUE AND PAYABLE, FOR ANY LEGAL FEES OR OTHER REASONABLE
EXPENSES INCURRED BY THEM IN CONNECTION WITH INVESTIGATING OR DEFENDING ANY
CLAIM.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE
INDEMNIFICATION AGREEMENT CONTAINED IN THIS SECTION 6.1 (I) DOES NOT APPLY TO A
CLAIM BY AN INVESTOR INDEMNIFIED PERSON ARISING OUT OF OR BASED UPON A VIOLATION
THAT OCCURS IN RELIANCE UPON AND IN CONFORMITY WITH INFORMATION FURNISHED IN
WRITING TO THE COMPANY BY SUCH INVESTOR INDEMNIFIED PERSON EXPRESSLY FOR USE IN
THE REGISTRATION STATEMENT OR ANY SUCH AMENDMENT THEREOF OR SUPPLEMENT THERETO,
IF SUCH PROSPECTUS OR SUPPLEMENT THERETO WAS TIMELY MADE AVAILABLE BY THE
COMPANY PURSUANT TO SECTION 3.3 HEREOF; AND (II) DOES NOT APPLY TO AMOUNTS PAID
IN SETTLEMENT OF ANY CLAIM IF SUCH SETTLEMENT IS MADE WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMPANY, WHICH CONSENT WILL NOT BE UNREASONABLY WITHHELD. THIS
INDEMNITY OBLIGATION WILL REMAIN IN FULL FORCE AND EFFECT REGARDLESS OF ANY
INVESTIGATION MADE BY OR ON BEHALF OF THE INDEMNIFIED PERSONS AND WILL SURVIVE
THE TRANSFER OF THE REGISTRABLE SECURITIES BY THE INVESTORS UNDER ARTICLE IX OF
THIS AGREEMENT.

 

6.2                                 IN CONNECTION WITH ANY REGISTRATION
STATEMENT IN WHICH AN INVESTOR IS PARTICIPATING, ABSENT ANY NEGLIGENCE OR
INTENTIONAL MISCONDUCT OF THE COMPANY, EACH SUCH INVESTOR WILL INDEMNIFY AND
HOLD HARMLESS, TO THE SAME EXTENT AND IN THE SAME MANNER SET FORTH IN
SECTION 6.1 ABOVE, THE COMPANY, EACH OF ITS DIRECTORS, EACH OF ITS OFFICERS WHO
SIGNS THE REGISTRATION STATEMENT, EACH PERSON, IF ANY, WHO CONTROLS THE COMPANY
WITHIN THE MEANING OF THE SECURITIES ACT OR THE EXCHANGE ACT, AND ANY OTHER
STOCKHOLDER SELLING SECURITIES PURSUANT TO THE REGISTRATION STATEMENT OR ANY OF
ITS DIRECTORS OR OFFICERS OR ANY PERSON WHO CONTROLS SUCH STOCKHOLDER WITHIN THE
MEANING OF THE SECURITIES ACT OR THE EXCHANGE ACT (EACH A “COMPANY INDEMNIFIED
PERSON”) AGAINST ANY CLAIM TO WHICH ANY OF THEM MAY BECOME SUBJECT UNDER THE
SECURITIES ACT, THE EXCHANGE ACT OR OTHERWISE, INSOFAR AS SUCH CLAIM ARISES OUT
OF OR IS BASED UPON ANY VIOLATION, IN EACH CASE TO THE EXTENT (AND ONLY TO THE
EXTENT) THAT SUCH VIOLATION OCCURS IN RELIANCE UPON AND IN CONFORMITY WITH
WRITTEN INFORMATION FURNISHED TO THE COMPANY BY SUCH INVESTOR EXPRESSLY FOR USE
IN SUCH REGISTRATION STATEMENT.  SUBJECT TO THE RESTRICTIONS SET FORTH IN
SECTION 6.4 WITH RESPECT TO THE NUMBER OF LEGAL COUNSEL, SUCH INVESTOR WILL
PROMPTLY REIMBURSE EACH COMPANY INDEMNIFIED PERSON FOR ANY LEGAL OR OTHER
EXPENSES (PROMPTLY AS SUCH EXPENSES ARE INCURRED AND DUE AND PAYABLE) REASONABLY
INCURRED BY THEM IN CONNECTION WITH INVESTIGATING OR DEFENDING ANY SUCH CLAIM.  
HOWEVER, THE INDEMNITY AGREEMENT CONTAINED IN THIS SECTION 6.2 DOES NOT APPLY TO
AMOUNTS PAID IN SETTLEMENT OF ANY CLAIM IF SUCH SETTLEMENT IS EFFECTED WITHOUT
THE PRIOR WRITTEN CONSENT OF SUCH INVESTOR, WHICH CONSENT WILL NOT BE
UNREASONABLY WITHHELD, AND NO INVESTOR WILL BE LIABLE UNDER THIS AGREEMENT
(INCLUDING THIS SECTION 6.2 AND ARTICLE VII) FOR THE AMOUNT OF ANY CLAIM THAT
EXCEEDS THE NET PROCEEDS ACTUALLY RECEIVED BY SUCH INVESTOR AS A RESULT OF THE
SALE OF REGISTRABLE SECURITIES PURSUANT TO SUCH REGISTRATION STATEMENT.  THIS
INDEMNITY WILL REMAIN IN FULL FORCE AND EFFECT REGARDLESS OF ANY INVESTIGATION
MADE BY OR ON BEHALF OF A COMPANY INDEMNIFIED PARTY AND WILL SURVIVE THE
TRANSFER OF THE REGISTRABLE SECURITIES BY THE INVESTORS UNDER ARTICLE IX OF THIS
AGREEMENT.

 

6.3                                 IF ANY PROCEEDING SHALL BE BROUGHT OR
ASSERTED AGAINST ANY PERSON ENTITLED TO INDEMNITY UNDER SECTIONS 6.1 OR 6.2
HEREOF (AN “INDEMNIFIED PARTY”), SUCH INDEMNIFIED PARTY PROMPTLY SHALL NOTIFY
THE PERSON FROM WHOM INDEMNITY IS SOUGHT (THE “INDEMNIFYING PARTY”) IN WRITING,
AND THE INDEMNIFYING PARTY SHALL ASSUME THE DEFENSE THEREOF, INCLUDING THE
EMPLOYMENT OF COUNSEL REASONABLY SATISFACTORY TO THE INDEMNIFIED PARTY AND THE
PAYMENT OF ALL REASONABLE FEES AND EXPENSES INCURRED IN CONNECTION WITH DEFENSE
THEREOF; PROVIDED, HOWEVER, 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 PROXIMATELY AND MATERIALLY ADVERSELY PREJUDICED THE INDEMNIFYING
PARTY.

 

11

--------------------------------------------------------------------------------

 

6.4                                 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 INDEMNIFIED PARTIES UNLESS: (I) THE INDEMNIFYING PARTY
HAS AGREED IN WRITING TO PAY SUCH FEES AND EXPENSES; (II) 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 (III) 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
SUCH COUNSEL SHALL BE AT THE REASONABLE EXPENSE OF THE INDEMNIFYING PARTY;
PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE INDEMNIFYING PARTY BE RESPONSIBLE
FOR THE FEES AND EXPENSES OF MORE THAN ONE SEPARATE COUNSEL).  THE INDEMNIFYING
PARTY SHALL NOT BE LIABLE FOR ANY SETTLEMENT OF ANY SUCH PROCEEDING EFFECTED
WITHOUT ITS WRITTEN CONSENT, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD. 
NO INDEMNIFYING PARTY SHALL, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
INDEMNIFIED PARTY, EFFECT ANY SETTLEMENT OF ANY PENDING PROCEEDING IN RESPECT OF
WHICH ANY INDEMNIFIED PARTY IS A PARTY, UNLESS SUCH SETTLEMENT INCLUDES AN
UNCONDITIONAL RELEASE OF SUCH INDEMNIFIED PARTY FROM ALL LIABILITY ON CLAIMS
THAT ARE THE SUBJECT MATTER OF SUCH PROCEEDING.

 

6.5                                 SUBJECT TO THE FOREGOING, ALL REASONABLE
FEES AND EXPENSES OF THE INDEMNIFIED PARTY (INCLUDING FEES AND EXPENSES TO THE
EXTENT INCURRED IN CONNECTION WITH INVESTIGATING OR PREPARING TO DEFEND SUCH
PROCEEDING IN A MANNER NOT INCONSISTENT WITH THIS SECTION) SHALL BE PAID TO THE
INDEMNIFIED PARTY, AS INCURRED, WITHIN TEN (10) BUSINESS DAYS OF WRITTEN NOTICE
THEREOF TO THE INDEMNIFYING PARTY, WHICH NOTICE SHALL BE DELIVERED NO MORE
FREQUENTLY THAN ON A MONTHLY BASIS (REGARDLESS OF WHETHER IT IS ULTIMATELY
DETERMINED THAT AN INDEMNIFIED PARTY IS NOT ENTITLED TO INDEMNIFICATION
HEREUNDER; PROVIDED, THAT THE INDEMNIFYING PARTY MAY REQUIRE SUCH INDEMNIFIED
PARTY TO UNDERTAKE TO REIMBURSE ALL SUCH FEES AND EXPENSES TO THE EXTENT IT IS
FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PARTY IS NOT ENTITLED TO
INDEMNIFICATION HEREUNDER).

 

ARTICLE VII
CONTRIBUTION

 

To the extent that any indemnification provided for herein is prohibited or
limited by law, the indemnifying party will make the maximum contribution with
respect to any amounts for which it would otherwise be liable under Article VI
to the fullest extent permitted by law.  However, (a) no contribution will be
made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Article VI (without
giving effect to any prohibition or limitation or indemnification under
applicable law), (b) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation, and (c) contribution (together with any indemnification or
other obligations under this Agreement) by any seller of Registrable Securities
will be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.

 

12

--------------------------------------------------------------------------------

 

ARTICLE VIII
EXCHANGE ACT REPORTING

 

In order to make available to the Investors the benefits of Rule 144 or any
similar rule or regulation of the SEC that may at any time permit the Investors
to sell securities of the Company to the public without registration, the
Company will:

 

(A)                                  FILE WITH THE SEC IN A TIMELY MANNER, AND
MAKE AND KEEP AVAILABLE, ALL REPORTS AND OTHER DOCUMENTS REQUIRED OF THE COMPANY
UNDER THE SECURITIES ACT AND THE EXCHANGE ACT SO LONG AS THE COMPANY REMAINS
SUBJECT TO SUCH REQUIREMENTS (IT BEING UNDERSTOOD THAT NOTHING HEREIN LIMITS THE
COMPANY’S OBLIGATIONS UNDER SECTION 4.3 OF THE PURCHASE AGREEMENT) AND FILE AND
MAKE AVAILABLE OF SUCH REPORTS AND OTHER DOCUMENTS AS REQUIRED FOR THE
APPLICABLE PROVISIONS OF RULE 144; AND

 

(B)                                 FURNISH TO EACH INVESTOR, SO LONG AS SUCH
INVESTOR HOLDS REGISTRABLE SECURITIES, PROMPTLY UPON THE INVESTOR’S REQUEST,
(I) A WRITTEN STATEMENT BY THE COMPANY THAT IT HAS COMPLIED WITH THE REPORTING
REQUIREMENTS OF RULE 144, THE SECURITIES ACT AND THE EXCHANGE ACT, (II) A COPY
OF THE MOST RECENT ANNUAL OR QUARTERLY REPORT OF THE COMPANY AND SUCH OTHER
REPORTS AND DOCUMENTS FILED BY THE COMPANY WITH THE SEC AND (III) SUCH OTHER
INFORMATION AS MAY BE REASONABLY REQUESTED TO PERMIT THE INVESTORS TO SELL SUCH
SECURITIES PURSUANT TO RULE 144 WITHOUT REGISTRATION.

 

ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS

 

The rights of the Initial Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, may be
assigned by the Initial Investors to transferees or assignees of all or any
portion of the Registrable Securities, but only if (a) the Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being transferred or assigned, (c) after such transfer
or assignment, the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and applicable state securities
laws, (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, (e) such transfer is made in accordance with the applicable requirements
of the Purchase Agreement, and (f) the transferee is an “accredited investor” as
that term is defined in Rule 501 of Regulation D.

 

ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS

 

This Agreement may be amended and the obligations hereunder may be waived
(either generally or in a particular instance, and either retroactively or
prospectively) only with the written consent of the Company and of the Investors
who then hold a majority interest of the Registrable Securities.  Any amendment
or waiver effected in accordance with this Article X is binding upon each
Investor and the Company.

 

13

--------------------------------------------------------------------------------

 

ARTICLE XI
MISCELLANEOUS

 

11.1                           CONFLICTING INSTRUCTIONS.  A PERSON OR ENTITY IS
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 WILL ACT UPON THE BASIS
OF INSTRUCTIONS, NOTICE OR ELECTION RECEIVED FROM THE REGISTERED OWNER OF SUCH
REGISTRABLE SECURITIES.

 

11.2                           NOTICES.  ANY NOTICES REQUIRED OR PERMITTED TO BE
GIVEN UNDER THE TERMS OF THIS AGREEMENT WILL BE GIVEN AS SET FORTH IN THE
PURCHASE AGREEMENT.

 

11.3                           WAIVER.  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, DOES NOT OPERATE AS A WAIVER THEREOF.

 

11.4                           GOVERNING LAW.  THIS AGREEMENT WILL BE GOVERNED
BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.  THE PARTIES HERETO HEREBY SUBMIT
TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL AND STATE COURTS
LOCATED IN THE STATE OF NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS
AGREEMENT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT THAT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL
FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH
ANY TRANSACTION CONTEMPLATED HEREBY.

 

11.5                           SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT
IS INVALID OR UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR RULE OF LAW, THEN
SUCH PROVISION WILL BE DEEMED MODIFIED IN ORDER TO CONFORM WITH SUCH STATUTE OR
RULE OF LAW.  ANY PROVISION HEREOF THAT MAY PROVE INVALID OR UNENFORCEABLE UNDER
ANY LAW WILL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION
HEREOF.

 

11.6                           ENTIRE AGREEMENT.  THIS AGREEMENT AND THE
PURCHASE AGREEMENT (INCLUDING ALL SCHEDULES AND EXHIBITS THERETO) CONSTITUTE THE
ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND THEREOF.  THERE ARE NO RESTRICTIONS, PROMISES, WARRANTIES OR
UNDERTAKINGS, OTHER THAN THOSE SET FORTH OR REFERRED TO HEREIN OR THEREIN.  THIS
AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS AMONG THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF.

 

11.7                           SUCCESSORS AND ASSIGNS.  SUBJECT TO THE
REQUIREMENTS OF ARTICLE IX HEREOF, THIS AGREEMENT INURES TO THE BENEFIT OF AND
IS BINDING UPON THE SUCCESSORS AND ASSIGNS OF EACH OF THE PARTIES HERETO. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, INCLUDING, WITHOUT LIMITATION,
ARTICLE IX, THE RIGHTS OF AN INVESTOR HEREUNDER ARE ASSIGNABLE TO AND
EXERCISABLE BY A BONA FIDE PLEDGEE OF THE REGISTRABLE SECURITIES IN CONNECTION
WITH AN INVESTOR’S MARGIN OR BROKERAGE ACCOUNTS.

 

11.8                           HEADINGS.  THE HEADINGS OF THIS AGREEMENT ARE FOR
CONVENIENCE OF REFERENCE ONLY, ARE NOT PART OF THIS AGREEMENT AND DO NOT AFFECT
ITS INTERPRETATION.

 

14

--------------------------------------------------------------------------------

 

11.9                           COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN
TWO OR MORE COUNTERPARTS, EACH OF WHICH IS DEEMED AN ORIGINAL BUT ALL OF WHICH
CONSTITUTE ONE AND THE SAME AGREEMENT.  THIS AGREEMENT, ONCE EXECUTED BY A
PARTY, MAY BE DELIVERED TO THE OTHER PARTY HERETO BY FACSIMILE TRANSMISSION, AND
FACSIMILE SIGNATURES ARE BINDING ON THE PARTIES HERETO.

 

11.10                     FURTHER ASSURANCES.  EACH PARTY WILL DO AND PERFORM,
OR CAUSE TO BE DONE AND PERFORMED, ALL SUCH FURTHER ACTS AND THINGS, AND WILL
EXECUTE AND DELIVER ALL OTHER AGREEMENTS, CERTIFICATES, INSTRUMENTS AND
DOCUMENTS, AS ANOTHER PARTY MAY REASONABLY REQUEST IN ORDER TO CARRY OUT THE
INTENT AND ACCOMPLISH THE PURPOSES OF THIS AGREEMENT AND THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

11.11                     CONSENTS.  UNLESS OTHERWISE PROVIDED IN THIS
AGREEMENT, ALL CONSENTS AND OTHER DETERMINATIONS TO BE MADE BY THE INVESTORS
PURSUANT TO THIS AGREEMENT WILL BE MADE BY THE INVESTORS HOLDING A MAJORITY IN
INTEREST OF THE REGISTRABLE SECURITIES.

 

11.12                     NO STRICT CONSTRUCTION.  THE LANGUAGE USED IN THIS
AGREEMENT IS DEEMED TO BE THE LANGUAGE CHOSEN BY THE PARTIES TO EXPRESS THEIR
MUTUAL INTENT, AND NO RULES OF STRICT CONSTRUCTION WILL BE APPLIED AGAINST ANY
PARTY.

 

15

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned Investors and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first above
written.

 

 

COMPANY:

 

 

 

SONUS PHARMACEUTICALS, INC.

 

 

 

 

 

By:

 

/s/ Michael A. Martino

 

 

Name:

 

Michael A. Martino

 

 

Title:

 

President and CEO

 

 

16

--------------------------------------------------------------------------------

 

OMNIBUS SIGNATURE PAGE TO

SONUS PHARMACEUTICALS, INC.

REGISTRATION RIGHTS AGREEMENT

 

 

The undersigned hereby executes and delivers the Registration Rights Agreement
to which this Signature Page is attached, which, together with all counterparts
of the Agreement and Signature Pages of the other parties named in said
Agreement, shall constitute one and the same document in accordance with the
terms of the Agreement.

 

 

Sign Name:

 

 

 

 

Print Name:

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telephone:

 

 

 

 

 

Facsimile:

 

 

 

 

Number of Common Shares:

 

 

 

 

 

Number of Warrant Shares:

 

 

17

--------------------------------------------------------------------------------

 

ANNEX A

 

Sonus Pharmaceuticals, Inc.

 

Selling Securityholder Notice and Questionnaire

 

The undersigned beneficial owner of common stock, $.001 par value per share (the
“Common Stock”), of Sonus Pharmaceuticals, Inc. (the “Company”), (the
“Registrable Securities”) understands that the Company has filed or intends to
file with the Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (the “Registration Statement”) for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the “Securities Act”), of the Registrable Securities, in accordance with the
terms of the Registration Rights Agreement, dated as of August       , 2005 (the
“Registration Rights Agreement”), among the Company and the Purchasers named
therein.  A copy of the Registration Rights Agreement is available from the
Company upon request at the address set forth below.  All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Registration Rights Agreement.

 

Certain legal consequences arise from being named as a selling securityholder in
the Registration Statement and the related prospectus.  Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Securityholder”) of Registrable
Securities hereby elects to include the Registrable Securities owned by it and
listed below in Item 3 (unless otherwise specified under such Item 3) in the
Registration Statement.

 

18

--------------------------------------------------------------------------------

 

The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

1.                                      Name.

 

(a)

 

Full Legal Name of Selling Securityholder

 

 

 

 

 

 

(b)

 

Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities Listed in Item 3 below are held:

 

 

 

 

 

 

(c)

 

Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire):

 

 

 

 

 

 

2. Address for Notices to Selling Securityholder:

 

 

 

 

 

 

  Telephone:

 

 

  Fax:

 

 

  Contact Person:

 

 

 

3.  Beneficial Ownership of Registrable Securities:

 

(a)

 

Type and Amount of Registrable Securities beneficially owned:

 

 

 

 

 

 

 

 

 

 

 

 

 

19

--------------------------------------------------------------------------------

 

4.  Broker-Dealer Status:

 

(a)                                  Are you a broker-dealer?

 

Yes   o              No   o

 

Note:                   If yes, the Commission’s staff has indicated that you
should be identified as an underwriter in the Registration Statement.

 

(b)                                 Are you an affiliate of a broker-dealer?

 

Yes   o              No   o

 

(c)                                  If you are an affiliate of a broker-dealer,
do you certify that you bought the Registrable Securities in the ordinary course
of business, and at the time of the purchase of the Registrable Securities to be
resold, you had no agreements or understandings, directly or indirectly, with
any person to distribute the Registrable Securities?

 

Yes   o              No   o

 

Note:                   If no, the Commission’s staff has indicated that you
should be identified as an underwriter in the Registration Statement.

 

5.  Beneficial Ownership of Other Securities of the Company Owned by the Selling
Securityholder.

 

Except as set forth below in this Item 5, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.

 

(a)

Type and Amount of Other Securities beneficially owned by the Selling
Securityholder:

 

 

 

 

 

 

 

20

--------------------------------------------------------------------------------

 

6.  Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.

 

 

State any exceptions here:

 

 

 

 

 

 

 

The undersigned agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof at any time while the Registration Statement remains effective.

 

By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related prospectus.  The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Registration Statement
and the related prospectus.

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

 

Dated:

 

 

Beneficial Owner:

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

Title:

 

 

 

21

--------------------------------------------------------------------------------