Filed by Bowne Pure Compliance



 




Exhibit 10.3




WARRANT NO.: 2007 UNIT [                    ]



WARRANT TO PURCHASE COMMON STOCK

OF NEUTRON ENTERPRISES, INC.




THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES REPRESENTED
HEREBY HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT PURPOSES ONLY, AND NOT WITH A VIEW TO
RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE
SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR OTHER APPLICABLE
SECURITIES LAWS.



This WARRANT (“Warrant”) confirms that, FOR VALUE RECEIVED, 
 _____ 
(“Holder”) is
entitled to purchase, subject to the terms and conditions hereof, from NEUTRON ENTERPRISES, INC., a
Nevada corporation (the “Company”), 
 _____ 
shares of common stock, $.001 par value per share,
of the Company (the “Common Stock”), at any time during the period commencing at 9:00 a.m., Eastern
Standard Time on the
 _____ 
, 2007 (the “Commencement Date”) and, subject to Section 9
hereof, ending at 5:00 p.m. Eastern Standard Time on the
 _____ 
, 2009 (the “Termination
Date”), at an exercise price (the “Exercise Price”) of $0.35 per share of Common Stock. The number
of shares of Common Stock purchasable upon exercise of this Warrant and the Exercise Price per
share shall be subject to adjustment from time to time upon the occurrence of certain events as set
forth herein.



The shares of Common Stock or any other shares or other units of stock or other securities or
property, or any combination thereof, then receivable upon exercise of this Warrant, as adjusted
from time to time, are sometimes referred to hereinafter as “Exercise Shares.” The exercise price
per share as from time to time in effect is referred to hereinafter as the “Exercise Price.”



1. Exercise of Warrant; Issuance of Exercise Shares.



(a) Exercise of Warrant. Subject to the terms hereof, the purchase rights represented
by this Warrant are exercisable by the Holder in whole or in part, at any time, or from time to
time, by the surrender of this Warrant and the Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder, at the office of the Company (or such other office or agency of
the Company as it may designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company) accompanied by payment of the Exercise Price in full in cash
or by bank or certified check for the Exercise Shares with respect to which this Warrant is
exercised.


 


 









 





In the event that this Warrant shall be duly exercised in part prior to the Termination Date,
the Company shall issue a new Warrant of like tenor evidencing the rights of the Holder thereof to
purchase the balance of the Exercise Shares purchasable under the Warrant so surrendered that shall
not have been purchased.



(b) Issuance of Exercise Shares: Delivery of Warrant Certificate. The Company shall,
within five (5) business days or as soon thereafter as is practicable of the exercise of this
Warrant, issue in the name of and cause to be delivered to the Holder one or more certificates
representing the Exercise Shares to which the Holder shall be entitled upon such exercise under the
terms hereof. Such certificate or certificates shall be deemed to have been issued and the Holder
shall be deemed to have become the record holder of the Exercise Shares as of the date of the
proper exercise of this Warrant.



(c) Exercise Shares Fully Paid and Non-Assessable. The Company agrees and covenants
that all Exercise Shares issuable upon the due exercise of the Warrant represented by this Warrant
certificate (“Warrant Certificate”) shall, upon issuance and payment therefor in accordance with
the terms hereof, be duly authorized, validly issued, fully paid and non-assessable and free and
clear of all taxes (other than taxes which, pursuant to Section 2 hereof, the Company shall not be
obligated to pay) or liens, charges, and security interests created by the Company with respect to
the issuance thereof.



(d) Reservation of Exercise Shares. The Company covenants that during the term that
this Warrant is exercisable, the Company will reserve from its authorized and unissued Common Stock
a sufficient number of shares to provide for the issuance of the Exercise Shares upon the exercise
of this Warrant, and from time to time will take all steps necessary to amend its articles of
incorporation to provide sufficient reserves of shares of Common Stock issuable upon the exercise
of this Warrant.



(e) Fractional Shares. The Company shall not be required to issue fractional shares
of capital stock upon the exercise of this Warrant or to deliver Warrant Certificates that evidence
fractional shares of capital stock. In the event that any fraction of an Exercise Share would,
except for the provisions of this subsection (e), be issuable upon the exercise of this Warrant,
the Company shall pay to the Holder exercising this Warrant an amount in cash equal to such
fraction multiplied by the Current Market Value of the Exercise Share on the last business day
prior to the date on which this Warrant is exercised.



For purposes hereof, the “Current Market Value means on any particular date (i) the last
closing bid price per share of the Common Stock on such date on the OTC Bulletin Board or the
registered national stock exchange on which the Common Stock is then listed, or if there is no such
price on such date, then the closing bid price on such exchange or quotation system on the date
nearest preceding such date, or (ii) if the Common Stock is not listed then on the OTC Bulletin
Board or a registered national stock exchange, the last closing bid price for a share of Common
Stock in the over-the-counter market, as reported by the OTC Bulletin Board or in the National
Quotation Bureau Inc. (or similar organization or agency succeeding to its functions of reporting
prices) at the close of business on such date, or (iii) if the Common Stock is not then reported by
the OTC Bulletin Board or the National Quotation Bureau Inc. (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the “Pink Sheet” quotes for the five (5) Trading Days preceding such date of determination, or
(iv) if no such quotes or closing bid prices are available, as determined in any reasonable manner
as may be prescribed by the Board of Directors of the Company.


 


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For the purposes hereof, Trading Day means (1) a day on which the Common Stock is traded on
the OTC Bulletin Board or registered national stock exchange, or (2) if the Common Stock is not
traded on the OTC Bulletin Board or a registered national stock exchange, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Inc.
(or any similar organization or agency succeeding its functions of reporting prices);
provided, however, that in the event that the Common Stock is not listed or quoted
as set forth in (1) or (2) hereof, then Trading Day shall mean any day except Saturday, Sunday and
any day which shall be a legal holiday or a day on which banking institutions in the State of New
York are authorized or required by law or other government action to close.



2. Payment of Taxes. The Company will pay all documentary stamp taxes, if any,
attributable to the initial issuance of Exercise Shares upon the exercise of this Warrant;
provided, however, that the Company shall not be required to pay any tax or taxes
that may be payable in respect of any transfer involved in the issue of any Warrant Certificates or
any certificates for Exercise Shares in a name other than that of the Holder of this Warrant
Certificate surrendered upon the exercise of this Warrant, and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid. Except as specifically provided in this
Section 2, Holder shall be responsible for the payment of all other taxes incurred in connection
with the receipt, transfer or sale of the Warrant or the Exercise Shares.



3. Mutilated or Missing Warrant Certificates. In case this Warrant shall be mutilated,
lost, stolen or destroyed, the Company may in its discretion issue, in exchange and substitution
for and upon cancellation of the mutilated Warrant, or in lieu of and in substitution for the
Warrant lost, stolen or destroyed, a new Warrant of like tenor and in the same aggregate
denomination, but only (i) in the case of loss, theft or destruction, upon receipt of evidence
satisfactory to the Company of such loss, theft or destruction of such Warrant and indemnity or
bond, if requested, also satisfactory to it and (ii) in the case of mutilation, upon surrender of
the mutilated Warrant. Applicants for such substitute Warrants shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company or its counsel may
prescribe.



4. Rights of Holder. The Holder shall not, by virtue of anything contained in this Warrant
or otherwise, be entitled to any right whatsoever, either at law or in equity, of a stockholder of
the Company, including without limitation, the right to receive dividends or to vote or to consent
or to receive notice as a shareholder in respect of the meetings of shareholders or the election of
directors of the Company or any other matter.


 


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5. Registration of Transfers and Exchanges. The Warrant shall be transferable, subject to
the provisions of Section 7 hereof, upon the books of the Company, if any, to be maintained by it
for that purpose, upon surrender of this Warrant Certificate to the Company at its principal office
accompanied (if so required by the Company) by a written instrument or instruments of transfer
in form satisfactory to the Company and duly executed by the Holder thereof or by the duly
appointed legal representative thereof or by a duly authorized attorney and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer. In all cases of
transfer by an attorney, the original letter of attorney, duly approved, or an official copy
thereof, duly certified, shall be deposited and remain with the Company. In case of transfer by
executors, administrators, guardians or other legal representatives, duly authenticated evidence of
their authority shall be produced, and may be required to be deposited and remain with the Company
in its discretion. Upon any such registration of transfer, a new Warrant shall be issued to the
transferee named in such instrument of transfer, and the surrendered Warrant shall be canceled by
the Company. This Warrant may be exchanged, at the option of the Holder thereof and without
charge, when surrendered to the Company at its principal office, or at the office of its transfer
agent, if any, for another Warrant of like tenor and representing in the aggregate the right to
purchase from the Company a like number and kind of Exercise Shares as the Warrant surrendered for
exchange or transfer, and the Warrant so surrendered shall be canceled by the Company or transfer
agent, as the case may be.



6. Adjustment of Exercise Shares and Exercise Price. The Exercise Price and the number and
kind of Exercise Shares purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the happening of certain events as hereinafter provided. The
Exercise Price in effect at any time and the number and kind of securities purchasable upon
exercise of each Warrant shall be subject to adjustment as follows:



(a) In case of any consolidation or merger of the Company with another corporation (other than
a merger with another corporation in which the Company is the surviving corporation and which does
not result in any reclassification or change — other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a subdivision or combination
— of outstanding Common Stock issuable upon such exercise), the rights of the Holder of this
Warrant shall be adjusted in the manner described below:



(i) In the event that the Company is the surviving corporation or is merged into a wholly
owned subsidiary for the purpose of incorporating the Company in a different jurisdiction, this
Warrant shall, without payment of additional consideration therefor, be deemed modified so as to
provide that the Holder of this Warrant, upon the exercise thereof, shall procure, in lieu of each
share of Common Stock theretofore issuable upon such exercise, the kind and amount of shares of
stock, other securities, money and property receivable upon such reclassification, change,
consolidation or merger by the holder of each share of Common Stock, had exercise of this Warrant
occurred immediately prior to such reclassification, change, consolidation or merger. This Warrant
(as adjusted) shall be deemed to provide for further adjustments that shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Section 6. The provisions of this
clause (i) shall similarly apply to successive reclassifications, changes, consolidations and
mergers.



(ii) In the event that the Company is not the surviving corporation (except in the case of a
merger of the Company into a wholly owned subsidiary for the purpose of incorporating the Company
in a different jurisdiction), Holder shall be given at least fifteen (15) days prior written notice
of such transaction and shall be permitted to exercise this Warrant, to the extent it is
exercisable as of the date of such notice, during this fifteen (15) day period. Upon expiration of such fifteen (15) day period, this Warrant and all of Holder’s rights hereunder
shall terminate.


 


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(b) If the Company, at any time while this Warrant, or any portion thereof, remains
outstanding and unexpired, by reclassification of securities or otherwise, shall change any of the
securities as to which purchase rights under this Warrant exist into the same or a different number
of securities of any other class or classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable as the result of such change
with respect to the securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Exercise Price therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this Section 6.



(c) In case the Company shall (i) pay a dividend or make a distribution on its shares of
Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding Common Stock
into a greater number of shares, or (iii) combine or reclassify its outstanding Common Stock into a
smaller number of shares, the Exercise Price in effect at the time of the record date for such
dividend or distribution or of the effective date of such subdivision, combination or
reclassification, shall be proportionally adjusted so that the Holder of this Warrant exercised
after such date shall be entitled to receive the aggregate number and kind of shares that, if this
Warrant had been exercised by such Holder immediately prior to such date, he would have owned upon
such exercise and been entitled to receive upon such dividend, subdivision, combination or
reclassification. For example, if the Company declares a 2 for 1 stock dividend or stock split and
the Exercise Price immediately prior to such event was $0.50 per share, the adjusted Exercise Price
immediately after such event would be $0.25 per share. Such adjustment shall be made successively
whenever any event listed above shall occur. Whenever the Exercise Price payable upon exercise of
each Warrant is adjusted pursuant to this subsection (c), the number of Exercise Shares purchasable
upon exercise of this Warrant shall simultaneously be adjusted by multiplying the number of
Exercise Shares initially issuable upon exercise of this Warrant by the Exercise Price in effect on
the date hereof and dividing the product so obtained by the Exercise Price, as adjusted.



(d) In the event that at any time, as a result of an adjustment made pursuant to subsection
(a), (b) or (c) above, the Holder of this Warrant thereafter shall become entitled to receive any
Exercise Shares of the Company, other than Common Stock, thereafter the number of such other shares
so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in subsections (a), (b) or (c) above.



(e) Irrespective of any adjustments in the Exercise Price or the number or kind of Exercise
Shares purchasable upon exercise of this Warrant, Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of shares as are stated in the similar
Warrants initially issuable pursuant to this Warrant.



(f) Whenever the Exercise Price shall be adjusted as required by the provisions of the
foregoing Section 6, the Company shall forthwith file in the custody of its Secretary or an
Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer’s
certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of
additional shares of Common Stock, if any, and such other facts as shall be necessary to show the
reason for and the manner of computing such adjustment. Each such officer’s certificate shall be
made available at all reasonable times for inspection by Holder and the Company shall, forthwith
after each such adjustment, mail a copy by certified mail of such certificate to the Holder.


 


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(g) All calculations under this Section 6 shall be made to the nearest cent or to the nearest
one one-hundredth (1/100th) of a share, as the case may be.



7. Investment Intent, Exercise Restrictions and Transfer Restrictions.



(a) Neither this Warrant nor any Exercise Share may be offered for sale or sold, or otherwise
transferred or sold in any transaction which would constitute a sale thereof within the meaning of
the Securities Act of 1933, as amended (the “1933 Act”), unless (i) such security has been
registered for sale under the 1933 Act and registered or qualified under applicable state
securities laws relating to the offer and sale of securities, or (ii) exemptions from the
registration requirements of the 1933 Act and the registration or qualification requirements of all
such state securities laws are available and the Company shall have received an opinion of counsel
satisfactory to the Company that the proposed sale or other disposition of such securities may be
effected without registration under the 1933 Act and would not result in any violation of any
applicable state securities laws relating to the registration or qualification of securities for
sale, such counsel and such opinion to be satisfactory to the Company.



(b) The certificates evidencing any Exercise Shares issued upon the exercise of this Warrant
shall have endorsed thereon (except to the extent that the restrictions described in any such
legend are no longer applicable) the following legend, appropriate notations thereof will be made
in the Company’s stock transfer books, and stop transfer instructions reflecting these restrictions
on transfer will be placed with the transfer agent of the Exercise Shares.




THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE
SECURITIES REPRESENTED HEREBY HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT
PURPOSES ONLY, AND NOT WITH A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE
SOLD, TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF
1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR OTHER APPLICABLE
SECURITIES LAWS.



8. Indemnification. Holder agrees to indemnify, defend and hold harmless the Company and
its respective affiliates and agents from and against any and all demands, claims, actions or
causes of action, judgments, assessments, losses, liabilities, damages or penalties and reasonable
attorneys’ fees and related disbursements incurred by the Company that arise out of or result
from a breach of any representations, warranties, covenants or agreements made by Holder herein,
and Holder agrees that in the event of any breach of any representations, warranties, covenants or
agreements made by Holder herein, the Company may, at its option, forthwith rescind the issuance of
this Warrant to Holder.


 


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9. Call. Notwithstanding anything herein to the contrary, the Company may, at its
option, call (a “Call”) up to one hundred percent (100%) of this Warrant if the Current Market
Value of the Common Stock has been equal to or greater than $0.75 (as may be adjusted for any stock
splits or combinations of the Common Stock) for a period of ten (10) consecutive Trading Days
immediately prior to the date of delivery of the Call Notice (a “Call Notice Period”), by providing
the Holder of this Warrant written notice pursuant to Section 11 (the “Call Notice”). The Call
Notice shall set forth (a) the number of Exercise Shares subject to the Call Notice (the “Called
Exercise Shares”) and (b) the date on which this Warrant shall terminate with respect to the Called
Exercise Shares (the “Early Termination Date”). The rights and privileges granted pursuant to this
Warrant with respect to the Called Exercise Shares shall expire on the Early Termination Date if
this Warrant is not exercised with respect to such Called Exercise Shares prior to such Early
Termination Date. In the event this Warrant is not exercised with respect to the Called Exercise
Shares prior to such Early Termination Date, upon the Holder tendering to the Company this Warrant
Certificate, the Company shall remit to the Holder of this Warrant (i) $.01 per Called Exercise
Share and (ii) a new Warrant to purchase that number of Exercise Shares, if any, which shall not
have been subject to the Call Notice.



10. Registration Rights. The Holder shall be entitled to the rights and subject to the
obligations set forth in “Registration Rights Provisions” attached hereto and made a part hereof as
Appendix B.



11. Notices. All notices or other communications under this Warrant shall be in writing
and shall be deemed to have been given on the day of delivery if delivered by hand, on the fifth
day after deposit in the mail if mailed by certified mail, postage prepaid, return receipt
requested, or on the next business day after mailing if sent by a nationally recognized overnight
courier such as federal express, addressed as follows:




If to the Company:




Neutron Enterprises, Inc.

3500 de Maisonneuve West

Suite 1650

Montreal, Quebec, Canada H3Z 3C1

Attention: Chief Executive Officer




with a copy to:




Fox Rothschild LLP

997 Lenox Drive, Building 3

Lawrenceville, NJ 08646

Attention: Vincent A. Vietti, Esquire


 


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and to the Holder at the address of the Holder appearing on the books of the Company
or the Company’s transfer agent, if any.



Either of the Company or the Holder may from time to time change the address to which notices
to it are to be mailed hereunder by notice in accordance with the provisions of this Section 11.



12. Supplements and Amendments. The Company may from time to time supplement or amend this
Warrant without the approval of the Holder of this Warrant in order to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or inconsistent with
any other provision, or to make any other provisions in regard to matters or questions herein
arising hereunder which the Company may deem necessary or desirable and which shall not materially
adversely affect the interests of the Holder. Except as set forth in the immediately preceding
sentence, this Warrant may not be amended, modified or supplemented except by an instrument or
instruments in writing signed by the party against whom enforcement of any such amendment,
modification or supplement is sought.



13. Successors and Assigns. This Warrant shall inure to the benefit of and be binding on
the respective successors, assigns and legal representatives of the Holder and the Company.



14. Severability. If for any reason any provision, paragraph or terms of this Warrant is
held to be invalid or unenforceable, all other valid provisions herein shall remain in full force
and effect and all terms, provisions and paragraphs of this Warrant shall be deemed to be
severable.



15. Governing Law. This Warrant shall be governed by and construed in accordance with the
laws of the State of Nevada, without regard to the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.



16. Headings. Section and subsection headings used herein are included herein for
convenience of reference only and shall not affect the construction of this Warrant nor constitute
a part of this Warrant for any other purpose.



IN WITNESS WHEREOF, the Company has caused these presents to be duly executed as of the
 _____ 

day of
 _____ 
, 2007.



	 	 	 	 	 
	 	 	NEUTRON ENTERPRISES, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:







 


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APPENDIX A

NOTICE OF EXERCISE




	 	 	 
	To:

	 	Neutron Enterprises, Inc.
	 

	 	3500 de Maisonneuve West
	 

	 	Suite 1650
	 

	 	Montreal, Quebec, Canada H3Z 3C1
	 
	 	 
	 

	 	Attention: Chief Executive Officer






(1) The undersigned hereby elects to purchase
 _____ 
shares of Common Stock of Neutron
Enterprises, Inc., a Nevada corporation, pursuant to the terms of the attached Warrant, and tenders
herewith payment of the Exercise Price for such shares in full in accordance with the terms of the
Warrant.



(2) In exercising this Warrant, the undersigned hereby confirms and acknowledges that the
shares of Common Stock to be issued upon conversion hereof are being acquired solely for the
account of the undersigned, not as a nominee for any other party, and for investment purposes only,
and that the undersigned will not offer, sell or otherwise dispose of any such shares of Common
Stock except under circumstances that will not result in a violation of the Securities Act of 1933,
as amended, any state securities laws or other applicable securities laws.



(3) Terms not otherwise defined in this Notice of Exercise shall have the meanings ascribed to
such terms in the attached Warrant



(4) Please issue a certificate or certificates representing said shares of Common Stock in the
name of the undersigned.



	 	 	 
	 

	 	HOLDER
	 
	 	 
	 

	 	 
	(Date)

	 	(Signature)







 


 









 







APPENDIX B

REGISTRATION RIGHTS PROVISIONS





Registration Rights. The Company and Holder covenant and agree as follows:



1.1 For the purpose of these Registration Rights Provisions, the following definitions shall
apply:




“Agreement” shall mean these Registration rights Provisions.



“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC thereunder, all as the same shall be in effect at the time.




“Company” shall mean Neutron Enterprises, Inc.



“Offering” shall mean that certain offering by the Company of up to 4,000,000 or more units at
a purchase price of US$0.25 per unit.



“Person” shall mean an individual, partnership (general or limited), corporation, limited
liability company, joint venture, business trust, cooperative, association or other form of
business organization, whether or not regarded as a legal entity under applicable law, a trust
(inter vivos or testamentary), an estate of a deceased, insane or incompetent person, a
quasi-governmental entity, a government or any agency, authority, political subdivision or other
instrumentality thereof, or any other entity.



“Register,” “registered,” and “registration” shall refer to a registration effected by
preparing and filing a registration statement in compliance with the Securities Act, and the
declaration or order of effectiveness of such registration statement or document by the SEC.



“Registration Statement” shall mean any registration statement of the Company filed with the
SEC pursuant to the provisions of Section 1.2 of this Agreement, which covers the resale of the
Restricted Stock on an appropriate form then permitted by the SEC to be used for such registration
and the sales contemplated to be made thereby under the Securities Act, or any similar rule that
may be adopted by the SEC, and all amendments and supplements to such registration statement,
including any pre- and post- effective amendments thereto, in each case including the prospectus
contained therein, all exhibits thereto and all materials incorporated by reference therein.



“Restricted Stock” shall mean (i) the Exercise Shares; and (ii) any additional shares of
Common Stock of the Company issued or issuable after the date hereof in respect of the Exercise
Shares, by way of a stock dividend or stock split; provided that as to any particular shares of
Restricted Stock, such securities shall cease to constitute Restricted Stock when (x) a
Registration Statement with respect to the sale of such securities shall have become effective
under the Securities Act and such securities shall have been disposed of thereunder, (y) such
securities are permitted to be transferred pursuant to Rule 144 (or any successor provision to such
rule) under the Securities Act without restriction or (z) such securities are otherwise freely
transferable to the public without further registration under the Securities Act.


 


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“Selling Stockholders” shall mean Holder and any other holder of Warrants issued in the
Offering, and their respective successors and assigns.




“SEC” shall mean the United States Securities and Exchange Commission.




“Securities Act” shall mean the Securities Act of 1933, as amended.



“Subscription Agreement” shall mean that certain Subscription Agreement by and between the
Holder and the Company dated on or about the date of the Warrant.



Capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in
the Subscription Agreement or the Warrant to which this Annex is attached, as applicable .




1.2. Registration of the Securities.



(a) The Company shall use its reasonable best efforts to prepare and file with the SEC, within
120 days of the date the Subscription Agreement is executed by the Company, a Registration
Statement under the Securities Act to permit the public sale of the Restricted Stock, and to cause
such Registration Statement to be declared effective as soon as reasonably practicable thereafter.
The Selling Stockholders shall furnish such information as may be reasonably requested by the
Company in order to include such Restricted Stock in such Registration Statement. If any Selling
Stockholder decides not to include all of its Restricted Stock in any registration statement
thereafter filed by the Company, such Selling Stockholder shall provide written notice to the
Company and shall continue to have the right to include any Restricted Stock in any subsequent
registration statement or registration statements as may be filed by the Company with respect to
offerings of its securities, all upon the terms and conditions set forth herein. In the event that
any registration pursuant to this Section 1.2(a) is terminated or withdrawn, the Company shall use
its reasonable best efforts to prepare and file with the SEC, as soon thereafter as practicable, a
Registration Statement under the Securities Act to permit the public sale of the Restricted Stock.



(b) In the event that any Selling Stockholder decides not to include its Restricted Stock in
the Registration Statement filed pursuant to Section 1.2(a) above, the Company shall notify such
Selling Stockholders in writing at least twenty (20) days prior to the filing of any registration
statement under the Securities Act for the purpose of registering securities of the Company,
excluding registration statements on SEC Forms S-4, S-8 or any similar or successor forms, and will
afford each such Selling Stockholder an opportunity to include in such registration statement all
or part of such Restricted Stock held by such Selling Stockholder. Each Selling Stockholder
desiring to include in any such registration statement all or any part of the Restricted Stock held
by it shall, within ten (10) days after the above-described notice from the Company, so notify the
Company in writing. Such notice shall state the intended method of disposition of the Restricted
Stock by such Selling Stockholder. If a Selling Stockholder decides not to include all of its
Restricted Stock in any registration statement thereafter filed by the Company, such Selling
Stockholder shall nevertheless continue to have the right to include any Restricted Stock in any
subsequent registration statement or registration statements as may be filed by the Company with
respect to offerings of its securities, all upon the terms and conditions set forth herein. The
Company may, without the consent of the Selling Stockholders, withdraw such registration statement
prior to its becoming effective if the proposal to register the securities proposed to be
registered thereby is abandoned. If the registration pursuant to Section 1.2(b) shall be, in whole
or in


 


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part, an underwritten public offering of Common Stock on behalf of the Company, all Selling
Stockholders proposing to distribute their Restricted Stock through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or underwriters selected for
such underwriting by the Company. If the managing underwriter thereof advises the Company in
writing that in its opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in an orderly manner in such offering within a price range
acceptable to the Company, the Company shall include in such registration (i) first, the securities
the Company proposes to sell, and (ii) second, any securities that are subject to demand or
mandatory registration rights and (iii) third Restricted Stock and any other registrable securities
eligible and requested to be included in such registration to the extent that the number of shares
to be registered under this clause (iii) will not, in the opinion of the managing underwriter,
adversely affect the offering of the securities pursuant to clauses (i) or (ii). In such a case,
shares shall be registered pro rata among the holders of such Restricted Stock and registrable
securities on the basis of the number of shares eligible for registration that are owned by all
such holders and requested to be included in such registration.



(c) Notwithstanding anything to the contrary contained herein, the Company’s obligation in
Sections 1.2(a) and 1.2(b) above shall extend only to the inclusion of the Restricted Stock in a
Registration Statement. The Company shall have no obligation to assure the terms and conditions of
distribution, to obtain a commitment from an underwriter relative to the sale of the Restricted
Stock or to otherwise assume any responsibility for the manner, price or terms of the distribution
of the Restricted Stock.



(d) The Company shall have the right to terminate or withdraw any registration initiated by it
under this Section 1.2 prior to the effectiveness of such registration without thereby incurring
liability to the holders of the Restricted Stock, regardless of whether any holder has elected to
include securities in such registration. The Registration Expenses (as defined in Section 1.5) of
such withdrawn registration shall be borne by the Company in accordance with Section 1.5 hereof.



1.3. Registration Procedures. Whenever it is obligated to register any Restricted
Stock pursuant to this Agreement, the Company shall:



(a) prepare and file with the SEC a Registration Statement with respect to the Restricted
Stock in the manner set forth in Section 1.2 hereof and use its reasonable best efforts to cause
such Registration Statement to become effective as promptly as possible and to remain effective
until the earlier of: (i) the sale of all shares of Restricted Stock covered thereby, (ii) the
availability under Rule 144 for the Selling Stockholder to freely resell without restriction all
Restricted Stock covered thereby, or (iii) the Termination Date of the Warrant;



(b) prepare and file with the SEC such amendments (including post-effective amendments) and
supplements to such Registration Statement and the prospectus used in connection therewith as may
be necessary to keep such Registration Statement effective for the period specified in Section
1.3(a) above and to comply with the provisions of the Act with respect to the disposition of all
Restricted Stock covered by such Registration Statement in accordance with the intended method of
disposition set forth in such Registration Statement for such period;



(c) furnish to the Selling Stockholders such number of copies of the Registration Statement
and the prospectus included therein (including each preliminary prospectus) as such person may reasonably request in order to facilitate the public sale or other disposition
of the Restricted Stock covered by such Registration Statement;


 


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(d) use its reasonable best efforts to register or qualify the Restricted Stock covered by
such Registration Statement under the state securities laws of such jurisdictions as any Selling
Stockholder shall reasonably request; provided, however, that the Company shall not
for any such purpose be required to qualify generally to transact business as a foreign corporation
in any jurisdiction where it is not so qualified or to consent to general service of process in any
such jurisdiction;



(e) in the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of
such offering. Each Selling Stockholder participating in such underwriting shall also enter into
and perform its obligations under such an agreement, as described in Section 1.2(b);



(f) immediately notify each Selling Stockholder at any time when a prospectus relating thereto
is required to be delivered under the Act, of the happening of any event as a result of which the
prospectus contained in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required or necessary to be stated
therein in order to make the statements contained therein not misleading in light of the
circumstances under which they were made. The Company will use reasonable efforts to amend or
supplement such prospectus in order to cause such prospectus not to include 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 not misleading in the light of the circumstances under which they were made;



(g) prepare and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus used in connection with such Registration Statements as may be
necessary to comply with the provisions of the Securities Act with respect to the disposition of
all securities covered by such Registration Statement;



(h) use its reasonable best efforts to list the Restricted Stock covered by such Registration
Statement on each exchange or automated quotation system on which similar securities issued by the
Company are then listed (with the listing application being made at the time of the filing of such
Registration Statement or as soon thereafter as is reasonably practicable);



(i) notify each Selling Stockholder of any threat by the SEC or state securities commission to
undertake a stop order with respect to sales under the Registration Statement; and



(j) cooperate in the timely removal of any restrictive legends from the shares of Restricted
Stock in connection with the resale of such shares covered by an effective Registration Statement.



1.4. Delay of Registration. No Selling Stockholder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or implementation of this Section
1.



 


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1.5 Expenses.



(a) For the purposes of this Section 1.5, the term “Registration Expenses” shall mean: all
expenses incurred by the Company in complying with Section 1.2 and 1.3 above, including, without
limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel
and independent public accountants for the Company, fees under state securities laws, fees of the
National Association of Securities Dealers, Inc. (“NASD”), fees and expenses of listing shares of
Restricted Stock on any securities exchange or automated quotation system on which the Company’s
shares are listed and fees of transfer agents and registrars. The term “Selling Expenses” shall
mean: all underwriting discounts and selling commissions applicable to the sale of Restricted Stock
and all accountable or non-accountable expenses paid to any underwriter in respect of such sale.



(b) Except as otherwise provided herein, the Company will pay all Registration Expenses in
connection with the Registration Statements filed pursuant to Section 1.2 above. All Selling
Expenses in connection with any Registration Statements filed pursuant to Section 1.2 above shall
be borne by the Selling Stockholders pro rata on the basis of the number of shares registered by
each Selling Stockholder whose shares of Restricted Stock are covered by such Registration
Statement, or by such persons other than the Company (except to the extent the Company may be a
seller) as they may agree.




1.6. Obligations of the Selling Stockholders.



(a) In connection with each registration hereunder, each Selling Stockholder will furnish to
the Company in writing such information with respect to it and the securities held by it and the
proposed distribution by it, as shall be reasonably requested by the Company in order to assure
compliance with applicable federal and state securities laws as a condition precedent to including
the Selling Stockholder’s Restricted Stock in the Registration Statement. Each Selling Stockholder
shall also promptly notify the Company of any changes in such information included in the
Registration Statement or prospectus as a result of which there is an untrue statement of material
fact or an omission to state any material fact required or necessary to be stated therein in order
to make the statements contained therein not misleading in light of the circumstances under which
they were made.



(b) In connection with the filing of the Registration Statement, each Selling Stockholder
shall furnish to the Company in writing such information and affidavits as the Company reasonably
requests for use in connection with such Registration Statement or prospectus.



(c) In connection with each registration pursuant to this Agreement, each Selling Stockholder
agrees that it will not effect sales of any Restricted Stock until notified by the Company of the
effectiveness of the Registration Statement, and thereafter will suspend such sales after receipt
of telegraphic or written notice from the Company to suspend sales to permit the Company to correct
or update a Registration Statement or prospectus. At the end of any period during which the
Company is obligated to keep a Registration Statement current, each Selling Stockholder shall
discontinue sales of Restricted Stock pursuant to such Registration Statement upon receipt of
notice from the Company of its intention to remove from registration the Restricted Stock covered
by such Registration Statement that remains unsold, and each Selling Stockholder shall notify the
Company of the number of shares registered which remain unsold immediately upon receipt of such
notice from the Company.



 


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1.7. Information Blackout and Holdbacks.



(a) At any time when a Registration Statement effected pursuant to Section 1.2 is effective,
upon written notice from the Company to Selling Stockholder that the Company has determined in good
faith that the sale of Restricted Stock pursuant to the Registration Statement would require
disclosure of non-public material information, Purchaser shall suspend sales of Restricted Stock
pursuant to such Registration Statement until such time as the Company notifies Purchaser that such
material information has been disclosed to the public or has ceased to be material, or that sales
pursuant to such Registration Statement may otherwise be resumed.



(b) Notwithstanding any other provision of this Agreement, Selling Stockholder shall not
effect any public sale or distribution (including sales pursuant to Rule 144 under the Securities
Act), if and when available, of equity securities of the Company, or any securities convertible
into or exchangeable or exercisable for such securities, during the thirty (30) days prior to the
commencement of any primary offering to be undertaken by the Company of shares of its unissued
Common Stock (“Primary Offering”), which may also include other securities, and ending one hundred
twenty (120) days after completion of any such Primary Offering, unless the Company, in the case of
a non-underwritten Primary Offering, or the managing underwriter, in the case of an underwritten
Primary Offering, otherwise agree.




1.8. Indemnification.



(a) The Company agrees to indemnify, to the extent permitted by law, each Selling Stockholder,
such Selling Stockholder’s respective partners, officers, directors, underwriters and each Person
who controls any Selling Stockholder (within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses caused by (i) any untrue statement of or alleged untrue
statement of material fact contained in the Registration Statement, prospectus or preliminary
prospectus or any amendment or supplement thereto, (ii) any omission of or alleged omission of a
material fact required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law in connection with the offering covered by such
Registration Statement (“Violations”); provided, however, that the indemnity
agreement contained in this Section 1.8(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected without the consent of
the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable in
for any loss, claim, damage, liability or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with information furnished to the
Company by such Selling Stockholder, partner, officer, director, underwriter or controlling person
of such Selling Stockholder.



(b) To the extent permitted by law, each Selling Stockholder shall indemnify and hold harmless
the Company, each of its directors, its officers and each person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter and any other Selling Stockholder selling
securities under such registration statement or any of such other Selling Stockholder’s partners,
directors or officers or any person who controls such Selling Stockholder, against any losses,
claims, damages or liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Selling Stockholder, or partner, director,
officer or controlling person of such other Selling Stockholder, may become subject under the
Securities Act, the


 


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Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs (i) in reliance upon and in
conformity with information furnished by such Selling Stockholder to the Company, (ii) as a result
of any failure to deliver a copy of the prospectus relating to such Registration Statement, or
(iii) as a result of any disposition of the Restricted Stock in a manner that fails to comply with
the permitted methods of distribution identified within the Registration Statement.



(c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks indemnification (provided that
the failure to give prompt notice shall not impair any Person’s right to indemnification hereunder
to the extent such failure has not prejudiced the indemnifying party), and (ii) unless in such
indemnified party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such
defense is assumed, the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a
claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such indemnified party
and any other of such indemnified parties with respect to such claim.



(d) If the indemnification provided for in this Section 1.8 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages
or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the violation(s) described in
Section 1.8(a) that resulted in such loss, claim, damage or liability, as well as any other
relevant equitable considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by the indemnified party
and the parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, that in no event shall any contribution by a
Selling Stockholder hereunder exceed the net proceeds from the offering received by such Selling
Stockholder.



(e) The indemnification provided for under this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified party or any
officer, director or controlling Person of such indemnified party and shall survive the transfer of
securities. The Company also agrees to make such provisions as are reasonably requested by any
indemnified party for contribution to such party in the event the Company’s indemnification is
unavailable for any reason.




 


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