Document:

INTEGRATED PHARMACEUTICALS, INC.

REGISTRATION RIGHTS AGREEMENT

_____________, 2004

 

Integrated Pharmaceuticals, Inc., an Idaho corporation (the "Company"), and the accredited investor identified listed on the signature pages hereof (the "Purchaser") hereby agree as follows as of the date first written above:

 

Background:

 

The Purchaser has subscribed for the purchase of shares (the "Shares") of the Company’s Common Stock, $0.01 par value per share (the "Common Stock") at part of the Company’s 2004 Private Placement (the "Offering"), in which the Company hopes to raise up to $4 million. In connection with such purchase, the Company and the Purchaser wish to enter into certain arrangements with respect to the registration a public sale of the Shares under the Securities Act of 1933, as amended (the "Securities Act"), along with similar sales of Common Stock by other purchasers in the Offering. 

 

Agreement:

 

	1.  Definitions

 

	(a)  	"Commission" shall mean the Securities and Exchange Commission.

 

	(b)  	"Common Shares" shall mean the shares of Common Stock authorized by the Company’s Certificate of Incorporation and any additional shares of Common Stock which may be authorized in the future by the Company.

 

	(c)  	"Public Offering" shall mean any offering of Common Shares to the public, either on behalf of the Company or any of its security holders, pursuant to an effective registration statement under the Securities Act.

 

	(d)  	"Registrable Securities" shall mean (a) the Common Shares at any time issued or subject to issuance upon the conversion of convertible notes or any series of preferred stock, warrants, options or rights, the holders of which are granted registration rights by agreement with the Company (including the warrants issuable to subscribers under the Offering), and (b) any additional Common Stock issued upon any stock split, stock dividend, recapitalization, or similar event. Registrable Securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, or (ii) such securities shall be eligible to be distributed pursuant to Rule 144 under the Securities Act in a single three-month period by the holder
thereof.

 

	(e)  	"Registration Expenses" means all of the expenses incident to a Public Offering conducted in compliance with this Agreement including, without limitation, state and federal registration and filing fees, securities exchange listing and NASD fees, legal and accounting fees, the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, and any fees and disbursements of underwriters customarily paid by issuers or sellers of securities.

  

 

	 
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2.    Demand Registration

 

2.1    Right to Register Sale. Subject to Sections 2.2 through 2.4, if at any time after the first anniversary of this Agreement the Company shall receive a written request therefor from the record holders of an aggregate of more than 50% of the then-outstanding Registrable Securities, the Company shall prepare and file a registration statement under the Securities Act covering such number of Registrable Securities as are the subject of such request and shall use its diligent efforts to cause such registration statement to become effective, provided, however, that the market value of the Registrable
Securities to be included in any such registration exceeds $1,500,000. 

 

Upon the receipt of a registration request meeting the requirements of this Section, the Company shall promptly give written notice to all other record holders of Registrable Securities that such registration is to be effected. The Company shall include in such registration statement such additional Registrable Securities as such other record holders request in writing within thirty (30) days after the date of the Company's written notice to them. The Company shall be obligated to prepare, file and cause to be effective only one (1) registration statement pursuant to this Section 2.1.

 

            2.2    Underwritten Offering. At the request of the holders of a majority of the Registrable Securities to be registered, the method of disposition of all Registrable Securities included in such registration shall be an underwritten Public Offering. The managing underwriter of any such Public Offering shall be selected by the Company. If in the good faith judgment of the managing underwriter of such Public Offering, the inclusion of all of the Registrable Securities proposed to be sold would interfere with their successful marketing, the number of Registrable Securities to be included in the Public Offering shall be reduced, pro rata, among the requesting
holders thereof (the "Selling Holders") in proportion to the number of Registrable Securities included in their respective requests for registration. Registrable Securities that are so excluded from such underwritten Public Offering shall be subject to Section 9 hereof. 

            2.3    Delay. The Company may delay initiating the preparation and filing of any registration statement requested pursuant to Section 2.1 for a period not to exceed one hundred eighty (180) days if, in the good faith judgment of the Company's Board of Directors, filing the registration statement would adversely affect a proposed Public Offering by the Company or would require the premature disclosure of any financing, acquisition, disposition of assets or stock, merger or other comparable transaction or would require the Company to make public
disclosure of information the public disclosure of which could have material adverse effect on the Company.

            2.4    Priority. At any time within sixty (60) days after receiving a demand for registration pursuant to Section 2.1, the Company may elect to effect an underwritten primary registration in lieu of the requested registration. If the Company so elects, the Company shall give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and shall afford such holders the rights contained in Article 3 with respect to "piggyback" registrations. In such event, the demand for registration pursuant to Section 2.1 shall be deemed to have been withdrawn.

 

	 
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3.    Piggyback Registration.

            3.1    Grant of Rights. From and after the first anniversary of this Agreement, each time the Company shall determine to proceed with the actual preparation and filing of a registration statement under the Securities Act in connection with the proposed offer and sale for money of any of its securities (other than a registration statement on Form S-8, Form S-4 or other limited purpose form), the Company will give written notice of its determination to all record holders of Registrable Securities. Upon the written request of a record holder of any Registrable Securities given within 30 days after the date of any such notice from the Company, the Company
will, except as herein provided, cause all Registrable Securities the registration of which is requested to be included in such registration statement to be so registered. Nothing herein shall prevent the Company from, at any time, abandoning or delaying any registration. 

            3.2                      Piggyback Onto Underwritten Offering. If any registration pursuant to Section 3.1 is underwritten in whole or in part, the Company may require that the Registrable Securities included in the registration be included in the underwriting on the same terms and conditions as the securities otherwise being sold through the underwriters. If, in the good faith judgment of the managing underwriter of the Public Offering, the inclusion of all of the Registrable Securities originally covered by requests for registration would reduce the number of shares to be offered by the Company or interfere with the successful marketing of
the shares offered by the Company, the number of Registrable Securities to be included in the Public Offering may be reduced in the following manner: 

 

first, securities held by officers and directors of the Company (other than Registrable Securities) shall be excluded from such underwritten public offering to the extent required by the managing underwriter; 

 

second, if a further reduction in the Public Offering is required, any securities other than Registrable Securities proposed to be sold in the Public Offering by persons other than the Company shall be excluded; and 

 

third, if a further reduction in the Public Offering is required, the Registrable Securities, requested to be included in the Public Offering shall be reduced, pro rata, among the requesting holders thereof in proportion to the number of Registrable Securities subject to reduction included in their respective requests for registration; 

 

The Registrable Securities which are thus excluded from the underwritten Public Offering shall be subject to section 9.

 

4.    Registration Procedures. If and whenever the Company is required by the provisions of Article 2 or Article 3 to effect a registration of Registrable Securities under the Securities Act, the Company will use its diligent efforts to effect the registration and sale of such Registrable Securities in accordance with the intended methods of disposition specified by the Selling Holders. Without limiting the foregoing, the Company in each such case will, as expeditiously as possible:

            4.1    Filing of Registration Statement. In the case of a demand registration, prepare and file with the Commission the requisite registration statement to effect such registration (including such audited financial statements as may be required by the Securities Act or the rules and regulations thereunder) and use its diligent efforts to cause such registration statement to become effective; and use reasonable efforts to furnish the Selling Holders with copies of drafts of documents proposed to be filed and provide such holders the opportunity to object to information pertaining to such holders that is contained therein.

 

	 
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            4.2    Amendments and Supplements. Prepare and file with the Commission such amendments and supplements to such registration statement and any prospectus used in connection therewith as may be necessary to maintain the effectiveness of such registration statement and to comply with the provisions of the Securities Act until the earlier of (a) such completion of the offering described in the registration statement or (b) ninety (90) days after such registration statement becomes effective.

            4.3    Communications with Selling Holders. Promptly notify each Selling Holder and the underwriter or underwriters, if any, of:

 

(a) when such registration statement or any prospectus or amendment or supplement thereto has been filed and when the same has become effective;

 

(b) any post-effect communications with the Commission relating to the registration statement or prospectus.

            4.4    Copies of Prospectus. Furnish to each Selling Holder such copies of the Registration Statement and the prospectus, and such other documents, as such holder may reasonably request to facilitate the disposition of its Registrable Securities.

            4.5    Blue Sky. Use its diligent efforts to register or qualify all securities included in such registration statement under the securities laws of such states as each Selling Holder shall reasonably request and to keep such registration or qualification in effect for so long as such registration statement remains in effect, except that the Company shall not for any such purpose be required (a) to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this Section be obl igated to be so qualified, (b) to consent to general service of process in any such jurisdiction or (c) to subject
itself to taxation in any such jurisdiction by reason of such registration or qualification.

            4.6    Correction of Prospectus. Notify each Selling Holder of any event that causes any prospectus or Registration Statement then in effect to omit or misstate a material fact, and promptly prepare and furnish to such holders a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary to correct the misstatement or omission.

            4.7    Information From Selling Holders. The Company may require each Selling Holder to: (i) furnish the Company and the underwriters with information and affidavits regarding such holder and the holder’s proposed distribution of Registrable Securities and (ii) otherwise cooperate with the Company as may be reasonably necessary to enable the Company to prepare the registration statement and prospectus, to maintain the currency and effectiveness thereof and otherwise comply with all applicable requirements of law in connection therewith. At any time during the effectiveness of any registration statement, if a Selling Holder becomes aware of any change
materially affecting the accuracy of the information contained in such registration statement or the prospectus (as then amended or supplemented), it will immediately notify the Company of such change.

            4.8    Selling Holders’ Securities Compliance. Each Selling Holder shall, during such period as such seller may be engaged in the distribution of the Registrable Securities, comply with Regulation M promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") and pursuant thereto it shall, among other things: (x) not engage in any stabilization activity in connection with the securities of the Company in contravention of such regulation; (y) distribute the Registrable Securities under the registration statement solely as provided in the registration statement; and (z) upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4.6, forthwith discontinue such seller's disposition of Registrable Securities until it receives the copies of the supplemented or amended prospectus contemplated by Section 4.6 and, if so directed by the Company, deliver to the Company all copies, then in such seller's possession of the prior prospectus relating to such Registrable Securities. 

 

 

	 
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5.    Expenses. With respect to any registration requested hereunder, the Company shall bear all of the Registration Expenses incident to the Company’s performance of its obligations under this Agreement in connection with such registration. The Company’s obligations to not extend to underwriting discounts, commissions and transfer taxes in respect of Registrable Securities or legal and accounting fees of the Selling Holders, which shall be payable by the holders of the Registrable Securities being registered, pro rata.

 

6.    Indemnification.

            6.1    Company Indemnification. The Company will, to the full extent permitted by law, indemnify and hold harmless each Selling Holder and any underwriter or controlling person of such holder from and against any and all losses, claims, damages, expenses or liabilities (collectively, "Losses") to which such holder, underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such Losses are based upon any material misstatement in or omission from a registration statement or prospectus prepared by the Company pursuant to this Agreement. Notwithstanding the foregoing, the Company will not be liable in any such
case to the extent that any such Losses arise out of or are based upon such holder’s failure to send or give a copy of the final prospectus to the persons asserting that there was such a material misstatement or omission at or prior to the written confirmation of the sale of Registrable Securities to such person if such misstatement or omission was corrected in such final prospectus.

            6.2    Selling Holders Indemnification. Each Selling Holder will, to the full extent permitted by law, indemnify and hold harmless the Company, each other person who participates in the relevant Public Offering, and their respective underwriters, officers, directors and controlling persons, against any and all Losses to which they may become subject under the Securities Act or otherwise, insofar as such Losses are based upon any material misstatement in or omission from a registration statement prepared and filed hereunder or any prospectus contained therein, but only to the extent that such untrue statement or omission was so made in reliance upon and in
conformity with written information furnished by such holder.

            6.3    Notice of Claims. An indemnified party hereunder will promptly notify the indemnifying party of the commencement of any action involving for which indemnity may be sought. In such a case, the indemnifying party shall assume the defense thereof with counsel reasonably satisfactory to such indemnified party. If there is a conflict of interest that would prevent counsel for the indemnifying party from also representing the indemnified party, the indemnified party shall have the right to select separate counsel to represent it in such action. No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or
enter into any settlement which does not release the indemnified party from all liability in respect to such claim or litigation. No indemnifying party shall be subject to any liability for any settlement made without its consent. An indemnified party may at any time elect to participate in the defense of any claim or proceeding at its own expense.

 

 

	 
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7.    Covenants Relating to Rule 144. If the Company is required to file reports under the Exchange Act, it will (a) file reports in compliance therewith and (b) comply with all rules and regulations of the Commission applicable to the use of Rule 144.

 

8.    Underwritten Offerings. If a distribution of Registrable Securities pursuant to a registration statement is to be underwritten, the Selling Holders shall be parties to such underwriting agreement and shall complete and execute all questionnaires, powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement. 

 

9.    Stand-Off Agreement. Each holder of Registrable Securities agrees, in connection with any Public Offering, upon request of the Company or the underwriters managing such Public Offering, not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Common Shares of the Company without the prior written consent of the Company or such underwriters, as the case may be, during the seven (7) days prior to and for such period of time (not exceeding 180 days) as is requested by the underwriters after the effective date of the Public Offering. 

 

10.    Miscellaneous

            10.1                   Amendment. The Company may amend this Agreement with the written consent of the holders of more than 50% of the Registrable Securities.

            10.2                   Termination. This Agreement, and all of the Company’s obligations hereunder (other than its obligations pursuant to Article 7, which obligations shall survive such termination), shall terminate upon the earlier to occur of (a) the date on which there are no Registrable Securities outstanding or (b) May 31, 2009.

            10.3                   Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and in accordance with the laws of the Commonwealth of Massachusetts for all purposes and respects, without giving effect to the conflict of law provisions thereof. Any suit for enforcement of this Agreement may be brought in the courts of the Commonwealth of Massachusetts or any federal court in Boston, Massachusetts, and each party hereto consents to the non-exclusive jurisdiction of each such court.

            10.4                   Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

 

 

* * * * * *

 

 

	 
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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first above.

	 	INTEGRATED PHARMACEUTICALS, INC.
	 	 	 
	 	 	 
	 	 	 
	 	By: 	 
	 	 	

	 	Name:	Chinmay Chatterjee
	 	Title:	CEO
	 	 
	 	 
	 	 
	 	PURCHASER:
	 	 
	 	 
	 	 
	 	

	 	(Type or Print Name)
	 	 	 
	 	By:	 
	 	 	

	 	 	 
	 	Print Title (if any):	 
	 	 	

	 	 	 
	 	Address:	

	 	 	 
	 	 	

	 	 	 
	 	 	

 

 

	 
	 	Page 7Exhibit 4.1

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK  ISSUABLE  UPON  EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933 (THE "ACT"),
AND NEITHER  THIS WARRANT NOR SUCH SHARES MAY BE SOLD,  ENCUMBERED  OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
OR AN EXEMPTION FROM SUCH REGISTRATION  REQUIREMENT,  AND, IF AN EXEMPTION SHALL
BE APPLICABLE,  THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

        VOID AFTER 5:00 P.M., NEW YORK CITY TIME, ON THE LAST DAY OF THE
                       EXERCISE PERIOD, AS DEFINED BELOW

300,000 SHARES OF COMMON STOCK                 ISSUANCE DATE: SEPTEMBER 22, 2004

                     CONVERSION SERVICES INTERNATIONAL, INC.

                          COMMON STOCK PURCHASE WARRANT

         This is to certify that, FOR VALUE  RECEIVED,  SANDS  BROTHERS  VENTURE
CAPITAL  LLC  ("HOLDER"),  is  entitled to  purchase  from  Conversion  Services
International,  Inc., a Delaware  corporation  (the  "COMPANY"),  subject to the
provisions  of this Common  Stock  Purchase  Warrant  (this  "WARRANT"),  at the
Initial Exercise Price (as defined below),  subject to adjustment as provided in
this Warrant,  THREE HUNDRED  THOUSAND  (300,000) shares of the Company's common
stock, $.001 par value per share (the "COMMON STOCK").

1. ISSUANCE OF WARRANT;  CERTAIN DEFINED TERMS.  This Warrant is being issued in
connection  with a loan  being  made as of the date  hereof by the Holder to the
Company.  As used herein, the following  capitalized terms have the meanings set
forth below:

         "EXERCISE PERIOD" shall mean the period:  (i) commencing on the earlier
to occur of: (A) the date of the closing of the first  Qualified  Financing  (as
defined below) occurring after the date hereof or (B) September 7, 2005 and (ii)
ending at 5:00 p.m.  (New York City  time) on the  earlier  to occur of: (A) the
three (3) year  anniversary of the closing of such  Qualified  Financing or (ii)
September 7, 2008.

         "EXERCISE  PRICE "shall mean the  exercise  price for the purchase of a
share of Common  Stock  pursuant  to this  Warrant  in effect at any time and as
adjusted from time to time in accordance with the terms hereof.  If this Warrant
is still outstanding,  the Exercise Price shall be increased by 10% (but no more
than  cumulatively  30%) for every $10 million of Gross Sales (as defined below)
above $60 million for the fiscal year ending  December 31, 2005 and $100 million
for fiscal year ending December 31, 2006. In addition,  the exercise price shall
be decreased by 20% (but no more than cumulatively 60%) for every $10 million of
Gross Sales below $60 million for the fiscal year ending  December  31, 2005 and
$100 million for fiscal year ending December 31, 2006.

         "GROSS SALES" shall be defined as the Company's total sales as reported
in its Annual Report on Form 10-KSB or Form 10-K, as the case may be.

         "INITIAL  EXERCISE  PRICE"  shall mean a price  equal to forty  percent
(40%) of the  price  per  share of  Common  Stock  received  by the  Company  in
connection with the first Qualified Financing (as defined below) occurring after
the date hereof.  Notwithstanding  the foregoing,  in the event that the Company
does not  consummate a Qualified  Financing on or before  September 7, 2005, the
Initial  Exercise Price  commencing after September 7, 2005 shall be adjusted to
$0.14 per share (which Exercise Price, however, shall be subject to immediate or
subsequent adjustment,  as the case may be, as provided for in the definition of
"Exercise Price" contained herein and as provided for in Section 8 hereof).

<PAGE>

         "QUALIFIED  FINANCING"  means  any  single  convertible  debt or equity
financing of the Company which raises $5 million or greater in gross proceeds to
the Company.

         "WARRANT  SHARES"  shall mean the shares of Common Stock  issuable upon
the valid exercise of this Warrant.

         2. EXERCISE OF WARRANT.

                  (a) This Warrant may be exercised, in whole or in part, at any
time during  (but not  following)  the  Exercise  Period,  by  presentation  and
surrender  of this  Warrant to the  Company at its  principal  office,  with the
Purchase  Form annexed  hereto duly  executed and  accompanied  by payment of an
aggregate price in cash (except as provided for in Section 2(b) hereof) equal to
the  Exercise  Price  multiplied  by the number of shares of Common  Stock to be
purchased.  Upon  receipt by the Company of this Warrant at its office in proper
form for exercise and  accompanied  by payment as herein  provided,  the Company
shall  promptly  issue and cause to be  delivered  to the Holder a  certificate,
issued  in the name of the  Holder,  for the full  number of  Warrant  Shares so
purchased.  Upon proper exercise of this Warrant,  the Holder shall be deemed to
be the  holder of record of the  Warrant  Shares  issuable  upon such  exercise,
notwithstanding  that the stock  transfer  books of the  Company  shall  then be
closed or that certificates  representing such shares shall not then be actually
delivered to the Holder. All taxes, if any, applicable to such exercise shall be
paid by the Holder upon exercise.

                  (b) The aggregate  Exercise  Price may also be paid in full or
in part at the  election of the Holder on a cashless  basis:  (i) in the form of
Common  Stock owned by the Holder  (based on the Fair  Market  Value (as defined
below)  of such  Common  Stock on the date of  exercise)  or (ii) in the form of
Warrant Shares  withheld by the Company from the Warrant Shares  otherwise to be
received upon exercise of this Warrant  having an aggregate Fair Market Value on
the date of exercise equal to the aggregate  Exercise Price of the Warrant.  For
purposes of this Warrant, the term "FAIR MARKET VALUE" means the average closing
price of the  publicly-traded  shares of Common  Stock for the five (5)  trading
days  immediately  preceding  the  applicable  exercise  date  on the  principal
securities  exchange  or market on which  shares of Common  Stock are  listed or
quoted,  if the  shares  of Common  Stock are so listed or quoted  or, if not so
listed or quoted, as determined by the Company in good faith and in a reasonable
manner, based on the information available to it.

         3. REDEMPTION. This Warrant may be called for redemption by the Company
in the event that:  (i) (A) Gross Sales exceed  $60,000,000  for the fiscal year
ended  December 31, 2005 or (B) Gross Sales exceed  $100,000,000  for the fiscal
year ended  December 31, 2006 and (ii) the closing price of the Common Stock is,
for five (5)  consecutive  trading days  following the public  reporting of such
Gross Sales numbers,  at or above two hundred percent (200%) of the then current
Exercise  Price.  In order to  effectively  exercise its redemption  right,  the
Company shall,  within fifteen (15) business days following the  satisfaction of
the  conditions set forth in this Section 3, provide the Holder with thirty (30)
days written  notice of such exercise (the  thirtieth  (30th) day following such
written notice being referred to herein as the "REDEMPTION  DATE"). In the event
that the Holder does not exercise  this Warrant in full prior to the  Redemption
Date, the unexercised  portion,  if any, of this Warrant will be redeemed by the
Company,  without any further  action  required  (other than payment by check or
wire transfer) of the Company or the Holder, at a price of $0.01.

         4. RESERVATION OF SHARES. The Company hereby covenants and agrees that,
at all times during the period this Warrant is outstanding,  it will reserve for
issuance and delivery upon exercise of this Warrant such number of shares of its

                                       2
<PAGE>

Common Stock as shall be required for  issuance  and delivery  upon  exercise of
this  Warrant.  If it becomes  necessary  at any time to increase  the number of
reserved  shares for issuance  hereunder,  the Board of Directors of the Company
shall promptly  increase the number of authorized  and/or  reserved  shares to a
number  sufficient  to provide for the number of shares that may be at that time
issuable to the Holder as  described  above.  If it is necessary to increase the
number of authorized shares for issuance hereunder,  the Board of Directors will
use its best  efforts to obtain any  required  approval of this  increase by the
shareholders.

         5.  FRACTIONAL  SHARES.  No  fractional  shares  or stock  representing
fractional  shares  shall be  issued  upon the  exercise  of this  Warrant.  All
fractional shares issuable upon the exercise of this Warrant shall be rounded to
the nearest whole Warrant Share.

         6. TRANSFER, EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT.

                  (a) This  Warrant  and the  Warrant  Shares may be assigned or
transferred  only  to an  affiliate  of  the  Holder,  and  provided  that  such
assignment or transfer is conducted in  compliance  with the  Securities  Act of
1933,  as  amended.  Any  purported  transfer or  assignment  made other than in
accordance  with this  Paragraph 6(a) shall be null and void ab initio and of no
force and effect.

                  (b) Any assignment  permitted  hereunder may be in whole or in
part and  shall be made by  surrender  of this  Warrant  to the  Company  at its
principal office with the Assignment Form annexed hereto duly executed, together
with funds  sufficient to pay any transfer tax. In such event the Company shall,
without  charge,  execute and deliver a new Warrant in the name of the  assignee
named in such  Assignment Form and this Warrant shall promptly be cancelled (and
a new Warrant issued to the Holder if the assignment is in part).

                  (c) Upon receipt by the Company of evidence satisfactory to it
of the loss, theft, destruction, or mutilation of this Warrant, and, in the case
of loss, theft, or destruction,  upon reasonably  satisfactory  indemnification,
and, in the case of mutilation, upon surrender and cancellation of this Warrant,
the Company will  execute and deliver a new Warrant of like tenor and date,  and
any such lost,  stolen,  destroyed,  or mutilated Warrant shall thereupon become
void. Any such new Warrant executed and delivered shall constitute an additional
contractual  obligation  on the part of the Company,  whether or not the Warrant
that  was so  lost,  stolen,  destroyed,  or  mutilated  shall  be at  any  time
enforceable by anyone.

         7. RIGHTS OF THE HOLDER.  The Holder  shall not, by virtue of ownership
of this  Warrant,  be entitled to any rights as a  stockholder  of the  Company,
either at law or  equity,  and the  rights of the  Holder  are  limited to those
expressed in this Warrant and are not enforceable  against the Company except to
the extent set forth herein.

         8. CERTAIN  ADJUSTMENTS.  The Exercise  Price and the number of Warrant
Shares  issuable upon the exercise of the Warrant shall be subject to adjustment
from time-to-time as follows:

                  (a)  Recapitalization.  In the event the Company should at any
time or from  time to time  while  this  Warrant  remains  in  force,  effect  a
recapitalization  of such character that the number of Common Shares outstanding
is  increased  or  decreased  by stock  split,  reverse  stock  split,  or other
modification of the capital structure of the Company, then thereafter the number
of Warrant Shares which the Holder of this Warrant shall be entitled to purchase
hereunder  shall be  increased  or  decreased,  as the case  may be,  in  direct
proportion  to the increase or decrease in the number of Common Shares by reason
of such  recapitalization,  and the Exercise Price per share  hereunder shall in
the case of an increase in the number of shares be proportionally reduced and in
the case of a decrease in the number of shares be proportionally increased.

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<PAGE>

                  (b)   Merger,   Consolidation,   etc.  In  case  of:  (i)  any
consolidation or merger of the Company with or into a company, where the Company
is not the surviving  entity, or (ii) the conveyance of all or substantially all
of the assets of the Company to another  company,  this Warrant shall thereafter
be  exercisable  into the  number  of  shares  of stock or other  securities  or
property  to which a holder of the  number  of  shares  of  Common  Stock of the
Company issuable upon exercise of the Warrant would have been entitled upon such
consolidation,  merger  or  conveyance;  and,  in  any  such  case,  appropriate
adjustment  (as  determined  by the  Board  of  Directors)  shall be made in the
application  of the  provisions  herein set forth with respect to the rights and
interest  thereafter of the Holder of the Warrant to the end that the provisions
set forth  herein  (including  provisions  with  respect to changes in and other
adjustments of the Exercise Price) shall thereafter be applicable,  as nearly as
reasonably  may be,  in  relation  to any  shares  of stock  or  other  property
thereafter deliverable upon the exercise of this Warrant.

                  (c) Certain  Adjustments to Exercise Price. If at any time the
Company shall issue or sell any shares of Common Stock (other than in connection
with Permitted Issuances (as defined below)) in exchange for consideration in an
amount per share of Common Stock less than the then current Exercise Price, then
the Exercise Price shall be adjusted so that it shall equal the price determined
by multiplying the Exercise Price in effect immediately prior to such event by a
fraction,  the  numerator of which shall be the number of shares of Common Stock
outstanding  on the date of  issuance  plus the number of  additional  shares of
Common Stock which the aggregate  offering  price would  purchase based upon the
Exercise  Price,  and the  denominator of which shall be the number of shares of
Common Stock  outstanding  on the date of issuance plus the number of additional
shares of Common Stock issued or issuable in such offering.  As used herein, the
term  "PERMITTED  ISSUANCES"  shall mean:  (i) Common Stock  issued  pursuant to
Section 8(a) or (b) hereof,  (ii) Common Stock  issuable or issued to employees,
consultants or directors of the Company  directly or pursuant to a stock plan or
other  compensation  arrangement  approved  by the  Board  of  Directors  of the
Company, (iii) capital stock, debt instruments convertible into capital stock or
options or warrants to purchase capital stock, issued to financial institutions,
investors  or  lessors  in  connection  with  commercial  credit   arrangements,
equipment  financings or similar  transactions,  provided that the terms of such
transaction  or  transactions  are  approved  by the Board of  Directors  of the
Company, and (iv) capital stock, debt instruments convertible into capital stock
or warrants or options to purchase  capital stock issued in connection with bona
fide  acquisitions,   mergers,  technology  licenses  or  purchases,   corporate
partnering  agreements,  joint  ventures or similar  transactions,  the terms of
which are approved by the Board of Directors of the Company.

                  (d) Adjustment in Number of Securities.  Upon each  adjustment
of the Exercise  Price  pursuant to the provisions of this Section 8, the number
of shares of Common Stock  issuable  upon the exercise of this Warrant  shall be
adjusted  to the  nearest  full  amount  by  multiplying  a number  equal to the
Exercise Price in effect  immediately  prior to such adjustment by the number of
shares of Common Stock issuable upon exercise of this Warrant  immediately prior
to such adjustment and dividing the product so obtained by the adjusted Exercise
Price.

                  (e) Certain Notices. Upon any adjustment of the Exercise Price
as provided  for in  Sections  8(a),  (b) or (c)  hereof,  in each such case the
Company shall promptly deliver a notice to the Holder,  which notice shall state
the Exercise Price  resulting from such adjustment and the increase or decrease,
if any, in the number of shares  Common Stock  receivable at such price upon the
conversion hereof,  setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.

         9. NO IMPAIRMENT. The Company will not, by amendment of its certificate
of incorporation or through any  reorganization,  recapitalization,  transfer of
assets, consolidation,  merger, dissolution, issue or sale of securities, or any
other voluntary action,  avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company,  but will

                                       4
<PAGE>

at all times in good faith assist in the carrying out of all the  provisions  of
this  Warrant  and in the  taking  of all such  action  as may be  necessary  or
appropriate in order to protect the exercise rights of the Holder of the Warrant
against impairment.

         10.  REPLACEMENT  OF  WARRANT.  Upon  receipt  of  evidence  reasonably
satisfactory  to the Company of the loss,  theft,  destruction  or mutilation of
this Warrant  and, in the case of any such loss,  theft or  destruction  of this
Warrant, upon delivery of indemnity by the Holder reasonably satisfactory to the
Company in form and amount or, in the case of any mutilation,  upon surrender of
this Warrant for  cancellation at the office of the Company,  the Company at its
expense will execute and deliver,  in lieu thereof,  a new Warrant of like tenor
and dated the date hereof.

         11. NOTICES.  Any notice,  request or other  communication  required or
permitted  hereunder  shall be in writing  and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid,  or by  overnight  courier  (prepaid)  or  if  delivered  by  facsimile
transmission, to the Company at the address or facsimile number set forth in the
Company's SEC filings or to the Holder at the addresses or facsimiles number set
forth in the  records of the  Company.  Any party  hereto may by notice so given
change its address for future notice  hereunder.  Notice shall be deemed to have
been given (a) upon  personal  delivery,  if delivered  by hand,  (b) three days
after  the  date of  deposit  in the  mails,  postage  prepaid,  or (c) the next
business day if sent by  facsimile  transmission  (if receipt is  electronically
confirmed) or by a prepaid overnight courier service.

         12.  GOVERNING  LAW. This Warrant shall be governed by and construed in
accordance  with  the laws of the  State  of  Delaware,  without  regard  to the
conflicts of laws principals thereof.

         13. AMENDMENTS; WAIVERS; HEADINGS. This Warrant and any term hereof may
be changed,  waived,  discharged or terminated only by an instrument in writing,
signed by the party against which enforcement of such change, waiver,  discharge
or  termination is sought.  The headings in this Warrant are for  convenience of
reference only and are not part of this Warrant.

         IN WITNESS  WHEREOF,  the Company has executed  this Warrant as of this
22nd day of September, 2004.

                                CONVERSION SERVICES INTERNATIONAL, INC.

                                    /s/ Scott Newman
                                By: _______________________________
                                    Name: Scott Newman
                                    Title: President and Chief Executive Officer

                                [Exhibits Follow]

                                       5
<PAGE>

                                    Exhibit A

                                     WARRANT
                                  PURCHASE FORM

                    (to be executed upon exercise of Warrant)

         The  undersigned  hereby  irrevocably  elects  to  exercise  the  right
represented by this Warrant to purchase ______________________________ shares of
the common stock,  par value $.001 per share (the "COMMON  STOCK") of Conversion
Services International, Inc.

         Check as applicable:

         [ ] The undersigned  herewith  tenders payment for such Common Stock in
the amount of $____________.

         [ ] The undersigned  hereby tenders payments for such Common Stock on a
cashless basis in accordance  with Section 2(b) of the attached  Warrant via the
cancellation  of such portion of the attached  Warrant as is  exercisable  for a
total of  _________  shares of Common Stock (using a Fair Market Value of $_____
per share for purposes of this calculation)

         The  undersigned  requests that a certificate  for such Common Stock be
registered   in  the  name  of   _______________________,   whose   address   is
_____________________________________________.

         If such number of shares of Common Stock is less than all of the Common
Stock purchasable  pursuant to the Warrant,  the undersigned requests that a new
Warrant representing the remaining shares of Common Stock purchasable thereunder
be  issued  in the name of  ______________________________,  and  that  such new
Warrant be delivered to ________________________________________________,  whose
address is __________________________________________________________________.

Date:_________________         Signature: _____________________________________
                                         (signature must conform in all
                                         respects to name of Holder as
                                         specified on the face of the Warrant.)

<PAGE>

                                    Exhibit B

                                     WARRANT
                                 ASSIGNMENT FORM

         FOR VALUE RECEIVED,  ___________________________________  hereby sells,
assigns and  transfers all of the rights of the  undersigned  under the attached
Warrant  with respect to  _______________________  shares of common  stock,  par
value $.001 per share, of Conversion Services International, Inc. unto:

Name of Assignee              Address                    No. of Common Shares
----------------              --------------------       --------------------

The   undersigned   does  also  hereby   irrevocably   constitute   and  appoint
____________________  as  attorney,  to  transfer  the same on the  books of the
Company with full power of substitution in the premises.

         DATED this ______ day of _______________, _____.

                                            By:
                                                --------------------------------

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