Exhibit
10.2


 


REGISTRATION RIGHTS*


 


1.             Shelf Registration.  The Company shall use its reasonable best efforts to file a
registration statement with the Commission within 60 days after the Closing
Date.  Such registration statement shall
relate to the offer and sale of the “Transfer Restricted Securities” by
“Holders” (as such terms are hereinafter defined) from time to time pursuant to
Rule 415 under the 1933 Act and in accordance with the methods of distribution
set forth therein, which registration statement may be substituted for by one
or more subsequent registration statements each relating to the offer and sale
of the Transfer Restricted Securities by Holders from time to time (as in
effect from time to time, the “Shelf Registration Statement”), and the Company
shall use its reasonable best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission within 90 days after the
Closing Date, provided, however, that the Company shall use its reasonable
best efforts to cause such Shelf Registration to be declared effective by the
Commission within 180 days of the Closing Date if the Company is notified
(orally or in writing) by the Commission that the Shelf Registration Statement
will be reviewed, provided further, however, that the Company may delay such
filing or effectiveness under the circumstances and during the periods
described in Section 2 hereof.  In
addition, the Company shall use its reasonable best efforts to keep the Shelf Registration
Statement, as supplemented and amended, continuously effective with respect to
Transfer Restricted Securities through August 31, 2008 (the “Effectiveness
Period”) or such shorter period that will terminate when all the Transfer
Restricted Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement.  For purposes of this Agreement: the term “Transfer Restricted
Securities” means the shares of Common Stock issuable upon conversion of the
Notes and upon exercise of the Warrants, until (i) the date on which such
shares of Common Stock have been effectively registered under the 1933 Act and
disposed of in accordance with the Shelf Registration Statement or (ii) the
date on which such shares of Common Stock may be immediately sold pursuant to
Rule 144(k) so long as the Company has provided to its transfer agent a legal
opinion that such shares of Common Stock may be issued without a restrictive
legend if the Holder in whose name such shares are to be registered is not then
an affiliate of the Company or (iii) the date on which such shares of Common
Stock are distributed to the public pursuant to Rule 144 or any other
applicable exemption under the 1933 Act without additional restriction upon
public resale; the term “Holders” means Persons owning Transfer Restricted
Securities, Notes or Warrants (provided however, that the term Holder shall not
include any Person who receives Transfer Restricted Securities other than (x)
by death, disability or gift or (y) pursuant to a transfer or an assignment of
not less than an amount of the Transfer Restricted Securities equal to the
number of shares of Common Stock a Holder would receive on the date of such
assignment if such Holder converted an aggregate principal amount of $100,000
of Notes), and of which the Company is given written notice at the time of such
transfer or assignment, stating the name and address of the transferee or
assignee and identifying the Transfer Restricted Securities with respect to
which such registration rights are being transferred or assigned; and, provided
further, the transferee or assignee of such rights assumes in writing the
obligations of such Holder under this Agreement.  If pursuant to one or more transfers or assignments at any time
there exists more than 10 Holders, the Company may, upon 30 days’ written
notice to the Holders require that the Holders appoint a single agent for
purposes of all communications between the Company and the Holders regarding
registration rights, including, without limitation, for purposes of Section 4
hereof and a single legal counsel to such agent representing all of the Holders
(the fees and expenses of such agent and counsel to be borne by the Holders);
provided that if such agent and counsel are not appointed by a writing


 












*Unless otherwise defined in this Exhibit C, all capitalized terms used
herein shall have the respective meanings ascribed to them in the annexed Note
Purchase Agreement, dated September   , 2003 (the “Agreement”),
between EquiFin, Inc., and John Winfield.


 

















 


signed by the Holders of
a majority of the Transfer Restricted Securities (assuming full conversion of
all Notes and exercise of all Warrants) and delivered to the Company within 30
days of such notice from the Company, the Company may limit thereafter its communications
with Holders under such Section 4 to the Holders of the three largest amounts
of Transfer Restricted Securities (assuming full conversion of all Notes and
exercise of all Warrants); the term “Person” means an individual, partnership,
corporation, limited liability company, trust or unincorporated organization,
or a government or agency or political subdivision thereof; and the term “Rule
144” means Rule 144 promulgated by the Commission pursuant to the 1933 Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.


 


2.                                       Delay
Periods.


 


(a)           If at any time prior to the
expiration of the Effectiveness Period, counsel to the Company has determined
in good faith that the filing of the Shelf Registration Statement or the
compliance by the Company with its disclosure obligations in connection with
the Shelf Registration Statement would require the disclosure of material
information which the Company has a bona fide business purpose for preserving
as confidential, then the Company may delay the filing of the Shelf
Registration Statement (if not then filed) and shall not be required to
maintain the effectiveness thereof or amend or supplement the Shelf
Registration Statement for a period (an “Information Delay Period”) expiring
upon the earlier to occur of (i) the date on which such material information is
disclosed to the public or ceases to be material or the Company is able to so
comply with its disclosure obligations and the Commission requirements or (ii)
45 days after counsel to the Company makes such good faith determination.  There shall not be two or more Information
Delay Periods during any contiguous 180-day period.


 


(b)           If at any time prior to the
expiration of the Effectiveness Period, the Company is advised by a nationally
or regionally recognized investment banking firm selected by the Company that,
in such firm’s written reasonable opinion addressed to the Company, sales of
Common Stock pursuant to the Shelf Registration Statement at such time would
materially adversely affect any immediately planned underwritten public
financing by the Company, the Company shall not be required to maintain the
effectiveness of the Shelf Registration Statement or amend or supplement the
Shelf Registration Statement for a period (a “Transaction Delay Period”)
commencing on the date of pricing of such financing and expiring upon the
earliest to occur of (i) the abandonment of such financing or (ii) 120 days
after the completion of such financing. 
There shall not be more than one Transaction Delay Period during any
contiguous 12-month period.


 


(c)           A Transaction Delay Period and an
Information Delay Period are hereinafter collectively referred to as “Delay Periods”
or a “Delay Period”.  The Company will
give prompt written notice, in the manner prescribed herein, to each Holder of
each Delay Period.  Such notice shall be
given (i) in the case of a Transaction Delay Period, at least 10 days in
advance of the commencement of such Delay Period, provided such notice need not
state the precise date of such commencement, as long as the Company provides
such Holder with at least 3 days’ notice of such date and provided such date is
within 45 days of the date of the first notice given to such Holder and (ii) in
the case of an Information Delay Period, as soon as practicable after the
circumstances giving rise thereto are identified.  Such notice shall state to the extent, if any, as is practicable,
an estimate of the duration of such Delay Period.  Each Holder, by his acceptance of any Notes, Warrants or Transfer
Restricted Securities, agrees that (i) upon receipt of such notice of a Delay


 


2

















 


Period it will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the Shelf
Registration Statement and (ii) will not deliver any prospectus forming a part
of the Shelf Registration Statement in connection with any sale of Transfer
Restricted Securities, in each case until the expiration of such Delay Period.


 


3.                                       Liquidated
Damages.


 


(a)           Except as provided in Section 3(c),
if (i) the Shelf Registration Statement is not filed with the Commission within
60 days after the Closing Date, or (ii) the Shelf Registration Statement has
not been declared effective by the Commission within 90 days after the Closing
Date, or if the Company is notified (orally or in writing) by the Commission
that the Shelf Registration will be reviewed, within 180 days of the Closing
Date (the “Effectiveness Target Date”) 
(each such event referred to in clauses (i) through (ii), a
“Registration Default”), the Company will pay liquidated damages (“Liquidated
Damages”) to each Holder of Notes, who has complied with its obligations under
this Agreement, equal to 2% of the aggregate principal amount of Notes owned by
such Holder, for each 30-day period that a Registrations Default continues.


 


All accrued Liquidated
Damages shall be paid by the Company to “Record Holders” (as such term is
hereinafter defined) entitled thereto on the next succeeding “Damages Payment
Date” (as such term is hereinafter defined) by wire transfer of immediately
available funds or by federal funds check. 
Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease, but any Liquidated Damages accrued through the
date of cure shall be paid to Record Holders on the next succeeding Damages
Payment Date.  If the Registration
Defaults described in either of clauses (i) or (ii) above arose solely because
the applicable Holder or Holders failed to provide the Company with certain
information within 20 business days after request therefor pursuant to Section
4(k), Liquidated Damages with respect thereto will not begin to accrue until 10
business days after such information has been provided to the Company.  For purposes hereof:  (i) the term “Damages Payment Date” means
June 30 or December 31 in each year; (ii) the term “Record Holder” means with
respect to any Damages Payment Date, each Person who is a holder of Notes on
the record date with respect to interest payment on the Notes due on such date.


 


(b)           Intentionally Left Blank.


 


(c)           Notwithstanding the foregoing, the
time periods specified in this Section 3 shall be tolled:


 


(i)            During the pendency of any
circumstances beyond the Company’s control that prevent performance by the
Company of its obligations hereunder despite the Company’s best efforts.  Such matters include events affecting
issuers generally, such as the temporary closure of federal agencies, and
events directly affecting the Company, such as the Company’s inability to
obtain all information regarding an acquisition entity within a time period
that would permit independent auditors to prepare any required audited
financial information on a timely basis;


 


(ii)           During any Delay Period; and


 


(iii)          In the case of an “Underwritten
Offering” (as defined in Section 4(l)).


 


3

















 


4.             Registration Procedures.   In connection with the Shelf Registration
Statement and any “Prospectus” (as such term is hereinafter defined) required
by this Agreement to permit the sale or resale of Transfer Restricted
Securities, the following provisions shall apply:


 


(a)           The Company shall furnish to each
Holder, prior to the filing thereof with the Commission, a copy of the Shelf
Registration Statement and each amendment thereto or each amendment or
supplement to the Prospectus included therein, and shall use its reasonable
best efforts to reflect in each such document when so filed with the
Commission, such comments as any Holder reasonably may propose; provided the
Company shall not be obligated to consider any comments received from a Holder
more than four business days after the Company sends by overnight courier or
telecopy; or more than seven business days after the Company sends by regular
mail such Shelf Registration Statement, amendment or supplement to the address
for such Holder in the note register. 
The Term “Prospectus” means the prospectus included in the Shelf
Registration Statement, as amended or supplemented by any prospectus supplement
and by all other amendments thereto, including post-effective amendments, and
all material incorporated by reference into such Prospectus.


 


(b)           The Company shall take such action as
may be necessary so that (i) the Shelf Registration Statement and any amendment
thereto and any Prospectus forming a part thereof and any supplement or
amendment thereto complies in all material respects with the 1933 Act and the
rules and regulations thereunder, (ii) the Shelf Registration and any amendment
thereto (in either case, other than with respect to written information
furnished to the Company by or on behalf of any Holder specifically for
inclusion therein) 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 any statement therein not misleading and
(iii) the Prospectus and any supplement thereto (in either case, other than
with respect to such information from Holders), 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 light of the circumstances under which
they were made, not misleading.


 


(c)           The Company shall promptly advise the
Holders (which advice pursuant to clauses (i) - (iv) shall be accompanied by an
instruction to suspend the use of the Prospectus until the requisite changes
have been made) and, if requested by such Persons, to confirm such advice in
writing;


 


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


 


(ii)           of any request by the Commission for
amendments to the Shelf Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto;


 


(iii)          of the issuance by the Commission of
any stop order suspending the effectiveness of the Shelf Registration Statement
or of the suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes; and


 


4

















 


(iv)          of the happening of any event that
requires the making of any changes in the Shelf Registration Statement or the
Prospectus so that, as of such date, the Shelf 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 light of the
circumstances under which they were made) not misleading.


 


(d)           If at any time the Commission shall
issue any stop order suspending the effectiveness of the Shelf Registration
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Company shall use its reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.


 


(e)           The Company shall furnish to each
Holder of Transfer Restricted Securities included under the Shelf Registration
Statement, without charge, at least one copy of the Shelf Registration
Statement and each post-effective amendment thereto, including all financial
statements and schedules, documents incorporated by reference therein and, if
the Holder so requests in writing, all exhibits (including exhibits
incorporated therein by reference).


 


(f)            The Company shall, during the
Effectiveness Period, deliver to each Holder of Transfer Restricted Securities
included under the Shelf Registration Statement, without charge, as many copies
of the Prospectus (including each preliminary prospectus) included in the Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company consents to the use of the Prospectus
and any amendment or supplement thereto by each of the selling Holders in
connection with the offering and the sale of the Transfer Restricted Securities
covered by the Prospectus or any amendment or supplement thereto during the
Effectiveness Period in accordance with applicable law.


 


(g)           Prior to any public offering pursuant
to the Shelf Registration Statement, the Company shall use its reasonable best
efforts to register or qualify or cooperate with the Holders of Transfer
Restricted Securities registered thereunder, the underwriter(s), if any, and
their respective counsel in connection with the registration and qualification
of such Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as such Holders or underwriters reasonably request in
writing and do any and all other acts or things necessary or advisable to
enable the offer and sale in such jurisdictions of such Transfer Restricted
Securities; provided,
however, that the Company will 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 it to general service of process or to taxation
in any jurisdiction where it is not then so subject.


 


(h)           The Company shall cooperate with the
Holders and the underwriter(s), if any, to facilitate the timely preparation
and delivery of certificates representing Transfer Restricted Securities to be
sold under the Shelf Registration Statement, free of any restrictive legends
and in such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request in connection with the sales of Transfer
Restricted Securities pursuant to the Shelf Registration Statement.


 


5

















 


(i)            Upon the occurrence of any event
contemplated by Section 4(c)(ii)-(iv), the Company shall file (and use its
reasonable best efforts to have declared effective as soon as possible) a
post-effective amendment to the Shelf Registration Statement or an amendment or
supplement to the Prospectus or file any other required document so that, as
thereafter delivered to the purchasers of Transfer Restricted Securities
registered under the Shelf Registration Statement, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in light of the circumstances
under which they were made not misleading. 
Each Holder of Transfer Restricted Securities registered under the Shelf
Registration Statement agrees by acquisition of such Transfer Restricted
Securities that, upon receipt of any notice from the Company of the existence
of any fact of the kind described in Section 4(c)(ii)-(iv) hereof, such Holder
will forthwith discontinue disposition of Transfer Restricted Securities
pursuant to the Shelf Registration Statement until such Holder receives copies
of the supplemented or amended Prospectus contemplated by Section 4(f), or
until such Holder is advised in writing by the Company that the use of the
Prospectus may be resumed, and such Holder has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus.  If so directed by the
Company, each Holder will deliver to the Company (at the Company’s expense) all
copies, other than permanent file copies then in such Holder’s possession, of
the Prospectus covering such Transfer Restricted Securities current at the time
of receipt of such notice.  In the event
the Company shall give any such notice, the time period regarding the Company’s
obligations to maintain the effectiveness of the Shelf Registration Statement
set forth in Section 1 hereof shall be extended by the number of days during
the period from and including the date of the giving of such notice pursuant to
Section 4(c) hereof to and including the date when such Holder shall have
received the copies of the supplemented or amended Prospectus contemplated by
this Section 4(i).


 


(j)            The Company shall use its reasonable
best efforts to comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders or otherwise
provide in accordance with Section 11(a) of the 1933 Act, as soon as
practicable after the effective date of the Shelf Registration Statement an
earnings statement satisfying the provisions of Section 11(a) of the 1933 Act.


 


(k)           The Company may require each Holder
to furnish to the Company such information regarding such Holder and the
distribution of such Holder’s Transfer Restricted Securities as the Company may
from time to time reasonably require for inclusion in the Shelf Registration
Statement.  In addition, each Holder
shall complete, execute and deliver all such other documents and undertakings
as the Company may deem necessary or desirable for purposes of compliance with
Federal and state securities laws.  The
Company may exclude from such registration statement the Transfer Restricted
Securities of any Holder that fails to furnish such information or complete,
execute or deliver to the Company such other documents and undertakings within
a reasonable time (which in any event shall not exceed 20 business days) after
receiving the Company’s request for same.


 


(l)            The Company shall, if requested by
the Holders of Transfer Restricted Securities being sold in an “Underwritten
Offering” (as hereinafter defined) or the underwriter(s) thereof, promptly incorporate
in the Shelf Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment, if necessary, such information as such underwriters
and Holders reasonably agree should be included therein and to which the
Company does not reasonably object, including,


 


6

















 


without limitation,
information relating to the plan of distribution of the Transfer Restricted
Securities, information with respect to the amount of Transfer Restricted Securities
being sold to such underwriter(s), the purchase price being paid therefor and
with respect to any other terms of the offering of the Transfer Restricted
Securities to be sold in such offering; and shall make all required filings of
such Prospectus supplement or post-effective amendment as soon as practicable
after the Company is notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment.  The Company shall be obligated to comply with only one request by
such Holders or such underwriter(s) for an Underwritten Offering.  The term “Underwritten Offering” means a
registration in which securities of the Company are sold to an underwriter for
re-offering to the public.


 


(m)          In connection with an Underwritten
Offering, the Company shall enter into such customary agreements (including an
underwriting agreement in customary form, if applicable) and take all such
other appropriate actions in order to expedite or facilitate the disposition of
the Transfer Restricted Securities pursuant to the Shelf Registration
Statement; provided the Company shall not be obligated to enter into a lock-up
agreement nor shall the Company be obligated to refrain in any manner from its
capital raising activities, and in connection therewith, the Company shall (i)
make such representations and warranties to the Holders of Transfer Restricted
Securities registered thereunder and the underwriter(s), if any, in form,
substance and scope as are customarily made by issuers to underwriters in primary
underwritten offerings; (ii) use its reasonable best efforts to obtain opinions
of counsel to the Company and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to such
underwriters and the Holders of a majority of the Transfer Restricted
Securities being sold) addressed to each such Holder and underwriter covering
such matters as are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such Holders
and underwriters; (iii) if and to the extent permitted by Statement of Auditing
Standards No. 72, obtain comfort letters and updates thereof from the Company’s
independent certified public accountants addressed to the underwriters requesting
the same, such letters to be in customary form and covering matters of the type
customarily covered in comfort letters in connection with primary underwritten
offerings; (iv) in connection with an Underwritten Offering only, set forth in
full or incorporate by reference in the underwriting agreement the
indemnification provisions and procedures of Section 6 hereof with respect to
all parties to be indemnified pursuant to said Section; and (E) deliver such
documents and certificates as may be reasonably requested by such Holders or
underwriters to evidence compliance with Section 4(m)(i) and with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company pursuant to this Section 4(m).  The foregoing actions set forth in clauses (i), (ii), (iii) and
(iv) of this Section 4(m) shall be performed at the closing under an
Underwritten Offering.


 


(n)           The Company shall make available at
reasonable times for inspection by the Holders of the Transfer Restricted
Securities, any underwriter participating in any disposition pursuant to the
Shelf Registration Statement, and any attorney or accountant retained by any
such Holders or underwriters, all financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries; and
cause the Company’s officers, directors and employees to supply all information
reasonably requested by any such Holder, underwriter, attorney or accountant in
connection with the Shelf Registration Statement subsequent to the filing
thereof as is customary for similar due diligence examinations; provided,
however, that any information that is designated in writing by the
Company, in good faith, as confidential at the time of delivery of


 


7

















 


such information shall be
kept confidential by such Holders or any such underwriter, attorney or
accountant, 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; and provided, further, that the foregoing
inspection and information gathering shall, to the greatest extent possible, be
coordinated on behalf of the Holders and the other parties entitled thereto by
one counsel designated by and on behalf of such Holders and other parties.


 


(o)           The Company shall use its reasonable
best efforts, subject to any applicable rules thereto, to cause all the Transfer
Restricted Securities to be listed on each securities exchange on which the
Common Stock is listed.


 


5.                                       Registration
Expenses.


 


(a)           Except as otherwise provided in
Section 8, the Company shall bear all expenses incurred in connection with the
performance of or compliance with its obligations under Sections 1, 3, and 4
hereof, including, without limitation, all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses and fees and disbursements of counsel for the
Company and all independent certified public accountants, and other persons
retained by the Company (all such expenses being herein called “Registration
Expenses”).  Registration Expenses shall
also include the Company’s internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed.


 


(b)           Each Holder will pay (i) the fees and
disbursements of its counsel, if any, and (ii) any discounts and commissions
incurred upon the sale of securities by it under the Shelf Registration
Statement, and any expenses incurred by the underwriters, if any, of its
Transfer Restricted Securities.


 


6.                                       Indemnification.


 


(a)           In connection with any Shelf
Registration Statement, the Company shall indemnify and hold harmless each
Holder, its officers and directors and each Person who controls such Holder
within the meaning of the 1933 Act against any and all losses, claims, damages
or liabilities and expenses whatsoever incurred, insofar as such losses,
claims, damages, liabilities and expenses arise out of or are based upon any
untrue or alleged untrue statement of material fact contained in the Shelf
Registration Statement, or any Prospectus or preliminary Prospectus or any
amendment thereof or supplement thereto or arise out of or are based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified Person, for any legal or other
expense reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that (i) the Company will not be liable in any case to the
extent that any loss, claim, damage, liability or expense arises out of or is
based upon (A) any such untrue or alleged untrue statement or omission or
alleged omission made therein


 


8

















 


in reliance upon and in
conformity with written information furnished to the Company, specifically for
inclusion therein or in any application for Blue Sky exemption or other
document relating thereto, by or on behalf of any such Holder, any Person in control
of such Holder within the meaning of the 1933 Act, and any underwriter of such
Holder’s Transfer Restricted Securities; (B) failure by the Holder or any
underwriter of such Holder’s Transfer Restricted Securities or any Person in
control of such Holder or such underwriter, to comply with the method of sale
required under any Blue Sky law, the 1933 Act and Securities Exchange Act of
1934, as amended (the “Exchange Act”), or any regulation promulgated thereunder
as set forth in any Blue Sky and securities compliance memorandum delivered by
the Company to such Holder or underwriter, if any (other than as relating to
the disclosures provided by the Company in the Memorandum); or (C) upon any
representation or disclosure made by any such Person in connection with the
offer and sale of the Transfer Restricted Securities which representation is
not set forth in the Prospectus or was not otherwise authorized in writing to
be made by the Company (items (i) (B) and (C) collectively, a “Securities
Violation”) and (ii) the foregoing indemnity with respect to any untrue
statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus relating to the Shelf Registration Statement shall
not inure to the benefit of any Holder (or any Person controlling such Holder)
from whom the Person asserting any such loss, claim, damage or liability
purchases any of the Transfer Restricted Securities that are the subject
thereof if such Person did not receive a copy of the final prospectus (or the
final prospectus as supplemented) at or prior to the written confirmation of
the sale of such Transfer Restricted Securities to such Person and the untrue
statement or alleged omission contained in the preliminary prospectus was
corrected in the final prospectus (or the final prospectus as supplemented).


 


The Company also agrees
to indemnify or contribute to losses of, as provided in Section 6(d), any
underwriters of Transfer Restricted Securities registered under the Shelf
Registration Statement, their officers and directors and each Person, if any,
who controls any such underwriter (within the meaning of the 1933 Act) on
substantially the same basis as that of the indemnification of the Holders
provided in this Section 6(a).


 


(b)           Each Holder and any underwriter (in
an Underwritten Offering) shall indemnify and hold harmless the Company, its
directors and officers and each Person, if any, who controls the Company
(within the meaning of the 1933 Act) against any and all losses, claims,
damages, liabilities and expenses, described in the indemnity contained in
Section 6(a) hereof, resulting from any untrue or alleged untrue statement of
material fact contained in the Shelf Registration Statement or any amendment
thereof or supplement thereto or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the extent, that
such loss, claim, damage, liability or expense relates to or arises from
information relating to such Holder or underwriter, as the case may be,
furnished in writing by such Holder or underwriter, as the case may be,
specifically for use in the Shelf Registration Statement or from a Securities
Violation by such Holder or underwriter, as the case may be.


 


(c)           Any Person entitled to
indemnification hereunder shall give notice as promptly as reasonably
practicable to each indemnifying party of any claim or action commenced against
it in respect of which indemnity may be sought hereunder; provided, however, that
failure to so notify an indemnifying party shall not relieve such indemnifying
party from any obligation that it may have pursuant to this Section except to
the extent that it has been materially prejudiced (through


 


9

















 


the forfeiture of
substantive rights or defenses) by such failure; provided further, however,
that the failure to notify the indemnifying party shall not relieve it from any
liability that it may have to an indemnified party otherwise than on account of
this indemnity agreement.  If any such
claim or action shall be brought against an indemnified party, the indemnified
party shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party.  After notice from the indemnifying party to
the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 6 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof; provided,
however, that an indemnified party will have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of
such counsel will be at the expense of such indemnified party unless (i) the
employment of counsel by the indemnified party has been authorized in writing
by the indemnifying party, or (ii) the indemnifying party has not in fact
employed counsel to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be
at the expense of the indemnifying party or parties.  It is understood that the indemnifying party or parties shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other
charges of more than one separate firm of attorneys (in addition to any local
counsel) at any one time for all such indemnified party or parties.  Each indemnified party, as a condition to
the indemnity agreements contained in Sections 6(a) and 6(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim.   No
indemnifying party shall be liable for any settlement or any such action
effected without its written consent, but if settled with its written consent
or if there be a final judgment (not subject to further review or appeal) of
the plaintiff in any such action, the indemnifying party agrees to indemnify
and hold harmless any indemnified party from and against any loss or liability
by reason of such settlement or judgment.


 


(d)           If a claim by an indemnified party
for indemnification under this Section 6 is found unenforceable in a final
judgment by a court of competent jurisdiction (not subject to further appeal or
review) even though the express provisions hereof provide for indemnification
in such case, then each applicable 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 any legal or other fees or expenses reasonably incurred by such party
in connection with any investigation or proceedings.


 


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The parties hereto agree
that it would not be just and equitable if contribution pursuant to this
Section 6(d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations
referred to in the immediately preceding paragraph.  No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to any contribution
from any person who was not guilty of such fraudulent misrepresentation.


 


7.             Rule 144. 
With a view to making available to the Holders the benefits of certain
rules and regulations of the Commission which may permit the sale of Transfer
Restricted Securities to the public without registration, the Company agrees to
use its reasonable best efforts to: 
make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after the effective date of
this Agreement through the end of the Effectiveness Period; file with the
Commission, in a timely manner (or obtain extensions in respect thereof and
file within the applicable grace period), all reports and other documents
required of the Company under the Exchange Act; and so long as a Holder owns
any Transfer Restricted Securities, furnish to such Holder forthwith upon
request (i) a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 of the 1933 Act and of the Exchange Act;
(ii) a copy of the most recent annual or quarterly report of the Company; and
(iii) such other reports and documents as the Company may have available to it
(and which are not deemed confidential by the Company) as a Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing it to sell any such Transfer Restricted Securities without
registration.


 


8.             Underwritten Offering Procedures.  If any of the Transfer Restricted Securities
included under the Shelf Registration Statement are to be sold in an
Underwritten Offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders
of a majority of the shares of Common Stock included among such Transfer
Restricted Securities (calculated as if all of the then outstanding Notes were
converted into Common Stock at the time of such selection and the Warrants were
exercised), provided,
however, that such managing underwriters shall be reasonably
satisfactory to the Company and the Company shall not be obligated to arrange
for more than one Underwritten Offering during the Effectiveness Period.


 


No Person may participate
in any underwritten registration hereunder unless such Person:  (i) agrees to sell such Person’s Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the requisite Holders entitled hereunder to approve
such arrangements;(ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements, lock-up letters and other
documents reasonably required under the terms of such underwriting
arrangements; and (iii) at least 20% of the outstanding Transfer Restricted
Securities are included in such Underwritten Offering.  The Holders participating in any
Underwritten Offering shall be responsible for any expenses customarily borne
by selling security holders, including underwriting discounts and commissions
and fees and expenses of counsel to the selling security holders and the fees
and expenses of the underwriter (including attorney’s fees and expenses).  During the pendency of any such Underwritten
Offering, any Holders’ Transfer Restricted Securities not included in such
Underwritten Offering shall not be the subject of a Shelf Registration
Statement until 90 days after the date such Underwritten Offering has been
concluded.


 


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