Registration Rights Agreement


    
      

      

    

    Exhibit
      10.7

     

     

    REGISTRATION
      RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT
      (this
“Agreement”),
      dated
      as of December 20, 2006, by and among COBALIS
      CORPORATION,
      a Nevada
      corporation (the “Company”),
      and
      the undersigned Buyers listed on Schedule I attached hereto (each, a
“Buyer”
and
      collectively, the “Buyers”).

     

    WHEREAS:

     

    A.    In
      connection with the Securities Purchase Agreement by and among the parties
      hereto of even date herewith (the “Securities
      Purchase Agreement”),
      the
      Company has agreed, upon the terms and subject to the conditions of the
      Securities Purchase Agreement, to issue and sell to the Buyers secured
      convertible debentures (the “Convertible
      Debentures”)
      which
      shall be convertible into that number of shares of the Company’s common stock,
      par value $0.001 per share (the “Common
      Stock”),
      pursuant to the terms of the Securities Purchase Agreement for an aggregate
      purchase price of up to Three Million Eight Hundred Fifty Dollars ($3,850,000).
      Capitalized terms not defined herein shall have the meaning ascribed to them
      in
      the Securities Purchase Agreement.

     

    B.    To
      induce
      the Buyers to execute and deliver the Securities Purchase Agreement, the Company
      has agreed to provide certain registration rights under the Securities Act
      of
      1933, as amended, and the rules and regulations thereunder, or any similar
      successor statute (collectively, the “Securities
      Act”),
      and
      applicable state securities laws.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and the Buyers hereby agree as
      follows:

     

    1.  DEFINITIONS.

     

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

     

    (a)  “Person”
means
      a
      corporation, a limited liability company, an association, a partnership, an
      organization, a business, an individual, a governmental or political subdivision
      thereof or a governmental agency.

     

    (b)  “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 Securities Act and pursuant
      to Rule 415 under the Securities Act or any successor rule providing for
      offering securities on a continuous or delayed basis (“Rule
      415”),
      and
      the declaration or ordering of effectiveness of such Registration Statement(s)
      by the United States Securities and Exchange Commission (the “SEC”).

     

    (c)  “Registrable
      Securities”
means
      the shares of Common Stock issuable to the Buyers upon conversion of the
      Convertible Debentures pursuant to the Securities Purchase
      Agreement,
      and the
      Warrant Shares
      as this
      term is defined in the Securities Purchase Agreement.

     

    
      
        
        

      

      
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    (d)  “Registration
      Statement”
means
      a
      registration statement under the Securities Act which covers Registrable
      Securities.

     

    2.  REGISTRATION.

     

    (a)  Subject
      to the terms and conditions of this Agreement, the Company shall prepare and
      file, no later than forty five (45) days from the date hereof (the “Scheduled
      Filing Deadline”),
      with
      the SEC a registration statement on Form S-1 or SB-2 (or, if the Company is
      then
      eligible, on Form S-3) under the Securities Act (the “Cornell
      Registration Statement”)
      registering for resale by the Buyers up to 10,583,737 Registrable Securities.
      Subject to the terms of this Agreement, the Company shall use its reasonable
      best efforts to cause the Cornell Registration Statement to be declared
      effective under the Securities Act as promptly as possible after the filing
      thereof, but in any event prior to the applicable Scheduled Effective Deadline
      (as defined below), and shall use its reasonable best efforts to keep the
      Cornell Registration Statement continuously effective under the Securities
      Act
      until the earliest of when all Registrable Securities covered by the Cornell
      Registration Statement have been sold, or when the Registrable Securities may
      be
      sold without volume restrictions pursuant to Rule 144(k), 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 Buyers shall furnish comments on the Cornell Registration Statement
      to the Company within twenty-four (24) hours of the receipt thereof from the
      Company. The Company shall file any additional Registration Statements (each
      an
“Additional Registration Statement” and collectively, the “Additional
      Registration Statements”) as may be necessary to register all of the Registrable
      Securities no earlier than one year from the date in which the Cornell
      Registration Statement was declared effective by the SEC. Notwithstanding
      any other provision hereof, any reduction in the number of shares of Common
      Stock registered for resale under the Registration Statements as a result of
      comments received in writing from the SEC with respect to the Registration
      Statements shall not constitute a breach or default by the Company under this
      Agreement or any other agreement between the Buyer and the Company.

     

    (b)  Effectiveness
      of the Cornell Registration Statement.
      The
      Company shall use its reasonable best efforts (i) to have the Cornell
      Registration Statement declared effective by the SEC no later than one hundred
      thirty five (135) days from the date hereof (the “Scheduled
      Effective Deadline”)
      and
      (ii) to insure that the Cornell Registration Statement remain in effect until
      all of the Registrable Securities covered by such Cornell Registration Statement
      have been sold, subject to the terms and conditions of this Agreement. No breach
      of this section shall be deemed to have occurred if the Company has used its
      reasonable best efforts to timely obtain effectiveness of the Cornell
      Registration Statement or any Additional Registration Statement and failure
      to
      timely obtain effectiveness is due to changes in the Commission’s, or its
      staff’s, policy or interpretations with respect to the registration of
      transactions of the nature contemplated hereunder. 

     

    (c)  Failure
      to File or Obtain Effectiveness of the Cornell Registration
      Statement.
      In the
      event the Cornell Registration Statement is not filed by the Scheduled Filing
      Deadline or is not declared effective by the SEC on or before the Scheduled
      Effective Date, or if after the Cornell Registration Statement has been declared
      effective by the SEC, sales cannot be made pursuant to the Cornell Registration
      Statement (whether because of a failure to keep the Cornell Registration
      Statement effective, failure to disclose such information as is necessary for
      sales to be made pursuant to the Cornell Registration Statement, but excluding
      failure to register sufficient shares of Common Stock) then as partial relief
      for the damages to any holder of Registrable Securities covered by such Cornell
      Registration Statement by reason of any such delay in or reduction of its
      ability to sell the underlying shares of Common Stock (which remedy shall not
      be
      exclusive of any other remedies at law or in equity), the Company will pay
      as
      liquidated damages (the “Liquidated
      Damages”)
      to the
      holder, at the holder’s option, a cash amount within three (3) business days,
      after demand therefore, equal to one percent (1%) of the liquidated value of
      the
      Convertible Debentures outstanding as Liquidated Damages for each thirty (30)
      day period after the Scheduled Filing Deadline or the Scheduled Effective Date
      as the case may be. Notwithstanding anything herein to the contrary, in no
      event
      shall Liquidated Damages be paid for a period in excess of fifteen (15) months
      from the First Closing. No Liquidated Damages if failure is due to a Buyer’s
      failure to provide timely information or the SEC’s finding that the terms of the
      transactions are non-compliant with law and requires the Registration Statement
      to be withdrawn and renegotiate terms.

     

    
      
        
        

      

      
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    (d)  Liquidated
      Damages.
      The
      Company and the Buyer hereto acknowledge and agree that the sums payable under
      subsection 2(d) above shall constitute liquidated damages and not penalties
      and
      are in addition to all other rights of the Buyer, including the right to call
      a
      default. The parties further acknowledge that (i) the amount of loss or damages
      likely to be incurred is incapable or is difficult to precisely estimate, (ii)
      the amounts specified in such subsections bear a reasonable relationship to,
      and
      are not plainly or grossly disproportionate to, the probable loss likely to
      be
      incurred in connection with any failure by the Company to obtain or maintain
      the
      effectiveness of the Cornell Registration Statement, (iii) one of the reasons
      for the Company and the Buyer reaching an agreement as to such amounts was
      the
      uncertainty and cost of litigation regarding the question of actual damages,
      and
      (iv) the Company and the Buyer are sophisticated business parties and have
      been
      represented by sophisticated and able legal counsel and negotiated this
      Agreement at arm’s length. 

     

    3.  RELATED
      OBLIGATIONS.

     

    (a)  Upon
      filing a Registration Statement, the Company agrees to keep such Registration
      Statement effective pursuant to Rule 415 at all times until the date on
      which the Buyer shall have sold all the Registrable Securities covered by such
      Registration Statement (the “Registration
      Period”),
      which
      Registration Statement (including any amendments or supplements thereto and
      prospectuses contained therein) shall not contain any untrue statement of a
      material fact or omit to state a material fact required to be stated therein,
      or
      necessary to make the statements therein, in light of the circumstances in
      which
      they were made, not misleading.

     

    (b)  The
      Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to such Registration Statement and
      the prospectus used in connection with such Registration Statement, which
      prospectus is to be filed pursuant to Rule 424 promulgated under the Securities
      Act, as may be necessary to keep such Registration Statement effective at all
      times during the Registration Period, and, during such period, comply with
      the
      provisions of the Securities Act with respect to the disposition of all
      Registrable Securities of the Company covered by such Registration Statement
      until such time as all of such Registrable Securities shall have been disposed
      of in accordance with the intended methods of disposition by the seller or
      sellers thereof as set forth in such Registration Statement. In the case of
      amendments and supplements to a Registration Statement which are required to
      be
      filed pursuant to this Agreement (including pursuant to this Section 3(b))
      by
      reason of the Company’s filing a report on Form 10-KSB, Form 10-QSB or Form 8-K
      or any analogous report under the Securities Exchange Act of 1934, as amended
      (the “Exchange
      Act”),
      the
      Company shall incorporate such report by reference into the Registration
      Statement, if applicable, or shall file such amendments or supplements with
      the
      SEC on the same day on which the Exchange Act report is filed which created
      the
      requirement for the Company to amend or supplement the Registration Statement.
      

     

    
      
        
        

      

      
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    (c)  The
      Company shall make available to each Buyer whose Registrable Securities are
      included in any Registration Statement, without charge, (i) at least one (1)
      copy of such Registration Statement as declared effective by the SEC and any
      amendment(s) thereto, including financial statements and schedules, all
      documents incorporated therein by reference, all exhibits and each preliminary
      prospectus, (ii) ten (10) copies of the final prospectus included in such
      Registration Statement and all amendments and supplements thereto (or such
      other
      number of copies as such Buyer may reasonably request) and (iii) such other
      documents as such Buyer may reasonably request from time to time in order to
      facilitate the disposition of the Registrable Securities owned by such
      Buyer.

     

    (d)  The
      Company shall use its reasonable best efforts to (i) register and qualify the
      Registrable Securities covered by a Registration Statement under such other
      securities or “blue sky” laws of such jurisdictions in the United States as any
      Buyer reasonably requests, (ii) prepare and file in those jurisdictions,
      such amendments (including post-effective amendments) and supplements to such
      registrations and qualifications as may be necessary to maintain the
      effectiveness thereof during the Registration Period, (iii) take such other
      actions as may be reasonably necessary to maintain such registrations and
      qualifications in effect at all times during the Registration Period, and (iv)
      take all other actions reasonably necessary or advisable to qualify the
      Registrable Securities for sale in such jurisdictions; provided, however, that
      the Company shall not be required in connection therewith or as a condition
      thereto to (w) make any change to its articles of incorporation or by-laws,
      (x)
      qualify to do business in any jurisdiction where it would not otherwise be
      required to qualify but for this Section 3(d), (y) subject itself to general
      taxation in any such jurisdiction, or (z) file a general consent to service
      of
      process in any such jurisdiction. The Company shall promptly notify each Buyer
      who holds Registrable Securities of the receipt by the Company of any
      notification with respect to the suspension of the registration or qualification
      of any of the Registrable Securities for sale under the securities or “blue sky”
laws of any jurisdiction in the United States or its receipt of actual notice
      of
      the initiation or threat of any proceeding for such purpose.

     

    (e)  As
      promptly as practicable after becoming aware of such event or development,
      the
      Company shall notify each Buyer in writing of the happening of any event as
      a
      result of which the prospectus included in a Registration Statement, as then
      in
      effect, includes an untrue statement of a material fact or omission 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 (provided that in no event shall such notice contain any material,
      nonpublic information), and promptly prepare a supplement or amendment to such
      Registration Statement to correct such untrue statement or omission, and deliver
      ten (10) copies of such supplement or amendment to each Buyer. The Company
      shall
      also promptly notify each Buyer in writing (i) when a prospectus or any
      prospectus supplement or post-effective amendment has been filed, and when
      a
      Registration Statement or any post-effective amendment has become effective
      (notification of such effectiveness shall be delivered to each Buyer by email
      or
      facsimile on the same day of such effectiveness), (ii) of any request by the
      SEC
      for amendments or supplements to a Registration Statement or related prospectus
      or related information, and (iii) of the Company’s reasonable determination
      that a post-effective amendment to a Registration Statement would be
      appropriate.

     

    
      
        
        

      

      
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    (f)  The
      Company shall use its reasonable best efforts to prevent the issuance of any
      stop order or other suspension of effectiveness of a Registration Statement,
      or
      the suspension of the qualification of any of the Registrable Securities for
      sale in any jurisdiction within the United States of America and, if such an
      order or suspension is issued, to obtain the withdrawal of such order or
      suspension at the earliest possible moment and to notify each Buyer who holds
      Registrable Securities being sold of the issuance of such order and the
      resolution thereof or its receipt of actual notice of the initiation or threat
      of any proceeding for such purpose.

     

    (g)  The
      Company shall make available for inspection upon reasonable notice by (i) any
      Buyer and (ii) one (1) firm of accountants or other agents retained by the
      Buyers (collectively, the “Inspectors”)
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the “Records”),
      as
      shall be reasonably deemed necessary by each Inspector, and cause the Company’s
      officers, directors and employees to supply all information which any Inspector
      may reasonably request; provided, however, that each Inspector shall agree,
      and
      each Buyer hereby agrees, to hold in strict confidence and shall not make any
      disclosure (except to a Buyer) or use any Record or other information which
      the
      Company determines in good faith to be confidential, and of which determination
      the Inspectors are so notified, unless (a) the disclosure of such Records is
      necessary to avoid or correct a misstatement or omission in any Registration
      Statement or is otherwise required under the Securities Act, (b) the release
      of
      such Records is ordered pursuant to a final, non-appealable subpoena or order
      from a court or government body of competent jurisdiction, or (c) the
      information in such Records has been made generally available to the public
      other than by disclosure in violation of this or any other agreement of which
      the Inspector and the Buyer has knowledge. Each Buyer agrees that it shall,
      upon
      learning that disclosure of such Records is sought in or by a court or
      governmental body of competent jurisdiction or through other means, give prompt
      notice to the Company and allow the Company, at its expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, the Records deemed confidential.

     

    (h)  The
      Company shall hold in confidence and not make any disclosure of information
      concerning a Buyer provided to the Company unless (i) disclosure of such
      information is necessary to comply with federal or state securities laws, (ii)
      the disclosure of such information is necessary to avoid or correct a
      misstatement or omission in any Registration Statement, (iii) the release of
      such information is ordered pursuant to a subpoena or other final,
      non-appealable order from a court or governmental body of competent
      jurisdiction, or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this Agreement or any other
      agreement. The Company agrees that it shall, upon learning that disclosure
      of
      such information concerning a Buyer is sought in or by a court or governmental
      body of competent jurisdiction or through other means, give prompt written
      notice to such Buyer and allow such Buyer, at the Buyer’s expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, such information.

     

    
      
        
        

      

      
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    (i)  The
      Company shall use its reasonable best efforts either to cause all the
      Registrable Securities covered by a Registration Statement (i) to be listed
      on
      each securities exchange on which securities of the same class or series issued
      by the Company are then listed, if any, if the listing of such Registrable
      Securities is then permitted under the rules of such exchange or (ii) the
      inclusion for quotation on the National Association of Securities Dealers,
      Inc.
      OTC Bulletin Board for such Registrable Securities. The Company shall pay all
      fees and expenses in connection with satisfying its obligation under this
      Section 3(j).

     

    (j)  The
      Company shall cooperate with each Buyer who holds Registrable Securities being
      offered and, to the extent applicable, to facilitate the timely preparation
      and
      delivery of certificates (not bearing any restrictive legend) representing
      the
      Registrable Securities to be offered pursuant to a Registration Statement and
      enable such certificates to be in such denominations or amounts, as the case
      may
      be, as the Buyers may reasonably request and registered in such names as the
      Buyers may request.

     

    (k)  The
      Company shall use its reasonable best efforts to cause the Registrable
      Securities covered by the applicable Registration Statement to be registered
      with or approved by such other governmental agencies or authorities as may
      be
      necessary to consummate the disposition of such Registrable
      Securities.

     

    (l)  The
      Company shall make generally available to its security holders as soon as
      practical, but not later than ninety (90) days after the close of the period
      covered thereby, an earnings statement (in form complying with the provisions
      of
      Rule 158 under the Securities Act) covering a twelve (12) month period beginning
      not later than the first day of the Company’s fiscal quarter next following the
      effective date of the Registration Statement.

     

    (m)  The
      Company shall otherwise use its reasonable best efforts to comply with all
      applicable rules and regulations of the SEC in connection with any registration
      hereunder.

     

    (n)  Within
      two (2) business days after a Registration Statement which covers Registrable
      Securities is declared effective by the SEC, the Company shall deliver, and
      shall cause legal counsel for the Company to deliver, to the transfer agent
      for
      such Registrable Securities (with copies to the Buyer whose Registrable
      Securities are included in such Registration Statement) confirmation that such
      Registration Statement has been declared effective by the SEC in the form
      attached hereto as Exhibit
      A.

     

    (o)  The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate disposition by each Buyer of Registrable Securities pursuant to
      a
      Registration Statement.

     

    
      
        
        

      

      
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    4.  OBLIGATIONS
      OF THE BUYERS.

     

    Each
      Buyer agrees that, upon receipt of any notice from the Company of the happening
      of any event of the kind described in Section 3(f) or the first sentence of
      3(e), such Buyer will immediately discontinue disposition of Registrable
      Securities pursuant to any Registration Statement(s) covering such Registrable
      Securities until such Buyer’s receipt of the copies of the supplemented or
      amended prospectus contemplated by Section 3(e) or receipt of notice that no
      supplement or amendment is required. Notwithstanding anything to the contrary,
      the Company shall cause its transfer agent to deliver unlegended certificates
      for shares of Common Stock to a transferee of a Buyer in accordance with the
      terms of the Securities Purchase Agreement in connection with any sale of
      Registrable Securities with respect to which a Buyer has entered into a contract
      for sale prior to the Buyer’s receipt of a notice from the Company of the
      happening of any event of the kind described in Section 3(f) or the first
      sentence of 3(e) and for which the Buyer has not yet settled.

     

    5.  EXPENSES
      OF REGISTRATION.

     

    All
      expenses incurred in connection with registrations, filings or qualifications
      pursuant to Sections 2 and 3, including, without limitation, all registration,
      listing and qualifications fees, printers, legal and accounting fees shall
      be
      paid by the Company. 

     

    6.  INDEMNIFICATION.

     

    With
      respect to Registrable Securities which are included in a Registration Statement
      under this Agreement:

     

    (a)  To
      the
      fullest extent permitted by law, the Company will, and hereby does, indemnify,
      hold harmless and defend each Buyer, the directors, officers, partners,
      employees, agents, representatives of, and each Person, if any, who controls
      any
      Buyer within the meaning of the Securities Act or the Exchange Act (each, an
      “Indemnified
      Person”),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
      expenses, joint or several (collectively, “Claims”)
      incurred in investigating, preparing or defending any action, claim, suit,
      inquiry, proceeding, investigation or appeal taken from the foregoing by or
      before any court or governmental, administrative or other regulatory agency,
      body or the SEC, whether pending or threatened, whether or not an indemnified
      party is or may be a party thereto (“Indemnified
      Damages”),
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon: (i) any untrue statement or alleged untrue statement of
      a
      material fact in a Registration Statement or any post-effective amendment
      thereto or in any filing made in connection with the qualification of the
      offering under the securities or other “blue sky” laws of any jurisdiction in
      which Registrable Securities are offered (“Blue
      Sky Filing”),
      or
      the omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading; (ii) any
      untrue statement or alleged untrue statement of a material fact contained in
      any
      final prospectus (as amended or supplemented, if the Company files any amendment
      thereof or supplement thereto with the SEC) or the omission or alleged omission
      to state therein any material fact necessary to make the statements made
      therein, in light of the circumstances under which the statements therein were
      made, not misleading; or (iii) any violation or alleged violation by the Company
      of the Securities Act, the Exchange Act, any other law, including, without
      limitation, any state securities law, or any rule or regulation there under
      relating to the offer or sale of the Registrable Securities pursuant to a
      Registration Statement (the matters in the foregoing clauses (i) through (iii)
      being, collectively, “Violations”).
      The
      Company shall reimburse the Buyers and each such controlling person promptly
      as
      such expenses are incurred and are due and payable, for any legal fees or
      disbursements or other reasonable expenses incurred by them in connection with
      investigating or defending any such Claim. Notwithstanding anything to the
      contrary contained herein, the indemnification agreement contained in this
      Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
      out of or based upon a Violation which occurs in reliance upon and in conformity
      with information furnished in writing to the Company by such Indemnified Person
      expressly for use in connection with the preparation of the Registration
      Statement or any such amendment thereof or supplement thereto; (y) shall not
      be
      available to the extent such Claim is based on a failure of the Buyer to deliver
      or to cause to be delivered the prospectus made available by the Company, if
      such prospectus was timely made available by the Company pursuant to Section
      3(c); and (z) shall not apply to amounts paid in settlement of any Claim if
      such settlement is effected without the prior written consent of the Company,
      which consent shall not be unreasonably withheld, conditioned, or delayed.
      Such
      indemnity shall remain in full force and effect regardless of any investigation
      made by or on behalf of the Indemnified Person and shall survive the transfer
      of
      the Registrable Securities by the Buyers pursuant to Section 9
      hereof.

     

    
      
        
        

      

      
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    (b)  In
      connection with a Registration Statement, each Buyer agrees to severally and
      not
      jointly indemnify, hold harmless and defend, to the same extent and in the
      same
      manner as is set forth in Section 6(a), the Company, each of its directors,
      each
      of its officers, employees, representatives, or agents and each Person, if
      any,
      who controls the Company within the meaning of the Securities Act or the
      Exchange Act (each an “Indemnified
      Party”),
      against any Claim or Indemnified Damages to which any of them may become
      subject, under the Securities Act, the Exchange Act or otherwise, insofar as
      such Claim or Indemnified Damages arise out of or is based upon any Violation,
      in each case to the extent, and only to the extent, that such Violation occurs
      in reliance upon and in conformity with written information furnished to the
      Company by such Buyer expressly for use in connection with such Registration
      Statement; and, subject to Section 6(d), such Buyer will reimburse any legal
      or
      other expenses reasonably incurred by them in connection with investigating
      or
      defending any such Claim; provided, however, that the indemnity agreement
      contained in this Section 6(b) and the agreement with respect to contribution
      contained in Section 7 shall not apply to amounts paid in settlement of any
      Claim if such settlement is effected without the prior written consent of such
      Buyer, which consent shall not be unreasonably withheld; provided, further,
      however, that the Buyer shall be liable under this Section 6(b) for only that
      amount of a Claim or Indemnified Damages as does not exceed the net proceeds
      to
      such Buyer as a result of the sale of Registrable Securities pursuant to such
      Registration Statement. Such indemnity shall remain in full force and effect
      regardless of any investigation made by or on behalf of such Indemnified Party
      and shall survive the transfer of the Registrable Securities by the Buyers
      pursuant to Section 9. Notwithstanding anything to the contrary contained
      herein, the indemnification agreement contained in this Section 6(b) with
      respect to any prospectus shall not inure to the benefit of any Indemnified
      Party if the untrue statement or omission of material fact contained in the
      prospectus was corrected and such new prospectus was delivered to each Buyer
      prior to such Buyer’s use of the prospectus to which the Claim
      relates.

     

    (c)  Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually satisfactory to the
      indemnifying party and the Indemnified Person or the Indemnified Party, as
      the
      case may be; provided, however, that an Indemnified Person or Indemnified Party
      shall have the right to retain its own counsel with the fees and expenses of
      not
      more than one (1) counsel for such Indemnified Person or Indemnified Party
      to be
      paid by the indemnifying party, if, in the reasonable opinion of counsel
      retained by the indemnifying party, the representation by such counsel of the
      Indemnified Person or Indemnified Party and the indemnifying party would be
      inappropriate due to actual or potential differing interests between such
      Indemnified Person or Indemnified Party and any other party represented by
      such
      counsel in such proceeding. The Indemnified Party or Indemnified Person shall
      cooperate fully with the indemnifying party in connection with any negotiation
      or defense of any such action or claim by the indemnifying party and shall
      furnish to the indemnifying party all information reasonably available to the
      Indemnified Party or Indemnified Person which relates to such action or claim.
      The indemnifying party shall keep the Indemnified Party or Indemnified Person
      fully apprised at all times as to the status of the defense or any settlement
      negotiations with respect thereto. No indemnifying party shall be liable for
      any
      settlement of any action, claim or proceeding effected without its prior written
      consent; provided, however, that the indemnifying party shall not unreasonably
      withhold, delay or condition its consent. No indemnifying party shall, without
      the prior written consent of the Indemnified Party or Indemnified Person,
      consent to entry of any judgment or enter into any settlement or other
      compromise which does not include as an unconditional term thereof the giving
      by
      the claimant or plaintiff to such Indemnified Party or Indemnified Person of
      a
      release from all liability in respect to such claim or litigation. Following
      indemnification as provided for hereunder, the indemnifying party shall be
      subrogated to all rights of the Indemnified Party or Indemnified Person with
      respect to all third parties, firms or corporations relating to the matter
      for
      which indemnification has been made. The failure to deliver written notice
      to
      the indemnifying party within a reasonable time of the commencement of any
      such
      action shall not relieve such indemnifying party of any liability to the
      Indemnified Person or Indemnified Party under this Section 6, except to the
      extent that the indemnifying party is prejudiced in its ability to defend such
      action.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (d)  The
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills are received or Indemnified Damages are incurred.

     

    (e)  The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of action or similar right of the Indemnified Party or Indemnified Person
      against the indemnifying party or others, and (ii) any liabilities the
      indemnifying party may be subject to pursuant to the law.

     

    7.  CONTRIBUTION.

     

    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided, however, that: (i) no seller of
      Registrable Securities guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the Securities Act) shall be entitled to
      contribution from any seller of Registrable Securities who was not guilty of
      fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
      Securities shall be limited in amount to the net amount of proceeds received
      by
      such seller from the sale of such Registrable Securities.

     

    8.  REPORTS
      UNDER THE EXCHANGE ACT.

     

    With
      a
      view to making available to the Buyers the benefits of Rule 144 promulgated
      under the Securities Act or any similar rule or regulation of the SEC that
      may
      at any time permit the Buyers 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 all reports and other documents required of the Company under the
      Securities Act and the Exchange Act so long as the Company remains subject
      to
      such requirements (it being understood that nothing herein shall limit the
      Company’s obligations under Section 4(c) of the Securities Purchase Agreement)
      and the filing of such reports and other documents as are required by the
      applicable provisions of Rule 144; and

     

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

     

    9.  AMENDMENT
      OF REGISTRATION RIGHTS.

     

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and Buyers who
      then
      hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
      or
      waiver effected in accordance with this Section 9 shall be binding upon
      each Buyer and the Company. No such amendment shall be effective to the extent
      that it applies to fewer than all of the holders of the Registrable Securities.
      No consideration shall be offered or paid to any Person to amend or consent
      to a
      waiver or modification of any provision of any of this Agreement unless the
      same
      consideration also is offered to all of the parties to this
      Agreement.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    10.  MISCELLANEOUS.

     

    (a)  A
      Person
      is deemed to be a holder of Registrable Securities whenever such Person owns
      or
      is deemed to own of record such Registrable Securities or owns the right to
      receive the Registrable Securities. If the Company receives conflicting
      instructions, notices or elections from two (2) or more Persons with respect
      to
      the same Registrable Securities, the Company shall act upon the basis of
      instructions, notice or election received from the registered owner of such
      Registrable Securities.

     

    (b)  Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one (1) business day after deposit with a nationally recognized
      overnight delivery service, in each case properly addressed to the party to
      receive the same. The addresses and facsimile numbers for such communications
      shall be:

     

    
      	
              If
                to the Company, to:

            	
              Cobalis
                Corporation

            
	
               

            	
              2445
                McCabe Way, Suite 150

            
	
               

            	
              Irvine,
                CA 92614

            
	
               

            	
              Attention:
                Dr. Gerald J. Yaktan

            
	
               

            	
              Telephone: 

            
	
               

            	
              Facsimile: 

            
	
               

            	
               

            
	
              With
                Copy to:

            	
              Wilson
                Sonsini Goodrich & Rosati

            
	
               

            	
              12235
                El Camino Real, Suite 200

            
	
               

            	
              San
                Diego, CA 92130

            
	
               

            	
              Attn:
                Martin J. Waters, Esq.

            
	
               

            	
              Telephone:
                 858-350-2300

            
	
               

            	
              Facsimile:
                 858-350-2399

            
	
               

            	
               

            


    

     

    If
      to an
      Buyer, to its address and facsimile number on the Schedule of Buyers attached
      hereto, with copies to such Buyer’s representatives as set forth on the Schedule
      of Buyers or to such other address and/or facsimile number and/or to the
      attention of such other person as the recipient party has specified by written
      notice given to each other party five (5) days prior to the effectiveness of
      such change. Written confirmation of receipt (A) given by the recipient of
      such
      notice, consent, waiver or other communication, (B) mechanically or
      electronically generated by the sender’s facsimile machine containing the time,
      date, recipient facsimile number and an image of the first page of such
      transmission or (C) provided by a courier or overnight courier service shall
      be
      rebuttable evidence of personal service, receipt by facsimile or receipt from
      a
      nationally recognized overnight delivery service in accordance with clause
      (i),
      (ii) or (iii) above, respectively.

     

    (c)  Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (d)  The
      laws
      of the State of New Jersey shall govern all issues concerning the relative
      rights of the Company and the Buyers as its stockholders. All other questions
      concerning the construction, validity, enforcement and interpretation of this
      Agreement shall be governed by the internal laws of the State of New Jersey,
      without giving effect to any choice of law or conflict of law provision or
      rule
      (whether of the State of New Jersey or any other jurisdiction) that would cause
      the application of the laws of any jurisdiction other than the State of New
      Jersey. Each party hereby irrevocably submits to the non-exclusive jurisdiction
      of the Superior Courts of the State of New Jersey, sitting in Hudson County,
      New
      Jersey and federal courts for the District of New Jersey sitting Newark, New
      Jersey, for the adjudication of any dispute hereunder or in connection herewith
      or with any transaction contemplated hereby or discussed herein, 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 brought in an inconvenient forum
      or that the venue of such suit, action or proceeding is improper. Each party
      hereby irrevocably waives personal service of process and consents to process
      being served in any such suit, action or proceeding by mailing a copy thereof
      to
      such party at the address for such notices to it under this Agreement and agrees
      that such service shall constitute good and sufficient service of process and
      notice thereof. Nothing contained herein shall be deemed to limit in any way
      any
      right to serve process in any manner permitted by law. If any provision of
      this
      Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
      or unenforceability shall not affect the validity or enforceability of the
      remainder of this Agreement in that jurisdiction or the validity or
      enforceability of any provision of this Agreement in any other jurisdiction.
      EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
      TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

     

    (e)  This
      Agreement, the Irrevocable Transfer Agent Instructions, the Securities Purchase
      Agreement and related documents including the Convertible Debenture and the
      Security Agreement dated the date hereof (the “Security
      Agreement”)
      constitute the entire agreement among the parties hereto with respect to the
      subject matter hereof and thereof. There are no restrictions, promises,
      warranties or undertakings, other than those set forth or referred to herein
      and
      therein. This Agreement, the Irrevocable Transfer Agent Instructions, the
      Securities Purchase Agreement and related documents including the Convertible
      Debenture, and the Security Agreement supersede all prior agreements and
      understandings among the parties hereto with respect to the subject matter
      hereof and thereof.

     

    (f)  This
      Agreement shall inure to the benefit of and be binding upon the permitted
      successors and assigns of each of the parties hereto.

     

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

     

    (h)  This
      Agreement may be executed in identical counterparts, each of which shall be
      deemed an original but all of which shall constitute one and the same agreement.
      This Agreement, once executed by a party, may be delivered to the other party
      hereto by facsimile transmission of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (i)  Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent and no rules of strict construction
      will
      be applied against any party.

     

    (j)  This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

     

    


    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    



    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    


    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their signature page to this Registration
      Rights Agreement to be duly executed as of the date first above
      written.

     

    
      	 	 	 
	 	
              COMPANY:

            
	 	
              COBALIS
                CORPORATION

            
	 
 	 
 	 
 
	 	By:  	/s/ Gerald
              Yakatan
	 	
              

              Name: Gerald
                Yakatan

            
	 	
              Title: Chief
                Executive Officer

            


    

     


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their signature page to this Registration
      Rights Agreement to be duly executed as of the date first above
      written.

     

    
      	 	 	 
	 	
              BUYER:

            
	 	
              CORNELL
                CAPITAL PARTNERS, LP

            
	 	 
	 	By:
              Yorkville Advisors, LLC
	 	Its:
              General Partner
	 
 	 
 	 
 
	 	By:  	/s/ Mark
              Angelo
	 	
              
Name:
              Mark Angelo
	 	Title:
              Portfolio Manager


    

     

    


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

     

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS

     

    


    
      	
              Buyer

            	
              Address/Facsimile
                

              Number
                of Buyer

            	
              Address/Facsimile
                

              Number
                of Buyer’s Representative

            
	
               

            	
               

            	
               

            
	
              Cornell
                Capital Partners, LP

            	
              101
                Hudson Street - Suite 3700

            	
              101
                Hudson Street - Suite 3700

            
	
               

            	
              Jersey
                City, NJ 07303

            	
              Jersey
                City, NJ 07303

            
	
               

            	
              Facsimile: (201)
                985-8266

            	
              Facsimile: (201)
                985-8266

            
	
               

            	
               

            	
              Attention:
                David Gonzalez, Esq.

            
	
               

            	
               

            	
               

            


    

    


    


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    


    EXHIBIT
      A

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    


    Attention: 

    


    
      	 	
              Re:

            	
              COBALIS
                CORPORATION

            


    

    


    Ladies
      and Gentlemen:

    


    We
      are
      counsel to Cobalis Corporation, a Nevada corporation (the “Company”),
      and
      have represented the Company in connection with that certain Securities Purchase
      Agreement (the “Securities
      Purchase Agreement”)
      entered into by and among the Company and the Buyers named therein
      (collectively, the “Buyers”)
      pursuant to which the Company issued to the Buyers shares of its Common Stock,
      par value $0.001 per share (the “Common
      Stock”).
      Pursuant to the Purchase Agreement, the Company also has entered into a
      Registration Rights Agreement with the Buyers (the “Registration
      Rights Agreement”)
      pursuant to which the Company agreed, among other things, to register the
      Registrable Securities (as defined in the Registration Rights Agreement) under
      the Securities Act of 1933, as amended (the “Securities
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on ________________, the Company filed a Registration Statement
      on
      Form ________ (File No. 333-_____________) (the “Registration
      Statement”)
      with
      the Securities and Exchange SEC (the “SEC”)
      relating to the Registrable Securities which names each of the Buyers as a
      selling stockholder there under.

     

    In
      connection with the foregoing, we advise you that a member of the SEC’s staff
      has advised us by telephone that the SEC has entered an order declaring the
      Registration Statement effective under the Securities Act at [ENTER
      TIME OF EFFECTIVENESS]
      on
[ENTER
      DATE OF EFFECTIVENESS]
      and we
      have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
      any stop order suspending its effectiveness has been issued or that any
      proceedings for that purpose are pending before, or threatened by, the SEC
      and
      the Registrable Securities are available for resale under the Securities Act
      pursuant to the Registration Statement.

     

     

    Very
      truly yours,

    


    [Law
      Firm]

    


    By:      

    


    cc: [LIST
      NAMES OF BUYERS]

    


    16