Exhibit 10.2

 

INVESTORS RIGHTS AGREEMENT

 

THIS INVESTORS RIGHTS AGREEMENT (this “Agreement”) is made and entered into as
of April 1, 2011, by and among CombiMatrix Corporation, a Delaware corporation
(the “Company”), and each purchaser identified on the signature pages hereto
(each, including its successors and assigns, a “Purchaser” and collectively, the
“Purchasers”).

 

RECITALS

 

A.            Simultaneously with the execution of this Agreement, the Company
and the Purchasers are entering into that certain Securities Purchase Agreement,
dated as of April 1, 2011, by and among the Company and the Purchasers (the
“Purchase Agreement”).

 

B.            To induce the Purchasers to enter into the Purchase Agreement, the
Company is entering into this Agreement.

 

AGREEMENT

 

In consideration of the mutual covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company and each of the Purchasers agree as follows:

 

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

 

“Advice” shall have the meaning set forth in Section 7(f).

 

“Affiliate” means, with respect to any person, any other person which directly
or indirectly controls, is controlled by, or is under common control with, such
person.

 

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

 

“Closing” has the meaning set forth in the Purchase Agreement.

 

“Closing Date” has the meaning set forth in the Purchase Agreement.

 

“Commission” means the Securities and Exchange Commission.

 

“common stock” or “Common Stock” means the common stock of the Company, par
value $0.001 per share, and any securities into which such common stock may
hereinafter be reclassified.

 

“Effective Date” means the date that the Registration Statement filed pursuant
to Section 2(a) is first declared effective by the Commission.

 

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“Effectiveness Deadline” means, with respect to the Initial Registration
Statement or the New Registration Statement, the earlier of: (i) the
60th calendar day following receipt by the Company of the Request Notice or, in
the case of a New Registration Statement, the 60th calendar day following
receipt by the Company of written comments from the Commission refusing to
accept the position set forth in the Response Letter (as defined in
Section 2(a)); provided, that, if the Commission reviews and has written
comments to a filed Registration Statement, then the Effectiveness Deadline
under this clause (i) shall be the 120th calendar day following receipt by the
Company of the Request Notice, and (ii) the tenth (10th) Trading Day following
the date on which the Company is notified by the Commission that the
Registration Statement will not be reviewed or is no longer subject to further
review and comments and the effectiveness of the Registration Statement may be
accelerated; provided, however, that if the Effectiveness Deadline falls on a
Saturday, Sunday or other day that the Commission is closed for business, the
Effectiveness Deadline shall be extended to the next Business Day on which the
Commission is open for business.

 

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

 

“Equity Securities” shall have the meaning set forth in Section 6(a).

 

“Event” shall have the meaning set forth in Section 2(c).

 

“Event Date” shall have the meaning set forth in Section 2(c).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Filing Deadline” means, with respect to the Registration Statement required to
be filed pursuant to Section 2(a), the 30th calendar day following receipt by
the Company of a written notice (the “Request Notice”) executed by Holders
holding more than 45% of the Registrable Securities held by all Holders (the
“Majority Holders”), requesting to register all or a portion of the Registrable
Securities, provided, however, that if the Filing Deadline falls on a Saturday,
Sunday or other day that the Commission is closed for business, the Filing
Deadline shall be extended to the next business day on which the Commission is
open for business, and provided further that such Filing Deadline shall be
tolled for the number of days prior to April 30 that the Request Notice is
received if the Request Notice is received between March 31 and April 30.

 

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

 

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

 

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

 

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

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

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“Principal Market” means the Trading Market on which the common stock is
primarily listed on and quoted for trading, which, as of the Closing Date, shall
be the Nasdaq Capital Market.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or, the Company’s Knowledge, threatened in
writing.

 

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

 

“Purchased Securities” means the Shares and Warrant Shares (and any securities
issued or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing).

 

“Register,” “registered” and “registration” refer to a registration made by
preparing and filing a Registration Statement or similar document in compliance
with the Securities Act and pursuant to Rule 415, and the declaration or
ordering of effectiveness of such Registration Statement or document.

 

“Registrable Securities” means all of (i) the Shares, (ii) the Warrant Shares
and (iii) any securities issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect to the
foregoing, provided, that Shares and Warrant Shares shall cease to be
Registrable Securities upon the earliest to occur of the following:  (A) sale
pursuant to a Registration Statement or Rule 144 under the Securities Act (in
which case, only such security sold shall cease to be a Registrable Security);
or (B) becoming eligible for sale by the Holder, without notice or restriction,
pursuant to Rule 144 provided that, if reasonably requested by the Company, such
Holder shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of such shares under the Securities Act.

 

“Registration Statements” means any one or more registration statements of the
Company filed under the Securities Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement (including
without limitation the Initial Registration Statement, the New Registration
Statement and any Remainder Registration Statements), amendments and supplements
to such Registration Statements, including post-effective amendments, all
exhibits and all material incorporated by reference or deemed to be incorporated
by reference in such Registration Statements.

 

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“RoFR Holder” means at a certain point of time a Purchaser (or its successor or
assigns) that beneficially owns at such time at least 25% of the Purchased
Securities purchased by such Purchaser pursuant to the Purchase Agreement;
provided, however, that such Purchaser (or its successor or assigns) must
beneficially own at least 250,000 shares of Purchased Securities (as adjusted
for any stock split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing) purchased by such Purchaser pursuant to the
Purchase Agreement.

 

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

 

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

 

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

 

“SEC Guidance” means (i) any publicly-available written or oral guidance,
comments, requirements or requests of the Commission staff and (ii) the
Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Selling Stockholder Questionnaire” means a questionnaire in the form attached
as Annex B hereto, or such other form of questionnaire as may reasonably be
adopted by the Company from time to time.

 

“Shares” means the shares of common stock issued or issuable to the Purchasers
pursuant to the Purchase Agreement.

 

“Special Registration Statement” shall mean a registration statement relating to
any employee benefit plan under Form S-8 or similar form or with respect to any
corporate reorganization or other transaction under Rule 145 of the Securities
Act.

 

“Trading Day” means (i) a day on which the common stock is listed or quoted and
traded on its Principal Market (other than the OTC Bulletin Board), or (ii) if
the common stock is not listed on a Trading Market (other than the OTC Bulletin
Board), a day on which the common stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the common stock is
not quoted on any Trading Market, a day on which the common stock is quoted in
the over-the-counter market as reported in the “pink sheets” by Pink Sheets LLC
(or any similar organization or agency succeeding to its functions of reporting
prices); provided, that in the event that the common stock is not listed or
quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a
Business Day.

 

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“Trading Market” means whichever of the New York Stock Exchange, the American
Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the
NASDAQ Capital Market or OTC Bulletin Board on which the common stock is listed
or quoted for trading on the date in question.

 

“Warrants” means the Warrants issued pursuant to the Purchase Agreement.

 

“Warrant Shares” means the shares of common stock issued or issuable upon
exercise of the Warrants.

 

2.             Registration.

 

(a)           On or prior to the Filing Deadline, the Company shall prepare and
file with the Commission a Registration Statement covering the resale of all of
the Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415 or, if Rule 415 is not available for offers and sales of
the Registrable Securities, by such other means of distribution of Registrable
Securities as the Holders may reasonably specify (the “Initial Registration
Statement”). The Initial Registration Statement shall be on Form S-3 (except if
the Company is then ineligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on Form S-1) subject to
the provisions of Section 2(f) and shall contain (except if otherwise required
pursuant to written comments received from the Commission upon a review of such
Registration Statement) the “Plan of Distribution” section attached hereto as
Annex A.  Notwithstanding the registration obligations set forth in this
subsection (a) and subsections (b) and (c) of this Section 2, in the event the
Commission informs the Company that all of the Registrable Securities cannot, as
a result of the application of Rule 415, be registered for resale as a secondary
offering on a single registration statement, the Company agrees to promptly
(i) inform each of the Holders thereof and use its commercially reasonable
efforts to file amendments to the Initial Registration Statement as required by
the Commission and/or (ii) withdraw the Initial Registration Statement and file
a new registration statement (a “New Registration Statement”), in either case
covering the maximum number of Registrable Securities permitted to be registered
by the Commission on Form S-3; provided, however, that prior to filing such
amendment or New Registration Statement, the Company shall be obligated to use
its commercially reasonable efforts to advocate with the Commission for the
registration of all of the Registrable Securities in accordance with the SEC
Guidance, including without limitation, the Division of Corporation Finance
Securities Act Rules Compliance and Disclosure Interpretation 612.09 (the
“Response Letter”). Notwithstanding any other provision of this Agreement, if
any SEC Guidance sets forth a limitation of the number of Registrable Securities
permitted to be registered on a particular Registration Statement as a secondary
offering (and notwithstanding that the Company used commercially reasonable
efforts to advocate with the Commission for the registration of all or a greater
number of Registrable Securities), unless otherwise directed in writing by a
Holder as to its Registrable Securities, the number of Registrable Securities to
be registered on such Registration Statement will: (A) first be reduced by
eliminating any securities to be included for the benefit of any Person other
than a Holder; (B) second to be reduced by Registrable Securities represented by
Warrant Shares (applied, in the case that some Warrant Shares may be registered,
to the Holders on a pro rata basis based on the total number of unregistered
Warrant Shares held by such Holders), and (C) third by Registrable Securities
represented by Shares (applied, in the case that some Shares may be registered,
to the Holders on a pro rata basis based on the total number of unregistered
Shares held by such Holders, subject to a determination by the Commission that
certain Holders must be reduced first based on the number of Shares held by such
Holders).

 

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In the event the Company amends the Initial Registration Statement or files a
New Registration Statement, as the case may be, under clauses (i) or (ii) above,
the Company will use its commercially reasonable efforts to file with the
Commission, as promptly as allowed by Commission or staff guidance provided to
the Company or to registrants of securities in general, one or more registration
statements on Form S-3 to register for resale those Registrable Securities that
were not registered for resale on the Initial Registration Statement, as
amended, or the New Registration Statement (the “Remainder Registration
Statements”).

 

(b)           The Company shall use its commercially reasonable efforts to cause
each Registration Statement to be declared effective by the Commission as soon
as practicable and, with respect to the Initial Registration Statement or the
New Registration Statement, as applicable, no later than the Effectiveness
Deadline (including filing with the Commission a request for acceleration of
effectiveness in accordance with Rule 461 promulgated under the Securities Act
within two (2) Business Days after the date that the Company is notified (orally
or in writing, whichever is earlier) by the Commission that such Registration
Statement will not be “reviewed,” or not be subject to further review and the
effectiveness of such Registration Statement may be accelerated) and shall use
its commercially reasonable efforts to keep each Registration Statement
continuously effective under the Securities Act until the earlier of (i) such
time as all of the Registrable Securities covered by such Registration Statement
have been publicly sold by the Holders or (ii) the date that all Shares and
Warrant Shares covered by such Registration Statement cease to be Registrable
Securities hereunder (the “Effectiveness Period”). The Company shall ensure that
each Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall 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 the case of prospectuses, in the
light of the circumstances in which they were made) not misleading. Each
Registration Statement shall also cover, to the extent allowable under the
Securities Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of common stock resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Securities. The Company shall telephonically request effectiveness of a
Registration Statement as of 5:00 pm Eastern Time on the Effective Date. The
Company shall promptly notify the Holders via facsimile or e-mail of the
effectiveness of a Registration Statement within three (3) Business Days of the
date on which the Company telephonically confirms effectiveness with the
Commission, which confirmation shall initially be the date requested for
effectiveness of a Registration Statement in the Company’s acceleration request.
The Company shall, on the first Trading Day on which the Commission is open for
business after the Effective Date, file a Rule 424(b) prospectus with the
Commission. Failure to so notify the Holders on or before the third Trading Day
after such notification or effectiveness or failure to file a final Prospectus
by the third Trading Day on which the Commission is open for business shall be
deemed an Event under Section 2(c).

 

(c)           If: (i) the Initial Registration Statement is not filed with the
Commission on or prior to the Filing Deadline, (ii) the Initial Registration
Statement or the New Registration Statement, as applicable, is not declared
effective by the Commission (or otherwise does not become effective) for any
reason on or prior to the Effectiveness Deadline or (iii) after its Effective
Date, (A) such Registration Statement ceases for any reason (including without
limitation by reason of a stop order, or the Company’s failure to update the
Registration Statement), but excluding the inability of any Holder to sell the
Registrable Securities covered thereby due to market conditions, to remain
continuously effective as to all Registrable Securities for which it is required
to be effective or (B) the Holders are not permitted to utilize the Prospectus
therein to resell such Registrable Securities, in the case of (A) and (B), for
an aggregate of more than 20 consecutive Trading Days or for more than an
aggregate of 30 Trading Days in any 12-month period (which need not be
consecutive), other than as a result of a breach of this Agreement by a Holder
or a Holder’s failure to return a Selling Stockholder Questionnaire within the
time period provided by Section 2(e) hereof or a delay by the Company’s auditors
in providing consent (any such failure or breach in clauses (i) through
(iii) above being referred to as an “Event,” and, for purposes of clauses (i) or
(ii), the date on which such Event occurs, or for purposes of clause (iii), the
date on which such 20 consecutive or 30 Trading Day period (as applicable) is
exceeded, being referred to as “Event Date”), then in addition to any other
rights the Holders may have hereunder or under applicable law, (x) on each such
Event Date the Company shall pay to each Holder that is not a director or
officer of the Company an amount in cash, as partial liquidated damages and not
as a penalty, equal to 1.0% of the aggregate Subscription Amount (as defined in
the Purchase Agreement) paid by such Holder pursuant to the Purchase Agreement
for any Registrable Securities held by such Holder on the Event Date (which
remedy shall be in addition to any other remedies available under this Agreement
or under applicable law); and (y) on each monthly anniversary of each such Event
Date (if the applicable Event shall not have been cured by such date) until the
applicable Event is cured, the Company shall pay to each Holder that is not a
director or officer of the Company an amount in cash, as partial liquidated
damages and not as a penalty, equal to 2.0% of the aggregate Subscription Amount
(as defined in the Purchase Agreement) paid by such Holder pursuant to the
Purchase Agreement for any Registrable Securities then held by such Holder
(which remedy shall be in addition to any other remedies available under this
Agreement or under applicable law) (it is hereby agreed with respect to clause
“(y)” that if the Event is cured during the month and before the monthly
anniversary occurs, then the partial liquidated damages pursuant to clause “(y)”
shall apply on a daily pro rata basis for any portion of a month prior to the
cure of an Event).

 

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The maximum amount of liquidated damages payable pursuant to this
Section 2(c) shall not exceed 10% of the aggregate Subscription Amount.  The
parties agree that the Company will not be liable for liquidated damages under
this Section 2(c) with respect to any Shares or Warrant Shares that are excluded
from the Initial Registration Statement or the New Registration Statement, as
applicable, by the Commission as a result of the application of Rule 415. If the
Company fails to pay any liquidated damages pursuant to this Section in full
within ten (10) Business Days after the date payable, the Company will pay
interest thereon at a rate of 1.5% per month (or such lesser maximum amount that
is permitted to be paid by applicable law) to the Holder, accruing daily from
the date such liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full. The liquidated damages pursuant to the terms
hereof shall apply on a daily pro-rata basis for any portion of a month prior to
the cure of an Event, except in the case of the first Event Date. In the event
that the Company registers some but not all of the Registrable Securities, the
2.0% of liquidated damages referred to above for any monthly period shall be
reduced to equal the percentage determined by multiplying 2.0% by a fraction,
the numerator of which shall be the number of Registrable Securities for which
there is not an effective Registration Statement at such time and the
denominator of which shall be the number of Registrable Securities at such time.

 

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The Effectiveness Deadline for a Registration Statement shall be extended
without default or liquidated damages hereunder in the event that the Company’s
failure to obtain the effectiveness of the Registration Statement on a timely
basis results from (i) the failure of a Holder to timely provide the Company
with information requested by the Company and necessary to complete the
Registration Statement in accordance with the requirements of the Securities Act
(in which the Effectiveness Deadline would be extended with respect to
Registrable Securities held by such Holder) or (ii) events or circumstances that
are not in any way attributable to the Company’s actions or inactions, including
but not limited to a delay by the Company’s auditors in providing consent.

 

(d)           Unless a Request Notice shall not have been delivered by the
anniversary of the date hereof, the Company shall not, from the date hereof
until the date that is 60 days after the Effective Date of the Registration
Statement, prepare and file with the Commission a registration statement
relating to an offering for its own account under the Securities Act of any of
its equity securities other than a Special Registration Statement or, in
connection with an acquisition, on Form S-4 unless the Closing Bid Price for the
Common Stock on the Trading Day prior to the date of filing any registration
statement was greater than the Unit Purchase Price. For the avoidance of doubt,
the Company shall not be prohibited from preparing and filing with the
Commission a registration statement relating to an offering of Common Stock by
existing stockholders of the Company under the Securities Act pursuant to the
terms of registration rights held by such stockholders.

 

(e)           Within three (3) Business Days following receipt of the Request
Notice the Company will serve written notice of such Request Notice (the “Demand
Notice”) to all Holders.  Each Holder that did not execute the Request Notice
will notify the Company within ten (10) days if such Holder does not wish its
Registrable Securities to be included in the registration statement.  Each
Holder agrees to furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex B (a “Selling Stockholder Questionnaire”)
not more than: (A) with respect to Holders that executed the Request Notice, ten
(10) days following the date of the Request Notice; and (B) with respect to
other Holders (to the extent such Holders did not request that their Registrable
Securities not be registered), within ten (10) days of receipt of the Demand
Notice. Each Holder further agrees that it shall not be entitled to be named as
a selling securityholder in a Registration Statement or use the Prospectus for
offers and resales of Registrable Securities at any time, unless such Holder has
returned to the Company a completed and signed Selling Stockholder
Questionnaire. If a Holder of Registrable Securities returns a Selling
Stockholder Questionnaire after the deadline specified in this Section 2(e), the
Company shall use its commercially reasonable efforts to take such actions as
are required to name such Holder as a selling security holder in the
Registration Statement or any pre-effective or post-effective amendment thereto
and to include (to the extent not theretofore included) in the Registration
Statement the Registrable Securities identified in such late Selling Stockholder
Questionnaire. Each Holder acknowledges and agrees that the information in the
Selling Stockholder Questionnaire will be used by the Company in the preparation
of the Registration Statement and hereby consents to the inclusion of such
information in the Registration Statement.

 

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(f)            In the event that the Company is ineligible to use Form S-3 for
the registration of the resale of Registrable Securities hereunder, the Company
shall (i) register the resale of the Registrable Securities on another
appropriate form reasonably acceptable to the Holders and (ii) undertake to
register the Registrable Securities on Form S-3 as soon as such form is
available, provided that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the Commission.

 

3.             Registration Procedures

 

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

 

(a)           Not less than three Trading Days prior to the filing of a
Registration Statement and not less than one Trading Day prior to the filing of
any related Prospectus (other than the initial 424(b) Prospectus relating to
such Registration Statement) or any amendment or supplement thereto (except for
Annual Reports on Form 10-K, and Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K and any similar or successor reports), the Company shall
furnish to HLM copies of such Registration Statement, Prospectus or amendment or
supplement thereto, as proposed to be filed, which documents (other than those
incorporated by reference or deemed to be incorporated by reference) will be
subject to the review of HLM (it being acknowledged and agreed that if HLM does
not object to or comment on the aforementioned documents within such three
(3) Trading Day or one (1) Trading Day period, as the case may be, then HLM
shall be deemed to have consented to and approved the use of such documents).
The Company shall not file any Registration Statement or amendment or supplement
thereto in a form to which HLM reasonably objects in good faith, provided that,
the Company is notified of such objection in writing within the three
(3) Trading Day or one (1) Trading Day period described above, as applicable.

 

(b)           (i) Prepare and file with the Commission such amendments
(including post-effective amendments) and supplements to each Registration
Statement and the Prospectus used in connection therewith as may be necessary to
keep such Registration Statement continuously effective as to the applicable
Registrable Securities for its Effectiveness Period and prepare and file with
the Commission such additional Registration Statements as permitted by SEC
Guidance in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of this
Agreement), and, as so supplemented or amended, to be filed pursuant to
Rule 424; (iii) respond as promptly as reasonably practicable to any comments
received from the Commission with respect to each Registration Statement or any
amendment thereto and, as promptly as reasonably possible, provide HLM true and
complete copies of all correspondence from and to the Commission relating to
such Registration Statement that pertains to the Holders as “Selling
Stockholders” but not any comments that would result in the disclosure of
material and non-public information concerning the Company; and (iv) comply in
all material respects with the provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable Securities covered by a
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of (subject to the terms of this Agreement) in
accordance with the intended methods of disposition by the Holders thereof as
set forth in such Registration Statement as so amended or in such Prospectus as
so supplemented; provided, however, that each Holder shall be responsible for
the delivery of the Prospectus to the Persons to whom such Holder sells any of
the Shares or the Warrant Shares (including in accordance with Rule 172 under
the Securities Act), and each Holder agrees to dispose of Registrable Securities
in compliance with the plan of distribution described in the Registration
Statement and otherwise in compliance with applicable federal and state
securities laws.

 

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In the case of amendments and supplements to a Registration Statement which are
required to be filed pursuant to this Agreement (including pursuant to this
Section 3(b)) by reason of the Company filing a report on Form 10-K, Form 10-Q
or Form 8-K or any analogous report under the Exchange Act, the Company shall
have incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the Commission on
the same day on which the Exchange Act report which created the requirement for
the Company to amend or supplement such Registration Statement was filed.

 

(c)           Notify (which notice shall, pursuant to clauses (iii) through
(vi) hereof, be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made) as promptly as reasonably
possible (and, in the case of (i)(A) below, not less than two Trading Days prior
to such filing, in the case of (iii) and (iv) below, not more than two Trading
Days after such issuance or receipt, in the case of (v) below, not more than two
Trading Days after a determination by the Company that the financial statements
in any Registration Statement have become ineligible for inclusion therein and,
in the case of (vi) below, not more than two Trading Days after the occurrence
or existence of such development) and (if requested by any such Person) confirm
such notice in writing no later than one Trading Day following the day
(i)(A) HLM when a Prospectus (other than the initial 424(b) Prospectus relating
to such Registration Statement) or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed; (B) HLM when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on any
Registration Statement (in which case the Company shall provide to HLM true and
complete copies of all comments that pertain to the Holders as a “Selling
Stockholder” or to the “Plan of Distribution” and all written responses thereto,
but not information that the Company believes would constitute material and
non-public information); and (C) the Holders with respect to each Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) HLM of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to a Registration Statement
or Prospectus or for additional information that pertains to the Holders as
“Selling Stockholders” or the “Plan of Distribution”; (iii) the Holders of the
issuance by the Commission or any other federal or state governmental authority
of any stop order suspending the effectiveness of a Registration Statement
covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (iv) the Holders of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; (v) the Holders of the occurrence of any event or passage of time that
makes the financial statements included in a Registration Statement ineligible
for inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus, form of prospectus or supplement thereto, in
light of the circumstances under which they were made), not misleading; and
(vi) the Holders the occurrence or existence of any pending development with
respect to the Company that the Company believes may be material and that, in
the determination of the Company, makes it not in the best interest of the
Company to allow continued availability of a Registration Statement or
Prospectus, provided that any and all of such information shall remain
confidential to each Holder until such information otherwise becomes public,
unless disclosure by a Holder is required by law; provided, further, that
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.

 

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

 

(e)           If requested by a Holder, furnish to such Holder, without charge,
at least one conformed copy of each Registration Statement and each amendment
thereto and all exhibits to the extent requested by such Person (including those
previously furnished or incorporated by reference) promptly after the filing of
such documents with the Commission; provided, that the Company shall have no
obligation to provide any document pursuant to this clause that is available on
the Commission’s EDGAR system.

 

(f)            Prior to any resale of Registrable Securities by a Holder, use
its commercially reasonable efforts to register or qualify, unless an exemption
from registration and qualification applies, the Registrable Securities for
offer and sale or resale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statements; provided, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject the Company to general service of
process in any jurisdiction where it is not then so subject or subject the
Company to any material tax in any such jurisdiction where it is not then so
subject.

 

(g)           If requested by the Holders, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statement, which certificates shall be free, to the extent
permitted by the Purchase Agreement and under law, of all restrictive legends,
and to enable such Registrable Securities to be in such denominations and
registered in such names as any such Holders may reasonably request.  In
connection therewith, if required by the Company’s transfer agent, the Company
shall promptly after the effectiveness of the Registration Statement cause an
opinion of counsel as to the effectiveness of the Registration Statement to be
delivered to and maintained with its transfer agent, together with any other
authorizations, certificates and directions required by the transfer agent,
which authorize and direct the transfer agent to issue such Registrable
Securities without legend upon sale by the holder of such shares of Registrable
Securities under the Registration Statement.

 

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(h)           Following the occurrence of any event contemplated by
Section 3(c)(iii) through (vi), and taking into account the Company’s good faith
assessment of any potential adverse consequences to the Company and its
stockholders of the premature disclosure of such event, as promptly as
reasonably practicable, prepare a supplement or amendment, including a
post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus, form of prospectus or supplement thereto, in light
of the circumstances under which they were made), not misleading.  If the
Company notifies the Holders in accordance herewith to suspend the use of any
Prospectus until the requisite changes to the Prospectus have been made, then
the Holders shall suspend the use of the Prospectus.

 

(i)            (i) In the time and manner required by the Principal Market,
prepare and file with such Trading Market an additional shares listing
application covering all of the Registrable Securities, (ii) use commercially
reasonable efforts to take all steps necessary to cause such Registrable
Securities to be approved for listing on the Principal Market as soon as
possible thereafter, (iii) if requested by any Holder, provide such Holder
evidence of such listing, and (iv) during the Effectiveness Period, use
commercially reasonable efforts to maintain the listing of such Registrable
Securities on the Principal Market.

 

(j)            In order to enable the Holders to sell Shares or Warrant Shares
under Rule 144, for a period of one year from the Closing, the Company covenants
to use commercially reasonable efforts to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to
Section 13(a) or 15(d) of the Exchange Act.  During such one year period, if the
Company is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to the Holders and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
covenants that it will use commercially reasonable efforts to take such further
action as any Holder may reasonably request, all to the extent required from
time to time to enable such Person to sell Shares and Warrant Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act, including compliance
with the provisions of the Purchase Agreement relating to the transfer of the
Shares and Warrant Shares.

 

(k)           The Company may require each selling Holder to furnish to the
Company a certified statement as to (i) the number of shares of common stock
beneficially owned by such Holder and any Affiliate thereof, (ii) any FINRA
affiliations, (iii) any natural persons who have the power to vote or dispose of
the common stock and (iv) any other information as may be requested by the
Commission, FINRA, The Nasdaq Stock Market LLC or any state securities
commission. During any periods that the Company is unable to meet its
obligations hereunder with respect to the registration of Registrable Securities
because any Holder fails to furnish such information within three Trading Days
of the Company’s request, any liquidated damages that are accruing at such time
as to such Holder only shall be tolled and any Event that may otherwise occur
solely because of such delay shall be suspended as to such Holder only, until
such information is delivered to the Company.

 

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(l)            The Company shall promptly deliver to each Holder, without
charge, as many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; provided, that the Company shall have no obligation to
provide any document pursuant to this clause that is available on the
Commission’s EDGAR system.  The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto to the extent permitted
by federal and state securities laws and regulations.

 

(m)          The Company shall comply in all material respects with all
applicable rules and regulations of the Commission under the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities
covered by a Registration Statement, including, without limitation, Rule 172
under the Securities Act, file any final Prospectus, including any supplement or
amendment thereof, with the Commission pursuant to Rule 424 under the Securities
Act, promptly inform the Holders in writing if, at any time during the
Effectiveness Period, the Company does not satisfy the conditions specified in
Rule 172 and, as a result thereof, the Holders are required to make available a
Prospectus in connection with any disposition of Registrable Securities and take
such other actions as may be reasonably necessary to facilitate the registration
of the Registrable Securities hereunder.

 

4.             Registration Expenses. All fees and expenses incident to the
Company’s performance of or compliance with its obligations under this Agreement
(excluding any underwriting discounts and selling commissions and all legal fees
and expenses of legal counsel for any Holder) shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with any Trading Market on which the common stock is then listed for
trading and (B) with respect to compliance with applicable state securities or
Blue Sky laws (including, without limitation, fees and disbursements of counsel
for the Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities and determination of the eligibility of the Registrable
Securities for investment under the laws of such jurisdictions as requested by
the Holders), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is reasonably requested by the Holders of a
majority of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.

 

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In no event shall the Company be responsible for any underwriting, broker or
similar fees or commissions of any Holder or, except to the extent provided for
in the Transaction Documents, any legal fees or other costs of the Holders.

 

5.                                      Indemnification.

 

(a)           Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify, defend and hold harmless each
Holder, the officers, directors, agents, partners, members, managers,
stockholders, Affiliates and employees of each of them, each Person who controls
any such Holder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, partners, members,
managers, stockholders, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable costs of preparation and investigation and reasonable attorneys’
fees) and expenses (collectively, “Losses”), as incurred, that arise out of or
are based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus or any form of
prospectus, or in any amendment or supplement thereto (it being understood that
the Holder has approved Annex A hereto for this purpose) or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (A) such
untrue statements, alleged untrue statements, omissions or alleged omissions are
based solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein (it being understood that each
Holder has approved Annex A hereto and the information contained in its Selling
Stockholder Questionnaire for this purpose), or (B) in the case of an occurrence
of an event of the type specified in Section 3(c)(iii)-(vi), related to the use
by a Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated and defined in
Section 7(f) below, but only if and to the extent that following the receipt of
the Advice the misstatement or omission giving rise to such Loss would have been
corrected. The Company shall notify the Holders promptly of the institution,
threat or assertion of any Proceeding arising from or in connection with the
transactions contemplated by this Agreement of which the Company is aware. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of an Indemnified Party (as defined in Section 5(c)) and
shall survive the transfer of the Registrable Securities by the Holders.

 

(b)           Indemnification by Holders. Each Holder shall, notwithstanding any
termination of this Agreement, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, arising out of or
based upon any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, any Prospectus, or any form of prospectus, or in
any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus, or any form of prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading (i) to the
extent, but only to the extent that, such untrue statements or omissions are
based solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein (it being understood that the
Holder has approved Annex A hereto and the information contained in its Selling
Stockholder Questionnaire for this purpose), or (ii) to the extent that such
information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and approved by such
Holder expressly for use in the Registration Statement (it being understood that
the Holder has approved Annex A hereto and the information contained in its
Selling Stockholder Questionnaire for this purpose), such Prospectus or such
form of Prospectus or in any amendment or supplement thereto or (iii) in the
case of an occurrence of an event of the type specified in
Section 3(c)(iii)-(vi), related to the use by a Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder
of the Advice contemplated and defined in Section 7(f) below, but only if and to
the extent that following the receipt of the Advice the misstatement or omission
giving rise to such Loss would have been corrected.

 

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

 

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

 

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest exists 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 reasonable 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 expense of the Indemnifying Party); provided,
that the Indemnifying Party shall not be liable for the fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified
Parties.

 

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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, delayed or conditioned. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.

 

Subject to the terms of this Agreement, all reasonable and actual fees and
expenses of the Indemnified Party (including reasonable 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 twenty Trading Days of written notice
thereof to the Indemnifying Party; provided, that the Indemnified Party shall
promptly reimburse the Indemnifying Party for that portion of such fees and
expenses applicable to such actions for which such Indemnified Party is finally
judicially determined to not be entitled to indemnification hereunder. The
failure to deliver written notice to the Indemnifying Party within a reasonable
time of the commencement of any such action shall not relieve such Indemnifying
Party of any liability to the Indemnified Party under this Section 5, except to
the extent that the Indemnifying Party is prejudiced in its ability to defend
such action.

 

(d)           Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in this Agreement, any reasonable attorneys’ or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.

 

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), (A) no Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission and (B) no
contribution will be made under circumstances where the maker of such
contribution would not have been required to indemnify the Indemnified Party
under the fault standards set forth in this Section 5.

 

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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 indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties and are not in diminution or limitation of the
indemnification provisions under the Purchase Agreement.

 

6.                                      Right Of First Refusal.

 

(a)           Subsequent Offerings.  Subject to applicable securities laws and
the rules and regulations of the Trading Market, each RoFR Holder shall have a
right of first refusal to purchase its pro rata share of all Equity Securities,
as defined below, that the Company may, from time to time, propose to sell and
issue after the date of this Agreement, other than the Equity Securities
excluded by Section 6(e) hereof.  Each RoFR Holder’s pro rata share is equal to
the ratio of (a) the number of Purchased Securities of which such RoFR Holder is
deemed to be a holder immediately prior to the issuance of such Equity
Securities to (b) the total number of shares of the Company’s outstanding Common
Stock (including all Purchased Securities) immediately prior to the issuance of
the Equity Securities.  The term “Equity Securities” shall mean (i) any Common
Stock, Preferred Stock or other equity security of the Company, (ii) any
security convertible into or exercisable or exchangeable for, with or without
consideration, any Common Stock, Preferred Stock or other equity security
(including any option to purchase such a convertible security), (iii) any
security carrying any warrant or right to subscribe to or purchase any Common
Stock, Preferred Stock or other equity security or (iv) any such warrant or
right.

 

(b)           Exercise of Rights.  If the Company proposes to issue any Equity
Securities, it shall give each RoFR Holder written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same.  Each RoFR Holder agrees to keep
such information confidential.  Each RoFR Holder shall have ten (10) days from
the giving of such notice to agree to purchase its pro rata share of the Equity
Securities for the price and upon the terms and conditions specified in the
notice by giving written notice to the Company and stating therein the quantity
of Equity Securities to be purchased.  Notwithstanding the foregoing, the
Company shall not be required to offer or sell such Equity Securities to any
RoFR Holder who would cause the Company to be in violation of applicable federal
securities laws by virtue of such offer or sale.

 

(c)           Issuance of Equity Securities to Other Persons.  The Company shall
have sixty (60) days after the tenth day referred to in Section 6(b) above to
sell the Equity Securities in respect of which the RoFR Holders’ rights were not
exercised, at a price not lower and upon general terms and conditions not
materially more favorable to the purchasers thereof than specified in the
Company’s notice to the RoFR Holders pursuant to Section 6(b) hereof.  If the
Company has not sold such Equity Securities within sixty (60) days of the notice
provided pursuant to Section 6(b), the Company shall not thereafter issue or
sell any Equity Securities, without first offering such securities to the RoFR
Holders in the manner provided above.

 

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(d)           Assignment of Rights of First Refusal.  The rights of first
refusal of each RoFR Holder under this Section 6 are subject to Section 7(j),
provided such assignee holds at least 250,000 shares of Registrable Securities
after such assignment.

 

(e)           Excluded Securities.  The rights of first refusal established by
this Section 6 shall have no application to any of the following Equity
Securities:

 

(i)            shares of Common Stock and/or options to purchase Common Stock
issued or to be issued after the date hereof to employees, officers or directors
of, or consultants or advisors to the Company or any subsidiary, pursuant to
stock purchase or stock option plans or other arrangements that are approved by
the Board of Directors;

 

(ii)           stock issued or issuable pursuant to any rights or agreements,
options, warrants or convertible securities outstanding as of the date of this
Agreement (including the Warrants); and stock issued pursuant to any such rights
or agreements granted after the date of this Agreement, so long as the rights of
first refusal established by this Section 6 were complied with, waived, or were
inapplicable pursuant to any provision of this Section 6 with respect to the
initial sale or grant by the Company of such rights or agreements;

 

(iii)         any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business
combination;

 

(iv)          any Equity Securities issued in connection with any stock split,
stock dividend or recapitalization by the Company;

 

(v)            any Equity Securities issued pursuant to any equipment loan or
leasing arrangement, real property leasing arrangement, or debt financing from a
bank or similar financial or lending institution, or pursuant to any strategic
license agreements and other partnering arrangements; or

 

(vi)          any Equity Securities issued in an underwritten public offering.

 

7.                                      Miscellaneous.

 

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

 

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(b)           No Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto) may
include securities of the Company in a Registration Statement other than the
Registrable Securities, and the Company shall not prior to the Effective Date
enter into any agreement providing any such right to any of its security
holders, except for such agreements that already existed prior to the date
hereof.

 

(c)           Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter, except for, and as provided in, the Transaction Documents.

 

(d)           Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it (unless an exemption therefrom is available) in connection with sales of
Registrable Securities pursuant to the Registration Statement and shall sell the
Registrable Securities only in accordance with a method of distribution
described in the Registration Statement.

 

(e)           Suspension of Trading. At any time after the Registrable
Securities are covered by an effective Registration Statement, the Company may
deliver to the Holders of such Registrable Securities a certificate (the
“Suspension Certificate”) approved by the Chief Executive Officer or Chief
Financial Officer of the Company and signed by an officer of the Company stating
that the effectiveness of, and sales of Registrable Securities under, the
Registration Statement would:

 

(i)            materially interfere with any transaction that would require the
Company to prepare financial statements under the Securities Act that the
Company would otherwise not be required to prepare in order to comply with its
obligations under the Exchange Act, or

 

(ii)           require public disclosure of a material transaction or event
prior to the time such disclosure might otherwise be required.

 

Upon receipt of a Suspension Certificate by Holders of Registrable Securities,
such Holders of Registrable Securities shall refrain from selling or otherwise
transferring or disposing of any Registrable Securities then held by such
Holders for a specified period of time (a “Suspension Period”) that is customary
under the circumstances (not to exceed twenty (20)  Trading Days). 
Notwithstanding the foregoing sentence, the Company shall be permitted to cause
Holders of Registrable Securities to so refrain from selling or otherwise
transferring or disposing of any Registrable Securities on only two
(2) occasions during each twelve (12) consecutive month period that the
Registration Statement remains effective with no less than twenty (20) calendar
days in between Suspension Periods. The Company may impose stop transfer
instructions to enforce any required agreement of the Holders under this
Section 7(e).  Immediately after the end of any Suspension Period, the Company
shall take all necessary actions (including filing any required supplemental
prospectus) to restore the effectiveness of the applicable Registration
Statement and the ability of the Holders to publicly resell, pursuant to such
effective Registration Statement, their Registrable Securities covered by such
Registration Statement.

 

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(f)            Discontinued Disposition. Each Holder further agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in
Sections 3(c)(iii)-(vi), such Holder will forthwith discontinue disposition of
such Registrable Securities under the Registration Statement until it is advised
in writing (the “Advice”) by the Company that the use of the applicable
Prospectus (as it may have been supplemented or amended) may be resumed. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph. The Company agrees and acknowledges that any periods during which the
Holder is required to discontinue the disposition of the Registrable Securities
hereunder shall be subject to the provisions of Section 2(c) as qualified by
Sections 3(a) and 3(k).

 

(g)           Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified,
supplemented or waived unless the same shall be in writing and signed by the
Company and Holders holding a majority of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of certain Holders and that does not directly or indirectly affect the
rights of other Holders may be given by those certain Holders of all of the
Registrable Securities to which such waiver or consent relates; provided,
however, that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence.

 

(h)           Term. The registration rights provided to the Holders of
Registrable Securities hereunder, and the Company’s obligation to keep the
Registration Statements effective, shall terminate upon the earlier of (i) such
time as there are no Registrable Securities and (ii) a Fundamental Transaction
(as defined in the Warrant). The right of first refusal provided to the Holders
of Registrable Securities hereunder shall terminate upon a Fundamental
Transaction (as defined in the Warrant). Notwithstanding the foregoing,
Section 4, Section 5 and Section 7(a), Section 7(g), Section 7(h), Section 7(i),
Section 7(l), Section 7(m), Section 7(n), Section 7(o) and Section 7(p) shall
survive the termination of this Agreement.

 

(i)            Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be delivered as
set forth in the Purchase Agreement.

 

(j)            Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. The Company may not
assign its rights or obligations hereunder without the prior written consent of
the Holders of a majority of the then outstanding Purchased Securities (other
than by merger or consolidation or to an entity which acquires the Company
including by way of acquiring all or substantially all of the Company’s assets).
The rights of the Holders hereunder, including the right to have the Company
register Registrable Securities pursuant to this Agreement, may be assigned by
each Holder to transferees or assignees of all or any portion of the Purchased
Securities, but only if (i) the Holder agrees in writing with the transferee or
assignee to assign such rights and related obligations under this Agreement, and
for the transferee or assignee to assume such obligations, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (ii) 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, (iii) at or before the
time the Company received the written notice contemplated by clause (ii) of this
sentence, the transferee or assignee agrees in writing with the Company to be
bound by all of the provisions contained herein that apply to the “Holders” and
(iv) the transferee is an “accredited investor,” as that term is defined in
Rule 501 of Regulation D. Any assignment in violation of this Section shall be
null and void.

 

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(k)           Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party, it being understood that both parties
need not sign the same counterpart. In the event that any signature is delivered
by facsimile transmission or by e-mail delivery of a “.pdf” format data file,
such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile or “.pdf” signature were the original thereof.

 

(l)            Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be determined
in accordance with the provisions of the Purchase Agreement.

 

(m)          Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.

 

(n)           Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable 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.

 

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

 

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(p)           Currency. Unless otherwise indicated, all dollar amounts referred
to in this Agreement are in United States Dollars. All amounts owing under this
Agreement are in United States Dollars. All amounts denominated in other
currencies shall be converted in the United States Dollar equivalent amount in
accordance with the applicable exchange rate in effect on the date of
calculation.

 

(q)           Further Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGES TO FOLLOW]

 

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

 

 

COMBIMATRIX CORPORATION

 

 

 

By:

/s/ R. Judd Jessup

 

 

Name:

R. Judd Jessup

 

 

Title:

CEO

 

 

 

 

 

 

 

Name of Purchaser:

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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Annex A

 

PLAN OF DISTRIBUTION

 

We are registering the shares of common stock issued to the selling stockholders
and issuable upon exercise of the warrants issued to the selling stockholders to
permit the resale of these shares of common stock by the holders of the shares
of common stock and warrants from time to time after the date of this
prospectus. We will not receive any of the proceeds from the sale by the selling
stockholders of the shares of common stock. We will bear all fees and expenses
incident to our obligation to register the shares of common stock.

 

The selling stockholders may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the shares of
common stock are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for underwriting discounts or commissions or
agent’s commissions. The shares of common stock may be sold on any national
securities exchange or quotation service on which the securities may be listed
or quoted at the time of sale, in the over-the-counter market or in transactions
otherwise than on these exchanges or systems or in the over-the-counter market
and in one or more transactions at fixed prices, at prevailing market prices at
the time of the sale, at varying prices determined at the time of sale, or at
negotiated prices. These sales may be effected in transactions, which may
involve crosses or block transactions. The selling stockholders may use any one
or more of the following methods when selling shares:

 

·                  ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;

 

·                  block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;

 

·                  purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;

 

·                  an exchange distribution in accordance with the rules of the
applicable exchange;

 

·                  privately negotiated transactions;

 

·                  settlement of short sales entered into after the effective
date of the registration statement of which this prospectus is a part;

 

·                  broker-dealers may agree with the selling stockholders to
sell a specified number of such shares at a stipulated price per share;

 

·                  through the writing or settlement of options or other hedging
transactions, whether such options are listed on an options exchange or
otherwise;

 

·                  a combination of any such methods of sale; and

 

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·                  any other method permitted pursuant to applicable law.

 

The selling stockholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act, as
permitted by that rule, or Section 4(1) under the Securities Act, if available,
rather than under this prospectus, provided that they meet the criteria and
conform to the requirements of those provisions.

 

Broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in sales. If the selling stockholders effect such
transactions by selling shares of common stock to or through underwriters,
broker-dealers or agents, such underwriters, broker-dealers or agents may
receive commissions in the form of discounts, concessions or commissions from
the selling stockholders or commissions from purchasers of the shares of common
stock for whom they may act as agent or to whom they may sell as principal. Such
commissions will be in amounts to be negotiated, but, except as set forth in a
supplement to this Prospectus, in the case of an agency transaction will not be
in excess of a customary brokerage commission in compliance with NASD Rule 2440;
and in the case of a principal transaction a markup or markdown in compliance
with NASD IM-2440.

 

In connection with sales of the shares of common stock or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the shares of
common stock in the course of hedging in positions they assume. The selling
stockholders may also sell shares of common stock short and if such short sale
shall take place after the date that this Registration Statement is declared
effective by the Commission, the selling stockholders may deliver shares of
common stock covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales. The selling
stockholders may also loan or pledge shares of common stock to broker-dealers
that in turn may sell such shares, to the extent permitted by applicable law.
The selling stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
Notwithstanding the foregoing, the selling stockholders have been advised that
they may not use shares registered on this registration statement to cover short
sales of our common stock made prior to the date the registration statement, of
which this prospectus forms a part, has been declared effective by the SEC.

 

The selling stockholders may, from time to time, pledge or grant a security
interest in some or all of the warrants or shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time pursuant to this prospectus or any amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of
1933, as amended, amending, if necessary, the list of selling stockholders to
include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus. The selling stockholders also may transfer
and donate the shares of common stock in other circumstances in which case the
transferees, donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.

 

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The selling stockholders and any broker-dealer or agents participating in the
distribution of the shares of common stock may be deemed to be “underwriters”
within the meaning of Section 2(11) of the Securities Act in connection with
such sales. In such event, any commissions paid, or any discounts or concessions
allowed to, any such broker-dealer or agent and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Selling Stockholders who are “underwriters”
within the meaning of Section 2(11) of the Securities Act will be subject to the
prospectus delivery requirements of the Securities Act and may be subject to
certain statutory liabilities of, including but not limited to, Sections 11, 12
and 17 of the Securities Act and Rule 10b-5 under the Securities Exchange Act of
1934, as amended, or the Exchange Act.

 

Each selling stockholder has informed the Company that it is not a registered
broker-dealer and does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the common stock. Upon the
Company being notified in writing by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of common
stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such selling stockholder and of
the participating broker-dealer(s), (ii) the number of shares involved,
(iii) the price at which such the shares of common stock were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this prospectus, and (vi) other facts material to the transaction. In no event
shall any broker-dealer receive fees, commissions and markups, which, in the
aggregate, would exceed eight percent (8%).

 

Under the securities laws of some states, the shares of common stock may be sold
in such states only through registered or licensed brokers or dealers. In
addition, in some states the shares of common stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.

 

There can be no assurance that any selling stockholder will sell any or all of
the shares of common stock registered pursuant to the registration statement, of
which this prospectus forms a part.

 

Each selling stockholder and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares of common stock by the selling
stockholder and any other participating person. Regulation M may also restrict
the ability of any person engaged in the distribution of the shares of common
stock to engage in market-making activities with respect to the shares of common
stock. All of the foregoing may affect the marketability of the shares of common
stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.

 

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We will pay all expenses of the registration of the shares of common stock
pursuant to the Investors Rights Agreement, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or “blue sky” laws; provided, however, that each selling
stockholder will pay all underwriting discounts and selling commissions, if any,
and any legal expenses incurred by it. We will indemnify the selling
stockholders against certain liabilities, including some liabilities under the
Securities Act, in accordance with the Investors Rights Agreement, or the
selling stockholders will be entitled to contribution. We may be indemnified by
the selling stockholders against civil liabilities, including liabilities under
the Securities Act, that may arise from any written information furnished to us
by the selling stockholders specifically for use in this prospectus, in
accordance with the related Investors Rights Agreement, or we may be entitled to
contribution.

 

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Annex B

 

COMBIMATRIX CORPORATION

 

SELLING STOCKHOLDER NOTICE AND QUESTIONNAIRE

 

The undersigned holder of shares of the common stock, par value $0.001 per
share, of CombiMatrix Corporation, a Delaware corporation (the “Company”),
issued pursuant to a certain Securities Purchase Agreement by and among the
Company and the Purchasers named therein, dated as of April 1, 2011 (the
“Agreement”), understands that the Company intends to file with the Securities
and Exchange Commission a registration statement on Form S-3 (the “Resale
Registration Statement”) for the registration and the 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 Agreement. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement.

 

In order to sell or otherwise dispose of any Registrable Securities pursuant to
the Resale Registration Statement, a holder of Registrable Securities generally
will be required to be named as a selling stockholder in the related prospectus
or a supplement thereto (as so supplemented, the “Prospectus”), deliver the
Prospectus to purchasers of Registrable Securities (including pursuant to
Rule 172 under the Securities Act) and be bound by the provisions of the
Agreement (including certain indemnification provisions, as described below).
Holders must complete and deliver this Notice and Questionnaire in order to be
named as selling stockholders in the Prospectus.  Holders of Registrable
Securities who do not complete, execute and return this Notice and Questionnaire
within ten (10) Trading Days following the date of the Agreement (1) will not be
named as selling stockholders in the Resale Registration Statement or the
Prospectus and (2) may not use the Prospectus for resales of Registrable
Securities.

 

Certain legal consequences arise from being named as a selling stockholder in
the Resale Registration Statement and the Prospectus. Holders of Registrable
Securities are advised to consult their own securities law counsel regarding the
consequences of being named or not named as a selling stockholder in the Resale
Registration Statement and the Prospectus.

 

NOTICE

 

The undersigned holder (the “Selling Stockholder”) of Registrable Securities
hereby gives notice to the Company of its intention to sell or otherwise dispose
of Registrable Securities owned by it and listed below in Item (3), unless
otherwise specified in Item (3), pursuant to the Resale Registration Statement.
The undersigned, by signing and returning this Notice and Questionnaire,
understands and agrees that it will be bound by the terms and conditions of this
Notice and Questionnaire and the Agreement.

 

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

 

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QUESTIONNAIRE

 

1.                                       Name.

 

(a)                                  Full Legal Name of Selling Stockholder:

 

 

 

(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
Stockholder:

 

 

 

 

Telephone:

 

Fax:

 

Contact Person:

 

E-mail address of Contact Person:

 

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3.                                       Beneficial Ownership of Registrable
Securities Issuable Pursuant to the Purchase Agreement:

 

(a)                                  Type and Number of Registrable Securities
beneficially owned and issued pursuant to the Agreement:

 

 

 

 

(b)                                 Number of shares of common stock to be
registered pursuant to this Notice for resale:

 

 

 

 

4.                                       Broker-Dealer Status:

 

(a)                                  Are you a broker-dealer?

 

Yes o

 

No o

 

(b)                                 If “yes” to Section 4(a), did you receive
your Registrable Securities as compensation for investment banking services to
the Company?

 

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.

 

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

 

Yes o

 

No o

 

Note:                   If yes, provide a narrative explanation below:

 

 

 

 

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(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 Stockholder.

 

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:

 

 

 

 

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:

 

 

 

 

7.                                       Plan of Distribution:

 

The undersigned has reviewed the form of Plan of Distribution attached as Annex
A to the Investors Rights Agreement, and hereby confirms that, except as set
forth below, the information contained therein regarding the undersigned and its
plan of distribution is correct and complete.

 

State any exceptions here:

 

 

 

 

***********

 

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The undersigned agrees to immediately notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof and prior to the effective date of any applicable Resale Registration
Statement. All notices hereunder and pursuant to the Agreement shall be made in
writing, by hand delivery, confirmed or facsimile transmission, first-class mail
or air courier guaranteeing overnight delivery at the address set forth below.
In the absence of any such notification, the Company shall be entitled to
continue to rely on the accuracy of the information in this Notice and
Questionnaire.

 

By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items (1) through (7) above and the inclusion
of such information in the Resale Registration Statement and the Prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of any such Registration
Statement and the Prospectus.

 

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By signing below, the undersigned acknowledges that it understands its
obligation to comply, and agrees that it will comply, with the provisions of the
Exchange Act and the rules and regulations thereunder, particularly Regulation M
in connection with any offering of Registrable Securities pursuant to the Resale
Registration Statement. The undersigned also acknowledges that it understands
that the answers to this Questionnaire are furnished for use in connection with
Registration Statements filed pursuant to the Investors Rights Agreement and any
amendments or supplements thereto filed with the Commission pursuant to the
Securities Act.

 

The undersigned hereby acknowledges and is advised of the following
Interpretation A.65 of the July 1997 SEC Manual of Publicly Available Telephone
Interpretations regarding short selling:

 

“An Issuer filed a Form S-3 registration statement for a secondary offering of
common stock which is not yet effective. One of the selling stockholders wanted
to do a short sale of common stock “against the box” and cover the short sale
with registered shares after the effective date. The issuer was advised that the
short sale could not be made before the registration statement become effective,
because the shares underlying the short sale are deemed to be sold at the time
such sale is made. There would, therefore, be a violation of Section 5 if the
shares were effectively sold prior to the effective date.”

 

By returning this Questionnaire, the undersigned will be deemed to be aware of
the foregoing interpretation.

 

I confirm that, to the best of my knowledge and belief, the foregoing statements
(including without limitation the answers to this Questionnaire) are correct.

 

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

 

 

Dated:

 

 

Beneficial Owner:

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

[                    ]

 

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