Document:

WWW.EXFILE.COM, INC. -- 14886 -- AMERICAN TELECOM SERVICES, INC. -- EXHIBIT 4.1 TO FORM 8-K

     

    EXHIBIT
      4.1

     

    THIS
      WARRANT AND ANY SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF HAVE NOT
      BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
      OR
      UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND HAVE BEEN ACQUIRED FOR
      INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
      DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE MADE WITHOUT AN
      EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
      SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
      THE
      ACT, OR APPLICABLE STATE SECURITIES LAWS.

     

     

    AMERICAN
      TELECOM SERVICES, INC.

     

    WARRANT
      TO PURCHASE 

     

    ____________
      SHARES

     

    OF
      COMMON STOCK

     

    (Void
      after January 30, 2012)

     

     

    No:
      PP-

      
        

      

    

     

     

    This
      certifies that for value, ________________________,
      or
      its
      registered assigns (the “Holder”),
      is
      entitled, subject to the terms set forth below, at any time from and after
      January 30, 2007 (the “Original
      Issue Date”)
      and
      before 5:00 p.m., Eastern Time, on January 30, 2012 (the “Expiration
      Date”),
      to
      purchase from American
      Telecom Services, Inc.,
      a
      Delaware corporation (the “Corporation”),
      __________________________
      (__________) shares
      of
      Common Stock (as defined in Section
      22
      below)
      of the Corporation, upon surrender hereof, at the Principal Office of the
      Corporation referred to below, with a duly executed subscription form in the
      form attached hereto as Exhibit A
      and
      simultaneous payment therefor in lawful, immediately available money of the
      United States or otherwise as hereinafter provided, at an initial exercise
      price
      per share of $4.25 (the “Purchase
      Price”).
      The
      Purchase Price and the number of shares of Common Stock issuable upon exercise
      of this Warrant are subject to further adjustment as provided in Section
      4
      below.
      The term “Warrant,”
as
      used herein, shall mean this Warrant and any other Warrants delivered in
      substitution or exchange therefor as provided herein.

     

    This
      Warrant is one of a series (collectively the “Warrants”)
      issued
      in connection with the Corporation’s sale of its Series A 8% Cumulative
      Convertible Preferred Stock (the “Series
      A Preferred Stock”)
      to
“accredited investors” pursuant to Subscription Agreements (the “Offering”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1. Exercise.
      This
      Warrant may be exercised at any time or from time to time from and after the
      Original Issue Date and before the Expiration Date on any business day (an
      “Exercise
      Date”),
      for
      the full number of shares of Common Stock called for hereby, by surrendering
      it
      at the principal office of the Corporation, at 2406 Peck Road, City of Industry,
      California 90601 (the “Principal
      Office”),
      with
      the subscription form duly executed, together with payment in an amount equal
      to
      (a) the number of shares of Common Stock called for hereby, multiplied
      (b) by the Purchase Price. Payment of the Purchase Price may be made at
      Holder’s choosing either: (1) by payment in immediately available funds; or (2)
      in lieu of any cash payment, in exchange for the number of shares of Common
      Stock equal to the product of (x) the number of shares for which the Warrant
      is
      being exercised multiplied by (y) a fraction, the numerator of which is the
      Purchase Price and the denominator of which is the Fair Market Value (as defined
      below). This Warrant may be exercised for less than the full number of shares
      of
      Common Stock at the time called for hereby, in which case the number of shares
      receivable upon the exercise of this Warrant as a whole, and the sum payable
      upon the exercise of this Warrant as a whole, shall be proportionately reduced.
      Upon a partial exercise of this Warrant in accordance with the terms hereof,
      this Warrant shall be surrendered, and a new Warrant of the same tenor and
      for
      the purchase of the number of such shares not purchased upon such exercise
      shall
      be issued by the Corporation to the Holder without any charge therefor. A
      Warrant shall be deemed to have been exercised immediately prior to the close
      of
      business on the Exercise Date and the Person(s) (as defined in Section
      22)
      entitled to receive the shares of Common Stock issuable upon such exercise
      shall
      be treated for all purposes as the holder of such shares of record as of the
      close of business on such date. Within two (2) business days after such date,
      the Corporation shall issue and deliver to the Person(s) entitled to receive
      the
      same a certificate or certificates for the number of full shares of Common
      Stock
      issuable upon such exercise (with such whole number of shares being determined
      taking into consideration any other Warrants being simultaneously exercised
      by
      such Holder), together with cash, in lieu of any fraction of a share, equal
      to
      such fraction of the then Fair Market Value of one full share of Common Stock
      as
      of the Exercise Date. “Fair
      Market Value”
      as used
      in this Section
      1
      shall
      mean the Closing Sales Price of the Common Stock on the Trading Date immediately
      preceding any Exercise Date (as such each of such terms is defined in
Section
      22
      below).
      Notwithstanding anything to the contrary contained in this Warrant, under no
      circumstances shall the Corporation be required to net cash settle the exercise
      of this Warrant.

     

    2. Shares
      Fully Paid; Payment of Taxes.
      All
      shares of Common Stock issued upon the exercise of this Warrant shall be validly
      issued, fully paid and non-assessable.

     

    3. Transfer
      and Exchange.
      (a)
      Neither this Warrant nor the shares of Common Stock to be issued upon exercise
      hereof (the “Warrant
      Shares”)
      have
      been registered under the Act or any Blue Sky Laws (as such terms are defined
      in
Section
      22
      below).
      This Warrant has been acquired, and the Warrant Shares, when issued, shall
      have
      been acquired, for investment purposes and not with a view to distribution
      or
      resale and may not be pledged, hypothecated, sold, made subject to a security
      interest, or otherwise transferred without: (i) an effective registration
      statement for such Warrant or Warrant Shares under the Act and any applicable
      Blue Sky Laws; or (ii) an opinion of counsel reasonably satisfactory to the
      Corporation that registration is not required under the Act or under any
      applicable Blue Sky Laws. 

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (b) Upon
      compliance with applicable federal and state securities laws as set forth in
      Section
      3(a),
      above,
      this Warrant and all rights hereunder are transferable, in whole or in part,
      on
      the books of the Corporation maintained for such purpose at its Principal Office
      by the Holder in Person or by duly authorized attorney, upon surrender of this
      Warrant together with a completed and executed assignment form in the form
      attached hereto as Exhibit B,
      and
      payment of any necessary transfer tax or other governmental charge imposed
      upon
      such transfer. Upon any partial transfer, the Corporation will issue and deliver
      to the assignee a new Warrant with respect to the shares of Common Stock for
      which it is exercisable that have been transferred, and will deliver to the
      Holder a new Warrant or Warrants with respect to the shares of Common Stock
      not
      so transferred. A Warrant may be transferred only by the procedure set forth
      herein. No transfer shall be effective until such transfer is recorded on the
      books of the Corporation, provided that such transfer is recorded promptly
      by
      the Corporation, and until such transfer on such books, the Corporation shall
      treat the registered Holder hereof as the owner of the Warrant for all
      purposes.

     

    (c) This
      Warrant is exchangeable at the Principal Office for two or more new Warrants,
      each in the form of this Warrant, to purchase the same aggregate number of
      shares of Common Stock, each new Warrant to represent the right to purchase
      such
      number of shares as the Holder shall designate at the time of such exchange,
      but
      which shall not exceed the total number of shares for which this Warrant may
      be
      from time to time exercisable. Two or more Warrants may also be combined into
      a
      single Warrant by delivery of the Warrants to be combined to the Corporation
      at
      the Principal Office.

     

    (d) Transfer
      of the Warrant Shares issued upon the exercise of this Warrant shall be
      restricted in the same manner and to the same extent as the Warrant, and the
      certificates representing such Warrant Shares shall bear substantially the
      following legend, until such Warrant Shares have been registered under the
      Act
      or may be removed as otherwise permitted under the Act:

     

    “THE
      SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE
      STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (i) A REGISTRATION
      STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE
      BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) IN THE OPINION OF COUNSEL
      SATISFACTORY TO THE CORPORATION, REGISTRATION UNDER THE ACT OR SUCH APPLICABLE
      STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
      TRANSFER.”

     

    (e) The
      Holder and the Corporation agree to execute such other documents and instruments
      as counsel to the Corporation reasonably deems necessary to effect the
      compliance of the issuance of this Warrant and any Warrant Shares issued upon
      exercise hereof 

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    with
      applicable federal and state securities laws, including compliance with
      applicable exemptions from the registration requirements of such
      laws.

     

    4. Adjustment
      of Purchase Price.
      

     

     

    (a)
      Adjustment
      for Stock Dividend.
      In case
      the Corporation shall pay or make a dividend or other distribution to all
      holders of its Common Stock payable in shares of Common Stock, the Purchase
      Price in effect at the opening of business on the day next following the date
      fixed for the determination of stockholders entitled to receive such dividend
      or
      other distribution shall be reduced by multiplying such Purchase Price by a
      fraction, of which the numerator shall be the number of shares of Common Stock
      outstanding at the close of business on the date fixed for such determination,
      and the denominator shall be the sum of the numerator and the total number
      of
      shares constituting such dividend or other distribution, such reduction to
      become effective immediately after the opening of business on the day next
      following the date fixed for such determination. For the purposes of this
      Section 4(a), the number of shares of Common Stock at any time outstanding
      shall
      not include shares of Common Stock held in the treasury of the Corporation.
      The
      Corporation will not pay any dividend or make any distribution on shares of
      Common Stock held in the treasury of the Corporation.

     

    (b) Adjustment
      for Splits.
      In case
      the outstanding shares of Common Stock shall be subdivided into a greater number
      of shares of Common Stock, the Purchase Price in effect at the opening of
      business on the day following the day upon which such subdivision becomes
      effective shall be proportionately reduced, and, conversely, in case the
      outstanding shares of Common Stock shall each be combined into a smaller number
      of shares of Common Stock, the Purchase Price in effect at the opening of
      business on the day following the day upon which such combination becomes
      effective shall be proportionately increased, such reduction or increase, as
      the
      case may be, to become effective immediately after the opening of business
      on
      the day following the day upon which such subdivision or combination becomes
      effective. 

     

    (c) Adjustment
      for Sales of Additional Stock below Purchase Price.
      In case
      the Corporation shall at any time after the Original Issue Date issue, grant
      or
      sell any Additional Stock (as defined below) for a consideration, exercise
      or
      conversion price per share less than the Purchase Price in effect immediately
      prior to the issuance or sale of such Additional Stock, or without
      consideration, then forthwith upon such issuance or sale, the Purchase Price
      shall be adjusted immediately thereafter so that it shall equal the price
      determined by multiplying the Purchase Price in effect immediately prior thereto
      by a fraction, (i) the numerator of which shall be the sum of (A) the number
      of
      shares of Common Stock outstanding (treating any convertible securities,
      outstanding options and outstanding warrants on an as-exercised, as-converted
      basis) immediately prior to the issuance of such Additional Stock and (B) the
      number of shares of Common Stock which the aggregate consideration received
      for
      the issuance of such Additional Stock would purchase at the Purchase Price
      in
      effect immediately prior to the issuance of such Additional Stock, and (ii)
      the
      denominator of which shall be the number of shares of Common Stock outstanding
      (treating any convertible securities, outstanding options and outstanding
      warrants as aforesaid) immediately after the issuance of such Additional Stock.
      

     

    For
      the
      purposes of this Section
      4(c),
      “Additional
      Stock”
      means
      shares of Common Stock or options, warrants or other rights to acquire or
      securities convertible into or 

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    exchangeable
      for shares of Common Stock, including shares held in the Corporation’s treasury,
      and shares of Common Stock issued upon the exercise of any options, rights
      or
      warrants to subscribe for shares of Common Stock and shares of Common Stock
      issued upon the direct or indirect conversion or exchange of securities for
      shares of Common Stock, other than:

     

    (i) Common
      Stock issued or issuable upon conversion of the Series A Preferred Stock;

    

    (ii) Common
      Stock issued or issuable upon the exercise of any Warrants; 

    

    (iii) Common
      Stock issued or issuable upon the exercise of purchase, conversion or exchange
      rights included in any options, warrants (inclusive of those issuable to the
      Placement Agent in connection with the Offering), rights or convertible or
      exchangeable securities that are outstanding as of the Original Issue
      Date;

    

    (iv) Common
      Stock or options, warrants or other rights to acquire shares of Common Stock
      issued pursuant to an option, stock purchase or other equity-based plan of
      the
      Corporation or its subsidiaries (including the Performance Accelerated
      Restricted Stock Plan) that has been approved by the Corporation’s Board of
      Directors (including a majority of the Independent Directors) and, to the extent
      required pursuant to the Certificate of Designation for the Series A Preferred
      Stock, the holders of the Series A Preferred Stock voting as a separate class;
      and

    

    (ii) Common
      Stock or any rights, options or warrants to subscribe for, purchase or otherwise
      acquire such shares issued to any consultant to the Corporation (as
      consideration for any non-investment banking and/or merger and
      acquisition-related services), provided
      that if
      at the time of issuance of any such shares, rights, options or warrants the
      sum
      of (x) the cumulative aggregate number of shares of Common Stock issued to
      all
      such consultants after the Original Issue Date and (y) the maximum number of
      number of shares of Common Stock issuable pursuant to options or warrants issued
      to such consultants after the Original Issue Date that are outstanding at such
      reference time exceeds 5% of the total number of shares of Common Stock
      outstanding on a fully-diluted basis as of such reference time, the number
      of
      shares then being issued or that are issuable upon the exercise of such rights,
      options or warrants that exceeds such 5% maximum shall be deemed to constitute
      Additional Stock. 

    

    For
      the
      purpose of any computation to be made in accordance with this Section
      4(c),
      the
      following provisions shall apply:

    

    (i) In
      case
      of the issuance or sale of shares of Additional Stock for a consideration part
      or all of which shall be cash, the amount of the cash consideration therefor
      shall be deemed to be the amount of cash received by the Corporation for such
      shares (or, if shares of Additional Stock are offered by the Corporation for
      subscription, the subscription price, or, if such securities shall be sold
      to
      underwriters or dealers for public offering without a subscription offering,
      the
      initial public offering price) before deducting therefrom any compensation
      paid
      or discount allowed in the sale, underwriting 

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    or
      purchase thereof by underwriters or dealers or others performing similar
      services, or any expenses incurred in connection therewith.

    

    (ii) In
      the
      case of the issuance or sale (otherwise than as a dividend or other distribution
      on any stock of the Corporation) of shares of Series A Preferred Stock for
      a
      consideration part or all of which shall be other than cash, the amount of
      the
      consideration therefor other than cash shall be deemed to be the fair market
      value of such consideration as determined in good faith by the Corporation’s
      Board of Directors. 

    

    (iii) The
      reclassification of securities of the Corporation other than shares of Series
      A
      Preferred Stock into securities including shares of Common Stock shall be deemed
      to involve the issuance of such shares of Common Stock for a consideration
      other
      than cash immediately prior to the close of business on the date fixed for
      the
      determination of security holders entitled to receive such shares, and the
      value
      of the consideration allocable to such shares of Common Stock shall be
      determined as provided in paragraph (ii) immediately preceding.

    

    (iv) In
      the
      case of the issuance of options, rights, or warrants to purchase or subscribe
      for shares of Common Stock, securities convertible into or exchangeable for
      shares of Common Stock, or options, rights or warrants to purchase or subscribe
      for any such convertible or exchangeable securities, the following provisions
      shall apply:

    

    (A) The
      effective price for the issuance, grant or sale of any options, rights or
      warrants shall be deemed to be the minimum purchase price per share provided
      for
      in such options, rights or warrants at the time of issuance plus the
      consideration, if any, received by the Corporation in connection with sale
      or
      issuance of such options, rights or warrants; provided, however, that upon
      the
      termination of such options, rights or warrants, if any thereof shall not have
      been exercised, the Purchase Price then in effect shall forthwith be readjusted
      and thereafter be the Purchase Price that would have been in effect if such
      adjustment been made on the basis of the issuance only of the shares of Common
      Stock actually issued or issuable upon the exercise of those options, rights
      or
      warrants as to which the exercise of rights shall not have expired or terminated
      unexercised.

    

    (B) The
      effective price for the issuance, grant or sale of any convertible or
      exchangeable securities shall be deemed to be the consideration received by
      the
      Corporation in connection with the sale of such securities plus the
      consideration, if any, receivable by the Corporation upon the conversion or
      exchange thereof; provided, however, that upon the termination of the right
      to
      convert or exchange such convertible or exchangeable securities (whether by
      reason of redemption or otherwise), the Purchase Price then in effect shall
      forthwith be readjusted and thereafter be the Purchase Price that would have
      been in effect if such adjustment been made on the basis of the issuance only
      of
      shares actually issued or issuable upon the conversion or exchange of those
      convertible or exchangeable securities as to which the conversion or exchange
      rights shall not have expired or terminated unexercised.

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (C) If
      any
      change shall occur in the price per share provided for in any of the options,
      rights or warrants referred to in paragraph (A) above, or in the price per
      share
      at which the securities referred to in paragraph (B) above are convertible
      or
      exchangeable, such options, rights or warrants or conversion or exchange rights,
      as the case may be, shall be deemed to have expired or terminated on the date
      when such price change became effective in respect of shares not theretofore
      issued pursuant to the exercise or conversion or exchange thereof, and the
      Corporation shall be deemed to have issued upon such date new options, rights
      or
      warrants or convertible or exchangeable securities at the new price in respect
      of the number of shares issuable upon the exercise of such options, rights
      or
      warrants or the conversion or exchange of such convertible or exchangeable
      securities.

    

    (D) No
      adjustment of the Purchase Price shall be made upon the actual issuance of
      such
      Common Stock upon exercise of options, rights or warrants or upon the actual
      issuance of such Common Stock upon conversion or exchange of any convertible
      or
      exchangeable securities in respect of which an adjustment has already been
      made
      under this Section
      4(c)(iv).

    

    (d) Adjustments
      for Noncash Dividends.
      If
      shares of the Corporation’s Capital Stock, evidences of the Corporation’s
      indebtedness or other assets or property of the Corporation is distributed
      to
      all or substantially all holders of Common Stock (other than dividends,
      distributions and rights, warrants, options or securities referred to in
Section
      4(a)
      or
(c)
      above
      and dividends or distributions in cash referred to in Section
      4(e)
      below),
      then
      the
      Purchase Price will be adjusted based on the following formula:

     

    PP(1)
      =
      PP(o) x SP(o)
      - FMV

    SP(o)

     

    where,

     

    
      	
            	PP(o)
              =	
               the
                Purchase Price in effect immediately prior to such
                distribution

            

    

     

    
      	
            	PP(1)
              =	
               the
                Purchase Price in effect immediately after such
                distribution

            

    

     

    
      	
            	SP(o)
              =	
               the
                average of the Closing Sale Prices of shares of Common Stock for
                the ten
                consecutive Trading Days prior to the Trading Day immediately preceding
                the ex-dividend date for such
                distribution

            

    

     

    
      
        	
              	FMV
                =	
                 the
                  fair market value (as determined by the Board of Directors) of
                  the shares
                  of Capital Stock, evidences of indebtedness, assets or property
                  distributed with respect to each outstanding shares of Common Stock
                  on the
                  ex-dividend date for such
                  distribution

              

      

    

     

    An
      adjustment made pursuant to this Section
      4(d)
      shall be
      made successively whenever any such distribution is made and shall become
      effective on the day immediately after the date fixed for the determination
      of
      stockholders entitled to receive such distribution.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (e) Adjustments
      for Cash Dividends.
      If any
      cash dividend or distribution is made to all or substantially all holders of
      shares of Common Stock, the Purchase Price will be adjusted based on the
      following formula:

     

    PP(1)
      =
      PP(o) x SP(o)
      - C

    SP(o)

     

    where,

     

    
      	
            	PP(o)
              =	
               the
                Purchase Price in effect immediately prior to the record date for
                such
                distribution

            

    

     

    
      	
            	PP(1)
              =	
               the
                Purchase Price in effect immediately after the ex-dividend date for
                such
                distribution

            

    

     

    
      	
            	SP(o)
              =	
               the
                average of the Closing Sale Prices of shares of Common Stock for
                the ten
                consecutive Trading Days prior to the Trading Day immediately preceding
                the ex-dividend date of such
                distribution

            

    

     

    
      	
            	C
              =	
               the
                amount in cash per share the Corporation distributes to holders of
                shares
                of Common Stock

            

    

     

    An
      adjustment made pursuant to this Section
      4(e)
      shall
      become effective on the date immediately after the record date for the
      determination of stockholders entitled to receive such dividend or distribution.
      If any dividend or distribution described in this subsection (d) is
      declared but not so paid or made, the Purchase Price shall again be adjusted
      to
      the Purchase Price that would then be in effect if such dividend or distribution
      had not been declared.

     

    (f) Adjustments
      for Certain Share Repurchases.
      The
      Purchase Price will be decreased if the Corporation or any of its subsidiaries
      purchases shares of outstanding Common Stock pursuant to a tender offer or
      exchange offer or otherwise which involves an aggregate consideration for each
      share purchased that exceeds the Closing Sale Price of shares of Common Stock
      on
      the Trading Day immediately after the last date on which tenders or exchanges
      may be made pursuant to the tender offer or exchange offer or the date on which
      any such other purchase is consummated, as applicable (the “Expiration
      Time”).
      The
      Purchase Price will be decreased based on the following formula:

     

     

    PP(1)
      =
      PP(o) x ____SP(1)
      x OS(o)____ 

    AC
      +
      (SP(1) x OS(1))

     

    where,

     

    
      	
            	PP(o)
              =	
               the
                Purchase Price in effect on the date such tender offer or exchange
                offer
                expires or such other purchase is
                consummated

            

    

     

    
      	
            	PP(1)
              =	
               the
                Purchase Price in effect on the day immediately after the date such
                tender
                offer or exchange offer expires or such other purchase is
                consummated

            

    

     

    
      
        
        

      

      
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            	AC
              =	
               the
                aggregate value of all cash and any other consideration (as determined
                by
                the Board of Directors) paid or payable for all shares of Common
                Stock
                that the Corporation or one of its subsidiaries purchases in the
                tender
                offer or exchange offer or other purchase
                transaction

            

    

     

    
      	
            	OS(o)=	
               the
                number of shares of Common Stock outstanding immediately prior to
                the date
                such tender offer or exchange offer expires or such other purchase
                is
                consummated

            

    

     

    
      	
            	OS(1)
              =	
               the
                number of shares of Common Stock outstanding immediately after the
                date
                such tender offer or exchange offer expires or such other purchase
                is
                consummated

            

    

     

    
      	
            	SP(1)
              =	
               the
                average of the Closing Sale Prices of shares of Common Stock for
                the ten
                consecutive Trading Days commencing on the Trading Day immediately
                after
                the date such tender offer or exchange offer expires or such other
                purchase is consummated

            

    

     

    If,
      however, the application of the foregoing formula would result in an increase
      in
      the Purchase Price, no adjustment to the Purchase Price will be made. Any
      adjustment made pursuant to this Section
      4(f)
      shall
      become effective on the date immediately following the Expiration Time. If
      the
      Corporation is obligated to purchase shares pursuant to any such tender or
      exchange offer, but the Corporation is permanently prevented by applicable
      law
      from effecting any such purchases or all such purchases are rescinded, the
      Purchase Price shall again be adjusted to be the Purchase Price that would
      be in
      effect if such tender or exchange offer had not been made.

     

    (g)
      Other
      Adjustments
      If any
      event occurs of the type contemplated by the provisions of this Section
      4
      but not
      expressly provided for by such provisions (including, without limitation, the
      granting of stock appreciation rights, phantom stock rights or other rights
      with
      equity features), then the Corporation's Board of Directors shall make an
      appropriate adjustment in the Purchase Price and the number of shares of Common
      Stock obtainable upon exercise of this Warrant so as to protect the rights
      of
      the Warrant Holder; provided that no such adjustment shall increase the Purchase
      Price or decrease the number of shares of Common Stock obtainable as otherwise
      determined pursuant to this Section
      4.
      

     

    (h) No
      Adjustment for Dividends or Distributions in which Holders
      Participate..
      Notwithstanding the foregoing provisions of this Section 4, no adjustment shall
      be made to the Purchase Price on account of any dividend or other distribution,
      if the holder of Warrants will otherwise participate in such dividend or other
      distributions without conversion solely as a holder of Warrants. If any Rights
      Plan (as defined in Section
      22
      below)
      adopted by the Corporation requires that each share of Common Stock issued
      upon
      the exercise of Warrants at any time prior to the distribution of separate
      certificates representing the Rights (as defined in Section
      22
      below)
      will be entitled to receive Rights as contemplated in Section
      6
      below,
      then, there shall not be any adjustment to Purchase Price pursuant to this
      Section 7 as a result of the issuance of Rights to the holders of Common Stock
      pursuant to such Rights Plan, but an adjustment to the Purchase Price shall
      be
      made pursuant to Section 4(d)
      upon the
      separation of 

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    such
      Rights from the shares of Common Stock, subject to readjustment in the event
      of
      the expiration, termination or redemption of such Rights.

     

    (i) No
      Adjustment in Certain Other Circumstances.
      Except
      as stated in this Section
      4,
      no
      adjustment to the Purchase Price will be made for the issuance of shares of
      Common Stock or any securities convertible into or exchangeable for shares
      of
      Common Stock or the right to purchase shares of Common Stock or such convertible
      or exchangeable securities. In particular, the applicable Purchase Price will
      not be adjusted:

     

    (i)  upon
      the
      issuance of any shares of Common Stock pursuant to any present or future plan
      providing for the reinvestment of dividends or interest payable on securities
      of
      the Corporation and the investment of additional optional amounts in shares
      of
      Common Stock pursuant to customary provisions in any such plan providing for
      such additional optional investments and without any solicitation by the
      Company; or

     

    (ii)  for
      a
      change in the par value of the shares of Common Stock.

     

    (j) Minimum
      Adjustments. No
      adjustment in the Purchase Price shall be required unless such adjustment would
      require a change of at least one percent (1%) in the Purchase Price then in
      effect; provided,
      however,
      that
      any adjustments that by reason of this Section 4(j)
      are not
      required to be made shall be carried forward and taken into account in any
      subsequent adjustment and the Corporation shall make such carried forward
      adjustments, regardless of whether the aggregate adjustment is less than one
      percent (1%), within one year of the first such adjustment carried forward.
      All
      calculations under this Section 4
      shall be
      made by the Corporation and shall be made to the nearest cent. 

     

    (k) Notice
      of Adjustments.
      Whenever the number of shares of Common Stock for which this Warrant is
      exercisable or the Purchase Price shall be adjusted pursuant to this
Section 4,
      the
      Company shall forthwith prepare a certificate to be executed by the chief
      financial officer of the Company setting forth, in reasonable detail, the event
      requiring the adjustment and the method by which such adjustment was calculated,
      specifying the number of shares of Common Stock for which this Warrant is
      exercisable and any related change in the Purchase Price, after giving effect
      to
      such adjustment or change. The Company shall keep at its Principal Office copies
      of all such certificates and cause the same to be available for inspection
      at
      said office during normal business hours by any Holder or any prospective
      transferee of a Warrant designated by a Holder thereof. The Company shall
      promptly cause a signed copy of such certificate to be delivered to each Holder
      in accordance with Section 15
      below.
      Failure to deliver such notice shall not affect the legality or validity of
      any
      such adjustment.

     

    (l) Treatment
      of Treasury Stock.
      For
      purposes of this Section 4,
      the
      number of shares of Common Stock at any time outstanding shall not include
      shares held in the treasury of the Corporation, unless such treasury shares
      participate in any distribution or dividend that requires an adjustment pursuant
      to this Section 4.

     

    (m) Adjustment
      of Number of Warrant Shares.
      Upon
      each adjustment in the Purchase Price pursuant to this Section
      4,
      the
      number of Warrant Shares purchasable hereunder 

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    shall
      be
      adjusted, to the nearest one-ten thousandth (1/10,000) of a share of Common
      Stock, to the product obtained by multiplying the number of Warrant Shares
      purchasable immediately prior to such adjustment by a fraction, (i) the
      numerator of which shall be the Purchase Price immediately prior to such
      adjustment, and (ii) the denominator of which shall be the Purchase Price
      immediately thereafter.

     

    5.Effect
      of Reclassification, Consolidation, Merger or Sale.
      (a) If
      the Corporation (i) reclassifies or changes its Common Stock (other than
      changes in par value or resulting from a subdivision or combination),
      (ii) consolidates or combines with or merges into or is a party to a
      binding share exchange with any Person or (iii) sells or conveys or
      otherwise disposes to another Person all or substantially all of the
      Corporation’s property and assets, and as a result of which the holders of
      shares of Common Stock receive (or the shares of Common Stock are converted
      into) stock, other securities or other property or assets (including cash or
      any
      combination thereof) with respect to or in exchange for shares of Common Stock,
      then, following such reclassification, change, consolidation, combination,
      merger, share exchange, sale, conveyance or other disposition, each Warrant
      then
      outstanding will, without the consent of the Holder thereof, become exercisable
      for the purchase only of the kind and amount of shares of stock, other
      securities, other property or assets (including cash or any combination thereof)
      receivable, upon such reclassification, change, consolidation, combination,
      merger, share exchange, sale, conveyance or other disposition by a holder of
      the
      number of shares of Common Stock purchasable upon exercise of such Warrant
      immediately prior thereto, after giving effect to any adjustment event. In
      the
      event holders of Common Stock have the opportunity to elect the form of
      consideration to be received in such transaction, the type and amount of
      consideration that Holders of Warrants would have been entitled to receive
      will
      be deemed to be the weighted average of the types and amounts of consideration
      received by the holders of Common Stock that affirmatively make an election.
      The
      Corporation will not become party to any such transaction unless its terms
      are
      consistent with the foregoing.

     

    (b) The
      Corporation shall cause notice of the application of this Section 5
      to be
      delivered to each Holder of the shares of Series A Preferred Stock in accordance
      with Section 15
      below
      within 15 days after the occurrence of any of the events specified in
Section 5(a)
      and
      shall issue a press release containing such information and publish such
      information on its web site. Failure to deliver such notice shall not affect
      the
      legality or validity of any conversion right pursuant to this Section 5.

     

    (c) The
      above
      provisions of this Section 5
      shall
      similarly apply to successive reclassifications, changes, consolidations,
      mergers, combinations, sales and conveyances.

     

    6.
      Rights
      Issued in Respect of Common Stock Issuable Upon Exercise.
      If at
      the time that any shares Common Stock are issued upon exercise of this Warrant
      the Corporation has a Rights Plan in effect, in addition to receiving the number
      of shares of Common Stock required to be issued to the Holder of this Warrant
      pursuant to Section
      1
      above.
      such holder shall be entitled to receive the number of Rights issuable in
      respect of such shares of Common Stock under the Rights Plan, if any, and the
      certificates representing the shares of Common Stock issued pursuant to
Section
      1 shall
      bear such legends, if any, as may be provided by the terms of the Rights Plan.
      

    

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    7. Notices
      of Certain Corporate Events.
      In
      case:

    

    A. the
      Corporation shall take a record of the holders of its Common Stock (or other
      stock or securities at the time receivable upon the exercise of the Warrant)
      for
      the purpose of entitling them to receive any dividend or other distribution,
      or
      any right to subscribe for or purchase any shares of stock of any class or
      any
      other securities, or to receive any other right, or

     

    B. of
      any
      voluntary dissolution, liquidation or winding-up of the Corporation,
then,
      and
      in each such case, the Corporation will mail or cause to be mailed to each
      holder of a Warrant at the time outstanding a notice specifying, as the case
      may
      be, (a) the date on which a record is to be or has been taken for the
      purpose of such dividend, distribution or right, and stating the amount and
      character of such dividend, distribution or right, or (b) the date on which
      such dissolution, liquidation or winding-up is expected to take place (the
      “Payment
      Date”),
      and
      the time, if any is to be fixed, as of which the holders of record of Common
      Stock (or such stock or securities at the time receivable upon the exercise
      of
      the Warrants) shall be entitled to exchange their shares of Common Stock (or
      such other stock or securities) for securities or other property deliverable
      upon such dissolution, liquidation or winding-up. Such notice shall be mailed
      at
      least ten (10) days prior to the Payment Date therein specified.

     

    8. Loss
      or Mutilation.
      Upon
      receipt by the Corporation of evidence satisfactory to it (in the exercise
      of
      reasonable discretion) of the ownership of and the loss, theft, destruction
      or
      mutilation of any Warrant and (in the case of loss, theft or destruction) of
      indemnity and bond satisfactory to it (in the exercise of reasonable
      discretion), and (in the case of mutilation) upon surrender and cancellation
      thereof, the Corporation will execute and deliver in lieu thereof a new Warrant
      of like tenor.

     

    9. No
      Impairment.
      The
      Company shall not by any action, including, without limitation, amending its
      charter documents or through any reorganization, reclassification, transfer
      of
      assets, consolidation, merger, dissolution, issue or sale of securities or
      any
      other similar 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
      actions as may be necessary or appropriate to protect the rights of the Holder
      against impairment. Without limiting the generality of the foregoing, the
      Company shall take all such action as may be necessary or appropriate in order
      that the Company may validly and legally issue fully paid and nonassessable
      shares of Common Stock upon the exercise of this Warrant, free and clear of
      all
      liens, and shall use its best efforts to comply with all applicable foreign
      or
      United States federal and state laws and regulations and to obtain all such
      authorizations, exemptions or consents from any public regulatory body having
      jurisdiction over it as may be necessary to enable the Company to perform its
      obligations under this Warrant.

     

    10. Reservation
      of Common Stock.
      The
      Corporation shall at all times reserve and keep available for issue upon the
      exercise of Warrants such number of its authorized but unissued shares of Common
      Stock as will be sufficient to permit the exercise in full of this Warrant.
      All
      of the Warrant Shares will, upon issuance and receipt of the Purchase Price
      therefor, be fully paid and nonassessable, and free from all contractual
      preemptive rights, rights of first refusal or first offer with respect to the
      issuance thereof. If at any time, notwithstanding 

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    the
      Company’s compliance with its obligations under Section
      9
      above,
      the number of authorized but unissued shares of Common Stock shall not be
      sufficient for such purposes, the Corporation shall take such corporate action
      as may, in the opinion of its counsel, be necessary to increase its authorized
      but unissued shares of Common Stock to such number of shares as shall be
      sufficient for such purpose and the obligation to issue such shares shall be
      suspended until such action has been taken.

    

    11. Registration
      Rights.
      The
      Holder of this Warrant is entitled to have the Warrant Shares registered for
      resale under the Act, pursuant to and in accordance with the Registration Rights
      Agreement among the Corporation, the Holder and the other investors who were
      issued Warrants in the Offering.

     

    12. No
      Rights as Stockholder Conferred by Warrants.
      The
      Warrant shall not entitle the Holder hereof to any of the rights, either at
      law
      or in equity, of a stockholder of the Corporation. The Holder shall, upon the
      exercise hereof, not be entitled to any dividend that may have accrued or which
      may previously have been paid with respect to shares of stock issuable upon
      the
      exercise of the Warrant.

     

    13. Endorsement
      of Warrants.
      The
      Warrant when presented or surrendered for exchange, transfer or registration
      shall be accompanied (if so required by the Corporation) by an assignment in
      the
      form attached hereto as Exhibit
      B
      or such
      other written instrument of transfer, in form satisfactory to the Corporation,
      duly executed by the registered Holder or by his duly authorized
      attorney

     

    14. Agreement
      of Warrant Holders.
      The
      Holder, and to the extent that portions of this Warrant are assigned and there
      is more than one Holder of Warrants exercisable for the Warrant Shares, every
      holder of a Warrant, by accepting the same, consents and agrees with the
      Corporation and with all other Warrant holders that: (a) the Warrants are
      transferable only as permitted by Section
      3
      above;
      (b) the Warrants are transferable only on the registry books of the Corporation
      as herein provided; and (c) the Corporation may deem and treat the Person in
      whose name the Warrant certificate is registered as the absolute owner thereof
      and of the Warrants evidenced thereby for all purposes whatsoever, and the
      Corporation shall not be affected by any notice to the contrary.

     

    15. Payment
      of Taxes.
      The
      Corporation will pay all stamp, transfer and other similar taxes payable in
      connection with the original issuance of this Warrant and the Warrant Shares
      issued upon the exercise hereof, provided, however, that the Corporation shall
      not be required to (i) pay any such tax which may be payable in respect of
      any
      transfer involving the transfer and delivery of this Warrant or the issuance
      or
      delivery of certificates for shares of Common Stock issuable upon exercise
      thereof in a name other than that of the registered Holder of this Warrant;
      (ii)
      issue or deliver any certificate for Warrant Shares until any such tax required
      to be paid under clause (i) shall have been paid, all such tax being payable
      by
      the Holder of this Warrant at the time of surrender; or (iii) pay any such
      tax
      based on the income of the Holder.

     

    16. Entire
      Agreement.
      This
      Warrant constitutes the full and entire understanding and agreement among the
      parties with regard to the subject matter hereof and no party shall be liable
      

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    or
      bound
      to any other party in any manner by any representations, warranties, covenants
      or agreements except as specifically set forth herein.

     

    17. Successors
      and Assigns.
      All
      covenants and provisions of this Warrant by or for the benefit of the
      Corporation or the Holder of this Warrant shall bind and inure to the benefit
      of
      their respective successors, assigns, heirs and personal
      representatives.

     

    18. Notices.
      All
      notices and other communications from the Corporation to the Holder of this
      Warrant shall be deemed delivered two Business Days after mailing if mailed
      by
      first class, registered or certified mail, postage prepaid, to the address
      furnished to the Corporation in writing by the Holder or on the date of delivery
      if delivered by hand. All notices and other communications from the Holder
      of
      this Warrant to the Corporation shall be shall be deemed delivered two Business
      Days if mailed by first class, registered or certified mail, postage prepaid,
      to
      the Corporation at its Principal Office or on the date of delivery if delivered
      by hand.

     

    19. Change;
      Modifications; Waiver.
      No
      terms of this Warrant may be amended, waived or modified except by the express
      written consent of the Corporation and the holders of a majority in interest
      of
      the Warrants; provided
      that any
      amendment or waiver that by its terms would adversely affect the Holder in
      a
      manner different from the holders of the Warrants generally shall require the
      express written consent of the Holder.

     

    20. Headings.
      The
      headings in this Warrant are for purposes of convenience in reference only,
      and
      shall not be deemed to constitute a part hereof.

     

    21. Governing
      Law, Etc.
      This
      Warrant shall be governed by and construed in accordance with the internal
      laws
      of the State of New York without regard to the conflicts of laws principles
      thereof. The parties hereto hereby irrevocably agree that any suit or proceeding
      arising directly and/or indirectly pursuant to or under this Warrant, shall
      be
      brought solely in a federal or state court located in the City, County and
      State
      of New York. By its execution hereof, the parties hereby covenant and
      irrevocably submit to the in personam
      jurisdiction of the federal and state courts located in the City, County and
      State of New York and agree that any process in any such action may be served
      upon any of them personally, or by certified mail or registered mail upon them
      or their agent, return receipt requested, with the same full force and effect
      as
      if personally served upon them in New York City. The parties hereto waive any
      claim that any such jurisdiction is not a convenient forum for any such suit
      or
      proceeding and any defense or lack of in personam
      jurisdiction with respect thereto. In the event of any such action or
      proceeding, the party prevailing therein shall be entitled to payment from
      the
      other party hereto of all of its reasonable and documented legal fees and
      expenses.

     

    22. Additional
      Definitions.
      For
      purposes of this Warrant, the following terms not otherwise defined herein
      shall
      have the meanings indicated:

     

    “Act”
      means the Securities Act of 1933, as amended, and the rules and regulations
      thereunder.

     

    “Affiliate”
      of any Person means any other Person directly or indirectly controlling or
      controlled by or under direct or indirect common control with such Person.
      For
      the purposes of 

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    this
      definition, “control” when used with respect to any Person means the power to
      direct the management and policies of such Person, directly or indirectly,
      whether through the ownership of voting securities, by contract or otherwise;
      and the terms “controlling” and “controlled” have meanings correlative to the
      foregoing.

     

    “Blue
      Sky
      Laws” means any state securities or “blue sky” laws.

     

    “Board
      of
      Directors” means either the board of directors of the Corporation or any duly
      authorized committee of such board.

     

    “Business
      Day” means any day other than a Saturday, Sunday or a day on which state or U.S.
      federally chartered banking institutions in New York, New York are not required
      to be open.

     

    “Closing
      Sale Price” of the Common Stock or other capital stock or similar equity
      interests on any date means the closing sale price per share (or, if no closing
      sale price is reported, the average of the closing bid and ask prices or, if
      more than one in either case, the average of the average closing bid and the
      average closing ask prices) on such date as reported on the principal United
      States securities exchange on which Common Stock or such other capital stock
      or
      similar equity interests are traded or, if the Common Stock or such other
      Capital Stock or similar equity interests are not listed on a United States
      national or regional securities exchange, as reported by The Nasdaq Global
      Market or by the National Quotation Bureau Incorporated. In the absence of
      such
      quotations, the Board of Directors of the Corporation shall be entitled to
      determine the Closing Sale Price on the basis it considers appropriate, which
      determination shall be conclusive. The Closing Sale Price shall be determined
      without reference to any extended or after hours trading.

     

    “Common
      Stock” means any shares of any class of the Corporation that has no preference
      in respect of dividends or of amounts payable in the event of any voluntary
      or
      involuntary liquidation, dissolution or winding up of the Corporation and that
      is not subject to redemption by the Corporation. However, shares of Common
      Stock
      issuable on exercise of this Warrant shall include only shares of the class
      designated as Common Stock of the Corporation as of the Original Issue Date
      or
      shares of any class or classes resulting from any reclassification or
      reclassifications thereof and that have no preference in respect of dividends
      or
      of amounts payable in the event of any voluntary or involuntary liquidation,
      dissolution or winding up of the Corporation and which are not subject to
      redemption by the Corporation; provided
      that if
      at any time there shall be more than one such resulting class, the shares of
      each such class then so issuable on conversion shall be substantially in the
      proportion that the total number of shares of such class resulting from all
      such
      reclassifications bears to the total number of shares of all such classes
      resulting from all such reclassifications.

     

    “Person”
      means an individual, a corporation, a partnership, a limited liability company,
      an association, a trust or any other entity or organization, including a
      government or political subdivision or an agency or instrumentality
      thereof.

     

    “Placement
      Agent” means Northeast Securities, Inc. 

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    “Rights”
      means any Common Stock purchase rights, preferred stock purchase rights or
      other
      rights issued pursuant to a Rights Plan.

     

    “Rights
      Plan” means any stockholder rights plan or agreement adopted by the Corporation,
      as the same may be amended from time to time.

     

    “Trading
      Day” means a day during which trading in securities generally occurs on The
      Nasdaq Global Market or, if the applicable security is not listed on The Nasdaq
      Global Market, on the principal other national or regional securities exchange
      on which the applicable security is then listed or, if the applicable security
      is not listed on a national or regional securities exchange, on The Nasdaq
      Global Market or, if the applicable security is not quoted on The Nasdaq Global
      Market, on the principal other market on which the applicable security is then
      traded (provided that no day on which trading of the applicable security is
      suspended on The Nasdaq Global Market or such exchange or other trading market
      will count as a Trading Day).

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    WARRANT
      SIGNATURE PAGE

     

    

     

    

     

    Dated:
      January 30, 2007

    
      	 	 	 
	 	
              AMERICAN
                TELECOM SERVICES, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              
Name:
              Lawrence Burstein
	 	Title:
              Chairman

    

    

    

    

     

    Warrant
      #PP-_________

    Issued
      to
      __________________

    For
      _________ Shares

    

    

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    SUBSCRIPTION
      FORM

     

    (To
      be
      executed only upon exercise of Warrant)

     

    

     

    The
      undersigned registered owner of this Warrant irrevocably exercises this Warrant
      and purchases _______ shares of the Common Stock of American Telecom Services,
      Inc., purchasable with this Warrant, and herewith makes payment therefor, all
      at
      the price and on the terms and conditions specified in this Warrant, either
      by
      (i) payment by cash or check, and/or (ii) a cashless exercise.

     

    

    Dated:

    
      

    

    

    

    

     

    
      	 	
              
                

              

              (Signature
                of Registered Owner)

              

               

                

              

              (Street
                Address)

              

               

                

              

              (City
                / State / Zip Code)

               

            

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      B

     

    FORM
      OF ASSIGNMENT

    

     

    FOR
      VALUE RECEIVED
      the
      undersigned registered owner of this Warrant hereby sells, assigns and transfers
      unto the Assignee named below all of the rights of the undersigned under the
      within Warrant, with respect to the number of shares of Common Stock set forth
      below:

     

     

    
      	
              Name
                of Assignee

            	
              Address

            	
              Number
                of
                Shares

            

    

          

     

    and
      does
      hereby irrevocably constitute and appoint __________________________ Attorney
      to
      make such transfer on the books of American Telecom Services, Inc., maintained
      for the purpose, with full power of substitution in the premises.

     

    Dated:

    
      

    

     

    
      	 	
              
                

              

              (Signature)

              

               

                

              

              (Witness)

              
 

            

    

     

    The
      undersigned Assignee of the Warrant hereby makes to American Telecom Services,
      Inc., as of the date hereof, with respect to the Assignee, all of the
      representations and warranties made by the Holder, and the undersigned Assignee
      agrees to be bound by all the terms and conditions of the Warrant and the
      American Telecom Services, Inc. Registration Rights Agreement, . by and between
      American Telecom Services, Inc. and the Holder.

    
      Dated:

      
        

      

       

      
        	 	
                
                  

                

                (Signature)WWW.EXFILE.COM, INC. -- 14886 -- AMERICAN TELECOM SERVICES, INC. -- EXHIBIT 10.1 TO FORM 8-K

     

    EXHIBIT
      10.1

    REGISTRATION
      RIGHTS AGREEMENT

     

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of January 30, 2007, by and between American Telecom
      Services, Inc., (the “Company”),
      and
      each purchaser of securities of the Company pursuant to a Subscription Agreement
      (as defined below) (each a “Purchaser”
and
      collectively, the “Purchasers”),
      a
      list of which is attached hereto as Annex
      A.
      This
      Agreement is made pursuant to Subscription Agreements by and between the Company
      and each Purchaser (the “Subscription
      Agreement”),
      submitted in accordance with and subject to the terms and conditions described
      in the Subscription Agreement, including all documents incorporated by reference
      therein and all attachments, schedules and exhibits thereto, relating to the
      offering (the “Offering”)
      by the
      Company (i)
      of
      its 8% Series A Cumulative Convertible Preferred Stock, par value $0.001 per
      share (the “Preferred
      Stock”)
      and
      (ii) warrants (each a “Warrant”
and
      collectively the “Warrants”)
      to
      purchase shares of the Company’s common stock, par value $0.001 (the
“Common
      Stock”).
      The
      Conversion Shares and the Warrant Shares have the registration rights as set
      forth herein.

     

    The
      Company and the Purchasers hereby agree as follows:

     

    1. Definitions. Capitalized
      terms used but not otherwise defined in this Agreement shall have the meanings
      assigned to such terms in the Certificate of Designation (as defined below).
      As
      used in this Agreement, the following terms shall
      have the following meanings:

     

    “Agreement”
shall
      have the meaning set forth in the preamble.

     

    “Certificate
      of Designation”
means
      the Certificate of Designation heretofore filed by the Company with the
      Secretary of State of the State of Delaware setting forth the designations
      and
      the powers, preferences and rights, and the qualifications, limitations and
      restrictions, of the Preferred Stock.

     

    “Closing
      Date”
shall
      mean the initial closing of the Offering.

     

    “Commission”
means
      the United States Securities and Exchange Commission.

     

    “Common
      Stock”
shall
      have the meaning set forth in the preamble.

     

    “Company”
shall
      have the meaning set forth in the preamble.

     

    “Conversion
      Shares”
      means
      shares of Common Stock issuable upon conversion of the Preferred Stock,
      including any such shares issued in respect of accumulated but unpaid dividends
      on the Preferred Stock.

     

    “Effective
      Date”
shall
      mean the date on which the Shelf Registration Statement shall have been declared
      effective by the Commission. 

     

    “Effectiveness
      Period”
shall
      have the meaning set forth in Section
      2(a).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Filing
      Date”
shall
      mean no later than sixty (60) days after the Closing Date. 

     

    “Holder”
or
      “Holders”
means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities (including any permitted assignee).

     

    “Indemnified
      Party”
shall
      have the meaning set forth in Section 5(c).

     

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 5(c). 

     

    “Lockup
      Commencement Date”
      means
      the Effective Date. 

     

    “Lockup
      Period”
      means
      the period commencing on the Lockup Commencement Date and ending at the Lockup
      Termination Time. 

     

    “Lockup
      Termination Time”
      means
      4:00 pm, New York City time, on the 90th
      day
      following the Lockup Commencement Date.

     

    “Losses”
shall
      have the meaning set forth in Section 5(a).

     

    “Offering”
shall
      have the meaning set forth in the preamble.

     

    “Person”
shall
      mean an
      individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

    “Piggyback
      Registration”
shall
      have the meaning set forth in Section
      2(b).

     

    “Placement
      Agent”
      shall
      mean Northeast Securities, Inc.

     

    “Placement
      Agent’s Warrants”
      shall
      mean those warrants issuable to the Placement Agent in connection with the
      Offering.

     

    “Preferred
      Stock”
shall
      have the meaning set forth in the preamble.

     

    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

     

    “Prospectus”
means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by any prospectus supplement, with respect to the terms of the offering of
      any
      portion of the Registrable Securities covered by the Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    “Purchaser”
shall
      have the meaning set forth in the preamble.

     

    “Registrable
      Securities”
means
      (i) the Conversion Shares, (ii) the Warrant Shares and (iii) any shares of
      Common Stock or other capital stock issued or issuable upon any stock split,
      dividend or other distribution, recapitalization, share exchange, anti-dilution
      adjustment or similar event with respect to the foregoing or otherwise issuable
      in respect of the Preferred Stock and/or the Warrants pursuant to any provisions
      of the Warrants and/or the Certificate of Designation.

     

    “Registration
      Statement”
means
      any registration statement required to be filed hereunder (which, at the
      Company's option, may be an existing registration statement of the Company
      previously filed with the Commission, but not declared effective), including
      (in
      each case) the Prospectus, amendments and supplements to the registration
      statement or Prospectus, including pre- and post-effective amendments, all
      exhibits thereto, and all material incorporated by reference or deemed to be
      incorporated by reference in the registration statement.

     

    “Rule 424”
means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as
      such Rule may be amended from time to time, or any similar Rule or
      regulation hereafter adopted by the Commission having substantially the same
      effect as such Rule.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Shelf
      Registration Statement”
shall
      have the meaning set forth in Section
      2(a).

     

    “Subscription
      Agreement”
shall
      have the meaning set forth in the preamble.

     

    “Underwritten
      Secondary Offering”
shall
      have the meaning set forth in Section
      2(c).

     

    “Warrants”
shall
      have the meaning set forth in the preamble.

     

    “Warrant
      Shares”
      means
      all
      shares of Common Stock issuable upon exercise of the Warrants and the Placement
      Agent’s Warrants, respectively.

     

    2. Registration.

     

    (a) Mandatory
      Registration.
      No later
      than the Filing Date, the Company shall prepare and file with the Commission
      a
      Registration Statement covering the resale of all of the Registrable Securities
      for an offering to be made on a continuous basis pursuant to Rule 415 (a
“Shelf
      Registration Statement”).
      The
      Shelf Registration Statement required hereunder shall be on Form S-1 or Form
      S-3
      (except if the Company is not then eligible to register for resale the
      Registrable Securities on Form S-1 or Form S-3, in which case the Shelf
      Registration Statement shall be on another appropriate form in accordance
      herewith). The Shelf Registration Statement required hereunder shall contain
      the
      Plan of Distribution, attached hereto as Annex
      B
      (which
      may be modified to respond to comments, if any, received by the Commission).
      The
      Company shall use its best efforts to cause the Shelf Registration Statement
      to
      be declared effective one hundred twenty
      (120)
      days following the Closing Date.
      The
      Company shall use its best efforts to keep the Shelf Registration Statement
      continuously effective under the Securities Act until the 

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    earlier
      date when all Registrable Securities (i) have been sold pursuant to the Shelf
      Registration Statement or an exemption from the registration requirements of
      the
      Securities Act and (ii) five (5) years from the Effective Date (the
“Effectiveness
      Period”).
      If the
      Shelf Registration Statement does not become effective within 180 days following
      the Closing Date or, once it becomes effective, such effectiveness is thereafter
      suspended at any time, the Effectiveness Period shall be increased by the number
      of days during which the Shelf Registration Statement is not effective. Other
      than Registrable Securities held by a Holder, no other securities of the Company
      may be included in the Shelf Registration Statement, without the prior written
      consent of Holders of a majority in interest of Registrable
      Securities.

     

    (b) Piggyback
      Registrations Rights.
      If the
      Company shall determine to prepare and file with the Commission a Registration
      Statement relating to an offering for its own account or the account of others
      under the Securities Act of any of its equity securities (other than on Form
      S-4
      or Form S-8 or their then equivalents relating to equity securities to be issued
      solely in connection with any acquisition of any entity or business or equity
      securities issuable in connection with stock option or other employee benefit
      plans) (a “Piggyback
      Registration”)
      at a
      time when no Shelf Registration Statement is effective (whether during or after
      the Effectiveness Period), then the Company shall send to each Holder a written
      notice of such determination at least twenty (20) days prior to the filing
      of
      any such Registration Statement and shall include in such Registration Statement
      all Registrable Securities; provided,
      however,
      that
      (i) if, at any time after giving written notice of is intention to register
      any
      securities and prior to the effective date of the Registration Statement filed
      in connection with such Piggyback Registration, the Company determines for
      any
      reason not to proceed with such Piggyback Registration, the Company will be
      relieved of its obligation to register any Registrable Securities in connection
      with such Piggyback Registration and (ii) in case of a determination by the
      Company to delay such Piggyback Registration, the Company will be permitted
      to
      delay the registration of Registrable Securities for the same period as the
      delay in registering the other securities to be registered in such Piggyback
      Registration. If the Piggyback Registration involves an underwritten offering
      of
      securities and the underwriters advise the Company in writing (with a copy
      to
      each Holder of Registrable Securities who has requested to the inclusion of
      such
      securities in such offering) that, in its opinion, the amount of Registrable
      Securities requested to be included in such Piggyback Registration would
      materially adversely affect such offering, or the timing thereof, then the
      Company will include in such registration, to the extent of the amount and
      class
      which the Company is so advised can be sold without such material adverse effect
      in such offering: First, all securities proposed to be sold by the Company
      for
      its own account; second, the Registrable Securities requested to be included
      in
      such registration pursuant to this Section 2(b) and all other securities being
      registered pursuant to the exercise of contractual rights comparable to the
      rights granted in this Section 2(b), pro rata based on the estimated gross
      proceeds from the sale thereof; and third all other securities requested to
      be
      included in such registration. Each Holder of Registrable Securities shall
      be
      entitled to have its Registrable Securities included in an unlimited number
      of
      Piggyback Registrations pursuant to this Section 2(b).

    

    (c) If
      the
      Holders of Registrable Securities notify the Company that they intend to effect
      an underwritten offering of Registrable Securities pursuant to the Shelf
      Registration Statement (an “Underwritten
      Secondary Offering”),
      the
      Company shall not file or 

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    cause
      to
      be effected any other registration of any of its equity securities or securities
      convertible or exchangeable into or exercisable for its equity securities under
      the Securities Act (except on Form S-8 or any successor form), whether on its
      own behalf or at the request of any holder or holders of such securities, until
      a period of 90 days has elapsed from the commencement of such underwritten
      offering.

    

    3. Registration
      Procedures.
      Whenever
      required under Section 2 to effect the registration of any Registrable
      Securities, the Company shall, as expeditiously as practicable:

     

    (a)  Not
      less
      than five (5) business days prior to the filing of the Registration Statement
      or
      any related Prospectus or any amendment or supplement thereto, furnish to each
      Holder, a draft of the Registration Statement, or any related Prospectus or
      any
      amendment or supplement thereto.

     

    (b)  (i)
      Use
      its best efforts to prepare and file with the Commission such amendments,
      including post-effective amendments, to the Registration Statement and the
      Prospectus used in connection therewith continuously effective during the
      applicable offering period (and, in the case of the Shelf Registration Statement
      as may be necessary to keep the Registration Statement continuously effective
      as
      to the applicable Registrable Securities during the Effectiveness Period);
      (ii)
      use its best efforts to cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement, and as so supplemented
      or
      amended to be filed pursuant to Rule 424; and (iii) respond to any comments
      received from the Commission with respect to the Registration Statement or
      any
      amendment thereto.

     

    (c)  Notify
      as
      promptly as reasonably possible, but no later than one (1) business day, each
      Holder of Registrable Securities included in the Registration Statement: (i)
      (A)
      when a Prospectus or any Prospectus supplement or post-effective amendment
      to
      the Registration Statement has been filed, provided
      such
      Holder has previously requested in writing to receive notice of such filing;
      (B)
      when the Commission notifies the Company whether there will be a “review” of the
      Registration Statement and whenever the Commission comments in writing on the
      Registration Statement, provided
      such
      Holder has previously requested in writing to receive notice of such
      notification (and the Company shall upon written request from any Holder,
      provide to such Holder, true and complete copies of such comments and all
      written responses thereto, subject, if appropriate, to the execution by such
      Holder of a confidentiality agreement in form acceptable to the Company); and
      (C) when the Registration Statement or any post-effective amendment has become
      effective; (ii) of any request by the Commission or any other Federal or state
      governmental authority during the period of effectiveness of the Registration
      Statement for amendments or supplements to the Registration Statement or
      Prospectus or for additional information; (iii) of the issuance by the
      Commission or any other federal or state governmental authority of any stop
      order suspending the effectiveness of the Registration Statement covering any
      or
      all of the Registrable Securities or the initiation of any Proceedings for
      that
      purpose; (iv) of the receipt by the Company of any notification with respect
      to
      the suspension of the qualification or exemption from qualification of any
      of
      the Registrable Securities for sale in any jurisdiction, or the initiation
      of
      any Proceeding for such purpose; and (v) of the occurrence of any event or
      passage of time that makes the financial statements included in the Registration
      Statement ineligible for inclusion therein or any statement made in

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    the
      Registration Statement or Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference untrue in any material respect or that
      requires any revisions to the Registration Statement, Prospectus or other
      documents so that, in the case of the Registration Statement or the Prospectus,
      as the case may be, it will not contain any untrue statement of a material
      fact
      or omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in light of the circumstances under which they were
      made, not misleading.

     

    (d)  Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of
      (i) any order suspending the effectiveness of the Registration Statement, or
      (ii) any suspension of the qualification (or exemption from qualification)
      of
      any of the Registrable Securities for sale in any jurisdiction, at the earliest
      practicable moment.

     

    (e)  Promptly
      deliver to each Holder no later than five (5) business days after the Effective
      Date, without charge, two (2) copies of the Prospectus or Prospectuses
      (including each form of prospectus) and each amendment or supplement thereto
      (and, upon the request of the Holder such additional copies as such Persons
      may
      reasonably request in connection with resales by the Holder of Registrable
      Securities). The Company hereby consents to the use of such Prospectus and
      each
      amendment or supplement thereto by the Holder in connection with the offering
      and sale of the Registrable Securities covered by such Prospectus and any
      amendment or supplement thereto, except after the giving of any notice pursuant
      to Section 3(c).

     

    (f)  Prior
      to
      any resale of Registrable Securities by a Holder, use its best efforts to
      register or qualify or cooperate with the selling Holders in connection with
      the
      registration or qualification (or exemption from the registration or
      qualification) of such Registrable Securities for the resale by the Holder
      under
      the securities or Blue Sky laws of the State of New York and such additional
      jurisdictions within the United States as such Holder may reasonably request,
      to
      use its best efforts to keep such registration or qualification (or exemption
      therefrom) effective during the applicable offering period (or, in the case
      of
      the Shelf Registration Statement, during the Effectiveness Period) and to use
      its best efforts to do any and all other acts or things reasonably necessary
      to
      enable the disposition in such jurisdictions of the Registrable Securities
      covered by the Registration Statement; provided,
      however,
      that
      the Company shall not be required to qualify generally to do business in any
      jurisdiction where it is not then so qualified, subject the Company to any
      material tax in any such jurisdiction where it is not then so subject or file
      a
      general consent to service of process in any such jurisdiction.

     

    (g)  Upon
      the
      occurrence of any event contemplated by Section 3(c)(v),
      as
      promptly as reasonably possible, use its best efforts to prepare a supplement
      or
      amendment, including a post-effective amendment, to the Registration Statement
      or a supplement to the related Prospectus or any document incorporated or deemed
      to be incorporated therein by reference, and file any other required document
      so
      that, as thereafter delivered, neither the Registration Statement nor such
      Prospectus will contain 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, in light of the circumstances under which they were made,
      not misleading.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (h)  Use
      its
      best efforts to comply with all applicable rules and regulations of the
      Commission relating to the registration of the Registrable Securities pursuant
      to the Registration Statement or otherwise.

     

    (i)  The
      Company shall either (a) use its best efforts to cause all the Registrable
      Securities covered by a Registration Statement to be listed on each securities
      exchange on which securities of the same class or series issued by the Company
      are then listed, if any, if the listing of such Registrable Securities is then
      permitted under the rules of such exchange, or (b) use its best efforts to
      secure designation and quotation of all the Registrable Securities covered
      by
      the Registration Statement on the Nasdaq National Market or the Nasdaq SmallCap
      Market, or, (c) if the Company is unsuccessful in satisfying the preceding
      clauses (a) or (b), the Company shall use its best efforts to secure the
      inclusion for quotation on The American Stock Exchange, Inc. or if it is unable
      to, to use best efforts to provide for the Registrable Securities to trade
      on
      the OTC Bulletin Board, without limiting the generality of the foregoing, to
      use
      best efforts to secure at least two (2) market makers to register with the
      National Association of Securities Dealers, Inc. (“NASD”)
      as
      such with respect to such Registrable Securities. The Company shall pay all
      fees
      and expenses in connection with satisfying its obligation under this
Section 3(h).

     

    (j)  The
      Company covenants that it shall file the reports required to be filed by it
      under the Securities Act and the Exchange Act and the rules and regulations
      adopted by the Commission thereunder so long as the Holder owns any Registrable
      Securities, but in no event longer than two (2) years; provided,
      however,
      the
      Company may delay any such filing but only pursuant to Rule 12b-25 under
      the Exchange Act, and the Company shall take such further reasonable action
      as
      the Holder may reasonably request (including, without limitation, promptly
      obtaining any required legal opinions from Company counsel necessary to effect
      the sale of Registrable Securities under Rule 144 and paying the related
      fees and expenses of such counsel), all to the extent 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. Upon the request of any Holder of Registrable
      Securities, the Company will deliver to such Holder a written statement as
      to
      whether it has complied with such requirements.

     

    (k)  In
      the
      event of any underwritten or agented offering, enter into and perform the
      Company’s obligations under an underwriting or agency agreement (including
      indemnification and contribution obligations of underwriters or agents), in
      usual and customary form, with the managing underwriter or underwriters of
      or
      agents for such offering. The Company shall also cooperate with the selling
      Holders and the underwriters or placement agent for such offering in the
      marketing of the Registrable Securities, including making available the
      Company’s officers, accountants, counsel, premises, books and records for such
      purpose, but the Company shall not be required to incur any material
      out-of-pocket expense pursuant to this sentence. 

     

    (l)  Make
      available for inspection by any selling Holder, any underwriter or placement
      agent participating in such offering and the representatives of such selling
      Holder and underwriter or placement agent (but not more than one firm of counsel
      to such selling Holders), 

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    all
      financial and other information as shall be reasonably requested by them, and
      provide the selling Holder, any underwriter or placement agent participating
      in
      such offering and the representatives of such selling Holder and underwriter
      or
      placement agent the opportunity to discuss the business affairs of the Company
      with its principal executives and independent public accountants who have
      certified the audited financial statements included in such registration
      statement, in each case all as necessary to enable them to exercise their due
      diligence responsibility under the Securities Act; provided, however, that
      information that the Company determines, in good faith, to be confidential
      and
      which the Company advises such Person in writing, is confidential shall not
      be
      disclosed unless such Person signs a confidentiality agreement reasonably
      satisfactory to the Company or the related selling Holder of Registrable
      Securities agrees to be responsible for such Person’s breach of confidentiality
      on terms reasonably satisfactory to the Company.

     

    (m)  If
      so
      requested by a majority in interest of the selling Holders, use the Company’s
      best efforts to obtain a so-called “comfort letter” from its independent public
      accountants, and legal opinions of counsel to the Company addressed to the
      selling Holders, in customary form and covering such matters of the type
      customarily covered by such letters, and in a form that shall be reasonably
      satisfactory to the selling Holders. The Company shall furnish to each selling
      Holder a signed counterpart of any such comfort letter or legal opinion.
      Delivery of any such opinion or comfort letter shall be subject to the recipient
      furnishing such written representations or acknowledgements as are customarily
      provided by selling shareholders who receive such comfort letters or opinions.
      

     

    (n)  Take
      such
      other actions as are reasonably required in order to expedite or facilitate
      the
      disposition of Registrable Securities included in each such
      registration.

     

    4. Registration
      Expenses.
      All
      fees and expenses incident to the performance
      of or
      compliance with this Agreement by the Company shall be borne by the Company
      whether or not any Registrable Securities are sold pursuant to the Registration
      Statement, other discounts and commissions with respect to the sale of any
      Registrable Securities by the Holders. The fees and expenses referred to in
      the
      foregoing sentence shall include, without limitation, (i) all registration
      and
      filing fees (including, without limitation, fees and expenses (A) with respect
      to filings required to be made with the Trading Market on which the Common
      Stock
      is then listed for trading, and (B) in compliance with applicable state
      securities or Blue Sky laws), (ii) printing expenses (including, without
      limitation, expenses of printing certificates for Registrable Securities and
      of
      printing prospectuses if the printing of prospectuses is reasonably requested
      by
      the Holders of a majority of the Registrable Securities included in the
      Registration Statement), (iii) messenger, telephone and delivery expenses,
      (iv)
      fees and disbursements of (A) counsel for the Company and (B) one counsel for
      the selling Holders, (v) Securities Act liability insurance, if the Company
      so
      desires such insurance, and (vi) fees and expenses of all other Persons retained
      by the Company in connection with the consummation of the transactions
      contemplated by this Agreement.

     

    5. Indemnification.

     

    (a) Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless the Holder, the officers, 

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    directors,
      agents and employees of it, each Person who controls the Holder (within the
      meaning of Section 15 of the Securities Act or Section 20 of the
      Exchange Act) and the officers, directors, agents and employees of each such
      controlling Person, to the fullest extent permitted by applicable law, from
      and
      against any and all losses, claims, damages, liabilities, costs (including,
      without limitation, reasonable attorneys' fees) and expenses (including the
      cost
      (including without limitation, reasonable attorneys’ fees) and expenses relating
      to an Indemnified Party’s actions to enforce the provisions of this Section
      5)
      (collectively, “Losses”),
      as
      incurred, to the extent arising out of or relating to any untrue or alleged
      untrue statement of a material fact contained in the Registration Statement,
      any
      Prospectus or any form of prospectus or in any amendment or supplement thereto
      or in any preliminary prospectus, or arising out of or relating to any omission
      or alleged omission of a material fact required to be stated therein or
      necessary to make the statements therein (in the case of any Prospectus or
      form
      of prospectus or supplement thereto, in light of the circumstances under which
      they were made) not misleading, except to the extent, but only to the extent,
      that (1) such untrue statements or omissions are based solely upon information
      regarding such Holder furnished in writing to the Company by such Holder
      expressly for use therein, or to the extent that such information relates to
      such Holder or such Holder’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by such Holder
      expressly for use in the Registration Statement, such Prospectus or such form
      of
      Prospectus or in any amendment or supplement thereto (it being understood that
      the Holder has approved Annex A hereto for this purpose), (2) in the case of
      an
      occurrence of an event of the type specified in Section 3(c)(ii)-(v),
      the use
      by such Holder of an outdated or defective Prospectus after the Company has
      notified such Holder in writing that the Prospectus is outdated or defective
      and
      prior to the receipt by such Holder of the Advice contemplated in Section
      7(a),
      (3) the
      failure of the Holder to deliver a prospectus prior to the confirmation of
      a
      sale, or (4) caused by actions of or due to statements provided by the Holder’s
      broker, underwriter or other adviser engaged by Holder. The Company shall notify
      the Holders promptly of the institution, threat or assertion of any Proceeding
      of which the Company is aware in connection with the transactions contemplated
      by this Agreement.

    

    (b) Indemnification
      by Holder.
      The
      Holder shall indemnify and hold harmless the Company, its directors, officers,
      agents and employees, each Person who controls the Company (within the meaning
      of Section 15 of the Securities Act and Section 20 of the Exchange
      Act), and the directors, officers, agents or employees of such controlling
      Persons, to the fullest extent permitted by applicable law, from and against
      all
      Losses, as incurred, to the extent arising out of or based upon any untrue
      or
      alleged untrue statement of a material fact contained in any Registration
      Statement, any Prospectus, or any form of prospectus, or in any amendment or
      supplement thereto or in any preliminary prospectus, or arising out of or
      relating to any omission or alleged omission of a material fact required to
      be
      stated therein or necessary to make the statements therein not misleading to
      the
      extent, but only to the extent, that (1) such untrue statement or omission
      is
      contained in any information so furnished in writing by or on behalf of such
      Holder to the Company specifically for inclusion in the Registration Statement
      or such Prospectus or (2) in the case of an occurrence of an event of the type
      specified in Section 3(c)(ii)-(v),
      the use
      by such Holder of an outdated or defective Prospectus after the Company has
      notified such Holder in writing that the Prospectus is outdated or defective
      and
      prior to the receipt by such Holder of the Advice contemplated in Section 7(a).
      

     

    
      
        
        

      

      
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    (c) Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall have the right to assume the defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided,
      that
      the failure of any Indemnified Party to give such notice shall not relieve
      the
      Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
      except (and only) to the extent that such failure shall have materially
      prejudiced the Indemnifying Party.

     

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; (2) the Indemnifying Party shall have failed promptly to assume the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and such Indemnified Party shall have been advised
      by counsel that a conflict of interest is likely to exist if the same counsel
      were to represent such Indemnified Party and the Indemnifying Party (in which
      case, if such Indemnified Party notifies the Indemnifying Party in writing
      that
      it elects to employ separate counsel at the expense of the Indemnifying Party,
      the Indemnifying Party shall not have the right to assume the defense thereof
      and the reasonable fees and expenses of one separate counsel for all Indemnified
      Parties in any matters related on a factual basis shall be at the expense of
      the
      Indemnifying Party). The Indemnifying Party shall not be liable for any
      settlement of any such Proceeding affected without its written consent, which
      consent shall not be unreasonably withheld. No Indemnifying Party shall, without
      the prior written consent of the Indemnified Party, effect any settlement of
      any
      pending Proceeding in respect of which any Indemnified Party is a party, unless
      such settlement includes an unconditional release of such Indemnified Party
      from
      all liability on claims that are the subject matter of such
      Proceeding.

     

    All
      reasonable fees and expenses of the Indemnified Party (including reasonable
      fees
      and expenses to the extent incurred in connection with investigating or
      preparing to defend such Proceeding in a manner not inconsistent with this
      Section) shall be paid to the Indemnified Party, as incurred no later than
      ten
      (10) business days of written notice thereof to the Indemnifying
      Party.

     

    (d) Contribution.
      If a
      claim for indemnification under Section 5(a)
      or
Section
      5(b)
      is
      unavailable to an Indemnified Party (by reason of public policy or otherwise),
      then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
      shall contribute to the amount paid or payable by such Indemnified Party as
      a
      result of such Losses, in such proportion as is appropriate to reflect the
      relative fault of the Indemnifying Party and Indemnified Party in connection
      with the actions, statements or omissions that resulted in such Losses as well
      as any other relevant equitable considerations. The relative fault of such
      Indemnifying Party and Indemnified Party shall be determined by reference to,
      among other things, whether any action in question, including any untrue or
      alleged untrue statement of a material fact or omission or 

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    alleged
      omission of a material fact, has been taken or made by, or relates to
      information supplied by, such Indemnifying Party or Indemnified Party, and
      the
      parties' relative intent, knowledge, access to information and opportunity
      to
      correct or prevent such action, statement or omission. The amount paid or
      payable by a party as a result of any Losses shall be deemed to include, subject
      to the limitations set forth in Section 5(c),
      any
      reasonable attorneys' or other reasonable fees or expenses incurred by such
      party in connection with any Proceeding to the extent such party would have
      been
      indemnified for such fees or expenses if the indemnification provided for in
      this Section was available to such party in accordance with its
      terms.

     

    6. Lock-Up
      Agreements.

     

    The
      Company hereby covenants and agrees that it shall, no later than the Effective
      Date, cause each of its officers and directors (and each Person that
      beneficially owns 5% or more of the outstanding Common Stock of the Company,
      to
      the extent that such Person is an Affiliate of any such officer or director)
      (collectively, the “Insiders”) to enter into a “lock-up letter” (a “Lockup
      Letter”) pursuant to which each such Insider shall undertake not to offer to
      sell, contract to sell, or otherwise sell or dispose of (collectively, a
“Disposition”) any shares of Common Stock during the Lockup Period; provided,
      however, notwithstanding the foregoing, during the Lockup Period, the Insiders
      (on a collective basis) shall be permitted to effect Dispositions involving
      up
      to an aggregate of two percent (2%) of the number of shares of Common Stock
      issued and outstanding on the Lockup Commencement Date, and the Lockup Letter
      shall contain language to this effect. Each Lockup Letter shall be for the
      benefit of the Purchasers and the Purchasers shall be deemed to be third-party
      beneficiaries of each Lockup Letter.

    

    7. Miscellaneous.

     

    (a) Discontinued
      Disposition.
      The
      Holder agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from the Company of the occurrence of any event of the
      kind
      described in Section 3(c),
      such
      Holder will forthwith discontinue disposition of such Registrable Securities
      under the Registration Statement until such Holder's receipt of the copies
      of
      the supplemented Prospectus and/or amended Registration Statement or until
      it is
      advised in writing (the “Advice”)
      by the
      Company that the use of the applicable Prospectus may be resumed, and, in either
      case, has received copies of any additional or supplemental filings that are
      incorporated or deemed to be incorporated by reference in such Prospectus or
      Registration Statement. The Company may provide appropriate stop orders to
      enforce the provisions of this paragraph.

     

    (b) Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and each Holder of the then outstanding Registrable
      Securities.

     

    (c) Notices.
      Any
      and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (i) the Trading Day following the date of delivery to the
      courier service, if sent by nationally recognized overnight courier service,
      (ii) the third Trading Day 

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    following
      the date of mailing, if sent by first-class, registered or certified mail,
      postage prepaid, (iii) the Trading Day following transmission by electronic
      mail
      with receipt confirmed or acknowledged, or (iv) upon actual receipt by the
      party
      to whom such notice is required to be given. The address for such notices and
      communications shall be delivered and addressed as set forth in the Subscription
      Agreement or to such other address as shall be designated in writing from time
      to time by a party hereto.

     

    (d) Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      the
      Holder. Any Holder may assign its rights under this Agreement in whole or in
      part to any transferee of any Registrable Securities held by such
      Holder.

     

    (e) Execution
      and Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

     

    (f) Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York without regard to the conflicts of laws principles
      thereof. The parties hereto hereby irrevocably agree that any suit or proceeding
      arising directly and/or indirectly pursuant to or under this Agreement shall
      be
      brought solely in a federal or state court located in the City, County and
      State
      of New York. By its execution hereof, the parties hereby covenant and
      irrevocably submit to the in personam
      jurisdiction of the federal and state courts located in the City, County and
      State of New York and agree that any process in any such action may be served
      upon any of them personally, or by certified mail or registered mail upon them
      or their agent, return receipt requested, with the same full force and effect
      as
      if personally served upon them in New York City. The parties hereto waive any
      claim that any such jurisdiction is not a convenient forum for any such suit
      or
      proceeding and any defense or lack of in
      personam
      jurisdiction with respect thereto. In the event of any such action or
      proceeding, the party prevailing therein shall be entitled to payment from
      the
      other party hereto of its reasonable counsel fees and
      disbursements.

     

    (g) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their best efforts to find
      and
      employ an alternative means to achieve the same or substantially the same result
      as that contemplated by such term, provision, covenant or restriction. It is
      hereby stipulated and declared to be the intention of the parties that they
      would have executed the remaining terms, provisions, covenants and restrictions
      without including any of such that may be hereafter declared invalid, illegal,
      void or unenforceable.

     

    (h) Headings.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Company and each of the Purchasers have become parties to this Registration
      Rights Agreement as of the date first written above by execution of the
      applicable omnibus signature pages attached to the Subscription
      Agreements.

     

    
 

     

     

     

     

     

     

     

     

    

 

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    ANNEX
      A

     

    List
      of Purchasers

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ANNEX
      B

     

    Plan
      of Distribution

    

    

    The
      Holders of Registrable Securities and any of their pledgees, assignees and
      successors-in-interest may, from time to time, sell any or all of their shares
      of Common Stock on any stock exchange, market or trading facility on which
      the
      shares are traded or in private transactions. These sales may be at fixed or
      negotiated prices. The selling Holders may use any one or more of the following
      methods when selling shares:

     

    
      	·  	
              ordinary
                brokerage transactions and transactions in which the broker/dealer
                solicits purchasers;

            

    

     

    
      	·  	
              block
                trades in which the broker/dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	·  	
              purchases
                by a broker/dealer as principal and resale by the broker/dealer for
                its
                account;

            

    

     

    
      	·  	
              an
                exchange distribution in accordance with the Rules of the applicable
                exchange;

            

    

     

    
      	·  	
              privately
                negotiated transactions;

            

    

     

    
      	·  	
              settlement
                of short sales;

            

    

     

    
      	·  	
              broker/dealers
                may agree with the selling Holders to sell a specified number of
                such
                shares at a stipulated price per
                share;

            

    

     

    
      	·  	
              a
                combination of any such methods of sale;
                and

            

    

     

    
      	·  	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      selling Holders may also sell shares under Rule 144 under the Securities
      Act, if available, rather than pursuant to the Shelf Registration
      Statement.

     

    Broker/dealers
      engaged by the selling Holders may arrange for other brokers/dealers to
      participate in sales. Broker/dealers may receive commissions from the selling
      Holders (or, if any broker/dealer acts as agent for the purchaser of shares,
      from the purchaser) in amounts to be negotiated. The selling Holders do not
      expect these commissions to exceed what is customary in the types of
      transactions involved.

     

    The
      selling Holders may from time to time pledge or grant a security interest in
      some or all of the Registrable Securities owned by them and, if they default
      in
      the performance of their 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    secured
      obligations, the pledgees or secured parties may offer and sell the Registrable
      Securities from time to time under the Shelf Registration Statement, or under
      an
      amendment to the Prospectus under Rule 424(b)(3) or other applicable
      provision of the Securities Act of 1933 amending the list of selling Holders
      to
      include the pledgee, transferee or other successors in interest as selling
      Holders thereunder.

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