ex4_4.htm


    
      

    

    Exhibit 4.4

     

    
      REGISTRATION
RIGHTS AGREEMENT

      


      This
Registration Rights Agreement (this "Agreement") is made and
entered into as of August 14, 2008, by and among Arotech Corporation, a Delaware
corporation (the "Company"), and the investors
signatory hereto (each a "Purchaser" and collectively,
the "Purchasers").

      


      This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the
date hereof among the Company and the Purchasers (the "Purchase
Agreement").

      


      The
Company and the Purchasers hereby agree as follows:

      


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

      


      "Additional Effective Date"
means the date the Additional Registration Statement is declared effective by
the SEC.

      


      "Additional Effectiveness
Deadline" means the date which is sixty (60) calendar days after the
earlier of the Additional Filing Date and the Additional Filing Deadline or in
the event that the Registration Statement is subject to any review by the SEC,
ninety (90) calendar days after the earlier of the Additional Filing Date and
the Additional Filing Deadline.

      


      "Additional Filing Date" means
the date on which the Additional Registration Statement is filed with the
SEC.

      


      "Additional Filing Deadline"
means if Cutback Shares are required to be included in any Additional
Registration Statement, the later of (i) the date sixty (60) days after the date
substantially all of the Registrable Securities registered under the immediately
preceding Registration Statement are sold and (ii) the date six (6) months from
the Initial Effective Date or the last Additional Effective Date, as
applicable.

      


      "Additional Registrable
Securities" means, (i) any Cutback Shares not previously included on a
Registration Statement and (ii) any capital stock of the Company issued or
issuable with respect to the Notes, the Conversion Shares, the Warrants, the
Warrant Shares or Cutback Shares, as applicable, as a result of any stock split,
stock dividend, recapitalization, exchange or similar event or otherwise,
without regard to any limitations on conversions and/or redemptions of the Notes
or exercises of the Warrants.

      


      "Additional Registration
Statement" means a registration statement or registration statements of
the Company filed under the 1933 Act covering any Additional Registrable
Securities.

      


      "Additional Required Registration
Amount" means (I) any Cutback Shares not previously included on a
Registration Statement, without regard to any limitations on conversion and/or
redemption of the Notes or exercises of the Warrants, or (II) such other amount
as may be required by the staff of the SEC pursuant to Rule
415.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      "Business Day" means any day
other than Saturday, Sunday or any other day on which commercial banks in The
City of New York are authorized or required by law to remain
closed.

      


      "Closing Date" shall have the
meaning set forth in the Securities Purchase Agreement.

      


      "Cutback Shares" means any of
the Total Required Registration Amount, Initial Required Registration Amount or
the Additional Required Registration Amount (without regard to clause (II) in
the definition thereof) of Registrable Securities not included in all
Registration Statements previously declared effective hereunder as a result of a
limitation on the maximum number of shares of Common Stock of the Company
permitted to be registered by the staff of the SEC pursuant to Rule
415.  The number of Cutback Shares shall be allocated pro rata among
the Holders.  For the purpose of determining the Cutback Securities,
in order to determine any applicable Required Registration Amount, unless a
Holder gives written notice to the Company to the contrary with respect to the
allocation of its Cutback Shares, first the Conversion Shares shall be excluded
on a pro rata basis until all of the Conversion Shares have been excluded and
second, the Warrant Shares shall be excluded on a pro rata basis until all of
the Warrant Shares have been excluded.

      


      "Effective Date" means the
Initial Effective Date and the Additional Effective Date, as
applicable.

      


      "Effectiveness Deadline" means
the Initial Effectiveness Deadline and the Additional Effectiveness Deadline, as
applicable.

      


      "Effectiveness Period" shall
have the meaning set forth in Section 3(a).

      


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

      


      "Filing Deadline" means the
Initial Filing Deadline and the Additional Filing Deadline, as
applicable.

      


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

      


      "Initial Effective Date" means
the date that the Initial Registration Statement has been declared effective by
the SEC.

      


      "Initial Effectiveness
Deadline" for the Initial Registration Statement means the earlier of (i)
in the event that the Initial Registration Statement is not subject to a full
review by the SEC, ninety (90) calendar days after the Closing Date, (ii) in the
event that the Initial Registration Statement is subject to a full review by the
SEC, one hundred twenty (120) calendar days after the Closing Date and (iii) the
fifth (5th)
Business Day following the date on which the Company is notified by the SEC that
such Registration Statement will not be reviewed or is no longer subject to
further review and comments.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      "Initial Filing Deadline" means
the date which is thirty (30) calendar days after the Closing Date.

      


      "Initial Registrable
Securities" means (i) the Conversion Shares issued or issuable upon
conversion of the Notes (including the shares of Common Stock issued and
issuable as a Make-Whole Premium (as defined in the Notes)), (ii) the Warrant
Shares issued or issuable upon exercise of the Warrants and (iii) any capital
stock of the Company issued or issuable, with respect to the Conversion Shares,
the Notes, the Warrant Shares or the Warrants as a result of any stock split,
stock dividend, recapitalization, exchange or similar event or otherwise,
without regard to any limitations on conversions and/or redemptions of the Notes
or exercises of the Warrants.

      


      "Initial Registration
Statement" means a registration statement or registration statements of
the Company filed under the 1933 Act covering the Initial Registrable
Securities.

      


      "Initial Required Registration
Amount" (I) the Maximum Allowable Amount of the Total Required
Registration Amount or (II) such maximum lesser amount as may be required by the
staff of the SEC pursuant to Rule 415 with any cutback applied pro rata to all
Holders.

      


      "Indemnified Party" shall have
the meaning set forth in Section 6(c).

      


      "Indemnifying Party" shall have
the meaning set forth in Section 6(c).

      


      "Losses" shall have the meaning
set forth in Section 6(a).

      


      "Maximum Allowable Amount"
means a number of shares of Common Stock equal to one-third (1/3) (or the
greatest such other percentage as is permitted by the SEC) of the issued and
outstanding Common Stock of the Company that is not beneficially owned by an
affiliate of the Company.

      


      "Proceeding" means an action,
claim, suit, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced or
threatened.

      


      "Prospectus" means the
prospectus included in a Registration Statement (including, without limitation,
a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by the 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.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      "register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415, and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.

      


      "Registrable Securities" means
the Initial Registrable Securities and the Additional Registrable
Securities.

      


      "Registration Statement" means
the Initial Registration Statement and the Additional Registration Statement, as
applicable.

      


      "Required Holders" means the
holders of at least a majority of the Registrable Securities.

      


      "Required Registration Amount"
means either the Initial Required Registration Amount or the Additional Required
Registration Amount, as applicable.

      


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

      


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

      


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

      


      "SEC" means the United States
Securities and Exchange Commission.

      


      "Securities Act" means the
Securities Act of 1933, as amended.

      


      "Special Counsel" means Schulte
Roth & Zabel LLP.

      


      "Total Required Registration
Amount" means 130% of the sum of (i) the number of Conversion Shares
issued and issuable pursuant to the Notes (including the shares of Common Stock
issued and issuable as a Make Whole Premium (as defined in the Notes)) as of the
Trading Day immediately preceding the applicable date of determination and (ii)
the number of Warrant Shares issued and issuable pursuant to the Warrants as of
the Trading Day immediately preceding the applicable date of determination,
without regard to any limitations on conversions and/or redemptions of the Notes
or exercises of the Warrants.

      


      "Trading Day" means any day on
which the Common Stock is traded on the Principal Market (as defined in the
Securities Purchase Agreement), or, if the Principal Market is not the principal
trading market for the Common Stock, then on the principal securities exchange
or securities market on which the Common Stock is then traded; provided that
"Trading Day" shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York Time).


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      2.       
     Registration.

      


      (a)           On
or prior to the Initial Filing Deadline, the Company shall prepare and file with
the SEC the Initial Registration Statement covering the resale of the Initial
Required Registration Amount of the Initial Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415.  The
Initial Registration Statement shall be on Form S-3 (except if the Company is
not then eligible to register for resale the Initial Registrable Securities on
Form S-3, in which case such registration shall be on another appropriate form
in accordance herewith) and shall contain (except if otherwise directed by the
Holders) the "Selling Shareholders" and "Plan of Distribution" substantially in
the form attached hereto as Annex
A.  The Company shall use its reasonable best efforts to cause
the Initial Registration Statement to be declared effective under the Securities
Act but in no event later than the Initial Effectiveness Deadline.  By
9:30 a.m. New York time on the Business Day following the Initial Effective
Date, the Company shall file with the SEC in accordance with Rule 424 under the
1933 Act the final prospectus to be used in connection with sales pursuant to
such Initial Registration Statement.

      


      (b)           On
or prior to the Additional Filing Deadline, the Company shall prepare and file
with the SEC an Additional Registration Statement covering the resale of the
Additional Required Registration Amount of the Additional Registrable Securities
not previously registered on a Registration Statement hereunder for an offering
to be made on a continuous basis pursuant to Rule 415.  To the extent
the staff of the SEC does not permit the Additional Required Registration Amount
to be registered on an Additional Registration Statement, the Company shall file
Additional Registration Statements successively trying to register on each such
Additional Registration Statement the maximum number of remaining Additional
Registrable Securities until the Additional Required Registration Amount has
been registered with the SEC.  Each Additional Registration Statement
prepared pursuant hereto shall register for resale at least that number of
shares of Common Stock equal to the Additional Required Registration Amount
determined as of the date such Additional Registration Statement is initially
filed with the SEC.  Each Additional Registration Statement shall be
on Form S-3 (except if the Company is not then eligible to register for resale
the Additional Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form in accordance herewith) and
shall contain (except if otherwise directed by the Holders) the "Selling
Shareholders" and "Plan of Distribution" substantially in the form attached
hereto as Annex
A.  The Company shall use its reasonable best efforts to cause
the Additional Registration Statement to be declared effective under the
Securities Act but in no event later than the Additional Effectiveness
Deadline.  By 9:30 a.m. New York time on the Business Day following
the Additional Effective Date, the Company shall file with the SEC in accordance
with Rule 424 under the 1933 Act the final prospectus to be used in connection
with sales pursuant to such Additional Registration Statement.

      


      (c)           The
initial number of Registrable Securities included in any Registration Statement
and any increase or decrease in the number of Registrable Securities included
therein shall be allocated pro rata among the Holders based on the number of
Registrable Securities held by each Holder at the time the Registration
Statement covering such initial number of Registrable Securities or increase or
decrease thereof is declared effective by the SEC. In the event that an Holder
sells or otherwise transfers any of such Holder’s Registrable Securities in a
transfer involving the transfer of all or a part of the Holder’s rights
hereunder, each transferee shall be allocated a pro rata portion of the then
remaining number of Registrable Securities included in such Registration
Statement for such transferor. Any shares of Common Stock included in a
Registration Statement and which remain allocated to any Person which ceases to
hold any Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Holders, pro rata based on the number of Registrable
Securities then held by such Holders which are covered by such Registration
Statement.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (d)           If:
(i) a Registration Statement is not filed on or prior to its respective Filing
Deadline (if the Company files such Registration Statement without affording the
Holder the opportunity to review and comment on the same as required by Section
3(b) hereof, the Company shall not be deemed to have satisfied this clause (i)),
or (ii) the Company fails to file with the SEC a request for acceleration in
accordance with Rule 461 promulgated under the Securities Act, within five (5)
Business Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the SEC that a Registration Statement will not be
"reviewed," or not subject to further review, or (iii) after its respective
Effective Date, such Registration Statement ceases to be effective and available
to the Holders thereunder as to all Registrable Securities required to be
included in such Registration Statement (whether upon the delivery of an Advice
pursuant to Section 7(d) or otherwise) at any time prior to the expiration of
its Effectiveness Period for a period exceeding thirty (30) consecutive days at
any one time, forty five (45) days in the aggregate in any three-month period or
ninety (90) days in the aggregate during any twelve-month period; or (iv) the
Common Stock is not listed or quoted, or is suspended from trading on The NASDAQ
Global Market or another Trading Market (as defined in the Purchase Agreement)
for a period of three (3) Business Days (which need not be consecutive Business
Days), or (v) the conversion rights or the exercise rights of the Holders
pursuant to the Notes and Warrants, respectively, are suspended for any reason,
or (vi) any Registration Statement shall not be declared effective or by the SEC
or is not otherwise available to the Holders on or prior to its respective
Effectiveness Deadline (any such failure or breach being referred to as an
"Event," and for
purposes of clause (i), (v) or (vi) the date on which such Event occurs, or for
purposes of clause (ii) the date on which such five (5) Business Day period is
exceeded, or for purposes of clauses (iii) the date on which such 30, 45 or 90
day period, as applicable, is exceeded, or for purposes of clause (iv) the date
on which such three (3) Business Day period is exceeded, being referred to as
"Event Date"), then, in
addition to any other rights available to the Holders: (x) on each such Event
Date the Company shall pay to each Holder an amount in cash, as liquidated
damages and not as a penalty, equal to 1.5% of the aggregate principal amount of
the Notes, then held by such Holder and (y) on each monthly anniversary
thereafter of each such Event Date thereof (if the applicable Event shall not
have been cured by such date) until the applicable Event is cured, the Company
shall pay to each Holder an amount in cash, as liquidated damages and not as a
penalty, equal to 1.5% of the aggregate principal amount of the Notes, then held
by such Holder (the "Registration Delay Payments");
provided, however, that (i) the maximum aggregate Registration Delay Payments
payable to an Holder under this Agreement shall be ten percent (10%) of the
aggregate Purchase Price paid by such Holder pursuant to the Securities Purchase
Agreement, (ii) the Company shall not be liable for Registration Delay Payments
to any Holder under this Agreement with respect to any Cutback Shares that the
SEC requires the Company to exclude from a Registration Statement pursuant to
Rule 415 and (iii) the Company shall not be liable for any Registration Delay
Payments to any Holder under this Agreement with respect to any Registrable
Securities covered by a Registration Statement that may be sold without
restriction or limitation pursuant to Rule 144 and without the requirement to be
in compliance with Rule 144(c)(1).  If the Company fails to pay any
liquidated damages pursuant to this Section in full within seven days after the
date payable, the Company will pay interest thereon at a rate of 18% per annum
(or such lesser maximum amount that is permitted to be paid by applicable law)
to the Holder, accruing daily from the date such liquidated damages are due
until such amounts, plus all such interest thereon, are paid in
full.  The liquidated damages pursuant to the terms hereof shall apply
on a pro rata basis for any portion of a month prior to the cure of an
Event.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (c)           Notwithstanding
anything herein to the contrary, the Company shall prepare and file a supplement
to the appropriate Registration Statement (if permitted for such purpose under
the Securities Act) within 5 Business Days following the issuance of a new
Warrant or a new Note upon transfer of all or part of such Warrant or Note in
accordance with the terms of such Warrant or Note, as applicable, or (if such
supplement is not permitted for such purposes under the Securities Act), a new
Registration Statement within 15 Business Days following the issuance of such a
new Warrant.

      


      (d)           In
the event that Form S-3 is not  available for the registration of the
resale of Registrable Securities hereunder, the Company shall (i) register the
resale of the Registrable Securities on another appropriate form reasonably
acceptable to the Required Holders and (ii) undertake to register the
Registrable Securities on Form S-3 as soon as such form is available, provided
that the Company shall maintain the effectiveness of the Registration Statement
then in effect until such time as a Registration Statement on Form S-3 covering
the Registrable Securities has been declared effective by the SEC.

      


      3.         
   Registration
Procedures

      


      In
connection with the Company's registration obligations hereunder, the Company
agrees, with respect to clauses (a) through (l), and each Purchaser agrees, with
respect to clause (m), that it shall:

      


      (a)           The
Company shall use its reasonable best efforts to keep the Registration Statement
continuously effective under the Securities Act until the date when all the
Registrable Securities covered by such Registration Statement have been sold or
may be sold without restriction pursuant to Rule 144 and without the requirement
to be in compliance with Rule 144(c)(1) as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company's transfer agent and the affected Holders (the "Effectiveness
Period").

      


      (b)           Not
less than two (2) Business Days prior to the filing of a Registration Statement
or any related Prospectus or any amendment or supplement thereto, the Company
shall, (i) furnish to the Holders and their Special Counsel copies of all such
documents proposed to be filed (including documents incorporated or deemed
incorporated by reference, to the extent that such documents are not available
on EDGAR) which documents will be subject to the review of such Holders and
their Special Counsel, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to conduct a
reasonable investigation within the meaning of the Securities
Act.  The Company shall not file the Registration Statement or any
such Prospectus or any amendments or supplements thereto to which the Required
Holders and their Special Counsel shall reasonably object in good
faith.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (c)           (i)         
  Prepare and file with the SEC such amendments, including
post-effective amendments, to the Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period and prepare and file with the SEC such additional
Registration Statements in order to register for resale under the Securities Act
all of the Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) respond as
promptly as reasonably possible after the receipt of such comments, to any
comments received from the SEC with respect to the Registration Statement or any
amendment thereto and, as promptly as reasonably possible provide the Holders
true and complete copies of all correspondence from and to the SEC relating to
the Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.

      


      (d)           Notify
the Holders of Registrable Securities to be sold and their Special Counsel as
promptly as reasonably possible (and, in the case of (i)(A) below, not less than
two (2) Business Days prior to such filing) and (if requested by any such
Person) confirm such notice in writing no later than one (1) Business Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed;
(B) when the SEC notifies the Company whether there will be a "review" of such
Registration Statement and whenever the SEC comments in writing on such
Registration Statement (the Company shall provide true and complete copies
thereof and all written responses thereto to each of the Holders); and (C) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the SEC or any other Federal
or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (e)           Use
its reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of the Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment.

      


      (f)           Furnish
to each Holder and their Special Counsel, without charge, at least one (1)
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the
SEC.

      


      (g)           Promptly
deliver to each Holder and their Special Counsel, without charge, as many copies
of the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably
request.  The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

      


      (h)           Prior
to any public offering of Registrable Securities, use its best reasonable
efforts to register or qualify or cooperate with the selling Holders and their
Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or subject the Company to any
material tax in any such jurisdiction where it is not then so
subject.

      


      (i)           Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be free, to the
extent permitted by the Purchase Agreement, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered in
such names as any such Holders may reasonably request.

      


      (j)           Upon
the occurrence of any event contemplated by Section 3(d)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (k)           Comply
with all applicable rules and regulations of the SEC.

      


      (l)           Neither
the Company nor any Subsidiary (as defined in the Purchase Agreement) or
affiliate thereof shall identify any Holder as an underwriter in any public
disclosure or filing with the SEC or any Principal Market (as defined in the
Notes) or Eligible Market (as defined in the Notes) and any Holder being deemed
an underwriter by the SEC shall not relieve the Company of any obligations it
has under this Agreement or any other Transaction Document (as defined in the
Purchase Agreement); provided, however, that the
foregoing shall not prohibit the Company from including the disclosure found in
the "Plan of Distribution" section attached hereto as Annex A in the
Registration Statement.

      


      (m)           Obligations
of the Holders.

      


      (i)         
   Each Holder shall furnish in writing to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect the registration of such Registrable
Securities.  At least five (5) Business Days prior to the first
anticipated filing date of any Registration Statement, the Company shall notify
each Holder of the information the Company requires from such Holder if such
Holder elects to have any of the Registrable Securities included in the
Registration Statement.  A Holder shall provide such information to
the Company at least two (2) Business Days prior to the first anticipated filing
date of such Registration Statement if such Holder elects to have any of the
Registrable Securities included in the Registration Statement.

      


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

      


      (iii)          
Each Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(d), such Holder will
immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until such
Holder’s receipt of copies of the supplemented or amended prospectus as
contemplated by Section 3(d) or receipt of notice that no supplement or
amendment is required.

      


      (iv)  
        Each Holder covenants and agrees that
it will comply with the prospectus delivery requirements of the 1933 Act as
applicable to it or an exemption therefrom in connection with sales of
Registrable Securities pursuant to the Registration Statement.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      4.          
  Reports
Under the 1934 Act.

      


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

      


      (a)           make
and keep public information available, as those terms are understood and defined
in Rule 144;

      


      (b)           file
with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements and the filing of such reports and other
documents is required for the applicable provisions of Rule 144;
and

      


      (c)           furnish
to each Holder so long as such Holder owns Registrable Securities, promptly upon
request, (i) a written statement by the Company, if true, that it has complied
with the reporting requirements of Rule 144, the Securities Act and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the Holders to sell
such securities pursuant to Rule 144 without registration.

      


      5.         
   Registration
Expenses.  All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to the Registration
Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with The NASDAQ Global Market or any other Trading Market,
and (B) in compliance with applicable state securities or Blue Sky laws), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the holders of a majority of
the Registrable Securities included in the Registration Statement), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company and $5,000 for the fees and disbursements of Special
Counsel (which amount shall be paid to the Special Counsel concurrent with the
initial delivery of the Registration Statement to the Holders and their Special
Counsel pursuant to Section 3(b) hereof), (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement.  In addition, the
Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder.  Expenses of any Registration Statement abandoned prior to
the effectiveness thereof due to the request of the Holders shall be borne by
the Holders.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      6.         
   Indemnification

      


      (a)           Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, agents, brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to perform under
a margin call of Common Stock), investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable costs of
preparation and reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising
out of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for use therein, or
to the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the Holders have
approved Annex A hereto for this purpose).  The Company shall notify
the Holders promptly of the institution, threat or assertion of any Proceeding
of which the Company is aware in connection with the transactions contemplated
by this Agreement.

      


      (b)           Indemnification by
Holders.  Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses, as incurred, arising
solely out of or based solely upon: (x) such Holder's failure to comply with the
prospectus delivery requirements of the Securities Act or (y) any untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of 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 untrue
statement or omission is contained in any information so furnished in writing by
such Holder to the Company specifically for inclusion in such Registration
Statement or such Prospectus or to the extent that (1) such untrue statements or
omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement (it being understood that the Holders have approved Annex A hereto for
this purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (2) in the case of an occurrence of an event of the type
specified in Section 3(d)(ii)-(v), the use by such Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or  defective and prior to the receipt by
such Holder of the Advice contemplated in Section 7(d).  In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of the net proceeds received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification
obligation.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


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

      


      An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying
Party).  The Indemnifying Party shall not be liable for any settlement
of any such Proceeding effected without its written consent, which consent shall
not be unreasonably withheld.  No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such
Proceeding.

      


      All fees
and expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten Business Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (d)           Contribution.  If
a claim for indemnification under Section 6(a) or 6(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations.  The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission.  The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in Section 6(c), any reasonable attorneys' or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

      


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

      


      The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.

      


      7.        
    Miscellaneous

      


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


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (b)           No Piggyback on
Registrations.  Neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security
holders.  Except as and to the extent specified in Schedule 6(b) hereto,
the Company has not previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person which
have not been fully satisfied.

      


      (c)           Compliance.  Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.

      


      (d)           Discontinued
Disposition.  Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(d), such Holder will
forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the "Advice") by the Company that
the use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus or Registration
Statement.  The Company may provide appropriate stop orders to enforce
the provisions of this paragraph.

      


      (e)           Piggy-Back
Registrations.  If at any time during the Effectiveness
Period  there is not an effective Registration Statement covering all
of the Registrable Securities and the Company shall determine to prepare and
file with the SEC a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen (15) days after receipt of such notice, any
such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights.

      


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


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (g)           Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 6:30 p.m. (New York City time) on a Business
Day, (ii) the Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Agreement later than 6:30 p.m. (New York City time) on any
date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.  The address for such notices and
communications shall be as follows:

      


      If to the
Company:

      


      Arotech
Corporation

      1229 Oak
Valley Drive

      Ann
Arbor, Michigan 48108

      Facsimile
No.:  (734) 761-5836

      Telephone
No.:  (734) 761-5368

      Attention:
Tom Paup

      


      With a
copy to:

      


      Electric
Fuel (E.F.L.) Ltd.

      One
HaSolela Street, POB 641

      Western
Industrial Park

      Beit
Shemesh 99000, Israel

      Facsimile
No.:   011-972-2-990-6688

      Telephone
No.:  011-972-2-990-6623

      Attention:
General Counsel

      


      With a
copy (for informational purposes only) to:

      


      Lowenstein
Sandler PC

      65
Livingston Avenue

      Roseland,
New Jersey 07068

      Facsimile
No.:   (973) 597-2477

      Telephone
No.:  (973) 597-2500

      Attention:
Steven Skolnick, Esq.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      
        	
              	
                If
      to a Purchaser:

              	
                 To
      the address set forth under such Purchaser's name on the signature pages
      hereto.

              


      

      


      
        	
              	
                With
      a copy to: 

              	
                Schulte
      Roth & Zabel LLP

              


      

      919 Third
Avenue

      New York,
NY  10022

      Facsimile
No.:  (212) 593-5955

      Telephone
No.:  (212) 756-2376

      Attn:  Eleazer
Klein, Esq.

      


      
        	
                 
      

              	
                If
      to any other Person who is then the registered
  Holder:

              


      

      


      To the
address of such Holder as it appears in the stock transfer books of the
Company

      


      or such
other address as may be designated in writing hereafter, in the same manner, by
such Person.

      


      (h)           Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder.  The Company may not assign
its rights or obligations hereunder without the prior written consent of each
Holder.  Each Holder may assign their respective rights hereunder in
the manner and to the Persons as permitted under the Purchase
Agreement.

      


      (i)     
      Execution and
Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same
Agreement.  In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

      


      (j)         
  Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflict of laws
thereof.  Each party agrees that all legal Proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced in the state and federal courts sitting in the City of New York,
Borough of Manhattan.  Each party hereto hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, Borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of this Agreement),
and hereby irrevocably waives, and agrees not to assert in any suit, action or
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or Proceeding is has been commenced in an
improper or inconvenient forum. Each party hereto (including its affiliates,
agents, officers, directors and employees) hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal Proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action or
Proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or Proceeding shall be reimbursed by the other party for
its attorney's fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or
Proceeding.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


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

      


      (l)        
   Severability.  If
any provision of this Agreement is prohibited by law or otherwise determined to
be invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties.  The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable provision(s).

      


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

      


      (n)           Independent Nature of
Purchasers' Obligations and Rights.  The obligations of each
Purchaser hereunder are several and not joint with the obligations of any other
Purchaser hereunder, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser
hereunder.  Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this
Agreement.  Each Purchaser shall be entitled to protect and enforce
its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.

      


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

      


      
        	 
      	
                AROTECH
      CORPORATION

              	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	
                By:

              	 	 
	 
      	 
      	 
      	 
	 
      	
                Name:
      Robert S. Ehrlich

              	 
	 
      	
                Title:   Chief
      Executive Officer

              	 


      

      


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

      


      
        	 
      	
                HIGHBRIDGE
      INTERNATIONAL LLC

              	 
	 
      	 
      	 
      	 
	 
      	
                By:
      Highbridge Capital Management, LLC,

              	 
	 
      	
                Its
      Trading Manager

              	 
	 
      	 
      	 
      	 
	 
      	
                By:

              	 	 
	 
      	
                Name:
      Adam J. Chill

              	 
	 
      	
                Title:   Managing
      Director

              	 
	 
      	 
      	 
      	 
	 
      	
                Address
      for Notice:

              	 
	 
      	 
      	 
      	 
	 
      	
                c/o
      Highbridge Capital Management, LLC

              	 
	 
      	
                9
      West 57th Street, 27th Floor

              	 
	 
      	
                New
      York, New York  10019

              	 
	 
      	
                Attention:  Ari
      J. Storch / Adam J. Chill

              	 
	 
      	
                Facsimile
      No.:  (212) 751-0755

              	 
	 
      	
                Telephone
      No.:  (212) 287-4720

              	 
	 
      	
                Email:ari.storch@highbridge.com
      /

              	 
	 
      	
                adam.chill@highbridge.com

              	 
	 
      	 
      	 
      	 
	 
      	
                With
      a copy to:

              	 
	 
      	 
      	 
      	 
	 
      	
                Schulte
      Roth & Zabel LLP

              	 
	 
      	
                919
      Third Avenue

              	 
	 
      	
                New
      York, New York  10022

              	 
	 
      	
                Facsimile
      No.:  (212) 593-5955

              	 
	 
      	
                Telephone
      No.:  (212) 756-2376

              	 
	 
      	
                Attention:  Eleazer
      Klein, Esq.

              	 
	 
      	
                Email:
      eleazer.klein@srz.com

              	 


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


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

      


      
        	 
      	
                CRANSHIRE
      CAPITAL L.P.

              	 
	 
      	 
      	 
      	 
	 
      	
                By:

              	 
      	 
	 
      	
                Name:

              	 
	 
      	
                Title:

              	 
	 
      	 
      	 
      	 
	 
      	
                Address
      for Notice:

              	 
	 
      	 
      	 
      	 
	 
      	
                c/o
      Downsview Capital, Inc.

              	 
	 
      	
                The
      General Partner

              	 
	 
      	
                3100
      Dundee Road,

              	 
	 
      	
                Suite
      703

              	 
	 
      	
                Northbrook,
      IL  60062

              	 
	 
      	
                Attention:  Mitchell
      P. Kopin

              	 
	 
      	
                Facsimile:  (847)
      562-9031

              	 
	 
      	
                Telephone:  (847)
      562-9030

              	 
	 
      	
                Residence:
      Illinois

              	 
	 
      	
                Email:
      mkopin@cranshirecapital.com

              	 


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


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

      


      
        	 
      	
                IROQUOIS
      MASTER FUND LTD.

              	 
	 
      	 
      	 
      	 
	 
      	
                By:

              	 
      	 
	 
      	
                Name:

              	 
	 
      	
                Title:

              	 
	 
      	 
      	 
      	 
	 
      	
                Address
      for Notice:

              	 
	 
      	 
      	 
      	 
	 
      	
                Iroquois
      Master Fund Ltd.

              	 
	 
      	
                641
      Lexington Ave.

              	 
	 
      	
                26th
      Floor

              	 
	 
      	
                New
      York, New York  10022

              	 
	 
      	
                Facsimile:  (646)
      274-1728

              	 
	 
      	
                Telephone:   (212)
      974-3070

              	 
	 
      	
                Attention:  Joshua
      Silverman

              	 
	 
      	
                Email:
      JSilverman@icfund.com

              	 


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      Annex
A

      


      


      


      SELLING
SHAREHOLDERS

      


      The
shares of Common Stock being offered by the selling shareholders are issuable
upon conversion of the convertible notes and upon exercise of the
warrants.  For additional information regarding the issuance of those
convertible notes and warrants, see "Private Placement of Convertible Notes and
Warrants" above.  We are registering the shares of Common Stock in
order to permit the selling shareholders to offer the shares for resale from
time to time.  Except  for the ownership of the convertible
notes and the warrants issued pursuant to the Securities Purchase Agreement, the
selling shareholders have not had any material relationship with us within the
past three years.

      


      The table
below lists the selling shareholders and other information regarding the
beneficial ownership of the shares of Common Stock by each of the selling
shareholders.  The second column lists the number of shares of Common
Stock beneficially owned by each selling shareholder, based on its ownership of
the convertible notes and warrants, as of ________, 200_, assuming conversion of
all convertible notes and exercise of all warrants held by the selling
shareholders on that date.

      


      The third
column lists the shares of Common Stock being offered by this prospectus by the
selling shareholders.

      


      In
accordance with the terms of registration rights agreements with the selling
shareholders, this prospectus generally covers the resale of at least 130% of
the sum of (i) the maximum number of shares of Common Stock issuable upon
conversion of the convertible notes as of the trading day immediately preceding
the date the registration statement is initially filed with the SEC and (ii) the
maximum number of shares of common stock issued and issuable upon exercise of
the warrants, as of the Trading Day immediately preceding the date this
registration statement is initially filed with the SEC. Because the conversion
price of the convertible notes and the exercise price of the warrants may be
adjusted, the number of shares that will actually be issued may be more or less
than the number of shares being offered by this prospectus.  The
fourth column assumes the sale of all of the shares offered by the selling
shareholders pursuant to this prospectus.

      


      Under the
terms of the convertible notes and the warrants, a selling shareholder may not
convert the convertible notes or exercise the warrants to the extent such
conversion or exercise would cause such selling shareholder, together with its
affiliates, to beneficially own a number of shares of Common Stock which would
exceed 4.99% of our then outstanding shares of Common Stock following such
conversion or exercise, excluding for purposes of such determination shares of
Common Stock issuable upon conversion of the convertible notes which have not
been converted or upon exercise of the warrants which have not been
exercised.  The number of shares in the second column reflects this
limitation.  The selling shareholders may sell all, some or none of
their shares in this offering.  See "Plan of
Distribution."


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


      
        	
                Name of Selling
      Shareholder

              	
                Number of Shares Owned
      Prior to Offering

              	
                Maximum Number of
      Shares to be Sold Pursuant to this Prospectus

              	
                Number of Shares Owned
      After Offering

              
	 
      	 
      	 
      	 
      
	
                Highbridge
      International LLC (1)

              	
                [      ]

              	 
      	
                0

              
	 
      	 
      	 
      	 
      
	
                Cranshire
      Capital L.P.

              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                Iroquois
      Master Fund Ltd.

              	 
      	 
      	 
      


      

      


      


      (1)           Highbridge
Capital Management, LLC is the trading manager of Highbridge International LLC
and has voting control and investment discretion over securities held by
Highbridge International LLC.  Glenn Dubin and Henry Swieca
control Highbridge Capital Management, LLC and have voting control and
investment discretion over the securities held by Highbridge International
LLC.  Each of Highbridge Capital Management, LLC, Glenn Dubin and
Henry Swieca disclaim beneficial ownership of the securities held by
Highbridge International LLC.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      PLAN
OF DISTRIBUTION

      


      We are
registering the shares of Common Stock issuable upon conversion of the
convertible notes and the shares of Common Stock issuable upon exercise of the
warrants to permit the resale of these shares of Common Stock by the holders of
the convertible notes and warrants from time to time after the date of this
prospectus.  We will not receive any of the proceeds from the sale by
the selling shareholders of the shares of Common Stock.  We will bear
all fees and expenses incident to our obligation to register the shares of
Common Stock.

      


      The
selling shareholders may sell all or a portion of the shares of Common Stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents.  If the
shares of Common Stock are sold through underwriters or broker-dealers, the
selling shareholders will be responsible for underwriting discounts or
commissions or agent's commissions.  The shares of Common Stock may be
sold in one or more transactions at fixed prices, at prevailing market prices at
the time of the sale, at varying prices determined at the time of sale, or at
negotiated prices.  These sales may be effected in transactions, which
may involve crosses or block transactions,

      


      
        	
              	
                ●

              	
                on
      any national securities exchange or quotation service on which the
      securities may be listed or quoted at the time of
  sale;

              


      

      


      
        	
              	
                

                  

                    ●

                  

                

              	
                in
      the over-the-counter market;

              


      

      


      
        	
              	
                

                  

                    ●

                  

                

              	
                in
      transactions otherwise than on these exchanges or systems or in the
      over-the-counter market;

              


      

      


      
        	
              	
                

                  

                    ●

                  

                

              	
                through
      the writing of options, whether such options are listed on an options
      exchange or otherwise;

              


      

      


      
        	
              	
                

                  

                    ●

                  

                

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

              


      

      


      
        	
              	
                

                  

                    ●

                  

                

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

              


      

      


      
        	
              	
                

                  

                    ●

                  

                

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

              


      

       

      
        	
              	
                

                  

                    ●

                  

                

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

              


      

      


      
        	
              	
                

                  

                    ●

                  

                

              	
                privately
      negotiated transactions;

              


      

      


      
        	
              	
                

                  

                    ●

                  

                

              	
                short
      sales;

              


      

      


      
        	
              	
                

                  

                    ●

                  

                

              	
                sales
      pursuant to Rule 144;

              


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      
        	
              	
                

                  

                    ●

                  

                

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

              


      

      


      
        	
              	
                

                  

                    ●

                  

                

              	
                a
      combination of any such methods of sale;
and

              


      

      


      
        	
              	
                

                  

                    ●

                  

                

              	
                any
      other method permitted pursuant to applicable
  law.

              


      

      


      If the
selling shareholders effect such transactions by selling shares of Common Stock
to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling shareholders or commissions from
purchasers of the shares of Common Stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved).  In connection with
sales of the shares of Common Stock or otherwise, the selling shareholders may
enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the shares of Common
Stock in the course of hedging in positions they assume.  The selling
shareholders may also sell shares of Common Stock short and deliver shares of
Common Stock covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales.  The
selling shareholders may also loan or pledge shares of Common Stock to
broker-dealers that in turn may sell such shares.

      


      The
selling shareholders may, from time to time, pledge or grant a security interest
in some or all of the convertible notes, warrants or shares of Common Stock
owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell the shares of
Common Stock from time to time pursuant to this prospectus or any amendment to
this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act of 1933, as amended, amending, if necessary, the list of selling
shareholders to include the pledgee, transferee or other successors in interest
as selling shareholders under this prospectus.  The selling
shareholders also may transfer and donate the shares of Common Stock in other
circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus. The selling shareholders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).

      


      The
selling shareholders and any broker-dealer participating in the distribution of
the shares of Common Stock may be deemed to be "underwriters" within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act.  At the time a particular
offering of the shares of Common Stock is made, a prospectus supplement, if
required, will be distributed which will set forth the aggregate amount of
shares of Common Stock being offered and the terms of the offering, including
the name or names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling shareholders and any
discounts, commissions or concessions allowed or reallowed or paid to
broker-dealers.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


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

      


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

      


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

      


      We will
pay all expenses of the registration of the shares of Common Stock pursuant to
the registration rights agreement, estimated to be
$[     ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or "blue sky" laws; provided, however, that a selling
shareholder will pay all underwriting discounts and selling commissions, if
any.  We will indemnify the selling shareholders against liabilities,
including some liabilities under the Securities Act, in accordance with the
registration rights agreements, or the selling shareholders will be entitled to
contribution.  We may be indemnified by the selling shareholders
against civil liabilities, including liabilities under the Securities Act, that
may arise from any written information furnished to us by the selling
shareholder specifically for use in this prospectus, in accordance with the
related registration rights agreements, or we may be entitled to
contribution.

      


      Once sold
under the shelf registration statement, of which this prospectus forms a part,
the shares of Common Stock will be freely tradable in the hands of persons other
than our affiliates.