Exhibit 10.2

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INVESTOR RIGHTS AGREEMENT

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Between

CORAUTUS GENETICS INC.

and

BOSTON SCIENTIFIC CORPORATION

 

Dated as of July 30, 2003

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TABLE OF CONTENTS

Page

ARTICLE I       DEFINITIONS       SECTION 1.01 Certain Defined Terms 1 SECTION
1.02 Other Defined Terms 3       ARTICLE II       PRE-EMPTIVE RIGHT SECTION 2.01
Pre-emptive Right 4       ARTICLE III       REGISTRATION RIGHTS       SECTION
3.01 Demand Registration 5 SECTION 3.02 Selection of Underwriter(s) 5 SECTION
3.03 Priority in Requested Registration 6 SECTION 3.04 Limits on Demand
Registrations 6 SECTION 3.05 Withdrawal 6 SECTION 3.06 Shelf Registration 6
SECTION 3.07 Effective Registration Statement 7 SECTION 3.08 Piggyback
Registration 7 SECTION 3.09 Allocation of Securities Included in a Public
Offering 8 SECTION 3.10 Obligations of the Company 8 SECTION 3.11 Expenses of
Registration 13 SECTION 3.12 Indemnification 14 SECTION 3.13 Assignment of
Registration Rights 18 ARTICLE IV       ADDITIONAL AGREEMENTS       SECTION 4.01
Delivery of Information 18       ARTICLE V       BOARD OBSERVATION RIGHTS      
SECTION 5.01 Board Observation Rights 19

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ARTICLE VI       TERMINATION       SECTION 6.01 Termination 19       ARTICLE VII
      MISCELLANEOUS       SECTION 7.01 Further Action 20 SECTION 7.02 Expenses
20 SECTION 7.03 Notices 20 SECTION 7.04 Interpretation and Rules of Construction
21 SECTION 7.05 Public Announcements 22 SECTION 7.06 Severability 22 SECTION
7.07 Entire Agreement 22 SECTION 7.08 Remedies 22 SECTION 7.09 Assignment 23
SECTION 7.10 Successors and Assigns 23 SECTION 7.11 Governing Law 23 SECTION
7.12 Counterparts 23

Exhibit - A List of Agreements Relating to Registration Rights

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                                INVESTOR RIGHTS AGREEMENT, dated as of July 30,
2003, between Corautus Genetics Inc., a Delaware corporation (the “Company”),
and BOSTON SCIENTIFIC CORPORATION, a Delaware corporation (the “Investor”).

W I T N E S S E T H :

                                WHEREAS, the parties have entered into an
Investment Agreement, dated as of July 30, 2003 (the “Investment Agreement”),
pursuant to which the Investor has agreed, among other things, to subscribe for
and purchase Series D Convertible Preferred Stock of the Company, par value
$0.001 per share, (the “Series D Preferred Stock”) of the Company, and having
the designations, rights and preferences set forth in the Certificate of
Designations (as defined in the Investment Agreement), including, among other
matters, the right of the holder of the Series D Preferred Stock to convert such
capital stock into common stock (“Common Stock”) of the Company, par value under
$0.001 per share, (such shares issuable upon conversion of the Series D
Preferred Stock, the “Preferred Conversion Shares”).

                                WHEREAS, the parties and Vascular Genetics Inc.,
a wholly owned subsidiary of the Company, have entered into a Loan Agreement,
dated as of July 30, 2003 (the “Loan Agreement”), pursuant to which the Investor
has agreed, among other things, to subscribe for and purchase senior convertible
promissory notes (the “Notes”) of the Company, having the rights set forth in
the Notes, including, among other matters, the right of the holder of the Notes
to convert, in certain circumstances, such Notes into Common Stock (such shares
issuable upon conversion of the Notes, the “Note Conversion Shares”).

                                WHEREAS, the parties desire to enter into this
Agreement to govern certain of their rights, duties and obligations in
connection with the shares of the capital stock of the Company to be held by the
Investor and any permitted transferees.

                                NOW, THEREFORE, in consideration of the premises
and the covenants hereinafter contained and for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound hereby, it is agreed as follows:

ARTICLE I

DEFINITIONS

                                 SECTION 1.01      Certain Defined Terms.  As
used in this Agreement, the following terms shall have the following meanings:

              ”Affiliate” means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.

              ”Board” means the board of directors of the Company.

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              ”Business Day” means any day that is not a Saturday, a Sunday or
any other day on which banks are required or authorized by Law to be closed in
the City of New York.

              ”control” (including the terms “controlled by” and “under common
control with”) means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, as trustee or executor, by
contract or otherwise, including, without limitation, the ownership, directly or
indirectly, of securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such Person.

              ”Equity Securities” means any equity or equity-linked securities
of the Company, including any securities convertible into, exercisable or
exchangeable for, any Common Stock or preferred stock of the Company.

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

              ”Governmental Authority” means any United States or non-United
States federal, national, supranational, state, provincial, local, or similar
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.

              ”Law” means any other United States or non-United States federal,
national, supranational, state, provincial, local or similar statute, law,
ordinance, regulation, rule, code, order, requirement or rule of law.

              ”Person” means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act.

              ”Preliminary Prospectus” shall mean any preliminary Prospectus or
preliminary Prospectus supplement that may be included in any Registration
Statement.

              ”Private Placement” shall mean any offering or placement of
securities of the Company in a transaction that is exempt from the registration
requirements of the Securities Act.

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

              ”Public Offering” shall mean the offer of shares of Common Stock
or securities convertible into or exchangeable for Common Stock on a
broadly-distributed basis, not limited to sophisticated investors (except for
qualified institutional buyers pursuant to

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  Rule 144A under the Securities Act), pursuant to a firm-commitment or
best-efforts underwriting or purchase arrangement.

              ”register”, “registered” and “registration” refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.

              ”Registrable Securities” means at any time (a) the Preferred
Conversion Shares, (b) the Note Conversion Shares, and (c) any Common Stock of
the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security that is issued as) a dividend or other
distribution with respect to, or in exchange for, or in replacement of, the
Preferred Conversion Shares or the Note Conversion Shares. For purposes of this
Agreement, any Registrable Securities shall cease to be Registrable Securities
(i) when they have been registered under the Securities Act (the registration
statement in connection therewith having been declared effective) and disposed
of pursuant to such effective registration statement, (ii) when they are sold by
a Person in a transaction in which the rights and obligations under the
provisions of this Agreement are not assigned, (iii) when they have been sold or
distributed pursuant to Rule 144 (including Rule 144(k)) or (iv) when all such
Registrable Securities held by such holder may be sold or distributed without
registration pursuant to Rule 144(k).

              ”Registration Statement” shall mean any registration statement of
the Company under the Securities Act that covers any of the Registrable
Securities, including the prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference or deemed to be incorporated by reference
in such Registration Statement.

              ”Rule 144” means Rule 144 promulgated under the Securities Act or
any successor rule thereto.

              ”SEC” means the Securities and Exchange Commission.

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

              ”Transaction Documents” shall have the meaning ascribed thereto in
the Investment Agreement.

                                SECTION 1.02     Other Defined Terms.  The
following terms shall have the meanings defined for such terms in the Sections
set forth below:

  Term   Section         AMEX   3.10(c)(14)     Blackout Period   3.10(b)    
Common Stock   Recitals     Company   Preamble  

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  Term   Section           Company Indemnified Person   3.12(b)   Demand   3.01
  Existing Agreements   3.09   Existing Holders   3.08   indemnifying parties  
3.12(c)   Investment Agreement   Recitals   Investor   Preamble   Investor
Indemnified Person   3.12(a)   Investor Representative   5.01   Issue Notice  
2.01(b)   Loan Agreement   Recitals   Losses   3.12(a)   Maximum Number   3.08  
Note(s)   Recitals   Note Conversion Shares   Recitals   Preferred Conversion
Shares   Recitals   Proceeding(s)   3.12(c)   Registration Expenses   3.11(a)  
Right of First Offer   2.01(a)   Seller(s)   3.09(a)   Series D Preferred Stock
  Recitals

ARTICLE II

PRE-EMPTIVE RIGHT

                                SECTION 2.01      Pre-emptive
Right.  (a)  Subject to the terms and conditions of this Section 2.01, the
Company hereby grants to the Investor a right of first offer (the “Right of
First Offer”) to subscribe for its pro rata share of Equity Securities issued in
any Private Placement. The Investor’s pro rata share, for purposes of this Right
of First Offer, is the ratio of the number of shares of Common Stock owned by
the Investor immediately prior to the issuance of the Equity Securities,
assuming full conversion of the Series D Preferred Stock, conversion into Common
Stock of all Notes issued or issuable under the Loan Agreement and exercise of
all other outstanding rights, options and warrants to acquire Common Stock held
by the Investor, to the total number of shares of Common Stock outstanding
immediately prior to the issuance of the Equity Securities plus all shares of
Common Stock issuable upon conversion, redemption, exchange, exercise of, or as
a dividend declared as of the time of measurement with respect to, any shares of
preferred stock, options, warrants, debentures and other securities or any
subscription rights.

              (b)  Each time the Company proposes to effect a Private Placement,
the Company shall first make an offer of such Equity Securities to the Investor
in accordance with the following provisions:

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            (i)           The Company shall deliver a notice (an “Issue Notice”)
to the Investor stating (A) its bona fide intention to offer such Equity
Securities, (B) a description of such Equity Securities, (C) the number (or the
formula for determining the number) of such Equity Securities to be offered and
(D) the pricing mechanism and other terms upon which it proposes to offer such
Equity Securities.

                (ii)           By written notice to the Company within five (5)
Business Days after receipt by the Investor of an Issue Notice, the Investor may
elect to subscribe for all or a part of, its pro rata share of the Equity
Securities, applying the same pricing mechanism and upon the other terms as
specified in the Issue Notice and stating therein the quantity (or the formula
as specified in the Issue Notice, if applicable) of Equity Securities to be
purchased.

          (c)           If the Investor does not elect to subscribe for all of
the Equity Securities that the Investor is entitled to subscribe for pursuant to
Section 2.01(b)(ii), the Company may, during the one hundred twenty (120) day
period following the expiration of the five (5) Business Day period provided in
Section 2.01(b)(ii), offer the remaining unsubscribed portion of such Equity
Securities to any Person or Persons at a price, and upon terms that are not
materially different than those specified in the Issue Notice. If the Company
does not enter into an agreement for the sale of the Equity Securities within
such period, or if such agreement is not consummated within one hundred twenty
(120) days of the execution thereof, the right provided hereunder shall be
deemed to be revived and such Equity Securities shall not be offered unless
first re-offered to the Investor in accordance herewith.

ARTICLE III

REGISTRATION RIGHTS

          SECTION  3.01            Demand Registration.   If at any time after
the first year anniversary of this Agreement the Investor shall request the
Company in writing (each, a “Demand”) to register under the Securities Act a
specified number of Registrable Securities, the Company shall use commercially
reasonable best efforts to effect the registration under the Securities Act of
the Registrable Securities which the Company has been so requested to register
as soon as reasonably practicable so as to permit the sale thereof, and in
connection therewith shall prepare and file a Registration Statement with the
SEC under the Securities Act to effect such registration; provided, that each
such request shall (a) specify the number of shares of Registrable Securities
intended to be offered and sold, (b) describe the nature or method of the
proposed offer and sale thereof and (c) contain the undertaking of the Investor
to provide all such information and materials and take all such action as may be
required in order to permit the Company to comply with all applicable
requirements of the SEC and to obtain any desired acceleration of the effective
date of such Registration Statement.

          SECTION  3.02           Selection of Underwriter(s).  If the
registration pursuant to Section 3.01 relates to an underwritten offering, the
managing or lead underwriter(s) shall be an

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underwriter(s) of nationally recognized standing selected by the Investor, which
shall be reasonably acceptable to the Company; provided, if the foregoing is
inconsistent with any agreement that is in effect between the Company and an
underwriter on the date hereof (but not as such agreement may be hereafter
amended), then the Investor shall have the right to select the co-lead manager.

          SECTION  3.03            Priority in Requested Registration.  If a
registration pursuant to Section 3.01 involves an underwritten offering, and the
managing or lead underwriter(s) shall advise the Investor in writing (a copy of
which shall be provided to the Company by the Investor) that, in its or their
reasonable commercial judgment, the number of Registrable Securities requested
to be included in such registration by the Investor, the Company and any other
Person exceeds the number which can be sold in such offering within a price
range acceptable to the Investor, the Company shall include in such registration
the number of securities that the Company is so advised can be sold in such
offering, as follows: (i) first, the Registrable Securities proposed to be
included by the Investor, (ii) second, the Registrable Securities requested by
the Company, unless otherwise provided in an agreement between the Company and
another Person(s), and (iii) third, the Registrable Securities of any other
Person(s) proposed to be included in such registration, in accordance, as to the
priorities among such other Person(s), with the rights contained in the
respective agreements into which such Person(s) and the Company have entered.

          SECTION  3.04            Limits on Demand Registrations.  The Company
shall not be required to effect any registration pursuant to Section 3.01 or
3.06 after two Demands requested by the Investor pursuant to Section 3.01 and/or
3.06 shall have been effected.

          SECTION  3.05            Withdrawal.  The Investor shall have the
right to request withdrawal of any Registration Statement filed with the SEC
pursuant to Section 3.01 or Section 3.06 (and the Company shall so withdraw such
Registration Statement) so long as such Registration Statement has not become
effective, provided that, in such case, the Investor shall pay all related
out-of-pocket Registration Expenses (as defined below in Section 3.11(a))
reasonably incurred by the Company unless a Registration Statement shall be
effected pursuant to Section 3.01 or Section 3.06 within 270 days after such
withdrawal.

          SECTION  3.06            Shelf Registration.   If at any time after
the first year anniversary of this Agreement the Investor shall request to the
Company in writing, the Company shall use commercially reasonable best efforts
to file and cause to be declared effective a “shelf” Registration Statement on
any appropriate form pursuant to Rule 415 (or similar rule that may be adopted
by the SEC) under the Securities Act for Registrable Securities, which form
shall be available for the sale of the Registrable Securities in accordance with
the intended method or methods of distribution thereof. The Company agrees to
use commercially reasonable best efforts to keep such Registration Statement
continuously effective and usable for resale of Registrable Securities, for a
period of twenty-four months from the date on which the SEC declares such
Registration Statement effective or such shorter period which will terminate at
such time as the Investor has sold all the Registrable Securities covered by
such Registration Statement; provided, however, that the Company may elect that
such Registration Statement not be filed or usable during any Blackout Period
(as defined in Section 3.10(b)). The Investor shall

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be entitled to a total of one “shelf” registration pursuant to this Section
3.06, which shall count as one Demand for purposes of the limitations on Demands
set forth in Section 3.04.

          SECTION  3.07            Effective Registration Statement.   A
registration requested pursuant to Section 3.01 or 3.06 shall not be deemed to
be effected if (a) a Registration Statement with respect thereto shall not have
become effective under the Securities Act and remained effective for at least 90
days or until the completion of the distribution of the Registrable Securities
thereunder, whichever is earlier (including, without limitation, because of a
withdrawal of such Registration Statement by the Investor prior to the
effectiveness thereof pursuant to Section 3.05 hereof), (b) after it has become
effective, such registration is interfered with for any reason by any stop
order, injunction or other order or requirement of the SEC or any other
Governmental Authority, or as a result of the initiation of any proceeding for
such a stop order by the SEC through no fault of the Investor and the result of
such interference is to prevent the Investor from disposing of such Registrable
Securities proposed to be sold in accordance with the intended methods of
disposition, (c) the Company exercises its rights under Section 3.10(b), and the
result is a delay in the proposed distribution of any Registrable Securities and
the Investor determines not to sell such Registrable Securities pursuant to such
registration as a result of such delay, or (d) the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with any underwritten offering shall not be satisfied or waived with
the consent of the Investor.

          SECTION  3.08            Piggyback Registration.   Beginning on the
date of this Agreement, if the Company proposes to register any shares of Common
Stock for itself or any of its stockholders (the stockholders at such time being
the “Existing Holders”) under the Securities Act on a Registration Statement on
Form S-1, Form S-2 or Form S-3 (or an equivalent general registration form then
in effect), the Company shall give written notice of such proposal at least 15
days before the anticipated filing date, which notice shall include the intended
method of distribution of such shares, to the Investor. Such notice shall
specify at a minimum the number of shares of Common Stock proposed to be
registered, the proposed filing date of such Registration Statement, any
proposed means of distribution of such shares and the proposed managing
underwriter, if any. Subject to Section 3.09, upon the written request of the
Investor, given within 10 days after the receipt of any such written notice by
facsimile confirmed by mail (which request shall specify the Registrable
Securities intended to be disposed of by the Investor), the Company will use
commercially reasonable best efforts to include in the Registration Statement
the Registrable Securities referred to in the Investor’s request; provided,
however, that if such Registration Statement relates to a Public Offering, then
any participation in such Public Offering by the Investor shall be on
substantially the same terms as the Company’s (or its other stockholders’)
participation therein; and provided further that the amount of Registrable
Securities to be included in any such Public Offering shall not exceed the
maximum number which the managing underwriter of such Public Offering considers
in its reasonable commercial judgment to be appropriate based on market
conditions and other relevant factors (the “Maximum Number”). The Investor
agrees not to sell any of the Registrable Securities that may be registered
pursuant to this Section 3.08 for a period of one year after the date of this
Agreement. The Investor shall have the right to withdraw a request to include
Registrable Securities in any Public Offering pursuant to this Section 3.08 by
giving written notice to the Company of its election to withdraw such request at
least five business days prior to the proposed effective date of such
Registration Statement.

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          SECTION  3.09            Allocation of Securities Included in a Public
Offering.    (a)   If the lead managing underwriter for any Public Offering to
be effected pursuant to Section 3.08 of this Agreement shall advise the Company
and the Investor (each, a “Seller” and, collectively, the “Sellers”) in writing
that the number of shares of Common Stock sought to be included in such Public
Offering (including those sought to be offered by the Company, those sought to
be offered by the Sellers and those sought to be offered by Existing Holders) is
more than the Maximum Number, the shares of Common Stock to be included in such
Public Offering shall be allocated pursuant to the following procedures: First,
the Company shall be entitled to include all of the securities that it has
proposed to include, and second, to the extent that any other securities may be
included without exceeding the Maximum Number, and subject to rights of any
holders of the Company’s Securities under the agreements listed on Exhibit A
(the “Existing Agreements”), the Investor shall be entitled to participate in
that registration on a basis no less favorable than that of any other holder of
the Company’s securities.

              (b)         Notwithstanding anything to the contrary in Section
3.08 and Section 3.09(a), the Investor shall be entitled to participate in a
Public Offering effected by the Company pursuant to a request under an Existing
Agreement only to the extent that the terms of such Existing Agreement permits
the Investor to so participate. The Company agrees that in any modification or
amendment of an Existing Agreement, the rights of the Investor as granted under
this Agreement will not be adversely affected, and that registration rights
granted by the Company under any future registration rights agreement that the
Company may enter into will be on a basis no more favorable than the rights
granted to the Investor herein, unless the Company also grants equivalent rights
to the Investor at the time of such other agreement.

          SECTION  3.10            Obligations of the Company.   (a)   Whenever
the Company is required by the provisions of this Agreement to use commercially
reasonable best efforts to effect the registration of any Common Stock under the
Securities Act, the Company shall (i) prepare and, as soon as reasonably
possible and in any event within 45 days following receipt of a notice from the
Investor to that effect, file with the SEC a Registration Statement with respect
to such Registrable Securities, and shall use commercially reasonable best
efforts to cause such Registration Statement to become effective and to remain
effective until the sale of all of the shares of Registrable Securities so
registered or, in the case of a “shelf” registration statement filed pursuant to
Section 3.06, for the period specified in that Section; (ii) prepare and file
with the SEC such amendments and supplements to such Registration Statement and
the Prospectus used in connection therewith as may be reasonably necessary to
make and to keep such Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of all securities proposed to be registered pursuant to such Registration
Statement until the sale of all of the shares of Registrable Securities so
registered or, in the case of a “shelf” registration statement filed pursuant to
Section 3.06, for the period specified in that Section; and (iii) take all such
other action either necessary or desirable to permit the shares of Registrable
Securities held by the Investor to be registered and disposed of in accordance
with the method of disposition described herein.

              (b)        Notwithstanding the foregoing, if the Company shall
furnish to the Investor a certificate signed by its Chairman, Chief Executive
Officer or Chief Financial Officer stating that filing a Registration Statement
or maintaining effectiveness of a current

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      Registration Statement would have a material adverse effect on the Company
or its stockholders in relation to any material financing, acquisition or other
corporate transaction, and the Company has determined in good faith that such
disclosure is not in the best interests of the Company and its shareholders, the
Company shall be entitled to postpone filing or suspend the use by the Investor
of the Registration Statement for a reasonable period of time, but not in excess
of 60 consecutive calendar days (a “Blackout Period”). The Company shall be
entitled to exercise such suspension rights more than one time in any calendar
year; provided that such exercise shall not prevent the Investor from being
entitled to at least 240 days of effective registration rights per year and that
no suspension period may commence if it is less than 30 calendar days from the
prior such suspension period.

            (c)     In connection with any Registration Statement, the following
provisions shall apply:

            (1)     The Company shall furnish to the Investor, prior to the
filing thereof with the SEC, a copy of any Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the Prospectus
included therein and shall afford the Investor, the managing underwriters, and
their respective counsel, if any, a reasonable opportunity within a reasonable
time period to review and comment on copies of all such documents (including a
reasonable opportunity to review copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed.

            (2)     The Company shall take such action as may be necessary so
that: (i) any Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any amendment or supplement thereto (and
each report or other document incorporated therein by reference) complies in all
material respects with the Securities Act and the Exchange Act and the
respective rules and regulations thereunder, (ii) any Registration Statement and
any amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(iii) any Prospectus forming part of any Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.

            (3)     The Company shall advise the Investor and, if requested by
the Investor, confirm such advice in writing of:

                       (i)           when a Registration Statement and any
amendment thereto has been filed with the SEC and when the Registration
Statement or any post-effective amendment thereto has become effective;

                       (ii)           any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus included therein or
for additional information;

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                   (iii)         the issuance by the SEC of any stop order
suspending effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose;

                   (iv)         the receipt by the Company of any notification
with respect to the suspension of the qualification of the securities included
therein for sale in any jurisdiction or the initiation of any proceeding for
such purpose; and

                   (v)         the happening of any event that requires the
making of any changes in the Registration Statement or the Prospectus so that,
as of such date, the Registration Statement and the Prospectus do not contain an
untrue statement of a material fact and do not omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in the light of the circumstances under which they
were made) not misleading (which advice shall be accompanied by an instruction
to suspend the use of the Prospectus relating to such Registrable Securities
until the requisite changes have been made).

            (4)      The Company shall use commercially reasonable best efforts
to prevent the issuance, and if issued to obtain the withdrawal, of any order
suspending the effectiveness of the Registration Statement relating to such
Registrable Securities at the earliest possible time.

            (5)      The Company shall furnish to the Investor with respect to
the Registration Statement relating to such Registrable Securities, without
charge, such number of copies of such Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and all reports, other documents and exhibits (including those incorporated by
reference) as the Investor shall reasonably request.

            (6)      The Company shall furnish to the Investor such number of
copies of any Prospectus (including any preliminary Prospectus and any amended
or supplemented Prospectus) relating to such Registrable Securities, in
conformity with the requirements of the Securities Act, as the Investor may
reasonably request in order to effect the offering and sale of the shares of
such Registrable Securities to be offered and sold, but only while the Company
shall be required under the provisions hereof to cause the Registration
Statement to remain effective, and the Company consents (except during a
Blackout Period or event contemplated by Section 3.10(c)(3)(iii)-(v)) to the use
of the Prospectus or any amendment or supplement thereto by the Investor in
connection with the offering and sale of the Registrable Securities covered by
the Prospectus or any amendment or supplement thereto.

            (7)      Prior to any offering of Registrable Securities pursuant to
any Registration Statement, the Company shall use commercially reasonable best
efforts to register or qualify the Registrable Securities covered by such
Registration Statement under the securities or blue sky Laws of such states as
the Investor shall reasonably request, maintain any such registration or
qualification current until the earlier of the sale of the Registrable
Securities so registered or 90 days subsequent to the effective date of the
Registration Statement, and do any and all other acts and things either
reasonably

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      necessary  or advisable to enable the Investor to consummate the public
sale or other disposition of the Registrable Securities in jurisdictions where
the Investor desires to effect such sales or other disposition; provided that
the Company shall not be required to take any action that would subject it to
the general jurisdiction of the courts of any jurisdiction in which it is not so
subject or to qualify as a foreign corporation in any jurisdiction where the
Company is not so qualified.

            (8)     In connection with any offering of Registrable Securities
registered pursuant to this Agreement, the Company shall (x) furnish the
Investor, at the Company’s expense, on a timely basis with certificates free of
any restrictive legends representing ownership of the Registrable Securities
being sold in such denominations and registered in such names as the Investor
shall request and (y) instruct the transfer agent and registrar of the
Registrable Securities to release any stop transfer orders with respect to the
Registrable Securities and to cooperate with the Investor and its underwriters
(if any).

            (9)      Upon the occurrence of any event contemplated by Section
3.10(c)(3)(iii)-(v) above, the Company shall promptly prepare a post-effective
amendment to any Registration Statement or an amendment or supplement to the
related Prospectus or file any other required document so that, as thereafter
delivered to purchasers of the Registrable Securities included therein, the
Prospectus will not include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. If the Company
notifies the Investor of the occurrence of any Blackout Period or any event
contemplated by Section 3.10(c)(3)(iii)-(v) above, the Investor shall suspend
the use of the Prospectus, for a period not to exceed sixty calendar days in
accordance with Section 3.10(b), until the requisite changes to the Prospectus
have been made.

            (10)     To make generally available to the Company’s security
holders, including the Investor, as soon as practicable an earning statement
covering the twelve-month period ending on the first anniversary of the
effective date of the Registration Statement that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the SEC
thereunder.

            (11)      The Company shall, if requested, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to a
Registration Statement, such information as the managing underwriters
administering an underwritten offering of the Registrable Securities registered
thereunder reasonably request to be included therein and to which the Company
does not reasonably object and shall make all required filings of such
Prospectus supplement or post-effective amendment as soon as practicable after
they are notified of the matters to be included or incorporated in such
Prospectus supplement or post-effective amendment.

            (12)      If requested, the Company shall enter into an underwriting
agreement with an investment banking firm or firms (in the case of a
registration pursuant to Section 3.01 or 3.06 selected by the Investor)
containing representations, warranties, indemnities and agreements then
customarily included by an issuer in underwriting agreements with

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      respect to secondary underwritten distributions, and in connection
therewith, if an underwriting agreement is entered into, cause the same to
contain indemnification provisions and procedures substantially identical to
those set forth in Section 3.12 (or such other provisions and procedures
acceptable to the managing underwriters, if any) with respect to all parties to
be indemnified pursuant to Section 3.12 and take all such other actions as are
reasonably requested by the managing underwriters for such underwritten offering
in order to expedite or facilitate the registration or the disposition of such
Registrable Securities.

            (13)     In the event the Investor proposes to conduct an
underwritten Public Offering, then the Company shall: (i) make reasonably
available for inspection by the Investor and its counsel, any underwriter
participating in any distribution pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by the Investor or any such
underwriter, all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries as shall be
reasonably necessary to enable them to conduct a “reasonable” investigation for
purposes of Section 11(a) of the Securities Act; (ii) cause the Company’s
officers, directors and employees to make reasonably available for inspection
all relevant information reasonably requested by the Investor or any such
underwriter, attorney, accountant or agent in connection with any such
Registration Statement, in each case, as is customary for similar due diligence
examinations; provided that any information that is designated in writing by the
Company, in good faith, as confidential at the time of delivery of such
information shall be kept confidential by the Investor, such underwriter, or any
such, attorney, accountant or agent, unless such disclosure is made in
connection with a court proceeding or required by Law, or such information
becomes available to the public generally or through a third party without an
accompanying obligation of confidentiality; (iii) obtain opinions of counsel to
the Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters, if
any), addressed to the Investor and the underwriters, if any, covering such
matters as are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by the Investor
and underwriters (it being agreed that the matters to be covered by such opinion
or written statement by such counsel delivered in connection with such opinions
shall include in customary form, without limitation, as of the date of the
opinion and as of the effective date of the Registration Statement or most
recent post-effective amendment thereto, as the case may be, the absence from
such Registration Statement and the Prospectus included therein, as then amended
or supplemented, including the documents incorporated by reference therein, of
an untrue statement of a material fact or the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading); (iv) obtain “cold comfort” letters and updates thereof
from the independent public accountants of the Company (and, if necessary, any
other independent public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and financial
data are, or are required to be, included in the Registration Statement),
addressed to the Investor and the underwriters, if any, in customary form and
covering matters of the type customarily covered in “cold comfort” letters in
connection with primary underwritten offerings; and (v) deliver such documents
and certificates as may be reasonably requested by the Investor and the

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      managing underwriters, if any, and with any customary conditions contained
in the underwriting agreement or other agreement entered into by the Company.
The foregoing actions set forth in clauses (iii), (iv) and (v) of this Section
3.10(c)(13) shall be performed at each closing under any underwritten offering
to the extent required thereunder.

            (14)      The Company will use commercially reasonable best efforts
to cause such Registrable Securities to be admitted for quotation on the
American Stock Exchange (“AMEX”) or other stock exchange or trading system on
which the Common Stock primarily trades on or prior to the effective date of any
Registration Statement hereunder.

            (15)     The Company shall use commercially reasonable best efforts
to take all other steps reasonably necessary to effect the registration,
offering and sale of the Registrable Securities covered by a Registration
Statement contemplated hereby and enter into any other customary agreements and
take such other actions, including participation of senior management in
“roadshows” as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities, and the Company shall secure the
participation of its senior management for such purposes.

            (16)      The Company shall, at the reasonable request of the
Investor, hold periodic meetings with representatives of the Investor to report
on the market for the Company’s securities and opportunities for the Investor to
effect sales of such Registrable Securities.

            (d)   With a view to making available the benefits of certain rules
and regulations of the SEC which may at any time permit the sale of the
Registrable Securities to the public without registration, the Company agrees
to:

            (1)   Make and keep public information available, as those terms are
understood and defined in and interpreted under Rule 144, at all times;

            (2)  During such time as the Investor holds Registrable Securities,
furnish to the Investor upon request: (i) a written statement by the Company as
to its compliance with the reporting requirements of Rule 144, (ii) a copy of
the most recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company as the Investor may reasonably request in
availing itself of any rule or regulation of the SEC allowing the Investor to
sell any such securities without registration.

                     SECTION 3.11         Expenses of Registration.   (a)  
Except as provided in subsection (b) of this Section, all fees and expenses
incident to the registration and sale of Registrable Securities shall be borne
by the Company whether or not a Registration Statement is filed or becomes
effective, including, without limitation, (i) all registration, qualification
and filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the AMEX and (B) fees and expenses of compliance with
state securities or blue sky Laws (including, without limitation, fees and
disbursements of counsel for the Company or the underwriters, or both, in
connection with blue sky qualifications of the Registrable Securities)),
(ii) messenger and delivery expenses, word processing, duplicating and printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities in a

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form eligible for deposit with The Depository Trust Company, and the relevant
fees and expenses of the Company’s transfer agent, printing Preliminary
Prospectuses, Prospectuses, Prospectus supplements, including those delivered to
or for the account of the Investor as provided in this Agreement, and printing
or preparing any underwriting agreement, agreement among underwriters and
related syndicate or selling group agreements, pricing agreements and blue sky
memoranda), (iii) fees and disbursements of counsel for the Company, (iv) fees
and disbursements of all independent certified public accountants for the
Company (including, without limitation, the expenses of any “comfort letters”
required by or incident to such performance), (v) the fees and expenses of any
“qualified independent underwriter” or other independent appraiser participating
in an offering pursuant to Section 3 of Rule 2720 of the Conduct Rules of the
NASD (unless such qualified independent underwriter is required as a result of
an affiliation between an underwriter selected by the Investor and the Investor,
in which case such fees and expenses will be borne by the Investor), (vi)
Securities Act liability insurance, if the Company so desires such insurance,
(vii) all out-of-pocket expenses of the Company (including, without limitation,
expenses incurred by the Company, its officers, directors, employees and agents
performing legal or accounting duties or preparing or participating in
“roadshow” presentations or of any public relations, investor relations or other
consultants or advisors retained by the Company in connection with any roadshow,
including travel and lodging expenses of such roadshows), and (viii) the fees
and expenses incurred in connection with the quotation or listing of shares of
Common Stock on any securities exchange or automated securities quotation
system. The fees and expenses set forth in this Section 3.11(a) are collectively
referred to as “Registration Expenses”.  (b) The Investor shall pay all
underwriting discounts and commissions or broker’s commissions incurred in
connection with the sale or other disposition of Registrable Securities for or
on behalf of the Investor’s account as well as the fees and expenses of the
Investor’s counsel.  (c) The Investor shall pay all out-of-pocket Registration
Expenses reasonably incurred by the Company unless a Registration Statement
shall be effected pursuant to Section 3.01 or 3.06 within 270 days after a
withdrawal as provided in Section 3.05.

                    SECTION 3.12     Indemnification.  (a)   Indemnification by
the Company.  The Company shall, without limitation as to time, indemnify and
hold harmless, to the fullest extent permitted by Law, the Investor and any
underwriter participating in the distribution, their respective officers,
directors, partners and agents and employees of each of them, each Person who
controls the Investor or any such underwriter (within the meaning of Section 15
of the Securities Act and Section 20 of the Exchange Act) and the officers,
directors, partners, agents and employees of each such controlling Person
(individually, an “Investor Indemnified Person”) from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
costs of investigating, preparing to defend, defending and appearing as a
third-party witness and attorneys’ fees and disbursements) and expenses,
including any amounts paid in respect of any settlements (collectively,
“Losses”), joint or several, without duplication, as incurred, arising out of or
based upon any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, Prospectus or form of prospectus, or in any
amendment or supplements thereto or in any Preliminary Prospectus, or arising
out of or based upon, in the case of the Registration Statement or any
amendments thereto, any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and, in the case of the Prospectus or form of prospectus, or in any amendments
or supplements thereto, or in any Preliminary Prospectus, any omission or
alleged omission of a

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material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading except, in either case, (i) to the extent, but only to the extent,
that such untrue or alleged untrue statement or omission or alleged omission has
been made therein in reliance upon and in conformity with information furnished
in writing to the Company by such Investor Indemnified Person expressly for use
therein and (ii) if the Person asserting any such Losses who purchased the
Registrable Securities which are the subject thereof did not receive a copy of
an amended Preliminary Prospectus or the final Prospectus (or the final
Prospectus as amended or supplemented) at or prior to the written confirmation
of the sale of such Registrable Securities to such Person (if it is determined
that the Company has provided such Preliminary Prospectus and it was the
responsibility of such Investor Indemnified Person to provide such Person with a
current copy of the Prospectus or amended or supplemented Prospectus, as the
case may be) and the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact made in such Preliminary Prospectus was
corrected in the amended Preliminary Prospectus or the final Prospectus (or the
final Prospectus as amended and supplemented).

            (b)   Indemnification by Investor.   In connection with any
Registration Statement in which the Investor as a holder of Registrable
Securities is participating, the Investor shall severally but not jointly,
without limitation as to time, indemnify and hold harmless, to the fullest
extent permitted by Law, the Company, any underwriter participating in the
distribution and their respective directors, officers, agents and employees,
each Person who controls the Company or any such underwriter (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 Person
(individually, a “Company Indemnified Person”), from and against any and all
Losses, as incurred, arising out of or based upon (i) any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus, or form of prospectus, or in any amendment or supplement thereto or
in any Preliminary Prospectus, or arising out of or based upon, in the case of
the Registration Statement or any amendments thereto, any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, and, in the case of the Prospectus, or
form of prospectus, or in any amendments or supplements thereto, or in any
Preliminary Prospectus, any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, in
either case, to the extent, but only to the extent, that such untrue or alleged
untrue statement or omission or alleged omission has been made therein in
reliance upon and in conformity with information furnished in writing to the
Company by the Investor expressly for use therein or (ii) the failure of the
Investor (if it is determined that it was the responsibility of the Investor) at
or prior to the written confirmation of the sale of the Registrable Securities
to send or deliver a copy of an amended Preliminary Prospectus or the final
Prospectus (or the final Prospectus as amended or supplemented) to the Person
asserting any such Losses who purchased the Registrable Securities which are the
subject thereof and the untrue statement or alleged untrue statement or omission
or alleged omission of a material fact made in such Preliminary Prospectus was
corrected in the amended Preliminary Prospectus or the final Prospectus (or the
final Prospectus as amended and supplemented).

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            (c)   Conduct of Indemnification Proceedings. Each Indemnified
Person shall give prompt notice to the party or parties from which such
indemnity is sought (the “indemnifying parties”) of the commencement of any
action or proceeding (including any governmental investigation) (collectively
“Proceedings” and individually a “Proceeding”) with respect to which such
Indemnified Person seeks indemnification or contribution pursuant hereto;
provided, however, that the failure so to notify the indemnifying parties shall
not relieve the indemnifying parties from any obligation or liability except to
the extent that the indemnifying party was otherwise unaware of such Proceeding
and the indemnifying parties shall have been materially prejudiced by such
failure. The indemnifying parties shall have the right, exercisable by giving
written notice to an Indemnified Person promptly after the receipt of written
notice from such Indemnified Person of such Proceeding, to assume, at the
indemnifying parties’ expense, the defense of any such proceeding, with counsel
reasonably satisfactory to such Indemnified Person and shall pay as incurred the
fees and disbursements of such counsel related to such Proceeding; provided,
however, that an Indemnified Person or Indemnified Persons (if more than one
such Indemnified Person is named in any Proceeding) 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 Person or Indemnified Persons unless: (i) the indemnifying
party or parties agree to pay such fees and expenses; or (ii) the indemnifying
parties fail promptly to assume the defense of such Proceeding or fail promptly
to employ counsel reasonably satisfactory to such Indemnified Person or
Indemnified Persons; or (iii) the named parties to any such action (including
any impleaded parties) include both an Indemnified Person and the indemnifying
party, and the Indemnified Person or Indemnified Persons shall have been advised
by counsel that there may be a conflict between the positions of the
indemnifying party or an Affiliate of the indemnifying party and such
Indemnified Person or Indemnified Persons in conducting the defense of such
action or proceeding or that there may be legal defenses available to such
Indemnified Person or Indemnified Persons different from or in addition to those
available to the indemnifying party or such Affiliate, in which case, if such
Indemnified Person or Indemnified Persons notifies the indemnifying parties in
writing that it elects to employ separate counsel at the expense of the
indemnifying parties, the indemnifying parties shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
indemnifying parties, it being understood, however, that the indemnifying
parties shall not, in connection with any one such Proceeding or separate but
substantially similar or related Proceedings in the same jurisdiction, arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such Indemnified
Person or Indemnified Persons. Whether or not such defense is assumed by the
indemnifying parties, such indemnifying parties or Indemnified Person or
Indemnified Persons will not be subject to any liability for any settlement made
without its or their consent (but such consent will not be unreasonably
withheld). No indemnifying party shall be liable for any settlement of any such
action or proceeding effected without its written consent, but if settled with
its written consent each indemnifying party jointly and severally agrees,
subject to the exception and limitations set forth above, to indemnify and hold
harmless each Indemnified Person from and against any loss or liability by
reason of such

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      settlement. No indemnification provided for in Section 3.12(a) or 3.12(b)
shall be available to any party who shall fail to give notice as provided in
this Section 3.12(c) if the party to whom notice was not given was unaware of
the proceeding to which such notice would have related and was materially
prejudiced by the failure to give such notice, but the failure to give such
notice shall not relieve the indemnifying party or parties from any liability
which it or they may have to an Indemnified Person otherwise than on account of
the provisions of Section 3.12(a) or 3.12(b). No indemnifying party shall,
without the consent of the Indemnified Person, consent to entry of any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Person of a release from all
liability in respect of such claim or litigation.

            (d)   Contribution.   If the indemnification provided for in this
Section 3.12 is unavailable to an Indemnified Person or is insufficient to hold
such Indemnified Person harmless for any Losses in respect to which this Section
3.12 would otherwise apply by its terms, except by reasons of Section 3.12(a)(i)
or (ii) hereof or the failure of the Indemnified Person to give notice as
required in Section 3.12(c) hereof (provided that the indemnifying party was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice), then each applicable
indemnifying party, in lieu of indemnifying such Indemnified Person, shall have
an obligation to contribute to the amount paid or payable by such Indemnified
Person as a result of such Losses, in such proportion as is appropriate to
reflect the relative fault of the indemnifying party, on the one hand, and such
Indemnified Person, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The amount paid or payable by a party as a
result of any Losses shall be deemed to include any legal or other fees or
expenses incurred by such party in connection with any Proceeding, to the extent
such party would have been indemnified for such expenses if the indemnification
provided for in Section 3.12(a) or Section 3.12(b) were available to such party.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 3.12(d) were determined by pro rata allocation or by
any other method of allocation that does not take account of the equitable
considerations referred to above. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

            (e)   Remedies Cumulative.  The indemnity, contribution and expense
reimbursement obligations under this Section 3.12 shall be in addition to any
liability each indemnifying party may otherwise have and shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any Indemnified Person.

            (f)   Underwriting Agreement Controls.  In the event of any conflict
between the indemnification and contribution terms as herein set forth and as
set forth in any underwriting agreement entered pursuant hereto, the
underwriting agreement shall control.

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            (g)   Survival. The obligations of the Company and the Investor
under this Section 3.12 shall survive the completion of any offering of
Registrable Securities in a Registration Statement.

                    SECTION 3.13     Assignment of Registration Rights.  The
registration rights set forth in this Agreement shall be transferable or
assignable by the Investor, in whole or in part and from time to time; provided
that each transferee agrees in writing to be subject to all the terms and
conditions of this Agreement and provided further that the transferees can only
exercise a Demand if they independently or together with the Investor and/or
other transferees, satisfy the conditions and limits in Sections 3.01 through
Section 3.06. The Investor shall notify the Company of any such transfer. No
assignment by the Investor of its registration rights under this Agreement will
have the effect of increasing the aggregate number of Demand obligations of the
Company. The Investor shall not assign the registration rights to more than two
parties in the aggregate.

ARTICLE IV

ADDITIONAL AGREEMENTS

                      SECTION 4.01         Delivery of Information.    The
Company shall deliver the following information to the Investor:

              (a)            If the Company is not subject to Section 13 or
Section 15(d) of the Exchange Act, as soon as practicable after the end of each
fiscal year of the Company after the date this Agreement, and in any event
within 90 days after the end of such period, an annual report (including an
audited consolidated balance sheet of the Company, as at the end of such fiscal
year, and a statement of income and a statement of cash flows of the Company,
for such year, all prepared in accordance with United States generally accepted
accounting principles and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail) accompanied by a
report and opinion thereon by a firm of independent public accountants.

              (b)   If the Company is not subject to Section 13 or Section 15(d)
of the Exchange Act, as soon as practicable after the end of the first, second
and third quarterly accounting periods after the date of this Agreement in each
fiscal year of the Company, and in any event, within 45 days after the end of
such periods, an unaudited consolidated balance sheet of the Company as of the
end of each such quarterly period, and a statement of income and a statement of
cash flows of the Company for such period and for the current fiscal year to
date, prepared in accordance with United States generally accepted accounting
principles and setting forth in each case in comparative form the figures for
the comparable periods in the previous fiscal year, all in reasonable detail,
subject to year-end audit adjustments and the addition of and any changes to any
notes thereto.

              (c)   Copies of all reports or other communications (financial or
other) furnished to: (i) all shareholders (which will be provided in the same
manner as to all other shareholders), (ii) the Board (as provided in Section
5.01), and (iii) such additional

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  information concerning the business and financial condition as the Investor
may reasonably request from time to time, subject to the Investor entering into
a confidentiality agreement with the Company that is in a customary form.

ARTICLE V

BOARD OBSERVATION RIGHTS

                    SECTION 5.01        Board Observation Rights. The Investor
shall appoint one individual by written notice to the Company (the “Investor
Representative”), which representative may be removed and replaced by the
Investor from time to time, to participate in all meetings of the Board. The
Company shall give the Investor Representative notice of each meeting of the
Board at the same time and in the same manner as notice is given to the
directors, and the Company shall permit the Investor Representative to attend
all meetings in the same manner as, the directors of the Board participate. The
Investor Representative shall have the right to participate in all discussions
and deliberations of the Board to the same extent as the directors, except that
he or she shall not have the right to vote upon any matter before the Board. The
Investor Representative shall receive all written materials and other
information (including without limitation copies of meeting minutes) given to
directors in connection with such meetings at the same time such materials and
information are given to the directors. If the Company proposes to take any
action by written consent in lieu of a meeting of the Board, the Company shall
give written notice thereof to the Investor Representative at the same time and
in the same manner as is given to the directors of the effective date of such
consent describing in reasonable detail the nature and substance of such action.
The Investor Representative shall have the same observer rights as are set forth
above with respect to any of the Company’s subsidiaries with respect to which a
substantial number of the Company’s directors serve as directors. The Company
will pay all reasonable and necessary expenses in connection with the Investor
Representative observing the meetings of the Board in the same manner and
subject to the same limits as the Company from time to time establishes for
expense reimbursement for its directors. The Company shall to the maximum extent
permitted (a) by the Company’s (or its subsidiaries, if applicable) certificate
of incorporation or the by-laws or (b) by Law, indemnify and provide liability
insurance to the Investor Representative in the same manner provided to the
directors.

ARTICLE VI

TERMINATION

                    SECTION 6.01       Termination.   Article II, IV and V of
this Agreement shall terminate when the Investor has transferred to an
unaffiliated third party the greater of (a) one-half of the number of shares of
Common Stock acquired by the Investor pursuant to the Transaction Documents at
or prior to the date of such disposition, and (b) such number of shares of
Common Stock as shall leave the Investor with less than five percent of the
outstanding shares of Common Stock (calculated on a fully-diluted basis),
including in the case of both (a) and (b),

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Preferred Conversion Shares and Note Conversion Shares. Section 3.12 and the
last sentence of Section 5.01 shall survive any termination of this Agreement.

ARTICLE VII

MISCELLANEOUS

                    SECTION 7.01       Further Action.  Each of the parties
shall use commercially reasonable efforts to take, or cause to be taken, all
appropriate action, do or cause to be done all things necessary, proper or
advisable under applicable Law, and to execute and deliver such documents and
other papers, as may be required to carry out the provisions of this Agreement
and consummate and make effective the transactions contemplated by this
Agreement.

                    SECTION 7.02       Expenses.  Except as otherwise specified
in this Agreement, all costs and expenses, including, without limitation, fees
and disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such costs and expenses.

                    SECTION 7.03       Notices.  All notices, requests, claims,
demands and other communications hereunder (but not including the delivery of
information pursuant to Sections 4.01 and 5.01) shall be in writing and shall be
given or made (and shall be deemed to have been duly given or made upon receipt)
by delivery in person, by an internationally recognized overnight courier
service, by telecopy or registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 7.03):

                    (a) if to the Company:   Corautus Genetics Inc.   430 Tenth
Street, NW   Suite S-204   Atlanta, GA 30318   Telecopy: (404) 526-6218  
Attention: Chief Executive Officer

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  with a copy (which shall not constitute notice) to:       McKenna Long &
Aldridge LLP   303 Peachtree Street, Suite 5300   Atlanta, GA 30308   Telecopy:
(404) 527-4198   Attention: Robert E. Tritt

                    (b) if to the Investor:       Boston Scientific Corporation
  One Boston Scientific Place   Natick, MA 01760-1537   Telecopy: (508) 650 8956
  Attention: General Counsel       with a copy (which shall not constitute
notice) to:       Shearman & Sterling LLP   599 Lexington Ave.   New York, New
York 10022-6069   Telecopy: (212) 848-7179   Attention: Clare O’Brien, Esq.

                    Any notice, if mailed and properly addresses with postage
prepaid or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; and notice, if transmitted by facsimile, shall be
deemed given when the confirmation of transmission thereof is received by the
transmitter.

                    SECTION 7.04       Interpretation and Rules of Construction.
In this Agreement, except to the extent that the context otherwise requires:

            (a)   when a reference is made in this Agreement to an Article,
Section, Exhibit or Schedule, such reference is to an Article or Section of, or
a Schedule to, this Agreement unless otherwise expressly indicated;

            (b)  the Section headings for this Agreement are for reference
purposes only and do not affect in any way the meaning or interpretation of this
Agreement;

            (c)   whenever the words “include”, “includes” or “including” are
used in this Agreement, they are deemed to be followed by the words “without
limitation”;

            (d)   the words “hereof”, “herein” and “hereunder” and words of
similar import, when used in this Agreement, refer to this Agreement as a whole
and not to any particular provision of this Agreement;

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            (e)   all terms defined in this Agreement have such defined meanings
when used in any certificate or other document made or delivered pursuant
hereto, unless otherwise defined therein;

            (f)   the definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms;

            (g)   any Law defined or referred to herein or in any agreement or
instrument that is referred to herein means such Law or statute as from time to
time amended, modified or supplemented, including by succession of comparable
successor Laws;

            (h)   the use of “or” is not intended to be exclusive unless
expressly indicated otherwise; and

            (i)  all references to currency, monetary values and dollars shall
mean United States (U.S.) dollars and all payments hereunder shall be made in
United States dollars.

                    SECTION 7.05        Public Announcements.   No party shall
make, or cause to be made, any press release or public announcement in respect
of this Agreement or the transactions contemplated by this Agreement or
otherwise communicate with any news media without the prior written consent of
the other party in respect of this Agreement or the transactions contemplated by
this Agreement, and the parties shall cooperate as to the timing and contents of
any such press release or public announcement.

                    SECTION 7.06        Severability.   If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any Law or public policy, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect for so long as the economic
or legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated by this Agreement
are consummated as originally contemplated to the greatest extent possible.

                    SECTION 7.07        Entire Agreement.   The Transaction
Documents constitute the entire agreement of the parties with respect to the
subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.

                    SECTION 7.08        Remedies.   In the event of a breach by
any party of any of its obligations under this Agreement, the other party, in
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company and the Investor agree that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by the Company or the Investor, as the case may be, 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, the Company or
the Investor, as the case may be, shall waive the defense

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that a remedy at law would be adequate. No failure or delay on the part of the
Company or the Investor in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.

                    SECTION 7.09        Assignment.   This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither party may assign this Agreement
without the prior written consent of the other party; provided, however, that
the Investor may assign registration rights in accordance with Section 3.13, the
assignor shall however remain liable for any obligation in connection with a
registration which was effected under this Agreement for such assignor.

                    SECTION 7.10       Successors and Assigns.   Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties (including transferees of any shares of Registrable
Securities). Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.

                    SECTION 7.11       Governing Law.   This Agreement shall be
governed by, and construed in accordance with, the Laws of the State of New
York. The parties unconditionally and irrevocably agree and consent to the
exclusive jurisdiction of the courts located in the State of New York and waive
any objection with respect thereto, for the purpose of any action, suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby, and further agree not to commence any such action, suit or
proceeding except in any such court.

                    SECTION 7.12       Counterparts.   This Agreement may be
executed and delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties in separate counterparts, each of
which when executed shall be deemed to be an original, but all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.

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         IN WITNESS WHEREOF, each of the parties has executed, or has caused to
be executed by its duly authorized representative, this Agreement as of the date
first written above.

  CORAUTUS GENETICS INC.                   By: /s/  RICHARD E. OTTO    

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    Name: Richard E. Otto     Title: Chief Executive Officer           BOSTON
SCIENTIFIC CORPORATION                   By: /s/  LAWRENCE C. BEST    

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    Name: Lawrence C. Best     Title: Senior Vice President & Chief Financial
Officer

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Exhibit A

List of Agreements relating to Registration Rights

1. Investor Rights Agreement between Urogen Corp. Baxter Healthcare Corporation,
Ivor Royston, Paul Quadros and Robert Sobol, dated July 8, 1998, as amended by
the First Amendment to Investor Rights Agreement.     2. Registration Rights
Agreement between Genstar Therapeutics Corporation and certain holders dated May
15, 2000.     3. Warrants agreement with SCO Financial, dated October 18, 2001.
    4. Warrant agreement with Lyon & Lyon, dated May 8, 2002.     5. Two warrant
agreements with CEOCast, Inc., dated June 19, 2002.