Exhibit 10.3


 


PROSPECT MEDICAL HOLDINGS, INC.


 


REGISTRATION RIGHTS AGREEMENT


 


 


THIS
REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made by and among PROSPECT
MEDICAL HOLDINGS, INC., a Delaware corporation (the “Company”) and each
INVESTOR (collectively, the “Investors” and each individually, an “Investor”)
executing a copy hereof.


 


WHEREAS,
desire to purchase from the Company, and the Company desires to issue and sell
to the Investors, up to an aggregate of 104 Units (the “Units”) (plus an
additional 31 Units solely to cover over-subscriptions, if any), each Unit
consisting of 20,000 shares of the Company’s Series A Convertible Preferred
Stock (the “Series A Preferred Stock”), all upon the terms set forth in the
Company’s Confidential Private Placement Memorandum dated November 1, 2003 (the “Memorandum”);


 


WHEREAS, to
induce the Investors to purchase the Units, the Company has undertaken to
register the Common Stock issuable upon conversion of the Series A Preferred
Stock pursuant to the terms and on the conditions set forth herein.


 


NOW,
THEREFORE, the Company and the Investors hereby covenant and agree as follows:


 


1.             Certain
Definitions.  As used in this
Agreement, the following terms shall have the following respective meanings:


 


“Commission”
shall mean the United States Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act.


 


“Common Stock”
shall mean the Common Stock, par value $0.01 per share, of the Company, as
constituted as of the date of this Agreement.


 


“Eligible
Securities” shall mean all Registrable Securities other than Excluded
Securities.


 


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


 


“Excluded
Securities” shall mean Registrable Securities that are free of restriction on
resale under the Securities Act (by removal of all restrictive legends,
instructions to transfer agent or otherwise) pursuant to Rule 144(k).


 


“Final Closing
Date” shall mean the closing date of the sale of the last Unit to Investors
pursuant to the Memorandum.


 


“Reporting
Company Period” shall mean the period commencing on the Final Closing Date and
ending on the date ninety (90) days thereafter.


 


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“Register,”
“registered” and “registration” each shall refer to a registration effected by
preparing and filing a registration statement or statements or similar
documents in compliance with the Securities Act and the declaration or ordering
of effectiveness of such registration statement or document by the Commission.


 


“Registrable
Securities” shall mean (i) the Common Stock issuable upon conversion of the
Series A Preferred Stock held by the Investors, (ii) any Common Stock of the
Company issued as a dividend or other distribution with respect to, in exchange
for or in replacement of such Series A Preferred Stock, or Common Stock issued
upon conversion thereof, and (iii) any other shares of Common Stock otherwise
acquired by an Investor, but excluding any shares of Common Stock satisfying
clause (i), (ii) or (iii) above but which shares (x) are eligible for resale
under Rule 144A, or (y) are sold by an Investor in a transaction in which such
Investor’s registration rights under this Agreement have not been assigned.


 


“Requisite
Period” shall mean the period commencing on the effective date of the
registration statement and ending on the earlier of (i) the date on which the
sale of all Registrable Securities covered thereby is completed and (ii) 180
days after such effective date.


 


“Securities
Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the applicable time.


 


2.             Automatic
Registration Statement.


 


(a)           Not
later than thirty (30) days after the later to occur of (i) the date on which
the Company’s Exchange Act registration statement has become effective, and
(ii) the date on which the Commission staff has advised the Company that it has
no further comments on the Company’s Exchange Act registration statement, the
Company shall prepare and file a registration statement with the Commission on
Form S-1 or such other appropriate form in accordance with the Securities Act,
covering the Registrable Securities.


 


(b)           The Company shall use its
commercially reasonable efforts to have such registration statement declared
effective within twelve (12) months after the Final Closing Date, and to
maintain the effectiveness and use of such registration statement for a period
of no less than the earlier of (i) the date on which all of the Registrable
Securities may be resold without restriction pursuant to Rule 144(k) under the
Securities Act, or (ii) the date on which all of the Registrable Securities
have been sold.


 


(c)           If a registration
statement covering the Registrable Securities is not filed within the period
specified in Section 2(a) herein, (the “Registration Date”), for each thirty
(30) day period (or pro-rata for any portion thereof) following the
Registration Date during which no registration statement is filed with respect
to the Registrable Securities, the conversion price of the Series A Preferred
Stock shall be adjusted so that holders of Series A Preferred Stock shall
receive, upon conversion thereof, an additional 1% of the amount of shares of
Common Stock such holder would have otherwise received upon conversion.  Additionally, if the Company fails to use
reasonable commercial efforts to cause the registration statement covering the
Registrable Shares to be declared effective within the period specified in
Section 2(b) herein (the “Effective Date”), for each thirty (30) day period (or
pro-rata for any portion thereof) following the


 


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Effective Date during which the
registration statement is not declared effective pursuant to Section 2(b) with
respect to the Registrable Shares, the conversion price of the Series A
Preferred Stock shall be adjusted so that holders of Series A Preferred Stock
shall receive, upon conversion thereof, an additional 1% of the amount of
shares of Common Stock such holder would have otherwise received upon
conversion.


 


3.             Intentionally
Deleted.


 


4.             Piggyback
Registration.


 


(a)           If the Company at any
time from the date of this Agreement through the fifth anniversary of the Final
Closing Date, proposes to register any of its securities under the Securities
Act for sale to the public, whether for its own account or for the account of
other security holders or both (except with respect to registration statements
on Forms S-4, S-8 and any successor forms thereto as well as registrations that
do not permit resales), each such time it will give written notice to such
effect to all holders of outstanding Registrable Securities at least thirty
(30) days prior to such filing.  Upon
the written request of any such holder received by the Company within twenty
(20) days after the provision of any such notice by the Company to register any
of its Eligible Securities, the Company will cause the Eligible Securities as
to which registration shall have been so requested to be included in the
securities to be covered by the registration statement proposed to be filed by
the Company, or to the extent required to permit the sale or other disposition
by the holder of such Eligible Securities so registered.


 


(b)           If the registration of
which the Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the holders of Registrable Securities
as a part of the written notice given pursuant to Section 4(a).  In such event, the right of any such holder
to registration pursuant to Section 4 shall be conditioned upon such
holder’s participation in such underwriting and the inclusion of Eligible
Securities in the underwriting shall be limited to the extent provided
herein.  All holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.


 


5.             Intentionally
Deleted. 


 


6.             Holdback
Agreements. In connection with any registration of Registrable Securities,
each holder of Registrable Securities agrees, if so requested by the
underwriter or underwriters, not to effect any public sale or distribution
(including any sale pursuant to Rule 144 under the Securities Act) of any
Registrable Securities, and not to effect any such public sale or distribution
of any other equity security of the Company or of any security convertible into
or exchangeable or exercisable for any equity security of the Company (in each
case other than as part of such underwritten public offering), during the
180-day period, or such other period as the managing underwriter of such
offering shall reasonably require, or such other period agreed to by the
Attorney-in-fact or Power of Attorney on behalf of the holders, beginning on
the effective date of such registration statement, provided that (i)
such holder has received written notice of such registration at least fifteen
(15) days prior to such effective date and (ii), with respect to any offering
other than pursuant to a firm commitment underwriting, the underwriters
continue to actively market the Registrable Securities


 


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until the earlier of the end of such lock-up period and the closing with
respect to the sale of all, or the final portion of, the Registrable Securities
offered by such holders; provided, however, that the immediately
foregoing restrictions imposed on such holder or holders by this Section 6
shall terminate on the earlier of the end of such lock-up period and thirty
(30) days after such closing.


 


7.             Registration
Procedures.  If and whenever the
Company is required by the provisions hereof to use its best efforts to effect
the registration of any Registrable Securities under the Securities Act, the
Company will, as expeditiously as possible:


 


(a)           other than for such
registration in Section 2 herein, prepare and file with the Commission a
registration statement with respect to such securities and use its best efforts
to cause such registration statement to become effective not later than ninety
(90) days from the date of its filing and to remain effective for the Requisite
Period;


 


(b)           prepare and file with
the Commission such 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 Requisite Period and comply with
the provisions of the Securities Act with respect to the disposition of all
Registrable Securities 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 each seller
of Registrable Securities and to each underwriter such number of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the intended disposition of the Registrable Securities covered by
such registration statement;


 


(d)           use its best efforts
(i) to register or qualify the Registrable Securities covered by such
registration statement under the securities or “blue sky” laws of such
jurisdictions as the sellers of Registrable Securities or, in the case of an
underwritten public offering, the managing underwriter, reasonably shall
request, (ii) to prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements, and take such other
actions, as may be necessary to maintain such registration and qualification in
effect at all times for the period of distribution contemplated thereby and
(iii) to take such further action as may be necessary or advisable to enable
the disposition of the Registrable Securities in such jurisdictions, provided,
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)           use its best efforts to
list the Registrable Securities covered by such registration statement with any
securities exchange on which the Common Stock of the Company is then listed,
or, if the Common Stock is not then listed on a national securities exchange,
use its best efforts to facilitate the reporting of the Common Stock on the
American Stock Exchange or the Nasdaq SmallCap Market;


 


(f)            immediately notify
each seller of Registrable Securities and each underwriter under such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event of which the Company has


 


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knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing and promptly amend
or supplement such registration statement to correct any such untrue statement
or omission;


 


(g)           notify each seller of
Registrable Securities of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceedings for that purpose and make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible time;


 


(h)           permit a single firm of
counsel designated as selling stockholders’ counsel by the holders of a
majority in interest of the Registrable Securities being registered to review
the registration statement and all amendments and supplements thereto for a
reasonable period of time prior to their filing (provided,  however,
that in no event shall the Company be required to reimburse legal fees in
excess of $5,000 per registration statement pursuant to this Section 6(h)) and
the Company shall not file any document in a form to which such counsel
reasonably objects;


 


(i)            if the offering is an
underwritten offering, enter into a written agreement with the managing
underwriter selected in the manner herein provided in such form and containing
such provisions as are usual and customary in the securities business for such
an arrangement between such underwriter and companies of the Company’s size and
investment stature, including, without limitation, customary indemnification
and contribution provisions;


 


(j)            if the offering is an
underwritten offering, at the request of any seller of Registrable Securities,
use its best efforts to furnish to such seller on the date that Registrable
Securities are delivered to the underwriters for sale pursuant to such registration:
(i) a copy of an opinion dated such date of counsel representing the Company
for the purposes of such registration, addressed to the underwriters, stating
that such registration statement has become effective under the Securities Act
and that (A) to the best knowledge of such counsel, no stop order suspending
the effectiveness thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the Securities Act,
(B) the registration statement, the related prospectus and each amendment or
supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements or other financial or statistical
information contained therein) and (C) to such other effects as reasonably may
be requested by counsel for the underwriters; and (ii) a copy of a letter dated
such date from the independent public accountants retained by the Company,
addressed to the underwriters, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion
of such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to
the period


 


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ending no more than five
business days prior to the date of such letter) with respect to such
registration as such underwriters reasonably may request;


 


(k)           take all actions
reasonably necessary to facilitate the timely preparation and delivery of
certificates (not bearing any legend restricting the sale or transfer of such
securities) representing the Registrable Securities to be sold pursuant to the
registration statement and to enable such certificates to be in such
denominations and registered in such names as the Investors or any underwriters
may reasonably request; and


 


(l)            take all other
reasonable actions necessary to expedite and facilitate the registration of the
Registrable Securities pursuant to the registration statement.


 


In connection with each registration hereunder, the sellers of
Registrable Securities will furnish to the Company in writing such information
with respect to themselves and the proposed distribution by them as reasonably shall
be necessary in order to assure compliance with federal and applicable state
securities laws.


 


8.             Expenses.


 


All expenses
incurred by the Company in complying with Sections 2, 4 and 6, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent public accountants for the
Company, fees and expenses (including counsel fees) incurred in connection with
complying with state securities or “blue sky” laws, fees of the National Association
of Securities Dealers, Inc. (the “NASD”), fees of transfer agents and
registrars and fees and disbursements of one counsel for the sellers of
Registrable Securities (subject to the limitation in Section 7(h)), but
excluding any Selling Expenses, are called “Registration Expenses.”  All underwriting discounts and selling
commissions applicable to the sale of Registrable Securities are called
“Selling Expenses.”


 


The Company
will pay all Registration Expenses in connection with any registration
statement filed hereunder, and the Selling Expenses in connection with each
such registration statement shall be borne by the participating sellers in
proportion to the number of Registrable Securities sold by each or as they may
otherwise agree.


 


9.             Indemnification
and Contribution.


 


(a)           In the event of a
registration of any of the Registrable Securities under the Securities Act
pursuant to the terms of this Agreement, the Company will indemnify and hold
harmless and pay and reimburse, each seller of such Registrable Securities
thereunder, each underwriter of such Registrable Securities thereunder and each
other person, if any, who controls such seller or underwriter within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such seller, underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
Registrable Securities were registered under the Securities Act pursuant hereto
or any preliminary prospectus or final prospectus contained therein, or any
amendment or


 


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supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation or alleged violation of the Securities
Act or any state securities or blue sky laws and will reimburse each such
seller, each such underwriter and each such controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
that the Company will not be liable in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon the
Company’s reliance on an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information furnished
by any such seller, any such underwriter or any such controlling person in
writing specifically for use in such registration statement or prospectus.


 


(b)           In the event of a
registration of any of the Registrable Securities under the Securities Act
pursuant hereto each seller of such Registrable Securities thereunder, severally
and not jointly, will indemnify and hold harmless the Company, each person, if
any, who controls the Company within the meaning of the Securities Act, each
officer of the Company who signs the registration statement, each director of
the Company, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, against all losses, claims, damages
or liabilities, joint or several, to which the Company or such officer,
director, underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
reliance on any untrue statement or alleged untrue statement of any material fact
contained in the registration statement under which such Registrable Securities
were registered under the Securities Act pursuant hereto or any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such officer, director, underwriter and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided, that such seller will be liable hereunder in any such case if and
only to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with information
pertaining to such seller, as such, furnished in writing to the Company by such
seller specifically for use in such registration statement or prospectus, and
provided, that the liability of each seller hereunder shall be limited to the
proceeds received by such seller from the sale of Registrable Securities
covered by such registration statement. Notwithstanding the foregoing, the
indemnity provided in this Section 9(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or expense if such settlement
is effected without the consent of such indemnified party and provided further,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability (or action in respect thereof) arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission in such registration statement, which untrue statement or
alleged untrue statement or omission or alleged omission is completely
corrected in an amendment or supplement to the registration statement and the
undersigned indemnitees thereafter fail to deliver or cause to be delivered
such registration statement as so amended or supplemented prior to or currently
with the sale of the Registrable Shares to the


 


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person asserting such loss,
claim, damage or liability (or actions in respect thereof) or expense after the
Company has furnished the undersigned with the same.


 


(c)           Promptly after receipt
by an indemnified party hereunder of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified party other
than under this Section 9 and shall only relieve it from any liability which it
may have to such indemnified party under this Section 9 if and to the extent
the indemnifying party is materially prejudiced by such omission. In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in and, to the extent it shall wish, to assume
and undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 9 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, provided,
that if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded based upon written advise of its counsel that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified
party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of such separate counsel
and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.


 


(d)           In order to provide for
just and equitable contribution to joint liability under the Securities Act in
any case in which either (i) any holder of Registrable Securities exercising
rights under this Agreement, or any controlling person of any such holder,
makes a claim for indemnification pursuant to this Section 9 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this Section 9 provides for indemnification
in such case, or (ii) contribution under the Securities Act may be required on
the part of any such selling holder or any such controlling person in
circumstances for which indemnification is provided under this Section 9; then,
and in each such case, the Company and such holder will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that such holder is
responsible for the portion represented by the percentage that the public
offering price of its Registrable Securities offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; provided, that, in any such case, (A) no such holder will be
required to contribute any amount in excess of the public offering price of all
such Registrable Securities offered by it pursuant to such registration
statement and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning


 


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of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.


 


10.           Changes in Capital
Stock.  If, and as often as, there
is any change in the capital stock of the Company by way of a stock split,
stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue as so changed.


 


11.           Rule
144 Reporting.  With a view to
making available the benefits of certain rules and regulations of the
Commission which may at any time permit the sale of the Registrable Securities
to the public without registration, at all times after ninety (90) days after
any registration statement covering a public offering or resale of securities
of the Company under the Securities Act shall have become effective, the
Company agrees to:


 


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


 


(b)           file with the
Commission in a timely manner all reports and other documents required of the
Company under the Exchange Act; and


 


(c)           furnish to each holder
of Registrable Securities forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of such Rule 144
and of the Exchange Act, a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents so filed by the Company as
such holder may reasonably request in availing itself of any rule or regulation
of the Commission allowing such holder to sell any Registrable Securities
without registration.


 


12.           Representations
and Warranties of the Company.  The
Company represents and warrants to the Investors as follows:


 


(a)           The execution, delivery
and performance of this Agreement by the Company have been duly authorized by
all requisite corporate action and will not violate any provision of law, any
order of any court or other agency of government, the Charter or By-laws of the
Company or any provision of any indenture, agreement or other instrument to
which it or any of its properties or assets is bound, conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company or its
subsidiaries.


 


(b)           This Agreement has been
duly executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
subject to any applicable bankruptcy, insolvency or other laws affecting the
rights of creditors generally and to general equitable principles and the availability
of specific performance.


 


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13.           Assignment
of Registration Rights.  The rights
to have the Company register Registrable Securities pursuant to this Agreement
may be assigned by the Investors to transferees or assignees of such
securities; provided, that the Company is, within a reasonable time
after such transfer, furnished with written notice of the name and address of
such transferee or assignee and the securities with respect to which such registration
rights are being assigned and provided further that the transferee or
assignee of such rights assumes in writing the obligations of such holder under
this Agreement. The term “Investors” as used in this Agreement shall include
such permitted assigns.


 


14.           Miscellaneous.


 


(a)           All covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto (including without limitation transferees of any
Registrable Securities), whether so expressed or not.


 


(b)           All notices, requests,
consents and other communications hereunder shall be in writing and shall be
delivered in person, mailed by certified or registered mail, return receipt
requested, or sent by telecopier or telex, addressed (i) if to the Company, at
6083 Bristol Parkway, Suite 100, Culver City, California 90230; (ii) if to any
other party hereto, at the address of such party set forth beneath such party’s
signature to this Agreement; and (iii) if to any subsequent holder of
Registrable Securities, to it at such address as may have been furnished to the
Company in writing by such holder; or, in any case, at such other address or
addresses as shall have been furnished in writing to the Company (in the case
of a holder of Registrable Securities) or to the holders of Registrable
Securities (in the case of the Company) in accordance with the provisions of
this paragraph.


 


(c)           This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts entered into and to be performed wholly within said
State.


 


(d)           Any judicial proceeding brought against any of the parties to this
Agreement on any dispute arising out of this Agreement of any matter related
hereto shall be brought in the courts of the State of New York and County of
New York or in the United States District Court for the Southern District of
New York, and, by execution and delivery of this Agreement, each of the parties
hereto accepts for itself and himself the process in any such action or
proceeding by the mailing of copies of such process to it or him, at its or his
address as set forth in paragraph 14(b) and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Agreement.  Each party hereto irrevocably waives to the
fullest extent permitted by law any objection that it or he may now or
hereafter have to the laying of the venue of any judicial proceeding brought in
such courts and any claim that any such judicial proceeding has been brought in
an inconvenient forum.  The foregoing
consent to jurisdiction shall not constitute general consent to service of
process in the State of New York for any purpose except as provided above and
shall not be deemed to confer rights on any person other than the respective
parties to this Agreement.


 


(e)           This Agreement may not
be amended or modified without the written consent of the Company and the
holders of at least a majority of the Registrable Securities.


 


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(f)            Failure of any party
to exercise any right or remedy under this Agreement or otherwise, or delay by
a party in exercising such right or remedy, shall not operate as a waiver
thereof. No waiver shall be effective unless and until it is in writing and
signed by the party granting the waiver.


 


(g)           This Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.


 


(h)           The Company shall not
grant to any third party other than Spencer Trask Ventures, Inc. any
registration rights more favorable than or inconsistent with any of those
contained herein, or which would in any way adversely affect the rights of
Investors hereunder, so long as any of the registration rights under this
Agreement remains in effect.


 


(i)            If any provision of
this Agreement shall be held to be illegal, invalid or unenforceable, such
illegality, invalidity or unenforceability shall attach only to such provision
and shall not in any manner affect or render illegal, invalid or unenforceable
any other provision of this Agreement, and this Agreement shall be carried out
as if any such illegal, invalid or unenforceable provision were not contained
herein.


 


(j)            Omnibus Signature
Page.  This Agreement is intended to
be read and construed in conjunction with (a) that certain Subscription
Agreement and (b) the Stockholders’ Agreement by and among the Company and the
Investors dated October 28, 2003 (the “Stockholders’ Agreement”).  Accordingly, pursuant to the terms and
conditions of this Agreement and such related agreements, it is hereby agreed
that the execution by the Investors of the Subscription Agreement, in the place
set forth therein, shall constitute their agreement to be bound by the terms
and conditions hereof and the terms and conditions of the Subscription
Agreement, the Stockholders’ Agreement and this Agreement, with the same effect
as if each of such separate but related agreements were separately signed.


 


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IN WITNESS
WHEREOF, the undersigned has executed this Agreement as of this
      day of
          ,
200     .


 


 


See Omnibus Signature Pages for Investor
Signatures


 


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