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Prepared by MERRILL CORPORATION

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Exhibit 10.12  

THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS COMMON
STOCK PURCHASE WARRANT, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT, OR (C) IF REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.  

  
 

    PHAGE THERAPEUTICS INTERNATIONAL INC.    
    
    SERIES        COMMON STOCK PURCHASE WARRANT

	Series                         	 	 
	Warrant Certificate No. W -	 	 
	
Number of One and a Half Warrants:                        	
 	

Holder:                        
	

Expiration Date:                        	
 	

Address:                        
	

Exercise Price Per Share: $0.70	
 	

 

For
identification only. The governing terms of this Warrant are set forth below. 

    Phage
Therapeutics International Inc., a Florida corporation ("Phage"), hereby certifies that, for value received,            ,
or his assigns (the "Holder"), is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time after
the date hereof and prior to            , 20  (the "Exercise Period"), at the Purchase Price hereinafter set forth,
            (    ) shares. For every one and a half Warrants the Holder will be entitled to acquire one additional share of Common Stock of Phage at an exercise price of
$0.70 per
share with an expiry date of            . 

    Capitalized
terms used herein not otherwise defined will have the meanings ascribed thereto in that certain Securities Purchase Agreement dated as of October 23, 2000 herewith
between Phage and the Holder (the "Purchase Agreement"). By execution of this Warrant, the Holder hereof agrees to be bound by and to benefit from the
provisions of the Purchase Agreement set forth herein. As used herein the following terms, unless the context otherwise requires, have the following respective meanings: 

	(a)
	The
term "Common Stock" includes:

	(i)
	Phage's
common stock, par value $0.001 per share;

	(ii)
	any
other capital stock of any class or classes (however designated) of Phage, authorized on or after the date hereof, the Holders of which will
have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference, and the Holders of which will ordinarily, in the absence of contingencies, be entitled to vote for the election of a majority of directors of Phage (even though the
right so to vote has been suspended by the happening of such a contingency); and

	(iii)
	any
other securities into which or for which any of the securities described in (a) or (b) may be converted or exchanged pursuant to
a plan of recapitalization, reorganization, merger, sale of assets or otherwise. 

 

	(b)
	The
term "Other Securities" refers to any stock (other than Common Stock) and other securities of Phage or any other person
(corporate or otherwise) that the Holder of this Warrant at any time will be entitled to receive, or will have received, on the exercise of this Warrant, in lieu of or in addition to Common Stock, or
that at any time will be issuable or will have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4 or otherwise.

	(c)
	The
term "Phage" will include Phage Therapeutics International Inc. and any corporation that will succeed or assume the obligations
of such corporation hereunder. 

    1.  Exercise of Warrant.  

    1.1  Method of Exercise.  

	(a)
	This
Warrant may be exercised in whole or in part (but not as to a fractional Units), at any time and from time to time during the Exercise Period by the Holder hereof by delivery
of a notice of exercise (a "Notice of Exercise") substantially in the form attached hereto as Exhibit A via facsimile to Phage. Prior to sending the
Notice of Exercise via facsimile, the Holder will give Darren Pylot notice of its intent to submit a Notice of Exercise by telephone. Promptly thereafter the Holder will surrender this Warrant (if the
entire amount of the Warrant is subject to the Notice of Exercise) to Phage at its principal office via overnight delivery service, accompanied by payment of the Purchase Price multiplied by the
number of shares of Common Stock for which this Warrant is being exercised (the "Exercise Price"). Payment of the Exercise Price will be made, at the
option of the Holder, (i) by check or bank draft payable to the order of Phage, or (ii) by wire transfer to the account of Phage. On exercise, the Holder will be entitled to receive
within five Trading Days of the Exercise Date (as defined herein), one or more certificates, issued in the Holder's name or in such name or names as the Holder may direct, subject to the limitations
on transfer contained herein, for the number of Shares so purchased. The Shares so purchased will be deemed to be issued as of the close of business on the date on which Phage will have received from
the Holder payment in full of the Exercise Price (the "Exercise Date").

	(b)
	On
exercise of a portion of this Warrant in accordance with the terms hereof, records showing the amount so exercised and the date of exercise will be maintained on a ledger
substantially in the form of Annex B attached hereto (an originally signed and executed copy of which will be delivered to Phage with each Notice of Exercise). Phage will maintain the originally
signed and executed ledger and the Holder will maintain a copy thereof. On execution of the exercise of the Warrants contemplated by the Notice of Exercise, Phage will deliver to the Holder a copy of
Annex B signed and executed by Phage, and the Holder will deliver to Phage a copy of Annex B signed by the Holder. It is specifically contemplated that Phage will act as the calculation agent for all
exercises of this Warrant. The Holder and any assignee, by acceptance of this Warrant, acknowledges and agrees that, by reason of the provisions of this paragraph, following an exercise of a portion
of this Warrant, the number of Shares represented by this Warrant will be the amount indicated on Annex B attached hereto (which may be less than the amount stated on the face hereof).

	(c)
	In
the event there is a dispute as to the number of Shares the Holder is entitled to receive on exercise of this Warrant, Phage will issue to the Holder the number of shares not in
dispute and Phage and the Holder will use their best efforts to resolve such dispute within one Business Day following the receipt of a Notice of Exercise. If such dispute cannot be resolved within
such one-day period, Phage and the Holder will submit the dispute to an independent accountant mutually agreed on by Phage and the Holder to make a final and binding determination of the number of
shares owed to the Holder. Phage will issue Shares owed to 

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Holder
as a result of the resolution of the dispute within two Business Days following the receipt of the accountant's independent determination. 

    1.2  Regulation D Restrictions.  The Holder hereof represents and warrants to Phage that it has acquired
this Warrant and anticipates acquiring the Shares issuable on exercise of the Warrant solely for its own account for investment purposes and not with a view to or for resale of such securities unless
such resale has been registered with the Commission or an applicable exemption is available therefor and provided that the Holder will have furnished to Phage an opinion of counsel in form and
substance reasonably satisfactory to Phage, to the effect that such transfer is exempt from the registration requirements of the Securities Act and any applicable state securities laws. 

    1.3  Company Acknowledgment.  Phage will, at the time of the exercise of this Warrant, on request of the
Holder hereof, acknowledge in writing its continuing obligation to afford to such Holder the registration rights to which such Holder will continue to be entitled after such exercise in accordance
with the provisions of a Registration Rights Agreement dated the date hereof (the "Registration Rights Agreement"). 

    1.4  Limitation on Exercise.  Notwithstanding the rights of the Holder to exercise all or a portion of
this Warrant as described herein, such exercise rights will be limited, solely to the extent set forth in the Purchase Agreement as if such provisions were specifically set forth herein. In addition,
the number of Shares issuable on exercise of this Warrant is subject to reduction as specified in Section 10.3 of the Purchase Agreement. 

    2.  Delivery of Stock Certificates, Etc., on Exercise.  As soon as practicable
after the exercise of this Warrant, and in any event within five (5) Business Days thereafter, Phage at its expense (including the payment by it of any applicable issue, stamp or transfer
taxes) will cause to be issued in the name of and delivered to the Holder thereof, or, to the extent permissible hereunder, to such other person as such Holder may direct, a certificate or
certificates for the number of fully paid and non-assessable shares of Common Stock and Series Two Warrants forming the Shares (or Other Securities) to which such Holder will be entitled on
such exercise, plus, in lieu of any fractional securities to which such Holder would otherwise be entitled, cash equal to such fraction multiplied by the then applicable Purchase Price,
together with any other stock or other securities and property (including cash, where applicable) to which such Holder is entitled on such exercise pursuant to Section 1 or otherwise. 

    3.  Adjustment for Extraordinary Events.  The Purchase Price to be paid by the
Holder on exercise of this Warrant, and the consideration to be received on exercise of this Warrant, will be adjusted in case at any time or from time to time pursuant to Article 11 of the
Purchase Agreement as if such provisions were specifically set forth herein. 

    4.  No Impairment.  Phage will not, by amendment of its Certificate of
Incorporation or through any reorganization, 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 of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against impairment. Without limiting the generality of the foregoing, Phage: 

	(a)
	will
not increase the par value of any shares of stock receivable on the exercise of this Warrant above the amount payable therefor on such exercise;

	(b)
	will
take all such action as may be necessary or appropriate in order that Phage may validly and legally issue fully paid and unassessable shares of stock on the exercise of this
Warrant; and

	(c)
	will
not transfer all or substantially all of its properties and assets to any other person (corporate or otherwise), or consolidate with or merge into any other person or permit
any 

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such
person to consolidate with or merge into Phage (if Phage is not the surviving person), unless such other person will expressly assume in writing and will be bound by all the terms of this
Warrant. 

    5.  Certificate as to Adjustments.  In each case of any adjustment or
readjustment in the Shares (or Other Securities) issuable on the exercise of this Warrant, Phage will promptly cause its principal financial officer to compute such adjustment or readjustment in
accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts on which such adjustment or readjustment is based,
including a statement of: 

	(a)
	the
consideration received or receivable by Phage for any additional Shares (or Other Securities) issued or sold or deemed to have been issued or sold;

	(b)
	the
number of Shares (or Other Securities) outstanding or deemed to be outstanding; and

	(c)
	the
Purchase Price and the number of Shares to be received on exercise of this Warrant, in effect immediately prior to such issue or sale and as adjusted and readjusted as provided
in this Warrant. 

Phage
will forthwith mail a copy of each such certificate to the Holder of this Warrant, and will, on the written request at any time of the Holder of this Warrant, furnish to such Holder a like
certificate setting forth the Purchase Price at the time in effect and showing how it was calculated. 

    6.  Notices of Record Date, Etc. In the event of:  

	(a)
	any
taking by Phage of a record of the Holders of any class of securities for the purpose of determining the Holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right; or

	b)
	any
capital reorganization of Phage, any reclassification or recapitalization of the capital stock of Phage or any transfer of all or substantially all the assets of Phage to or
consolidation or merger of Phage with or into any other Person; or

	(c)
	any
voluntary or involuntary dissolution, liquidation or winding-up of Phage, 

then
and in each such event Phage will mail or cause to be mailed to the Holder of this Warrant a notice specifying the date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend, distribution or right, and the date on which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place, and the time, if any, as of which the Holders of record of Common Stock (or Other Securities) will be entitled to
exchange their shares of Common Stock (or Other Securities) for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up. Such notice will be mailed at least 20 days prior to the date specified in such notice on which any action is to be taken. 

    7.  Reservation of Stock, Etc.  Issuable on Exercise of Warrant. Phage will at
all times reserve and keep available, solely for issuance and delivery on the exercise of this Warrant, all shares of Common Stock, Series Two Warrants (or Other Securities) from time to time
issuable on the exercise of this Warrant. 

    8.  Exchange of Warrant.  On surrender for exchange of this Warrant, properly
endorsed and in compliance with the restrictions on transfer set forth in the legend on the face of this Warrant, to Phage, Phage at its expense will issue and deliver to or on the order of the Holder
thereof a new Warrant of like tenor, in the name of such Holder or as such Holder (on payment by such Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the 

4

 

number of Shares called for on the face of the Warrant so surrendered or for such lesser number of Shares as may be reflected on the Warrant Exercise Ledger attached as Annex B. 

    9.  Replacement of Warrant.  On receipt of evidence reasonably satisfactory to
Phage of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to Phage or, in the case of any such mutilation, on surrender and cancellation of this Warrant, Phage at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor. 

    10.  Remedies.  Phage stipulates that the remedies at law of the Holder of this
Warrant in the event of any default or threatened default by Phage in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that such terms may
be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 

    11.  Negotiability, Etc.  This Warrant is issued on the following terms, to all
of which each Holder or owner hereof by the taking hereof consents and agrees: 

	(a)
	until
this Warrant is transferred on the books of Phage, Phage may treat the registered Holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to
the contrary; and

	(b)
	this
Warrant may not be sold, transferred or assigned except pursuant to an effective registration statement under the Securities Act or pursuant to an applicable exemption
therefrom. 

    12.  Registration Rights.  Phage is obligated to register the underlying shares
of Common Stock issuable on exercise of this Warrant and the Series Two Warrant in accordance with the terms of the Registration Rights Agreement. 

    13.  Warrant Redemption.  On occurrence of the events described in Sections 3.3
of the Purchase Agreement, Phage, at the request of Holder, will redeem all outstanding Warrants that remain unexercised at a redemption price equal to the greater of (x) an appraised value of the
Warrants, as determined by Black Sholes, on the date they are called for redemption and (y) the number of Warrants being redeemed multiplied by the excess of (A) the average Closing Bid Price
of the Common Stock for the five trading days immediately prior to the date that the Warrants are called for redemption over (B) the exercise price of the Warrants. 

    14.  Notices, Etc.  All notices and other communications from Phage to the Holder
of this Warrant will be mailed by first class registered or certified mail, postage prepaid, at such address as may have been furnished to Phage in writing by such Holder or, until any such Holder
furnishes to Phage any address, then to, and at the address of, the last Holder of this Warrant who has so furnished an address to Phage. 

    15.  Miscellaneous.  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. This Warrant will be construed and
enforced in accordance with and governed by the internal laws of the State of Florida. The headings in this Warrant are for the purposes of reference only, and will not limit or otherwise affect any
of the terms hereof. The invalidity or unenforceability of any provision hereof will in no way affect the validity or enforceability of any other provision. 

DATED
for reference as of            , 20  . 

5

 

PHAGE THERAPEUTICS INTERNATIONAL INC.  

	
	 	 
	By:  Dr. Richard Honour	 	 
	Title: Chief Executive Officer, President & Secretary	 	 
	

	
 	

 
	By:  Darren Pylot	 	 
	Title: Chief Financial Officer	 	 
	

Countersigned by:	
 	

 
	
INTERWEST TRANSFER COMPANY, INC.
 Warrant Registrar and Transfer Agent	
 	

 
	

 Per: Authorized Signatory	
 	

 

 
 

FORM OF NOTICE EXERCISE—WARRANT
  (To be executed only on exercise of the Warrant in whole or in part)    

To:  Phage
Therapeutics International Inc.

19017 120th Avenue NE, Suite 102

Bothell, Washington 98011 

    The
undersigned registered Holder of the accompanying Warrant, hereby exercises such Warrant or portion thereof for, and purchases thereunder,            (1) Shares (as defined
in such Warrant) and herewith makes payment therefor in the amount and manner set forth below, as of the date written below. The undersigned requests that the certificates for such underlying shares
of Common Stock and Series Two Warrants forming the Shares be issued in the name of, and delivered to,
                        whose address
is                        . 

    The
Exercise Price is paid as follows: 

    / /  Certified
Bank draft payable to Phage in the amount of $      . 

    / /  Wire
transfer to the account of Phage in the amount of $      . 

    On
exercise pursuant to this Notice of Exercise, the Holder will be in compliance with the Limitation on Exercise (as defined in the Securities Purchase Agreement pursuant to which
this Warrant was
issued). The Holder of the shares of Common Stock received on exercise of the Warrant (the "Common Shares"), covenants and agrees that the Common Shares are being acquired as an investment and not
with a view to the distribution thereof in violation of the Securities Act and that the Common Shares may not be transferred, sold, assigned, hypothecated or otherwise disposed of, in whole or in part
except as provided in the legend on the first page of this Warrant and provided that the Holder will have furnished Phage an opinion of counsel in form and substance reasonably 

6

 

acceptable to Phage to the effect that such transfer is exempt from the registration requirements of the Securities Act and any applicable state securities laws.* 

	Date:	  
	 	  
 (Name must conform to name of Holder as specified on the face of the Warrant)
	

 	

 	

 	
 	

By:	
 	

  

	

 	

 	

 	
 	

Name:	
 	

  

	

 	

 	

 	
 	

Title:	
 	

  

	

 	

 	

 	
 	

Address of Holder:	

  

	

 	

 	

 	
 	

  

	

 	

 	

 	
 	

  

	

Date of exercise:	

  
	
 	

 	
 	

 	

 

*
If shares of common Stock are to be issued to anyone other than the Holder, this covenant and representation must be made by such other Person. 

	1.
	Insert
the number of shares of Common Stock as to which the accompanying Warrant is being exercised. In the case of partial exercise, a new Warrant or Warrant will be issued and
delivered, representing the unexercised portion of the accompanying Warrant, to the Holder surrendering the same. 

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ANNEX B    
  

 
 

WARRANT EXERCISE LEDGER    
  

	Date
 
	 	Original

Number of

Warrants
	 	Warrants

Exercised
	 	Exercise

Price Paid
	 	New Balance

of Warrants
	 	Holder's

Initials
	 	Issuer's

Initials

	
 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

	
 	

	
 	

	
 	

	
 	

	
 	

	
 	

	

	
 	

	
 	

	
 	

	
 	

	
 	

	
 	

	

	
 	

	
 	

	
 	

	
 	

	
 	

	
 	

	

	
 	

	
 	

	
 	

	
 	

	
 	

	
 	

	

	
 	

	
 	

	
 	

	
 	

	
 	

	
 	

	

	
 	

	
 	

	
 	

	
 	

	
 	

	
 	

	

	
 	

	
 	

	
 	

	
 	

	
 	

	
 	

	

	
 	

	
 	

	
 	

	
 	

	
 	

	
 	

	

	
 	

	
 	

	
 	

	
 	

	
 	

	
 	

	
PHAGE THERAPEUTICS INTERNATIONAL INC.	
 	

 	

 
	

  
	
 	

  

	By:	Darren Pylot	 	By:	  

	Title:	CFO & Director	 	Title:	  

	

Address:	

Phage Therapeutics International Inc.

19017 120th Ave NE, Suite 102

Bothell, Washington 98011	
 	

Address:	

  
  
  

	    Tel:	(425) 481-6255	 	    Tel:	  

	    Fax.:	(425) 481-5144	 	    Fax:	  

8

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PHAGE THERAPEUTICS INTERNATIONAL INC. SERIES COMMON STOCK PURCHASE WARRANT

FORM OF NOTICE EXERCISE—WARRANT (To be executed only on exercise of the Warrant in whole or in part)

ANNEX B

WARRANT EXERCISE LEDGERPrepared by MERRILL CORPORATION

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Exhibit 10.13  

 
 

REGISTRATION RIGHTS AGREEMENT    
  

    REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of September     , 2000, between Phage Therapeutics International Inc., a
Florida corporation ("Phage"), and the persons and entities listed on the Schedule of Purchasers attached to this Agreement (the "Purchasers") 

    1.  Introduction.  

    1.1  Securities Purchase Agreement.  Phage and the Purchasers have today executed that certain Securities
Purchase Agreement (the "Securities Purchase Agreement"), pursuant to which Phage has agreed, among other things, to issue up to an aggregate of One Million Five Hundred Thousand Dollars
(US$1,500,000) principal amount of Subordinated Convertible Debentures of Phage (the "Debentures") to the Purchasers or its successors, assigns or transferees (collectively, the "Holders"). The
Debentures are convertible into 2,142,857 initial units. Each "Initial Unit" will consist of one share (the "Debenture Conversion Shares") of Phage's common stock with a par value of $0.001 per share
(the "Common Stock") and one Common Stock purchase warrant (the "Series One Warrant"). For every one and a half Series One Warrant the holder will be entitled to acquire a new unit (the
"Subsequent Unit") at an exercise price of $0.70 per Subsequent Unit. Each Subsequent Unit will consist of one share of Phage's Common Stock and one additional warrant (the "Series Two
Warrant"). Each Series Two Warrant will entitle the holder to acquire one additional share of Commons Stock of Phage at an exercise price of $0.70 per share. (the Series One and Two Warrants
together collectively the "Warrants"). The shares of Common Stock issued under the Warrants will be referred to as the "Warrant Shares". 

    In
addition, pursuant to the terms of the Securities Purchase Agreement, the Purchasers have agreed to invest an additional One Million Five Hundred Thousand Dollars ($US 1,500,000)
in equity into Phage within seven (7) days from the date Phage files its Form 10SB with the Securities and Exchange Commission. Phage will issue to the Purchasers 2,142,857 Initial Units which
will have the same terms and conditions as set out above 

    The
number of Debenture Conversion Shares and Warrant Shares is subject to adjustment on the occurrence of stock splits, recapitalization and similar events occurring after the date
of this Agreement. 

    1.2  Definition of Securities.  The Debenture Conversion Shares and the Warrant Shares are herein
referred to as the "Securities." 

    1.3  Pink Sheet Representation.  Phage represents and warrants that Phage's Common Stock is currently
eligible for trading on the Pink Sheets under the symbol "PTXXE" Certain capitalized terms used in this Agreement are defined in Section 3 of this Agreement; references to sections will be to
sections of this Agreement. 

    2.  Registration under Securities Act, Etc.  

    2.1  Demand Registration.  

	(a)
	Registration of Registrable Securities/Request for Registration. In case Phage shall receive from Initiating Holders a written
request that Phage effect a registration under the Securities Act with respect to not less than two million (2,000,0000) shares (as adjusted for Recapitalization) of Registrable Securities, Phage
will:

	(i)
	promptly
give written notice of the proposed registration, qualification or compliance to all other Holders; and

	(ii)
	as
soon as practicable, use its best efforts to effect such registration (including, without limitation, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under 

 

the
Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request
received by Phage within 20 days after receipt of such written notice from Phage; 

Provided,
however, that Phage shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 2.1: 

	(A)
	In
any particular jurisdiction in which Phage would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless
Phage is already subject to service in such jurisdiction and except as may be required by the Securities Act;

	(B)
	Prior
to the earlier of (i)             , or (ii) six months after the effective date of Phage's first registered public offering of its stock;

	(C)
	During
the period starting with the date sixty (60) days prior to Phage's estimated date of filing of, and ending on the date six (6) months immediately following the
effective date of, any registration statement pertaining to securities of Phage (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan),
provided that Phage is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;

	(D)
	After
Phage has effected two such registrations pursuant to this subparagraph 8.5(a), and such registrations have been declared or ordered effective; or

	(E)
	If
Phage shall furnish to such Holders a certificate signed by the President of Phage stating that in the good faith judgment of the Board of Directors of Phage it would be
seriously detrimental to Phage or its shareholders for a registration statement to be filed in the near future, in which case Phage's obligation to use its best efforts to register, qualify or comply
under this Section 8.5 shall be deferred for a period not to exceed 120 days from the date of receipt of the written request from the Initiating Holders. 

Subject
to the foregoing clauses (A) through (E), Phage shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after
receipt of the request or requests of the Initiating Holders. Phage will have the right to include in any such registration, any or all of the Common Shares acquired by certain investors in a private
placement conducted by Phage in February 2000. 

	(b)
	Underwriting. In the event that a registration pursuant to this Section 2.1 is for a registered public offering involving an
underwriting, Phage shall so advise the Holders as part of the notice given pursuant to Section 2.1(a)(i). In such event, the right of any Holder to registration pursuant to this Section shall be
conditioned upon such Holder's participation in the underwriting arrangements required by this Section 2.1 , and the inclusion of such Holder's Registrable Securities in the underwriting to the extent
requested shall be limited as provided herein. Phage shall (together with all
Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with managing underwriter(s) selected for such underwriting by a
majority in interest of the Initiating Holders, but subject to Phage's reasonable approval. Notwithstanding any other provision of this Section 2.1, if 

2

 

the
managing underwriter(s) advise(s) the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then Phage shall so advise all Holders
participating and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders thereof in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement. No Registrable Securities excluded from the underwriting by
reason of the underwriters' marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, Phage or the underwriters may
round the number of shares allocated to any Holder to the nearest 100 shares.If any Holder disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice
to Phage, the managing underwriter and the Initiating Holders. The Registrable Securities so withdrawn shall also be withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to 90 days after the effective date of such registration, or such other shorter period of time as the underwriters may require. 

    2.2  Incidental Registration.  

	(a)
	Right to Include Registrable Securities. If at any time after the date of this Agreement but before the third anniversary of the date
of this Agreement, Phage proposes to register any of its securities under the Securities Act (other than by a registration in connection with an acquisition in a manner which would not permit
registration of Registrable Securities for sale to the public, on Form S-8, or any successor form thereto, on Form S-4, or any successor form thereto and other than pursuant to Section 2.1), on an
underwritten basis (either best-efforts or firm-commitment), then, Phage will each such time give prompt written notice to all holders of Registrable Securities of its intention to do so and of such
holders' rights under this Section 2.2. On the written request of any such holder made within twenty (20) days after the receipt of any such notice (which request will specify the Registrable
Securities intended to be disposed of by such holder and the intended method of disposition), Phage will, subject to the terms of this Agreement, use its commercially reasonable best efforts to effect
the registration under the Securities Act of the Registrable Securities, to the extent requisite to permit the disposition (in accordance with the intended methods as aforesaid) of such Registrable
Securities so to be registered, by inclusion of such Registrable Securities in the registration statement which covers the securities which Phage proposes to register, provided that if, at any time
after written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, Phage will determine for any
reason either not to register or to delay registration of such securities, Phage may, at its election, give written notice of such determination to each holder and, thereon, (i) in the case of
a determination not to register, will be relieved of this obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration
Expenses in connection therewith), and (ii) in the case of a determination to delay registering, will be permitted to delay registering any Registrable Securities, for the same period as the
delay in registering such other securities. No registration effected under this
Section 2.2 will relieve Phage of its obligation to effect any registration under Section 2.1, nor will any such registration hereunder be deemed to have been effected pursuant to Section 2.1. Phage
will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2.2. The right provided the holders of the Registrable Securities
pursuant to this Section will be exercisable at their sole discretion. 

3

 

	(b)
	Priority in Incidental Registrations. If the managing underwriter of the underwritten offering contemplated by this Section 2.2 will
inform Phage and holders of the Registrable Securities requesting such registration by letter of its belief that the number of securities requested to be included in such registration exceeds the
number which can be sold in such offering, then Phage will include in such registration, to the extent of the number which Phage is so advised can be sold in such offering, (i) first securities
proposed by Phage to be sold for its own account, and (ii) second Registrable Securities and securities of other selling security holders requested to be included in such registration pro rata
on the basis of the number of shares of such securities so proposed to be sold and so requested to be included; provided, however, the holders of Registrable Securities will have priority to all
shares sought to be included by officers and directors of Phage as well as holders of ten percent (10%) or more of Phage's Common Stock. 

    2.3  Registration Procedures.  If and whenever Phage is required to effect the registration of any
Registrable Securities under the Securities Act as provided in Section 2.1 and, as applicable, 2.2, Phage will, as expeditiously as possible: 

	(a)
	prepare
and file with the Commission the Registration Statement or amendments thereto, to effect such registration (including such audited financial statements as may be required by
the Securities Act or the rules and regulations promulgated thereunder) and thereafter use its commercially reasonable best efforts to cause such registration statement to be declared effective
by the Commission, as soon as practicable, but in any event no later than the Required Effectiveness Date (with respect to a registration pursuant to Section 2.1); provided, however, that before
filing such registration statement or any amendments thereto, Phage will furnish to the counsel selected by the holders of Registrable Securities which are to be included in such registration, copies
of all such documents proposed to be filed;

	(b)
	with
respect to any registration statement pursuant to Section 2.1, 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 and to comply with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement until the earlier to occur of five (5) years after the date of this Agreement (subject to the right of Phage to suspend the
effectiveness for not more than 10 consecutive days or an aggregate of 30 days in such five (5) years period) or such time as all of the securities which are the subject of such registration
statement cease to be Registrable Securities (such period, in each case, the "Registration Maintenance Period");

	(c)
	furnish
to each seller of Registrable Securities covered by such registration statement such number of conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents, as such seller and
underwriter, if any, may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such seller;

	(d)
	use
its commercially reasonable best efforts to register or qualify all Registrable Securities and other securities covered by such registration statement under such other
securities laws or blue sky laws as any seller will reasonably request, to keep such registrations or qualifications in effect for so long as such registration statement remains in effect, and 

4

 

take
any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such seller, except that Phage will not for
any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this subdivision (d) be obligated
to be so qualified or to consent to general service of process in any such jurisdiction; 

	(e)
	use
its commercially reasonable best efforts to cause all Registrable Securities covered by such registration statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the seller or sellers to consummate the disposition of such Registrable Securities;

	(f)
	furnish
to each seller of Registrable Securities a signed counterpart, addressed to such seller, and the underwriters, if any, of:

	(i)
	an
opinion of counsel for Phage, dated the effective date of such registration statement (or, if such registration includes an underwritten public
offering, an opinion dated the date of the closing under the underwriting agreement), reasonably satisfactory in form and substance to such seller including that the prospectus and any prospectus
supplement forming a part of the Registration Statement does not contain an untrue statement of a material fact or omits a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading, and

	(ii)
	if
such registration includes an underwritten public offering, a "comfort letter" dated the date of the closing and required to be delivered to
the underwriter under the underwriting agreement, signed by the independent public accountants who have certified Phage's financial statements; 

	(g)
	notify
the Sellers' Representative and its counsel promptly and confirm such advice in writing promptly after Phage has knowledge:

	(i)
	when
the Registration Statement, the prospectus or any prospectus supplement related thereto or post-effective amendment to the Registration
Statement has been filed, and, with respect to the Registration Statement or any post-effective amendment thereto, when the same has become effective;

	(ii)
	of
any request by the Commission for amendments or supplements to the Registration Statement or the prospectus or for additional information;

	(iii)
	of
the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any
proceedings by any Person for that purpose; and

	(iv)
	of
the receipt by Phage of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the
securities or blue sky laws of any jurisdiction or the initiation or threat of any proceeding for such purpose; 

	(h)
	notify
each seller of Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities
Act, on discovery that, or on the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material facts required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request
of any such seller promptly prepare and furnish to such seller a reasonable number of copies of a supplement to or an 

5

 

amendment
of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus will not include an 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 then existing; 

	(i)
	use
its commercially reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement at the earliest possible moment;

	(j)
	otherwise
use its commercially reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning with the first full calendar month after the effective
date of such registration statement, which earnings statement will satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

	(k)
	use
its commercially reasonable best efforts to list all Registrable Securities covered by such registration statement on any securities exchange on which any of the Registrable
Securities are then listed. 

    Phage
may require each seller of Registrable Securities as to which any registration is being effected to furnish Phage such information regarding such seller and the distribution of
such securities as Phage may from time to time reasonably request in writing. 

    Phage
will not file any registration statement pursuant to Section 2.1, or amendment thereto or any prospectus or any supplement thereto (including such documents incorporated by
reference and proposed to be filed after the initial filing of the Registration Statement) to which the Sellers' Representative will reasonably object, provided that Phage may file such documents in a
form required by law or on the advice of its counsel. 

    Phage
represents and warrants to each holder of Registrable Securities that it has obtained all necessary waivers, consents and authorizations necessary to execute this Agreement and
consummate the transactions contemplated hereby other than such waivers, consents and/or authorizations specifically contemplated by the Securities Purchase Agreement. 

    The
Purchasers agrees that, on receipt of any notice from Phage of the occurrence of any event of the kind described in subdivision (h) of this Section 2.3, the Purchasers will
forthwith discontinue the Purchasers's disposition of Registrable Securities pursuant to the Registration Statement relating to such Registrable Securities until such Purchasers's receipt of the
copies of the supplemented or amended prospectus contemplated by subdivision (h) of this Section 2.3 and, if so directed by Phage, will deliver to Phage (at Phage's expense) all copies, other
than permanent file copies, then in the Purchasers's possession of the prospectus relating to such Registrable Securities current at the time of receipt of such notice. 

    2.4  Underwritten Offerings.  

	(a)
	Incidental Underwritten Offerings. If Phage at any time proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or through one or more underwriters, Phage will, if requested by any holder of Registrable Securities as provided in Section
2.2 and subject to the provisions of Section 2.2(a), use its commercially reasonable best efforts to arrange for such underwriters to include all the Registrable Securities to be offered and sold by
such holder among the securities to be distributed by such underwriters. 

6

 

	(b)
	Holdback Agreements. Subject to such other reasonable requirements as may be imposed by the underwriter as a condition of inclusion
of holder's Registrable Securities in the registration statement, each holder agrees by acquisition of Registrable Securities, if so required by the managing underwriter, not to sell, make any short
sale of, loan, grant any option for the purchase of, effect any public sale or distribution of or otherwise dispose of, except as part of such underwritten registration, any equity securities of
Phage, during such reasonable period of time requested by the underwriter; provided however, such period will not exceed the 150 day period commencing 30 days prior to the commencement of such
underwritten offering and ending 120 days following the completion of such underwritten offering.

	(c)
	Participation in Underwritten Offerings. No holder of Registrable Securities may participate in any underwritten offering under
Section 2.2 unless such holder of Registrable Securities (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved, subject to the terms and
conditions of this Agreement, approved by Phage and (ii) completes and executes all questionnaires, indemnities, underwriting agreements and other documents (other than powers of attorney)
required under the terms of such underwriting arrangements. Notwithstanding the foregoing, no underwriting agreement (or other agreement in connection with such offering) will require any holder of
Registrable Securities to make any representations or warranties to or agreements with Phage or the underwriters other than representations and warranties contained in a writing furnished by such
holder expressly for use in the related registration statement or representations, warranties or agreements regarding such holder, such holder's Registrable Securities and such holder's intended
method of distribution and any other representation required by law. 

    2.5  Preparation; Reasonable Investigation.  In connection with the preparation and filing of each
registration statement under the Securities Act pursuant to this Agreement, Phage will give Sellers' Representative and counsel and accountants for Sellers' Representative, the opportunity to
participate in the preparation of such registration statement, each prospectus included therein or filed with the Commission, and each amendment or supplement thereto, and will give each of them such
access to its books and records and such opportunities to discuss the business of Phage with its officers and the independent public accountants who have certified its financial statements as will be
necessary, in the reasonable opinion of such holders' and such underwriters' respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act. 

    2.6  Registration Default Fee.  If the Registration Statement contemplated in Section 2.1 is (x) not
declared effective by the Required Effectiveness Date or (y) such effectiveness is not maintained for the Registration Maintenance Period, then Phage will pay to the Purchasers the Default Fee
specified in Section 10.4 of the Securities Purchase Agreement. 

    2.7  Indemnification.  

	(a)
	Indemnification by Phage. In the event of any registration of any securities of Phage under the Securities Act, Phage will, and
hereby does agree to indemnify and hold harmless the holder of any Registrable Securities covered by such registration statement, its directors and officers, each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person, if any, who controls such holder or any such underwriter within the meaning of the Securities Act against any losses,
claims, damages or liabilities, joint or several, to which such holder or any such director or officer or underwriter or controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened) arise out of or are based on any untrue 

7

 

statement
or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any 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 Phage will reimburse such holder and each such director, officer, underwriter and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding, provided that Phage will not be liable in any such case to the extent
that any such loss, claim, damage, liability, (or action or proceeding) or expense arises out of or is based on an untrue statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance on and in conformity with written information furnished to Phage
by such holder or underwriter stating that it is for use in the preparation such documents and, provided further that Phage will not be liable to any Person who participates as an underwriter in the
offering or sale of Registrable Securities or to any other Person, if any, who controls such underwriter within the meaning of the Securities Act, in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding) or expense arises out of such Person's failure to send or give a copy of the final prospectus, as the same may be then supplemented or amended,
within the time required by the Securities Act to the Person asserting the existence of an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such statement or omission was corrected in such final prospectus or an amendment or supplement thereto. Such indemnity will remain
in full force and effect regardless of any investigation made by or on behalf of such holder or any such director, officer, underwriter or controlling person and will survive the transfer of such
securities by such holder. 

	(b)
	Indemnification by the Holders. Phage may require, as a condition to including any Registrable Securities in any registration
statement filed pursuant to this Agreement, that Phage will have received an undertaking satisfactory to it from the prospective seller of such Registrable Securities, to indemnify and hold harmless
(in the same manner and to the same extent as set forth in subdivision (a) of this Section 2.7) Phage, each director of Phage, each officer of Phage and each other Person, if any, who controls
Phage within the meaning of the Securities Act, with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance on and in
conformity with written information furnished to Phage through an instrument duly executed by such seller specifically stating that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or supplement. Any such indemnity will remain in full force and effect, regardless of any investigation made by or on behalf of
Phage or any such director, officer or controlling person and will survive the transfer of such securities by such seller.

	(c)
	Notices of Claims, Etc. Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section 2.7, such indemnified party will, if a claim is to be made against an indemnifying party, give written notice to the latter
of the commencement of such action, provided that the failure of any indemnified party to give notice as provided 

8

 

herein
will not relieve the indemnifying party of its obligations under the preceding subdivisions of this Section 2.7, except to the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is brought against an indemnified party, unless in the opinion of the indemnified party's counsel a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party will be entitled to participate in and to assume the defense, jointly with any other indemnifying party similarly
notified, to the extent that the indemnifying party may wish, 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 the defense, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the
defense other than reasonable costs of investigation. No indemnifying party will, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement of any
such action which does not include as an unconditional term the giving by the claimant or plaintiff to such indemnified party of a release from all liability, or a covenant not to sue, in respect to
such claim or litigation. No indemnified party will consent to entry of any judgment or enter into any settlement of any such action the defense of which has been assumed by an indemnifying party
without the consent of such indemnifying party. 

	(d)
	Other Indemnification. Indemnification similar to that specified in the preceding subdivisions of this Section 2.7 (with appropriate
modifications) will be given by Phage and each seller of Registrable Securities (but only if and to the extent required pursuant to the terms of Section 2.7(b)) with respect to any required
registration or other qualification of securities under any Federal or state law or regulation of any governmental authority, other than the Securities Act. 

9

  

	(e)
	Indemnification Payments. The indemnification required by this Section 2.7 will be made by periodic payments of the amount during the
course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred.

	(f)
	Contribution. If the indemnification provided for in the preceding subdivision of this Section 2.7 is unavailable to an indemnified
party in respect of any expense, loss, claim, damage or liability referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, will contribute to the amount paid
or payable by such indemnified party as a result of such expense, loss, claim, damage or liability (i) in such proportion as is appropriate to reflect the relative benefits received by Phage on
the one hand and the holder or underwriter, as the case may be, on the other from the distribution of the Registrable Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of Phage on the one hand and
of the holder or underwriter, as the case may be, on the other in connection with the statements or omissions which resulted in such expense, loss, damage or liability, as well as any other relevant
equitable considerations. The relative benefits received by Phage on the one hand and the holder or underwriter, as the case may be, on the other in connection with the distribution of the Registrable
Securities will be deemed to be in the same proportion as the total net proceeds received by Phage from the initial sale of the Registrable Securities by Phage to the purchasers bear to the gain, if
any, realized by all selling holders participating in such offering or the underwriting discounts and commissions received by the underwriter, as the case may be. The relative fault of Phage on the
one hand and of the holder or underwriter, as the case may be, on the other will be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by Phage, by the holder or by the underwriter and the parties' relative intent, knowledge, access to information supplied by Phage, by
the holder or by the underwriter and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission, provided that the foregoing
contribution agreement will not inure to the benefit of any indemnified party if indemnification would be unavailable to such indemnified party by reason of the provisions contained in the first
sentence of subdivision (a) of this Section 2.7, and in no event will the obligation of any indemnifying party to contribute under this subdivision (f) exceed the amount that such
indemnifying party would have been obligated to pay by way of indemnification if the indemnification provided for under subdivision (b) of this Section 2.7 had been available under the
circumstances. 

    Phage
and the holders of Registrable Securities agree that it would not be just and equitable if contribution pursuant to this subdivision (f) were determined by pro rata
allocation (even if the holders and any underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph will be deemed to include, subject to the limitations set forth in the preceding sentence and subdivision (c) of this Section 2.7, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending any such action or claim. 

    Notwithstanding
the provisions of this subdivision (f), no holder of Registrable Securities or underwriter will be required to contribute any amount in excess of the amount by which
(i) in the case of any such holder, the net proceeds received by such holder from the sale of Registrable Securities or (ii) in the case of an underwriter, the total price at which the
Registrable Securities 

10

 

purchased by it and distributed to the public were offered to the public exceeds, in any such case, the amount of any damages that such holder or underwriter has otherwise been required to pay by
reason of such untrue or allege untrue statement or omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. 

    3.  Definitions.  As used herein, unless the context otherwise requires, the
following terms have the following respective meanings: 

    "Agreement": As defined in Section 1. 

    "Commission": The Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act. 

    "Common Stock": As defined in Section 1. 

    "Debenture Conversion Shares": As defined in Section 1. 

    "Debentures": As defined in Section 1, such term to include any securities issued in substitution of or in addition to such Debentures. 

    "Exchange Act": The Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder. 

    "Person": A corporation, association, partnership, limited liability company, trust, organization, business, individual, governmental
or political subdivision or a governmental agency. 

    "Registrable Securities": The Securities and any securities issued or issuable with respect to such Securities by way of stock dividend
or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise. Once issued such securities will cease to be Registrable
Securities when (a) a registration statement with respect to the sale of such securities will have become effective under the Securities Act and such securities will have been disposed of in
accordance with such registration statement, (b) they will have been distributed to the public pursuant to Rule 144 (or any successor provision) under the Securities Act, (c) they will
have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer will have been delivered by Phage and subsequent disposition of them will not require
registration or qualification of them under the Securities Act or any similar state law then in force, (d) they will have ceased to be outstanding, (e) on the expiration of the
applicable Registration Maintenance Period or (f) any and all legends restricting transfer have been removed in accordance with the provisions of Rule 144(k) (or any successor provision)
under the Securities Act. 

    "Registration Expenses": All expenses incident to Phage's performance of or compliance with this Agreement, including, without
limitation, all registration, filing and NASD fees, all stock exchange and OTC Bulletin Board or other NASD or stock exchange listing fees, all fees and expenses of complying with securities or blue
sky laws, all word processing, duplicating and printing expenses, messenger and delivery expenses, the fees and disbursements of counsel for Phage and of its independent public accountants, including
the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, the reasonable fees and disbursements of not more than one law firm (not to
exceed $20,000) retained by the holder or holders of more than 50% of the Registrable Securities, premiums and other costs of policies of insurance of Phage against liabilities arising out of the
public offering of the Registrable Securities being registered and any fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but excluding underwriting discounts
and commissions and transfer taxes, if any, provided that, in any case where Registration Expenses are not to be borne by Phage, such expenses will not include salaries of Company personnel or general
overhead expenses of 

11

 

Phage, auditing fees, premiums or other expenses relating to liability insurance required by underwriters of Phage or other expenses for the preparation of financial statements or other data normally
prepared by Phage in the ordinary course of its business or which Phage would have incurred in any event. 

    "Registration Maintenance Period": As defined in Section 2.3. 

    "Securities": As defined in Section 1.2. 

    "Securities Act": The Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated
thereunder. 

    "Securities Purchase Agreement": As defined in Section 1. 

    "Sellers' Representative": Robert Miller or such Person designated by Robert Miller as of the time of disposition of the last of the
Debentures held by the Purchasers (or subsequent Sellers' Representative). 

    "Warrant Shares": As defined in Section 1. 

    4.  Rule 144.  Phage will timely file the reports required to be filed by
it under the Securities Act and the Exchange Act (including but not limited to the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c) of
Rule 144 adopted by the Commission under the Securities Act) and the rules and regulations adopted by the Commission thereunder (or, if Phage is not required to file such reports, will,
on the request of any holder of Registrable Securities, make publicly available other information) and will take such further action as any holder of Registrable Securities may reasonably request, all
to the extent reasonably required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided
by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the Commission.
On the request of any holder of Registrable Securities, Phage will deliver to such holder a written statement as to whether it has complied with the requirements of this Section 4. 

    5.  Amendments and Waivers.  This Agreement may be amended and Phage may take any
action herein prohibited, or omit to perform any act herein required to be performed by it, only if Phage will have obtained the written consent to such amendment, action or omission to act, of the
holder or holders of the sum of 51% or more of the shares of (i) Registrable Securities issued at such time, plus (ii) Registrable Securities issuable on exercise or conversion of the
Securities then constituting derivative securities (if such Securities were not fully exchanged or converted in full as of the date such consent if sought). Each holder of any Registrable Securities
at the time or thereafter outstanding will be bound by any consent authorized by this Section 5, whether or not such Registrable Securities will have been marked to indicate such consent. 

    6.  Nominees for Beneficial Owners.  In the event that any Registrable Securities
are held by a nominee for the beneficial owner, the beneficial owner may, at its election, be treated as the holder of such Registrable Securities for purposes of any request or other action by any
holder or holders of Registrable Securities pursuant to this Agreement or any determination of any number of percentage of shares of Registrable Securities held by an holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any Registrable Securities so elects, Phage may require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Registrable Securities. 

    7.  Notices.  Except as otherwise provided in this Agreement, all notices,
requests and other communications to any Person provided for hereunder will be in writing and will be given to such Person (a) in the case of a party hereto other than Phage, addressed to such
party in the manner set forth in the Securities Purchase Agreement or at such other address as such party will have furnished 

12

 

to Phage in writing, or (b) in the case of any other holder of Registrable Securities, at the address that such holder will have furnished to Phage in writing, or, until any such other holder
so furnishes to Phage an address, then to and at the address of the last holder of such Registrable Securities who has furnished an address to Phage, or (c) in the case of Phage, at the address
set forth on the signature page hereto, to the attention of its President, or at such other address, or to the attention of such other officer, as Phage will have furnished to each holder of
Registrable Securities at the time outstanding. Each such notice, request or other communication will be effective (i) if given by mail, four (4) days after such communication is
deposited in the United States mails with first class postage prepaid, addressed as aforesaid or (ii) if given by any other means (including, without limitation, by fax or air courier), when
delivered at the address specified above, provided that any such notice, request or communication will not be effective until received. 

    8.  Assignment.  This Agreement will be binding on and inure to the benefit of
and be enforceable by the parties hereto. In addition, and whether or not any express assignment will have been made, the provisions of this Agreement which are for the benefit of the parties hereto
other than Phage will also be for the benefit of and enforceable by any subsequent holder of any Registrable Securities. Each of the holders of the Registrable Securities agrees, by accepting any
portion of the Registrable Securities after the date of this Agreement, to the provisions of this Agreement including, without limitation, appointment of the Sellers' Representative to act on behalf
of such holder pursuant to the terms of this Agreement which such actions will be made in the good faith discretion of the Sellers' Representative and be binding on all persons for all purposes. 

    9.  Descriptive Headings.  The descriptive headings of the several sections and
paragraphs of this Agreement are inserted for reference only and will not limit or otherwise affect the meaning of this Agreement. 

    10.  Governing Law.  THIS AGREEMENT WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES WILL BE GOVERNED BY, THE LAWS OF THE STATE OF FLORIDA WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS. 

    11.  Counterparts.  This Agreement may be executed by facsimile and may be signed
simultaneously in any number of counterparts, each of which will be deemed an original, but all such counterparts will together constitute one and the same instrument. 

    12.  Entire Agreement.  This Agreement embodies the entire agreement and
understanding between Phage and each other party hereto relating to the subject matter of this Agreement and supercedes all prior agreements and understandings relating to such subject matter. 

    13.  Severability.  If any provision of this Agreement, or the application of
such provisions to any Person or circumstance, will be held invalid, the remainder of this Agreement, or the application of such provision to Persons or circumstances other than those to which it is
held invalid, will not be affected thereby. 

[SIGNATURE PAGE FOLLOWS]  

13

 
 SIGNATURE PAGE FOR RIGHTS AGREEMENT  

    IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their respective officers duly authorized as of the date first above
written. 

	 	 	PHAGE THERAPEUTICS INTERNATIONAL INC.
	

 	
 	

	 	 	By:	Darren Pylot
	 	 	Title:	President
	

 	
 	

Address:	

Phage Therapeutics International Inc.

22116 23rd Drive SE

Bothell, Washington 98201
	 	 	 	Fax: (425) 482-9511

Tel.: (425) 482-0834

 
 

	
	 	

	

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14

 
SCHEDULE I  

 SCHEDULE OF PURCHASERS  

	Name
	 	Address/Facsimile Number
	 	$ Amount of Subscription

	

	
 	

	
 	

	

	
 	

	
 	

	

	
 	

	
 	

	

	
 	

	
 	

	

	
 	

	
 	

	

	
 	

	
 	

	

	
 	

	
 	

	

	
 	

	
 	

	

	
 	

	
 	

15

QuickLinks

REGISTRATION RIGHTS AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00032-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00032-of-00352.parquet"}]]