**Exhibit 10.28**

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**INVESTORS’ RIGHTS AGREEMENT**

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This**INVESTORS’ RIGHTS AGREEMENT** (this “***Agreement***”) dated as of March 1,2005, is entered into by and between Refocus Group, Inc., a Delawarecorporation (the “***Company***”), and MedCareInvestment Fund III, Ltd., a Texas limited partnership (the “***Purchaser***”).

 

A.                                   The Company has filed a Certificate ofDesignation, Rights and Preferences establishing three series of convertiblepreferred stock, namely, the Series A-1 Convertible Preferred Stock, par value$0.0001 per share (the “***Series A-1 Preferred Stock***”),the Series A-2 Convertible Preferred Stock, par value $0.0001 per share (the “***Series A-2 Preferred Stock***”), andthe Series A-3 Convertible Preferred Stock, par value $0.0001 per share (the “***Series A-3 Preferred Stock***”); and

 

B.                                     The Company and the Purchaser are parties tothat certain Securities Purchase Agreement dated as of even date herewith (the “***Purchase Agreement***”) pursuant towhich (i) the Company has agreed to sell, and the Purchaser has agreed topurchase, (a) 280,000 shares of the Series A-1 Preferred Stock (the “***Series A-1 Shares***”) at an initialclosing on the date hereof and (b) 280,000 shares of the Series A-2 PreferredStock (the “***Series A-2 Shares***”) at asubsequent closing provided certain milestones are met, and (ii) the Companyhas granted to the Purchaser a warrant to purchase 133,334 shares Series A-3Preferred Stock (the “***Warrant Shares***”);and

 

C.                                     The Company’s and the Purchaser’s respectiveobligations under the Purchase Agreement are conditioned upon the execution anddelivery of this Agreement.

 

**AGREEMENT**

 

**NOW,THEREFORE**, inconsideration of the foregoing recitals and the mutual promises hereinafter setforth, the parties hereto agree as follows.

 

**ARTICLE I**

 

**REGISTRATION RIGHTS**

 

## **Section 1.1****                                  ****Definitions**.  Forpurposes of this Agreement:

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### (a)                                  “***Affiliate***” means,with respect to any Person, (i) any other Person of which securities orother ownership interests representing more than fifty percent (50%) of thevoting interests are, at the time such determination is being made, owned,Controlled or held, directly or indirectly, by such Person or (ii) anyother Person which, at the time such determination is being made, isControlling, Controlled by or under common Control with, such Person.  As used herein, “***Control***”,whether used as a noun or verb, refers to the possession, directly orindirectly, of the power to direct, or cause the direction of, the managementor policies of a Person, whether through the ownership of voting securities orotherwise.

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### (b)                                 “***Holder***”means a Person that (i) is a party to this Agreement (or a permitted transfereeunder Section 1.11 hereof) and (ii) owns Registrable Securities; provided,however,

 

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### that for purposes of thisAgreement, Holders of Registrable Securities will not be required to converttheir Preferred Shares into Common Stock in order to exercise the registrationrights granted hereunder, until immediately before the closing of the offeringto which the registration relates.

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### (c)                                  “***NASD***” meansthe National Association of Securities Dealers, Inc.

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### (d)                                 “***Participating Holders***”means Holders participating, or electing to participate, in an offering ofRegistrable Securities.

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### (e)                                  “***Person***”means any individual, firm, corporation, company, partnership, trust,incorporated or unincorporated association, limited liability company, jointventure, joint stock company, government (or an agency or political subdivisionthereof) or other entity of any kind, and shall include any successor (bymerger or otherwise) of any such entity.

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### (f)                                    “***Preferred Shares***”means the Series A-1 Shares, the Series A-2 Shares and the Warrant Shares.

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### (g)                                 “***Registrable Securities***”means any shares of common stock of the Company (“***CommonStock***”) (i) issued or issuable upon conversion of the Preferred Shares;(ii) otherwise held or deemed held by conversion by the Purchaser or acquiredpursuant to any preemptive right; and (iii) issued or issuable with respect tothe securities referred to in clauses (i) and (ii) above by virtue of any stocksplit, combination, stock dividend, merger, consolidation or other similarevent; provided, however, that shares of Common Stock that areconsidered to be Registrable Securities shall cease to be RegistrableSecurities (A) upon the sale thereof pursuant to an effective registrationstatement, (B) upon the transfer thereof in a private transaction where thetransferor’s rights under this Agreement are not assigned, or (C) when suchsecurities cease to be outstanding.

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### (h)                                 “***Registration Expenses***”mean all expenses (other than underwriting discounts and commissions) arisingfrom or incident to the performance of, or compliance with, this Agreement,including, without limitation, (i) SEC, stock exchange, NASD and otherregistration and filing fees, (ii) all fees and expenses incurred in connectionwith complying with any securities or blue sky laws (including, withoutlimitation, fees, charges and disbursements of counsel in connection with bluesky qualifications of the Registrable Securities), (iii) all printing, messengerand delivery expenses, (iv) the fees, charges and disbursements of counsel tothe Company and of its independent public accountants and any other accountingand legal fees, charges and expenses incurred by the Company (including,without limitation, any expenses arising from any special audits or “comfortletters” required in connection with or incident to any registration), (v) thefees, charges and disbursements of any special experts retained by the Companyin connection with any registration pursuant to the terms of this Agreement,(vi) all internal expenses of the Company (including, without limitation, allsalaries and expenses of its officers and employees performing legal oraccounting duties), (vii) the fees and expenses incurred in connection with thelisting of the Registrable Securities on any securities exchange or Nasdaq and(viii) Securities Act liability insurance (if the Company elects to obtain suchinsurance), regardless of whether any Registration Statement filed inconnection with such registration is declared effective.  “Registration Expenses” shall also includefees, charges and

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### disbursements of one (1)firm of counsel to all of the Participating Holders participating in any underwrittenpublic offering pursuant to this Agreement (which shall be selected by amajority, based on the number of Registrable Securities to be sold, of theParticipating Holders.

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### (i)                                     “***Registration Statement***”shall mean any Registration Statement of the Company filed with the SEC on theappropriate form pursuant to the Securities Act which covers any of the sharesof Common Stock and any other Registrable Securities pursuant to the provisionsof this Agreement and all amendments and supplements to any such RegistrationStatement, including post-effective amendments, in each case including theprospectus contained therein, all exhibits thereto and all materialsincorporated by reference therein.

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### (j)                                     “***SEC***” or “***Commission***” means the United StatesSecurities and Exchange Commission.

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### (k)                                  “***Securities Act***”  means the Securities Act of 1933, as amended.

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### (l)                                     “***Selling Expenses***”shall mean the underwriting fees, discounts, selling commissions and stocktransfer taxes applicable to all Registrable Securities registered by theParticipating Holders.

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## **Section 1.2.****                               ****Demand Registration**.

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### (a)                                  Requestby Holders.  If the Company receivesat any time a written request from Holders that hold at least twenty percent (20%)of the Registrable Securities then outstanding (the “***RequestingHolders***”) that the Company register Registrable Securities heldby Requesting Holders (a “***Demand Request***”),then the Company shall, within ten (10) days after receipt of such DemandRequest, give written notice of such request (“***RequestNotice***”) to all Holders. Each Demand Request shall (x) specify the number of RegistrableSecurities that the Requesting Holders intend to sell or dispose of, (y) statethe intended method or methods of sale or disposition of the RegistrableSecurities**and (z) specify the expected pricerange (net of underwriting discounts and commissions) acceptable to theRequesting Holders to be received for such Registrable Securities.  Following receipt of a Demand Request, theCompany shall:

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#### (i)                                     cause to be filed, as soon as practicable,but within ninety (90) days of the date of delivery to the Company of theDemand Request, a Registration Statement covering such Registrable Securitieswhich the Company has been so requested to register by the Requesting Holdersand other Holders who request to the Company that their Registrable Securitiesbe registered within twenty (20)****days of themailing of the Request Notice, providing for the registration under theSecurities Act of such Registrable Securities to the extent necessary to permitthe disposition of such Registrable Securities in accordance with the intendedmethod of distribution specified in such Demand Request;

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#### (ii)                                  use its best efforts to have suchRegistration Statement declared effective by the SEC as soon as practicable thereafter;and

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#### (iii)                               refrain from filing any other RegistrationStatements, other than pursuant to a Registration Statement on Form S-4 or S-8(or similar or successor forms), with respect to

 

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#### any other securities of theCompany until such date which is one hundred and eighty (180) days followingeffectiveness of the Registration Statement filed in response to the DemandRequest.

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### (b)                                 Effective Registration Statement.  Aregistration requested pursuant to this Agreement shall not be deemed to havebeen effected (i) unless a Registration Statement with respect thereto hasbecome effective and remained effective in compliance with the provisions ofthe Securities Act with respect to the disposition of all RegistrableSecurities covered by such Registration Statement until such time as all ofsuch Registrable Securities have been disposed of in accordance with theintended methods of disposition by the Holders thereof set forth in suchRegistration Statement; (ii) if, after it has become effective, suchregistration is interfered with by any stop order, injunction or other order orrequirement of the SEC or other governmental agency or court and has notthereafter become effective, or if the offering of Registrable Securities isnot consummated for any reason, including, without limitation, if theunderwriters of an underwritten public offering advise the ParticipatingHolders that the Registrable Securities cannot be sold at a net price per shareequal to or above the net price disclosed in the preliminary prospectus; (iii)if the conditions to closing specified in the underwriting agreement, if any,entered into in connection with such registration are not satisfied or waived;or (iv) if the Requesting Holders are cut back regarding the RegistrableSecurities requested to be registered.

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### (c)                                  Selection of Underwriters.  Inthe event that the Company is required to file a Registration Statementcovering any Registrable Securities of any Requesting Holders pursuant to Section 1.2(a)hereof and the proposed public offering is to be an underwritten publicoffering, the managing underwriter shall be one or more reputable nationallyrecognized investment banks selected by a majority in interest of theRequesting Holders and reasonably acceptable to the Company, which consentshall not be unreasonably withheld, delayed or conditioned.

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### (d)                                 Priority for Demand Registration. Notwithstanding any other provision of this Agreement, if the managingunderwriter of an underwritten public offering determines and advises theParticipating Holders and the Company in writing that the inclusion of allsecurities proposed to be included by the Company and any other Holders in theunderwritten public offering would materially and adversely interfere with thesuccessful marketing of the Requesting Holders’ Registrable Securities, thenthe Company and other Holders shall not be permitted to include any securitiesin excess of the amount, if any, of securities which the managing underwriterof such underwritten public offering shall reasonably and in good faith agreein writing to include in such public offering in addition to the amount ofRegistrable Securities to be registered for the Requesting Holders. The Companywill be obligated to include in such Registration Statement, as to each Holder,only a portion of the Registrable Securities such Holder has requested beregistered equal to the ratio which such Holder’s requested RegistrableSecurities bears to the total number of Registrable Securities requested to beincluded in such Registration Statement by all Holders who have requested thattheir Registrable Securities be included in such Registration Statement. It isacknowledged by the parties hereto that pursuant to the foregoing provision,the securities to be included in a registration requested by the RequestingHolders pursuant to Section 1.2 shall be allocated:

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#### (i)                                     first, to the Participating Holders; and

 

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#### (ii)                                  second, to the Company and any othershareholders of the Company requesting registration of securities of theCompany.

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### (e)                                  Limitations on Demand Registrations.

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#### (i)                                     The Company may delay making a filing of aRegistration Statement or taking action in connection therewith by not morethan ninety (90)****days if the Company provides awritten certificate signed by the President and Chief Executive Officer of theCompany to the Holders, prior tothe time it would otherwise have been required to file such RegistrationStatement or take such action pursuant to this Section 1.2, statingthat the Board has determined in good faith that the filing of suchRegistration Statement would be seriously detrimental to the Company or wouldotherwise materially adversely affect a financing, acquisition, disposition,merger or other material transaction (collectively, a “***ValidBusiness Reason***”) and that it is therefore essential to deferthe filing of the Registration Statement; provided, however, thatsuch right to delay a Demand Request shall be exercised by the Company not morethan once in any twelve (12) month period and the Company shall only have theright to delay a Demand Request so long as such Valid Business Reason exists,and during such time, the Company may not file a Registration Statement forsecurities to be issued and sold for its own account or for that of anyoneother than the Holders.

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#### (ii)                                  The Company shall only be obligated to effecttwo (2) Demand Requests pursuant to this Section 1.2.

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#### (iii)                               The Company shall not be required to complywith a Demand Request unless the reasonably anticipated aggregate grossproceeds to be raised (before any underwriting discounts and commissions) wouldbe equal to or exceed $1,000,000.

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### (f)                                    Cancellation of Registration.  Amajority in interest****of theParticipating Holders shall have the right to cancel a proposed registration ofRegistrable Securities pursuant to this Section 1.2 when, (i) intheir discretion, market conditions are so unfavorable as to be seriouslydetrimental to an offering pursuant to such registration or (ii) the requestfor cancellation is based upon material adverse information relating to theCompany that is different from the information known to the ParticipatingHolders at the time of the Demand Request. Such cancellation of a registration shall not be counted as one of the two(2)****Demand Requests and notwithstandinganything to the contrary in the Agreement, the Company shall be responsible forthe expenses of the Participating Holders incurred in connection with the registrationprior to the time of cancellation.

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## **Section 1.3.****                               ****Piggyback Registrations**.

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### (a)                                  Rightto Include Registrable Securities. Each time that the Company proposes forany reason to register any of its Common Stock under the Securities Act, eitherfor its own account or for the account of a stockholder or stockholdersexercising demand registration rights other than Demand Requests pursuant to Section 1.2hereof or pursuant to a Registration Statement on Forms S-4 or S-8 (or similaror successor forms) (a “***Proposed Registration***”),the Company shall promptly give written notice of such Proposed Registration toall of the Holders of Registrable Securities (which notice shall be given notless than thirty (30) days prior to the

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### expected effective date of the Company’s RegistrationStatement) and shall offer such Holders the right to request inclusion of anyof such Holder’s Registrable Securities in the Proposed Registration. Noregistration pursuant to this Section 1.3 shall relieve the Companyof its obligation to register Registrable Securities pursuant to a DemandRequest, as contemplated by Section 1.2  hereof. The rights to piggyback registration may be exercised an unlimitednumber of occasions.

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### (b)                                 Piggyback Procedure.  EachHolder of Registrable Securities shall have twenty (20) days from the date ofreceipt of the Company’s notice referred to in Section 1.3(a) aboveto deliver to the Company a written request specifying the number ofRegistrable Securities such Holder intends to sell and such Holder’s intendedmethod of disposition.  Any Holder shallhave the right to withdraw such Holder’s request for inclusion of such holder’sRegistrable Securities in any Registration Statement pursuant to this Section 1.3by giving written notice to the Company of such withdrawal.  Subject to Section 1.3(d) below,the Company shall use its best efforts to****include insuch Registration Statement all such Registrable Securities so requested to beincluded therein; provided, however, that the Company may at anytime withdraw or cease proceeding with any such Proposed Registration if itshall at the same time withdraw or cease proceeding with the registration ofall other shares of Common Stock originally proposed to be registered.

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### (c)                                  Selection of Underwriters.  Themanaging underwriter for any Proposed Registration that involves anunderwritten public offering shall be one or more reputable nationallyrecognized investment banks selected by the Company and reasonably acceptableto a****majority in interest of****the Holders.

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### (d)                                 Priority for Piggyback Registration. Notwithstanding any other provision of this Agreement, if the managingunderwriter of an underwritten public offering determines and advises theCompany and the Holders in writing that the inclusion of all RegistrableSecurities proposed to be included by the Holders of Registrable Securities inthe underwritten public offering would materially and****adverselyinterfere with the successful marketing of the Company’s securities, then theHolders of Registrable Securities shall not be permitted to include anyRegistrable Securities in excess of the amount, if any, of RegistrableSecurities which the managing underwriter of such underwritten public offeringshall reasonably and in good faith agree in writing to include in such publicoffering in addition to the amount of securities to be registered for theCompany.  The Company will be obligatedto include in such Registration Statement, as to each Holder, only a portion ofthe Registrable Securities such Holder has requested be registered equal to theratio which such Holder’s requested Registrable Securities bears to the totalnumber of Registrable Securities requested to be included in such RegistrationStatement by all Holders who have requested that their Registrable Securitiesbe included in such Registration Statement.  It is acknowledged by the parties hereto that pursuant to the foregoingprovision, the securities to be included in a registration initiated by theCompany shall be allocated:

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#### (i)                                     first, to the Company; and

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#### (ii)                                  second, pari passu among the Holders and allother holders of securities of the Company with piggyback registration rights.

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Ifas a result of the provisions of this Section 1.3(d), any Holdershall not be entitled to include all****of itsRegistrable Securities in a registration that such Holder has requested to beso included, such Holder may withdraw such Holder’s request to include RegistrableSecurities in such Registration Statement.

 

### (e)                                  Underwritten Offering.  Inthe event that the Proposed Registration by the Company is, in whole or inpart, an underwritten public offering of securities of the Company, any requestunder this Section 1.3 shall specify that the RegistrableSecurities be included in the underwriting on the same terms and conditions asthe shares, if any, otherwise being sold through underwriters under suchregistration.

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## **Section 1.4****                                  ****Form S-3 Registration**.** **Any Holder (an “***Initiating Form S-3 Holder***”) mayrequest at any time that the Company file a Registration Statement under theSecurities Act on Form S-3 (or similar or successor form) covering the sale orother distribution of all or any portion of the Registrable Securities held bysuch Initiating Form S-3 Holder pursuant to Rule 415 under the Securities Act (**“*Form S-3 Demand*”**) if (i) thereasonably anticipated aggregate gross proceeds would equal or exceed $5,000,000,****(ii) the Company is a registrant qualified to use Form S-3(or any similar or successor form) to register such Registrable Securities and(iii) the plan of distribution of the Registrable Securities is other thanpursuant to an underwritten public offering. If such conditions are met, the Company shall use its best efforts toregister under the Securities Act on Form S-3 (or any similar or successorform) at the earliest practicable date, for sale in accordance with the methodof disposition specified in the Form S-3 Demand, the number of Registrable Securitiesspecified in such Form S-3 Demand.  Inconnection with a Form S-3 Demand, the Company agrees to include in theprospectus included in any Registration Statement on Form S-3, such materialdescribing the Company and intended to facilitate the sale of securities beingso registered as is reasonably requested for inclusion therein by theInitiating Form S-3 Holders, whether or not the rules applicable to preparationof Form S-3 require the inclusion of such information. Notwithstanding theforegoing, if the Company shall furnish to the Initiating Form S-3 Holders acertificate signed by the Chief Executive Officer and Chief Financial Officerof the Company stating that in the good faith opinion of the Board of Directorsof the Company, a Valid Business Reason exists, the Company shall have theright to delay or defer taking action with respect to such filing for a periodof ninety (90) days after receipt of the Form S-3 Demand; provided, however,that such right to delay or defer a Form S-3 Demand shall be exercised by theCompany not more than once in any twelve (12) month period, the Company shallonly have the right to delay a Form S-3 Demand so long as such Valid BusinessReason exists, and during such time the Company may not file a RegistrationStatement for securities to be issued and sold for its own account or for thatof any other Holders. Form S-3 Demands will not be deemed to be Demand Requestsas described in Section 1.2 hereof and Holders shall have the rightto request an unlimited number of Form S-3 Demands.  Notwithstanding the foregoing, the Companyshall not be obligated to file more than one (1) Registration Statement on FormS-3 pursuant to this Section 1.4 in any given six (6) month period.

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## **Section 1.5.****                               ****Registration Procedures**.

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### (a)                                  Obligationsof the Company.  Wheneverregistration of Registrable Securities is required pursuant to this Agreement,the Company shall use its best efforts to effect the

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### registration and sale of such Registrable Securitiesin accordance with the intended method of distribution thereof as promptly aspossible, and in connection with any such request, the Company shall, asexpeditiously as possible:

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#### (i)                                     *Preparation of RegistrationStatement; Effectiveness*.  Prepare and file with the SEC (in any eventnot later than ninety (90) days after receipt of a Demand Request to file aRegistration Statement with respect to Registrable Securities), a RegistrationStatement on any form on which the Company then qualifies, which counsel forthe Company shall deem appropriate and pursuant to which such offering may bemade in accordance with the intended method of distribution thereof (exceptthat the Registration Statement shall contain such information as mayreasonably be requested for marketing or other purposes by the managingunderwriter), and use its best efforts****to cause anyregistration required hereunder to become effective as soon as practicableafter the initial filing thereof and remain effective for a period of not lessthan one hundred and eighty (180) days (or such shorter period in which allRegistrable Securities have been sold in accordance with the methods ofdistribution set forth in the Registration Statement); provided, however,that, in the case of any registration of Registrable Securities on Form S-3which are intended to be offered on a continuous or delayed basis, such onehundred eighty (180) day period shall be extended, if necessary, to keep theRegistration Statement effective until all such Registrable Securities aresold, provided that Rule 415, or any successor rule under the SecuritiesAct, permits an offering on a continuous or delayed basis;

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#### (ii)                                  *Participation in Preparation*. Provide any Participating Holder, any underwriter participating in anydisposition pursuant to a Registration Statement, and any attorney, accountantor other agent retained by any Participating Holder or underwriter (each, an **“*Inspector*”** and, collectively,the **“*Inspectors*”**),the opportunity to reasonably participate (including, but not limited to,reviewing, commenting on and attending all meetings) in the preparation of suchRegistration Statement, each prospectus included therein or filed with the SECand each amendment or supplement thereto;

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#### (iii)                               *Due Diligence*.  Fora reasonable period prior to the filing of any Registration Statement pursuantto this Agreement, make available for inspection and copying by the Inspectorssuch financial and other information and books and records, pertinent corporatedocuments and properties of the Company and its subsidiaries and cause theofficers, directors, employees, counsel and independent certified publicaccountants of the Company and its subsidiaries to respond to such inquiriesand to supply all information reasonably requested by any such Inspector inconnection with such Registration Statement, as shall be reasonably necessary,in the judgment of the respective counsel referred to in Section 1.5(a)(ii),to conduct a reasonable investigation within the meaning of the Securities Act;

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#### (iv)                              *General Notifications*. Promptly notify in writing the Participating Holders, the sales orplacement agent, if any, therefor and the managing underwriter of thesecurities being sold, (A) when such Registration Statement or the prospectusincluded therein or any prospectus amendment or supplement or post-effectiveamendment has been filed, and, with respect to any such Registration Statementor any post-effective amendment, when the same has become effective, (B) whenthe SEC notifies the Company whether there will be a “review” of suchRegistration Statement and (C) of any comments (oral or written) by the SEC andby the blue sky or securities commissioner or regulator of any state withrespect thereto or (D) of any

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#### request by the SEC for anyamendments or supplements to such Registration Statement or the prospectus orfor additional information;

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#### (v)                                 *10b-5 Notification*. Promptly notify in writing theParticipating Holders, the sales or placement agent, if any, therefor and themanaging underwriter of the securities being sold pursuant to any RegistrationStatement at any time when a prospectus relating thereto is required to bedelivered under the Securities Act upon discovery that, or upon the happeningof any event as a result of which, any prospectus included in such RegistrationStatement (or amendment or supplement thereto) contains an untrue statement ofa material fact or omits to state any material fact required to be statedtherein or necessary to make the statements therein not misleading in light ofthe circumstances under which they were made, and the Company shall promptlyprepare a supplement or amendment to such prospectus and file it with the SEC(in any event no later than ten (10)****days followingnotice of the occurrence of such event to each Participating Holder, the salesor placement agent and the managing underwriter) so that after delivery of suchprospectus, as so amended or supplemented, to the purchasers of such RegistrableSecurities, such prospectus, as so amended or supplemented, shall not containan untrue statement of a material fact or omit to state any material factrequired to be stated therein or necessary to make the statements therein notmisleading in light of the circumstances under which they were made;

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#### (vi)                              *Notification of Stop Orders;Suspensions of Qualifications and Exemptions*. Promptly notify in writing the Participating Holders, the sales orplacement agent, if any, therefor and the managing underwriter of thesecurities being sold of the issuance by the SEC of (A) any stop order issuedor threatened to be issued by the SEC or (B) any notification with respect tothe suspension of the qualification or exemption from qualification of any ofthe Registrable Securities for sale in any jurisdiction or the initiation orthreatening of any proceeding for such purpose, and the Company agrees to use commerciallyreasonable best efforts****to (x) preventthe issuance of any such stop order, and in the event of such issuance, toobtain the withdrawal of any such stop order and (y) obtain the withdrawal ofany order suspending or preventing the use of any related prospectus orsuspending the qualification of any Registrable Securities included in suchRegistration Statement for sale in any jurisdiction at the earliest practicabledate;

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#### (vii)                           *Amendments and Supplements;Acceleration*.  Prepare and file with the SEC suchamendments, including post-effective amendments to each Registration Statementas may be necessary to keep such Registration Statement continuously effectivefor the applicable time period required hereunder and if applicable, file anyRegistration Statements pursuant to Rule 462(b) under the Securities Act; causethe related prospectus to be supplemented by any required prospectussupplement, and as so supplemented to be filed pursuant to Rule 424 (or anysimilar provisions then in force) promulgated under the Securities Act; andcomply with the provisions of the Securities Act and the Exchange Act with respectto the disposition of all securities covered by such Registration Statementduring such period in accordance with the intended methods of disposition bythe sellers thereof set forth in such Registration Statement as so amended orin such prospectus as so supplemented. If a majority in interest of****theParticipating Holders so request, to request acceleration of effectiveness ofthe Registration Statement from the SEC and any post-effective amendmentsthereto, if any are filed; provided that at the time of such request,the Company does not in good faith believe that it is necessary to

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#### amend further theRegistration Statement in order to comply with the provisions of thissubparagraph.  If the Company wishes tofurther amend the Registration Statement prior to requesting acceleration, itshall have five (5) days to so amend prior to requesting acceleration;

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#### (viii)                        *Copies*. Furnish as promptly as practicable to each Participating Holder andInspector prior to filing a Registration Statement or any supplement oramendment thereto, copies of such Registration Statement, supplement oramendment as it is proposed to be filed, and after such filing such number ofcopies of such Registration Statement, each amendment and supplement thereto(in each case including all exhibits thereto), the prospectus included in suchRegistration Statement (including each preliminary prospectus) and such otherdocuments as each such Participating Holder or underwriter may reasonablyrequest in order to facilitate the disposition of the Registrable Securitiesowned by such Participating Holder;

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#### (ix)                                *Blue Sky*.  Use commerciallyreasonable efforts****to, prior toany public offering of the Registrable Securities, register or qualify (or seekan exemption from registration or qualifications) such Registrable Securitiesunder such other securities or blue sky laws of such jurisdictions as anyParticipating Holder or underwriter may request, and to continue suchqualification in effect in each such jurisdiction for as long as is permissiblepursuant to the laws of such jurisdiction, or for as long as a ParticipatingHolder or underwriter requests or until all of such Registrable Securities aresold, whichever is shortest, and do any and all other acts and things which maybe reasonably necessary or advisable to enable any Participating Holder toconsummate the disposition in such jurisdictions of the Registrable Securities;

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#### (x)                                   *Other Approvals*.  Use commerciallyreasonable efforts****to obtain allother approvals, consents, exemptions or authorizations from such governmentalagencies or authorities as may be necessary to enable the Participating Holdersand underwriters to consummate the disposition of Registrable Securities;

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#### (xi)                                *Agreements*. Enter into customary agreements (including any underwriting agreementsin customary form), and take such other actions as may be reasonably requiredin order to expedite or facilitate the disposition of Registrable Securities;

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#### (xii)                             “*Cold Comfort*” *Letter*.  Obtain a “coldcomfort” letter from the Company’s independent public accountants in customaryform and covering such matters of the type customarily covered by “cold comfort”letters as the managing underwriter may reasonably request, and reasonably satisfactoryto a majority in interest of****theParticipating Holders;

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#### (xiii)                          *Legal Opinion*. Furnish, at the request of any underwriter of Registrable Securities onthe date such securities are delivered to the underwriters for sale pursuant tosuch registration, an opinion, dated such date, of counsel representing theCompany for the purposes of such registration, addressed to the Holders, andthe placement agent or sales agent, if any, thereof and the underwriters, ifany, thereof, covering such legal matters with respect to the registration inrespect of which such opinion is being given as such underwriter may reasonablyrequest and as are customarily included in such opinions, and reasonablysatisfactory to a majority in interest of the Participating Holders;

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#### (xiv)                         *SEC Compliance, EarningsStatement*. Use its bestefforts****to comply with all applicable rulesand regulations of the SEC and make available to its shareholders, as soon asreasonably practicable, but no later than fifteen (15) months after theeffective date of any Registration Statement, an earnings statement covering aperiod of twelve (12) months beginning after the effective date of suchRegistration Statement, in a manner which satisfies the provisions of Section 11(a)of the Securities Act and Rule 158 thereunder;

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#### (xv)                            *Certificates, Closing*. Provide officers’ certificates and other customary closing documents;

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#### (xvi)                         *NASD*. Cooperate with each Participating Holder and each underwriter participatingin the disposition of such Registrable Securities and underwriters’ counsel inconnection with any filings required to be made with the NASD;

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#### (xvii)                      *Road Show*. Cause appropriate officers as are requested by an managing underwriterto participate in a “road show” or similar marketing effort being conducted bysuch underwriter with respect to an underwritten public offering;

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#### (xviii)                   *Listing*.  Useits best efforts to cause all such Registrable Securities to be listed on eachsecurities exchange on which similar securities issued by the Company are thenlisted and if not so listed, to be listed on the NASD automated quotationsystem;

####  

#### (xix)                           *Transfer Agent, Registrar andCUSIP*.  Provide a transfer agent and registrar forall Registrable Securities registered pursuant hereto and a CUSIP number forall such Registrable Securities, in each case, no later than the effective dateof such registration;

####  

#### (xx)                              *Private Sales*.  Useits best efforts to assist a Holder in facilitating private sales of RegistrableSecurities by, among other things, providing officers’ certificates and othercustomary closing documents; and

####  

#### (xxi)                           *Commercially Reasonable Efforts*.  Use commerciallyreasonable efforts to take all other actions necessary to effect theregistration of the Registrable Securities contemplated hereby.

####  

### (b)                                 Seller Information.  TheCompany may require each Participating Holder as to which any registration ofsuch Holder’s Registrable Securities is being effected to furnish to theCompany with such information regarding such Participating Holder and suchParticipating Holder’s method of distribution of such Registrable Securities asthe Company may from time to time reasonably request in writing.

###  

### (c)                                  Notice to Discontinue.  EachParticipating Holder whose Registrable Securities are covered by a RegistrationStatement filed pursuant to this Agreement agrees that, upon receipt of writtennotice from the Company of the happening of any event of the kind described in Section 1.5(a)(v),such Participating Holder shall forthwith discontinue the disposition ofRegistrable Securities until such Participating Holder’s receipt of the copiesof the supplemented or amended prospectus contemplated by Section 1.5(a)(v)or until it is advised in writing by the Company that the use of the prospectusmay be resumed and has received copies of any additional or supplementalfilings which are incorporated by reference into the prospectus, and,

 

11

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### if so directed by theCompany in the case of an event described in Section 1.5(a)(v),such Participating Holder shall deliver to the Company (at the Company’sexpense) all copies, other than permanent file copies then in suchParticipating Holder’s possession, of the prospectus covering such RegistrableSecurities which is current at the time of receipt of such notice.  If the Company shall give any such notice,the Company shall extend the period during which such Registration Statement isto be maintained effective by the number of days during the period from andincluding the date of the giving of such notice pursuant to Section 1.5(a)(v)to and including the date when the Participating Holder shall have received thecopies of the supplemented or amended prospectus contemplated by, and meetingthe requirements of, Section 1.5(a)(v).

###  

## **Section 1.6.****                               ****Registration Expenses****. **Except as otherwiseprovided herein, all Registration Expenses shall be borne by the Company.  All Selling Expenses relating to RegistrableSecurities registered shall be borne by the Participating Holders of suchRegistrable Securities pro rata on the basis of the number of shares soregistered.

##  

## **Section 1.7.****                               ****Indemnification****.**

##  

### (a)                                  Indemnificationby the Company.  The Company agrees,notwithstanding termination of this Agreement, to indemnify and hold harmlessto the fullest extent permitted by law, each Holder, each of its directors,officers, employees, advisors, agents and general or limited partners (and thedirectors, officers, employees, advisors and agents thereof), their respectiveAffiliates and each Person who controls (within the meaning of the SecuritiesAct or the Exchange Act) any of such Persons, and each underwriter and eachPerson who controls (within the meaning of the Securities Act or the ExchangeAct) any underwriter (collectively, **“*HolderIndemnified Parties*”**) from and against any and alllosses, claims, damages, expenses (including, without limitation, reasonablecosts of investigation and fees, disbursements and other charges of counsel,any amounts paid in settlement effected with the Company’s consent, whichconsent shall not be unreasonably withheld or delayed and any costs incurred inenforcing the Company’s indemnification obligations hereunder) or otherliabilities (collectively, **“*Losses*”**)to which any such Holder Indemnified Party may become subject under theSecurities Act, Exchange Act, any other federal law, any state or common law orany rule or regulation promulgated thereunder or otherwise, insofar as suchLosses (or actions or proceedings, whether commenced or threatened, in respectthereof) are resulting from or arising out of or based upon (i) any untrue, oralleged untrue, statement of a material fact contained in any RegistrationStatement, prospectus or preliminary prospectus (as amended or supplemented) orany document incorporated by reference in any of the foregoing or resultingfrom or arising out of or based upon any omission or alleged omission to statetherein a material fact required to be stated therein or necessary to make the statementstherein (in the case of a prospectus, in light of the circumstances under whichthey were made), not misleading or (ii) any violation by the Company of theSecurities Act, Exchange Act, any other federal law, any state or common law orany rule or regulation promulgated thereunder or otherwise incident to anyregistration, qualification or compliance and in any such case, the Companywill promptly reimburse each such Holder Indemnified Party for any legal andany other Losses reasonably incurred in connection with investigating,preparing or defending any such claim, loss, damage, liability, action orinvestigation or proceeding (collectively, a **“*Claim*”**);****provided,however, that the Company shall not be liable to any Holder IndemnifiedParty for any Losses that arise out of or

###  

### 12

### 

###  

### are based upon written information provided by aHolder Indemnified Party specifically stating it is for use in the RegistrationStatement.****Such indemnity obligation shall remainin full force and effect regardless of any investigation made by or on behalfof the Holder Indemnified Parties and shall survive the transfer of RegistrableSecurities by such Holder Indemnified Parties.

###  

### (b)                                 Indemnification by Holders.  Inconnection with any proposed registration in which a Holder is participatingpursuant to this Agreement, each such Holder shall furnish to the Company inwriting such information with respect to such Holder as the Company mayreasonably request or as may be required by law for use in connection with anyRegistration Statement or prospectus or preliminary prospectus to be used inconnection with such registration and each Holder agrees, severally and notjointly, to indemnify and hold harmless the Company, any underwriter retainedby the Company and their respective directors, officers, partners, employees,advisors and agents, their respective Affiliates and each Person who controls(within the meaning of the Securities Act or the Exchange Act) any of suchPersons to the same extent as the foregoing indemnity from the Company to theHolders as set forth in Section 1.7(a) (subject to the exceptionsset forth in the foregoing indemnity, the proviso to this sentence andapplicable law), but only with respect to any such information furnished inwriting by such Holder expressly for use therein; provided, however,that the liability of any Holder under this Section 1.7(b) shall belimited to the amount of the net****proceedsreceived by such Holder in the offering giving rise to such liability. Suchindemnity obligation shall remain in full force and effect regardless of anyinvestigation made by or on behalf of the Holder Indemnified Parties (except asprovided above) and shall survive the transfer of Registrable Securities bysuch Holder.

###  

### (c)                                  Conduct of Indemnification Proceedings.  AnyPerson entitled to indemnification hereunder (the **“*Indemnified Party*”**) agrees to give prompt writtennotice to the indemnifying party (the **“*IndemnifyingParty*”**) after the receipt by the Indemnified Party of anywritten notice of the commencement of any action, suit, proceeding orinvestigation or threat thereof made in writing for which the Indemnified Partyintends to claim indemnification or contribution pursuant to this Agreement; provided,however, that, the failure so to notify the Indemnifying Party shall notrelieve the Indemnifying Party of any liability that it may have to theIndemnified Party hereunder unless and to the extent such Indemnifying Party ismaterially prejudiced by such failure. If notice of commencement of any such action is given to theIndemnifying Party as above provided, the Indemnifying Party shall be entitledto participate in and, to the extent it may wish, jointly with any otherIndemnifying Party similarly notified, to assume the defense of such action atits own expense, with counsel chosen by it and reasonably satisfactory to suchIndemnified Party.  The Indemnified Partyshall have the right to employ separate counsel in any such action andparticipate in the defense thereof, but the fees and expenses of such counselshall be paid by the Indemnified Party unless (i) the Indemnifying Party agreesto pay the same, (ii) the Indemnifying Party fails to assume the defense ofsuch action with counsel satisfactory to the Indemnified Party in itsreasonable judgment or (iii) the named parties to any such action (including,but not limited to, any impleaded parties) reasonably believe that therepresentation of such Indemnified Party and the Indemnifying Party by the samecounsel would be inappropriate under applicable standards of professionalconduct.  In the case of clause (ii)above and (iii) above, the Indemnifying Party shall not have the right toassume the defense of such action on behalf of such Indemnified Party.  No Indemnifying Party shall be liable for anysettlement entered into without its written consent, which consent shall not beunreasonably

###  

### 13

### 

###  

### withheld.  No Indemnifying Party shall, without thewritten consent of the Indemnified Party, effect the settlement or compromiseof, or consent to the entry of any judgment with respect to, any pending orthreatened action or claim in respect of which indemnification or contributionmay be sought hereunder (whether or not the Indemnified Party is an actual orpotential party to such action or claim) unless such settlement, compromise orjudgment (A) includes an unconditional release of the Indemnified Party fromall liability arising out of such action or claim and (B) does not include astatement as to, or an admission of, fault, culpability or a failure to act byor on behalf of any Indemnified Party. The rights afforded to any Indemnified Party hereunder shall be inaddition to any rights that such Indemnified Party may have at common law, byseparate agreement or otherwise.

###  

### (d)                                 Contribution.  Ifthe indemnification provided for in this Section 1.7 from theIndemnifying Party is unavailable or insufficient to hold harmless anIndemnified Party in respect of any Losses referred to herein, then theIndemnifying Party, in lieu of indemnifying the Indemnified Party, shallcontribute to the amount paid or payable by the Indemnified Party as a resultof such Losses in such proportion as is appropriate to reflect the relativefault of the Indemnifying Party and the Indemnified Party, as well as any otherrelevant equitable considerations.  Therelative faults of the Indemnifying Party and Indemnified Party shall bedetermined by reference to, among other things, whether any action in question,including any untrue or alleged untrue statement of a material fact or omissionor alleged omission to state a material fact, was made by, or relates toinformation supplied by, such Indemnifying Party or Indemnified Party, and theIndemnifying Party’s and Indemnified Party’s relative intent, knowledge, accessto information and opportunity to correct or prevent such action; provided,however, that the liability of any Holder under this Section 1.7(d)shall be limited to the amount of the net****proceedsreceived by such Holder in the offering giving rise to such liability.  The amount paid or payable by a party as aresult of the Losses or other liabilities referred to above shall be deemed toinclude, subject to the limitations set forth in Sections 1.7(a), 1.7(b)and 1.7(c), any legal or other fees, charges or expenses reasonablyincurred by such party in connection with any investigation or proceeding.

###  

Theparties hereto agree that it would not be just and equitable if contribution pursuantto this Section 1.7(d) were determined by pro rata allocation or byany other method of allocation which does not take account of the equitableconsiderations referred to in the immediately preceding paragraph.  No person guilty of fraudulent misrepresentation(within the meaning of Section 11(f) of the Securities Act) shall beentitled to contribution pursuant to this Section 1.7(d).

 

## **Section 1.8.****                               ****Rule 144 and Rule 144A; OtherExemptions**. With a viewto making available to the Holders the benefits of Rule 144 and Rule 144Apromulgated under the Securities Act and other rules and regulations of the SECthat may at any time permit a Holder to sell securities of the Company to thepublic without registration, the Company covenants that it shall (i) file in atimely manner all reports and other documents required to be filed by it underthe Securities Act and the Exchange Act and the rules and regulations adoptedby the SEC thereunder and (ii) take such further action as each Holder mayreasonably request (including, but not limited to, providing any informationnecessary to comply with Rule 144 and Rule 144A, if available with respect toresales of the Registrable Securities under the Securities Act), all to theextent required from time to time to enable such Holder to sell RegistrableSecurities without

##  

## 14

## 

##  

## registration under theSecurities Act within the limitation of the exemptions provided by (x) Rule 144and Rule 144A (if available with respect to resales of the RegistrableSecurities) under the Securities Act, as such rules may be amended from time totime or (y) any other rules or regulations now existing or hereafter adopted bythe SEC.  Upon the written request of aHolder, the Company shall deliver to the Holder a written statement as towhether it has complied with such requirements.

##  

## **Section 1.9.****                               ****Certain Limitations OnRegistration Rights**. NoHolder may participate in any Registration Statement hereunder unless suchHolder completes and executes all questionnaires, powers of attorney,indemnities, underwriting agreements, and other documents reasonably requiredunder the terms of such underwriting arrangements and agrees to sell suchHolder’s Registrable Securities on the basis provided in any underwritingagreement approved by the Holder or Holders entitled hereunder to approve sucharrangements; provided, however, that no such Holder shall berequired to make any representations or warranties to the Company or theunderwriters in connection with any such registration other thanrepresentations and warranties as to (i) such Holder’s ownership of itsRegistrable Securities to be sold or transferred, (ii) such Holder’s power andauthority to effect such transfer and (iii) such matters pertaining to compliancewith securities laws as may be reasonably requested.  Such Holders of Registrable Securities to besold by such underwriters may, at their option, require that any or all of therepresentations and warranties by, and the other agreements on the part of theCompany to and for the benefit of such underwriters, shall also be made to andfor the benefit of such Holders and that any or all of the conditions precedentto the obligations of the underwriters under the underwriting agreement beconditions precedent to the obligations of the Holders.

##  

## **Section 1.10.****                        ****Limitations on SubsequentRegistration Rights**.  The Company agrees that from and after thedate of this Agreement, it shall not, without the prior written consent of theHolders of at least 80% of the Registrable Securities then outstanding, enterinto any agreement (or amendment or waiver of the provisions of any agreement)with any holder or prospective holder of any securities of the Company thatwould grant such holder registration rights that are more favorable, pari passuor senior to those granted to the Purchaser hereunder.

##  

## **Section 1.11.****                        ****Transfer of Registration Rights**.****The rights ofa Holder hereunder may be transferred or assigned in connection with a transferof Registrable Securities to (i) any Affiliate of a Holder, (ii) anysubsidiary, parent, partner, limited partner, shareholder or member****of a Holder or (iii) any party or parties to a transactionor series of related transactions who, after such transaction, holds or collectivelyhold at least 1,000,000 shares of Registrable Securities (as adjusted for any****stock dividends, stock splits, combinations andreorganizations and similar events). Notwithstanding the foregoing, such rights may only be transferred orassigned provided that all of the following additional conditions aresatisfied:  (a) such transfer orassignment is effected in accordance with applicable securities laws; (b) suchtransferee or assignee agrees in writing to become subject to the terms of thisAgreement; and (c) the Company is given written notice by such Holder of suchtransfer or assignment, stating the name and address of the transferee orassignee and identifying the Registrable Securities with respect to which suchrights are being transferred or assigned.

##  

## 15

## 

##  

## **ARTICLE II**

##  

## **PREEMPTIVERIGHTS**

##  

## **Section 2.1  General**.  The Purchaserand any party to whom the Purchaser’s rights under this Article 2 havebeen duly assigned in accordance with this Agreement (each such holder orassignee hereinafter referred to as a **“*RightsHolder*”**), has the preemptive right to purchase suchRights Holder’s Pro Rata Share (as defined herein), of all or any part of any **“*New Securities*”** (as definedin Section 2.2 hereof), that the Company may from time to timeissue after the date of this Agreement. A Rights Holder’s **“*Pro Rata Share*”** for purposes of this preemptiveright is the ratio of (a) the number of Registrable Securities as to which suchRights Holder is the Holder (and/or is deemed to be the Holder under Section 1.1(b)hereof) to (b) the sum of the total number of shares of the Company’s CommonStock then outstanding, the number of shares of the Company’s Common Stockissuable upon conversion of the then outstanding Series A-1 Preferred Stock,Series A-2 Preferred Stock and Series A-3 Preferred Stock and the number ofshares of the Company’s Common Stock issuable upon conversion or exercise ofthen outstanding securities.

##  

## **Section 2.2  New Securities**.  Forpurposes of this Article 2, **“*NewSecurities*”** means any of the Company’s capital stock,whether now authorized or not, and rights, options or warrants to purchase suchcapital stock and securities of any type whatsoever that are, or may become,convertible into, exercisable or exchangeable into such capital stock; provided,however, that the term “New Securities” does not include securitiesissued or issuable:

##  

### (a)                                  under the Purchase Agreement and the Warrant;

###  

### (b)                                 to officers, directors or employees of, orconsultants, to the Company pursuant to those certain stock option or stockpurchase plans in effect as of the date hereof or new plans approved by amajority of the directors appointed by the Purchaser or agreements on termsapproved by the Board, including a majority of the directors appointed by the Purchaser;

###  

### (c)                                  upon the exercise of warrants outstanding asof the date hereof; and

###  

### (d)                                 as a dividend or distribution on the Series A-1Preferred Stock, the Series A-2 Preferred Stock or the Series A-3 PreferredStock.

###  

## **Section 2.3  Procedure**.  TheCompany will give each Rights Holder at least twenty-five (25) days priorwritten notice of the Company’s intention to issue New Securities (the **“*New Securities Notice*”**),describing the type and amount of New Securities to be issued and the price andthe general terms and conditions upon which the Company proposes to issue suchNew Securities.  Each Rights Holder maypurchase at least such Rights Holder’s Pro Rata Share of such New Securities,by delivering to the Company, within twenty-five (25) days after the date ofmailing of any such New Securities Notice by the Company, a written noticespecifying such number of New Securities which such Rights Holder desires topurchase (which may be all or any part of such New Securities), for the price andupon the general terms and conditions specified in the New Securities Notice.  If any Rights Holder fails to notify theCompany in writing within such twenty-five (25) day period of its election topurchase any or all****of such RightsHolder’s Pro Rata Share of an offering of New Securities (a **“*Nonpurchasing Holder*”**),

##  

## 16

## 

##  

## then such NonpurchasingHolder will forfeit the right hereunder to purchase that part of such RightsHolder’s Pro Rata Share of such New Securities that such Rights Holder did notagree to purchase.  If any Rights Holderfails to elect to purchase the full amount of such Rights Holder’s Pro RataShare of the New Securities, the Company shall give notice of such failure tothe Rights Holders who did so elect (a **“*ParticipatingHolder*”**).  TheParticipating Holders shall have ten (10) days from the date such notice wasgiven to notify the Company in writing of its election to purchase their prorata portion of the total number of New Securities not subscribed for by theNonpurchasing Holders.   EachParticipating Holder’s pro rata portion thereof will be equal to the total ofthe number of shares of Common Stock of the Company held by such ParticipatingHolder plus the number of shares of Common Stock of the Company into which allshares of Preferred Stock held by such Participating Holder are convertible onthe date of the New Securities Notice, as a percentage of the total number ofshares of Common Stock of the Company held by all Participating Holders plusthe number of shares of Common Stock of the Company into which all shares ofPreferred Stock held by all such Participating Holders are convertible on thedate of the New Securities Notice.

##  

## **Section 2.4  Failure To Exercise**.  Inthe event that the Rights Holders fail to exercise in full the preemptive rightwithin such twenty-five (25) day period, then the Company will have ninety (90)days thereafter to sell the New Securities with respect to which the RightsHolders’ preemptive rights hereunder were not exercised, at a price and uponterms and conditions not more favorable to the purchasers thereof thanspecified in the Company’s New Securities Notice to the Rights Holders.  In the event that the Company has not issuedand sold the New Securities within such ninety (90)****dayperiod, then the Company shall not thereafter issue or sell any New Securitieswithout again first offering such New Securities to the Rights Holders pursuantto this Article 2.

##  

## **Section 2.5  Termination**.  Thepreemptive rights set forth in this Article 2 shall terminate upon theearlier of (a) the consummation of an underwritten public offering pursuant toa Registration Statement under the Securities Act that results in gross proceedsto the Company of not less than $45,000,000 in the aggregate (a **“*Qualified Public Offering*”**),and (b) such time as the Investor and its Affiliates hold fewer than twenty-fivepercent (25%) of the Series A-1 Preferred Stock originally issued under thePurchase Agreement.

##  

## **Section 2.6  Assignment**.** **The preemptive rights set forth inthis Article 2 may not be assigned or transferred, except the rights of aRights Holder hereunder may be transferred or assigned in connection with atransfer of Registrable Securities to (i) any Affiliate of a Rights Holder, or (ii)any subsidiary, parent, partner, limited partner, shareholder or member of aRights Holder.

##  

## **ARTICLE III**

##  

## **GENERALPROVISIONS**

##  

## **Section 3.1  Entire Agreement. **This Agreement constitutes the entire agreement and understanding ofthe parties in respect of the subject matter hereof and supersedes all priorunderstandings, agreements or representations by or among the parties, writtenor oral, to the extent they relate in any way to the subject matter hereof.

##  

## 17

## 

##  

## **Section 3.2  Successors and Assigns**.** **All of the terms, agreements,covenants, representations, warranties and conditions of this Agreement arebinding upon, and inure to the benefit of and are enforceable by, the partiesand their respective successors and permitted assigns.

##  

## **Section 3.3**. **Notices**.  All notices, requests andother communications provided for or permitted to be given under this Agreementmust be in writing and shall be given by personal delivery, by certified orregistered United States mail (postage prepaid, return receipt requested), by anationally recognized overnight delivery service for next day delivery, or byfacsimile transmission, as follows (or to such other address as any party maygive in a notice given in accordance with the provisions hereof):

##  

If to the Purchaser:

 

Medcare Investment Fund III, Ltd.

8122 Datapoint Drive, Suite 1000

San Antonio, Texas 78229

Fax: (210) 614-5841

Attn: Tim Lyles

 

With a copy to (which does not constitute notice):

 

Akin Gump Strauss Hauer & Feld LLP

300 Convent Street, Suite 1500

San Antonio, Texas 78205

Phone: (210) 281-7000

Fax: (210) 224-2035

Attn: Alan Schoenbaum, Esq.

 

If to the Company:

 

Refocus Group, Inc.

10300 North Central Expressway, Suite 104.

Dallas, Texas 75231

Fax:  (214)368-0332

Attn: President

 

With a copy to (which does not constitute notice):

 

Jenkens & Gilchrist, P.C.

1445 Ross Avenue, Suite 3200

Dallas, Texas 75202

Phone:  (214)855-4500

Fax:  (214)855-4300

Attn:  RobertW. Dockery, Esq.

 

18

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## All notices, requests or other communications will beeffective and deemed given only as follows: (i) if given by personal delivery, upon such personal delivery, (ii) ifsent by certified or registered mail, on the fifth business day after beingdeposited in the United States mail, (iii) if sent for next day delivery byovernight delivery service, on the date of delivery as confirmed by writtenconfirmation of delivery, (iv) if sent by facsimile, upon the transmitter’sconfirmation of receipt of such facsimile transmission, except that if suchconfirmation is received after 5:00 p.m. (in the recipient’s time zone) on abusiness day, or is received on a day that is not a business day, then suchnotice, request or communication will not be deemed effective or given untilthe next succeeding business day. Notices, requests and other communications sent in any other manner,including by electronic mail, will not be effective.

##  

## **Section 3.4  Governing Law**.  This Agreement will be governed by andconstrued in accordance with the laws of the State of Texas, without givingeffect to any choice of law principles.

##  

## **Section 3.5  Headings**.  The article andsection headings contained in this Agreement are inserted for convenienceonly and will not affect in any way the meaning or interpretation of thisAgreement.

##  

## **Section 3.6  Amendments**.****This Agreementmay not be amended or modified without the written consent of the Holders of atleast a majority of the Registrable Securities.

##  

## **Section 3.7  Extensions; Waivers**.  Anyparty may, for itself only, (a) extend the time for the performance of any ofthe obligations of any other party under this Agreement, (b) waive anyinaccuracies in the representations and warranties of any other party containedherein or in any document delivered pursuant hereto and (c) waive compliancewith any of the agreements or conditions for the benefit of such partycontained herein.  Any such extension orwaiver will be valid only if set forth in a writing signed by the party to bebound thereby.  Nowaiver by any party of any default, misrepresentation or breach of warranty orcovenant hereunder, whether intentional or not, may be deemed to extend to anyprior or subsequent default, misrepresentation or breach of warranty orcovenant hereunder or affect in any way any rights arising because of any prioror subsequent such occurrence.  Neitherthe failure nor any delay on the part of any party to exercise any right orremedy under this Agreement shall operate as a waiver thereof, nor shall anysingle or partial exercise of any right or remedy preclude any other or furtherexercise of the same or of any other right or remedy.

##  

## **Section 3.8  Severability. **The provisions of this Agreement will be deemed severable and theinvalidity or unenforceability of any provision will not affect the validity orenforceability of the other provisions hereof; provided that if any provisionof this Agreement, as applied to any party or to any circumstance, isjudicially determined not to be enforceable in accordance with its terms, theparties agree that the court judicially making such determination may modifythe provision in a manner consistent with its objectives such that it isenforceable, and/or to delete specific words or phrases, and in its modifiedform, such provision will then be enforceable and will be enforced.

##  

## **Section 3.9  Counterparts; Effectiveness**.  ThisAgreement may be executed in two or more counterparts, each of which will bedeemed an original but all of which together will

##  

## 19

## 

##  

## constitute one and the sameinstrument.  This Agreement will becomeeffective when one or more counterparts have been signed by each of the partiesand delivered to the other parties.  Forpurposes of determining whether a party has signed this Agreement or anydocument contemplated hereby or any amendment or waiver hereof, only ahandwritten original signature on a paper document or a facsimile copy of sucha handwritten original signature shall constitute a signature, notwithstandingany law relating to or enabling the creation, execution or delivery of anycontract or signature by electronic means.

##  

**[SIGNATURE PAGE FOLLOWS]**

 

20

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

 
| **COMPANY:**   |       | **REFOCUS GROUP, INC.**                                          |
|----------------|------------|------------------------------------------------------------------|
|           |       |                                                             |
|           |       |                                                             |
|           |       | By:                                                              |  /s/ Terence  A. Walts |   |
|           |       | Name: Terence A. Walts                                           |
|           |       | Title: President                                                 |
|           |       |                                                             |
|           |       |                                                             |
| **PURCHASER:** | ** ** | **MEDCARE INVESTMENT FUND III,  LTD.**                           |
| ** **     | ** ** | ** **                                                       |
|           |       | By: MEDCARE GP CORP, Inc., a Texas  corporation, General Partner |
|           |       |                                                             |
|           |       |                                                             |
|           |       | By:                                                              | /s/ Thomas W. Lyles, Jr. |   |
|           |       |                                                             | Thomas W. Lyles, Jr., President |
|           |       |                                                             |

 

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