EVENT AFFECTING THE NUMBER OR CHARACTER OF
OUTSTANDING SHARES OF COMMON STOCK, OR OTHERWISE, CHANGE ANY OF THE SECURITIES
AS TO WHICH PURCHASE RIGHTS UNDER THIS NOTE EXIST INTO THE SAME OR A DIFFERENT
NUMBER OF SECURITIES OF ANY OTHER CLASS OR CLASSES, THIS NOTE 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 CONVERSION RIGHTS UNDER THIS NOTE IMMEDIATELY PRIOR TO SUCH
SUBDIVISION, COMBINATION, RECLASSIFICATION OR OTHER CHANGE.
7.3
SPLIT, SUBDIVISION OR COMBINATION OF COMMON STOCK.
IF THE
COMPANY, AT ANY TIME WHILE THIS NOTE REMAINS OUTSTANDING, SHALL SPLIT, SUBDIVIDE
OR COMBINE THE SECURITIES AS TO WHICH CONVERSION RIGHTS UNDER THIS NOTE EXIST,
THE CONVERSION PRICE AND PER SHARE PRICE SHALL BE PROPORTIONATELY INCREASED OR
DECREASED AS APPROPRIATE TO ADJUST FOR THE SPLIT, SUBDIVISION OR COMBINATION.
4
8.
REGISTRATION RIGHTS.
8.1
PIGGYBACK REGISTRATION. IF AT ANY TIME THE COMPANY PROPOSES TO
FILE A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), WITH RESPECT TO A PUBLIC OFFERING OF THE COMPANY'S COMMON
STOCK (OTHER THAN A REGISTRATION STATEMENT RELATING TO THE SALE OF SECURITIES TO
PARTICIPANTS IN A DIVIDEND REINVESTMENT PLAN, A REGISTRATION ON FORM S-4 OR
SIMILAR OR SUCCESSOR FORM THERETO RELATING TO A BUSINESS COMBINATION OR SIMILAR
TRANSACTION PERMITTED TO BE REGISTERED ON SUCH FORM S-4, AND A REGISTRATION ON
FORM S-8 OR SIMILAR OR SUCCESSOR FORM THERETO RELATING TO THE SALE OF SECURITIES
TO PARTICIPANTS IN A STOCK OR EMPLOYEE BENEFIT PLAN) WHILE ANY CONVERSION SHARES
ARE ISSUABLE PURSUANT TO THIS NOTE OR ARE OUTSTANDING, THE COMPANY SHALL GIVE
THE HOLDER PRIOR WRITTEN NOTICE OF THE FILING OF SUCH REGISTRATION STATEMENT (A
"PIGGYBACK REGISTRATION") AT THE ADDRESS THAT APPEARS ON THE RECORDS OF THE
COMPANY.
THE NOTICE SHALL OFFER TO INCLUDE IN THE REGISTRATION STATEMENT ANY OR
ALL OF THE REGISTRABLE SHARES (AS DEFINED BELOW).
THE HOLDER SHALL HAVE UNTIL
THE 15TH DAY AFTER RECEIPT OF SUCH NOTICE TO SEND TO THE COMPANY A WRITTEN
REQUEST THAT SHALL SPECIFY THE NUMBER OF REGISTRABLE SHARES WHICH THE HOLDER
DESIRES TO HAVE INCLUDED IN THE REGISTRATION STATEMENT. SUBJECT TO SECTION 8.2
AND THE PROVISO BELOW, THE COMPANY SHALL INCLUDE IN THE FILING FOR REGISTRATION
UNDER THE SECURITIES ACT, THE AGGREGATE NUMBER OF REGISTRABLE SHARES WHICH THE
HOLDER REQUESTED TO BE INCLUDED IN SUCH FILING CONCURRENTLY WITH THE
REGISTRATION OF SUCH OTHER SECURITIES, ALL TO THE EXTENT REQUIRED TO PERMIT THE
PUBLIC OFFERING AND SALE OF THE REGISTRABLE SHARES; PROVIDED, HOWEVER, THAT IF
THE REGISTRATION STATEMENT PURSUANT TO WHICH THE HOLDER IS EXERCISING ITS RIGHTS
PURSUANT TO THIS SECTION 8.1 IS BEING FILED BY THE COMPANY AS A RESULT OF A
DEMAND RECEIVED BY THE COMPANY FROM SHAREHOLDERS (EACH A "DEMANDING
SHAREHOLDER") EXERCISING THEIR DEMAND REGISTRATION RIGHTS PURSUANT TO THE
REGISTRATION RIGHTS AGREEMENT DATED JULY 23, 2003 (THE "REGISTRATION RIGHTS
AGREEMENT") BY AND AMONG THE COMPANY, CITYNET TELECOMMUNICATIONS, INC.