Document:

d876840_ex4-2.htm

    Exhibit
4.2

     

    REGISTRATION
RIGHTS AGREEMENT

     

    This
Registration Rights Agreement (this “Agreement”) is made and
entered into as of April 23, 2008, by and among TOP SHIPS INC., a Marshall
Islands corporation (the “Company”), and the investors
signatory hereto (each an “Investor” and collectively,
the “Investors”).

     

    RECITALS

     

    
      	
              A.  

            	
              The
      Company is corporation that is in the business of owning and operating
      tanker and drybulk vessels.

            

    

     

    
      	
              B.  

            	
              The
      Company has entered into stock purchase agreements with some of the
      Investors (collectively, the “Stock Purchase
      Agreements”), each dated April 23, 2008, pursuant to which the
      Company has agreed to issue to such Investors, and such Investors have
      agreed to purchase, an aggregate of 5,307,143 shares of the Company’s
      common stock, par value $0.01 per share (the “Purchased Shares”) at a
      price per share of $7.00, for an aggregate investment amount of
      $37,150,001.

            

    

     

    
      	
              C.  

            	
              The
      Company has entered into a loan agreement with Imperial Ventures Inc.
      (“Imperial”),
      dated March 11, 2008, as amended March 20, 2008 (the “Imperial Loan
      Agreement”), pursuant to which the Company has agreed to issue to
      Imperial 738,318 shares of the Company’s common stock, par value $0.01 per
      share, (the “Imperial
      Shares”).

            

    

     

    
      	
              D.  

            	
              The
      Company has entered into a loan agreement with Proteus Investments Inc.
      (“Proteus”), dated
      April 7, 2008 (the “Proteus Loan
      Agreement”), pursuant to which the Company has agreed to issue to
      Proteus 1,223,231 shares of the Company’s common stock, par value $0.01
      per share, (the “Proteus
      Shares” and, together with the Purchased Shares and the Imperial
      Shares, the “Registration
      Shares”).

            

    

     

    
      	
              E.  

            	
              This
      Agreement is made pursuant to each of the Stock Purchase Agreements with
      respect to the Purchased Shares, the Imperial Loan Agreement with respect
      to the Imperial Shares and the Proteus Loan Agreement with respect to the
      Proteus Shares.

            

    

     

    NOW, THEREFORE, in
consideration of the foregoing recitals and the mutual representations,
warranties, covenants and promises contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     

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

     

    “Advice” shall have the meaning
set forth in Section
6(b).

     

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

     

    “Availability Date” shall have
the meaning set forth in Section
3(j).

     

    “Business Day” means any day
except Saturday, Sunday and any day which shall be a federal legal holiday or a
day on which banking institutions in the State of New York, London, England or
Athens, Greece are authorized or required by law or other governmental action to
close.

     

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

     

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

     

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

     

    “Filing Date” means the
180th day
after the date of this Agreement.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Holder” or “Holders” means the holder or
holders, as the case may be, from time to time of Registrable
Securities.

     

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

     

    “Imperial” shall have the
meaning set forth in the recitals above.

     

    “Imperial Loan Agreement”
shall have the meaning set forth in the recitals above.

     

    “Imperial Shares” shall have
the meaning set forth in the recitals above.

     

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

     

    “Investor” or “Investors” shall have the
respective meaning set forth in the preamble above.

     

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

     

    “Plan of Distribution” shall
have the meaning set forth in Section
2.

     

    “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 the 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.

     

    “Proteus” shall have the
meaning set forth in the recitals above.

     

    “Proteus Loan Agreement” shall
have the meaning set forth in the recitals above.

     

    “Proteus Shares” shall have
the meaning set forth in the recitals above.

     

    “Registrable Securities” means
the Registration Shares, together with any Securities issued or issuable upon
any stock split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing and any other shares of Common Stock owned
by the Investors at the time of the Filing Date.

     

    “Registration Shares” shall
have the meaning set forth in the recitals above.

     

    “Registration Statement” means
each registration statement required to be filed hereunder, including 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 415” means Rule 415
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.

     

    “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.

     

     

    
      
        
        

      

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

     

    “Stock Purchase Agreement”
shall have the meaning set forth in the recitals above.

     

    “Suspension Certificate” shall
have the meaning set forth in Section
6(d).

     

    “Trading Market” means the New
York Stock Exchange, the American Stock Exchange, the NASDAQ Global Market or
the NASDAQ Capital Market; and, with respect to any particular date, shall mean
the Trading Market on which the Common Stock is listed or quoted for trading on
the such date.

     

    2.     Registration.
(a) On or prior to the Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the offering and resale of all of
the Registrable Securities pursuant to Rule 415, or if Rule 415 is not available
for offers or sales of the Registrable Securities, for such other means of
distribution of Registrable Securities as the Holders may specify. The
Registration Statement required hereunder shall be on Form S-3 or Form F-3, as
applicable (except if the Company is not then eligible to register for resale
the Registrable Securities on Form S-3 or Form F-3, in which case the
Registration shall be on Form S-1 or F-1 or another appropriate form as shall be
selected by the Company upon advice of its counsel). The Registration Statement
required hereunder shall contain (except if otherwise directed by the Holders)
the “Plan of
Distribution” attached hereto as Annex
A. The Company shall use its best efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but no later than 120 days following the
filing thereof, and shall use its best efforts to keep such Registration
Statement continuously effective under the Securities Act (including the filing
of any necessary amendments, post-effective amendments and supplements) until
the date which is two years after the Closing Date or such later date when all
Registrable Securities covered by the Registration Statement (i) have been sold
pursuant to the Registration Statement or an exemption from the registration
requirements of the Securities Act or (ii) may be sold without volume
restrictions pursuant to Rule 144(k) promulgated under the Securities Act, as
determined by the counsel to the Company pursuant to a written opinion letter to
such effect, addressed and reasonably acceptable to the Company’s transfer agent
and the affected Holders (the “Effectiveness Period”). If
Rule 415 is not available and the Holder shall specify that the Registration
Statement relate to an underwritten offering, then the Company shall, at the
underwriter’s request, direct its Chief Executive Officer and Chief Financial
Officer to participate in one or more “road show” presentations, which
presentations shall be conducted at the Company’s expense.

     

    (b)       
   Other Registrations.
If the Company has previously filed a Registration Statement with respect to
Registrable Securities, and if such previous registration has not been withdrawn
or abandoned, the Company shall not be obligated to cause to become effective
any other registration of any of its securities under the Securities Act,
whether on its own behalf or at the request of any holder or holders of such
securities, until a period of at least 90 days has elapsed from the termination
of the offering under the previous registration.

     

    3.     Registration
Procedures.

     

    In
connection with the Company’s registration obligations hereunder, the Company
shall:

     

    (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, (i) furnish to
the Holders copies of all such documents proposed to be filed (including
documents incorporated or deemed incorporated by reference to the extent
requested by such Person) which documents will be subject to the review of such
Holders, and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of respective legal counsel to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities shall reasonably object in good faith.

     

    (b)  
    (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously
effective as to the Registrable Securities for the Effectiveness Period;

     

     

    
      
        
        

      

      
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    (ii)
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; (iii) respond as promptly as reasonably possible to any comments
received from the Commission with respect to the Registration Statement or any
amendment thereto; and (iv) comply in all material respects with the provisions
of the Securities Act and the Exchange Act with respect to the disposition of
all Registrable Securities covered by the Registration Statement in accordance
with the intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so
supplemented.

     

    (c)       Notify
the Holders of Registrable Securities to be sold as promptly as reasonably
possible (and, in the case of (i)(A) below, not less than two (2) Business Days
prior to such filing) and (if requested by any such Person) confirm such notice
in writing promptly following the day (i) (A) when a Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed; (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 (the Company shall
upon request provide true and complete copies thereof and all written responses
thereto as promptly as reasonably possible to each of the Holders who so
requests provided such requesting Holders agree to keep such information
confidential until it is publicly disclosed); and (C) with respect to the
Registration Statement or any post-effective amendment, when the same 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 or
threatening 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
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 (provided that such Holder of Registrable Securities agrees
to keep such information confidential until it is publicly
disclosed).

     

    (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)       To the
extent requested by such Holders, furnish to each Holder, without charge, at
least one conformed copy of the Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
(including those previously furnished or incorporated by reference) promptly
after the filing of such documents with the Commission.

     

    (f)       Promptly
deliver to each Holder, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto 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 each of
the selling Holders 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).

     

    (g)       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 such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each of
the registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and 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, 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.

     

     

    
      
         

      

      
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    (h)       If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any such Holders may
request.

     

    (i)        Upon the
occurrence of any event contemplated by Section 3(c)(v), as
promptly as reasonably possible, 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.

     

    (j)        Use best
efforts to make available to its security holders no later than the Availability
Date (as defined below), an earning statement covering a period of at least
twelve (12) months, beginning after the effective date of the Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, including Rule 158 promulgated thereunder. For the
purpose of this subsection, “Availability Date” shall mean
the 45th day
following the end of the fourth fiscal quarter after the fiscal quarter that
includes the effective date of the Registration Statement, except that, if such
fourth fiscal quarter is the last quarter of the Company’s fiscal year, “Availability Date” means the
90th
day after the end of such fourth fiscal quarter.

     

    (k)       Comply
with all applicable rules and regulations of the Commission and use its
reasonable best efforts to cause all Registrable Securities to be listed for
trading on a Trading Market.

     

    The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and, if required by the Commission, the person thereof that has voting
and dispositive control over the Shares, for purposes of disclosure in the
“Selling Stockholder” table in the Registration Statement.

     

    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. 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) for 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
counsel for the Company, (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. In addition, the Company shall be
responsible for all of its internal and accounting expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties and all fees and
expenses of the Company’s certified public accountants), the expense of the
preparation of all financial statements and any audit or review thereof by the
Company’s accountants and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any broker or
similar commissions or any legal fees or other costs of the
Holders.

     

     

    
      
        
        

      

      
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    5.         Indemnification.

     

    (a)           Indemnification by the
Company. The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers, directors,
agents and employees of each of them, each Person who controls any such 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 (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, or any violation or alleged violation by the
Company of the Securities Act, Exchange Act or any state securities law, or any
rule or regulation thereunder, 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 as set forth in Annex
A hereto or any changes to Annex
A hereto that are 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, 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
6(b).

     

    (b)       Indemnification by
Holders. Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its officers, directors, agents and employees, each Person
who controls the Company (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, as incurred, to the extent
arising out of or based upon: (x) such Holder’s failure to comply with the
prospectus delivery requirements of the Securities Act or (y) 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 to the extent, but only
to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company specifically
for inclusion in the Registration Statement or such Prospectus expressly for use
therein; provided, that each Holder’s obligation to indemnify such indemnified
parties shall only be to the extent of the net proceeds received by such Holder
in the offering to which the Registration Statement relates, or to the extent
that such information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities as set forth in Annex
A hereto or any changes to Annex
A hereto that are 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, 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
6(b).

     

    (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 it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have prejudiced the Indemnifying Party.

     

     

    
      
        
        

      

      
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    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 reasonably 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 shall be at
the expense of the Indemnifying Party). The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its written
consent. 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, within ten (10)
Business Days of written notice thereof to the Indemnifying Party; provided, that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that
portion of such fees and expenses applicable to such actions for which such
Indemnified Party is not entitled to indemnification hereunder, determined based
upon the relative faults of the parties.

     

    (d)       Contribution. If a
claim for indemnification under Section 5(a) or 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 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.

     

        The parties
hereto agree that it would not be just and equitable if contribution pursuant to
this Section
5(d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the immediately preceding paragraph. Notwithstanding the provisions of
this Section
5(d), no Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the proceeds actually received by such
Holder from the sale of the Registrable Securities subject to the Proceeding
exceeds the amount of any damages that such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission, except in the case of fraud by such Holder. The indemnity and
contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified
Parties.

     

    6. 
       Miscellaneous.

     

    (a)       Compliance. Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (b)       Discontinued
Disposition. Each 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. In the event of a discontinued disposition under this Section 6(b), the
Company will use its reasonable best efforts to ensure that the use of the
Prospectus may be resumed as promptly as is practicable and to provide copies of
the supplemented Prospectus and/or amended Registration Statement or the Advice
as soon as possible in order to enable each Holder to resume dispositions of the
Registrable Securities. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.

     

    (c)       Amendments in
Writing. No amendment, modification, waiver, termination or discharge of
any provision of this Agreement, or any consent to any departure by the Company
or Company and any Holder of the then outstanding Registrable Securities from
any provision hereof, shall in any event be effective unless the same shall be
in writing and signed by the Company and at least a majority of the Holders of
the then outstanding Registrable Securities, and each such amendment,
modification, waiver, termination or discharge shall be effective only in the
specific instance and for the specific purpose for which given. No provision of
this Agreement shall be varied, contradicted or explained by any oral agreement,
course of dealing or performance or any other matter not set forth in an
agreement in writing and signed by the Company and at least a majority of the
Holders of the then outstanding Registrable Securities.

     

    (d)       Suspension of
Trading. At any time after the Registrable Securities are covered by an
effective Registration Statement, the Company may deliver to the Holders of such
Registrable Securities a certificate (the “Suspension Certificate”)
approved by the Chief Executive Officer of the Company and signed by an officer
of the Company stating that the effectiveness of and sales of Registrable
Securities under the Registration Statement would:

     

       (i)    materially
interfere with any transaction that would require the Company to prepare
financial statements under the Securities Act that the Company would otherwise
not be required to prepare in order to comply with its obligations under the
Exchange Act, or

     

       (ii)   
 
require
public disclosure of any transaction of the type discussed in Section 6(d)(i) prior
to the time such disclosure might otherwise be required.

     

    Beginning
ten (10) Business Days after the receipt of a Suspension Certificate by Holders
of Registrable Securities, the Company may, in its discretion, require such
Holders of Registrable Securities to refrain from selling or otherwise
transferring or disposing of any Registrable Securities or other Company
securities then held by such Holders for a specified period of time that is
customary under the circumstances (not to exceed thirty (30) days).
Notwithstanding the foregoing sentence, the Company shall be permitted to cause
Holders of Registrable Securities to so refrain from selling or otherwise
transferring or disposing of any Registrable Securities or other securities of
the Company on only one occasion during each twelve (12) consecutive month
period that the Registration Statement remains effective. The Company may impose
stop transfer instructions to enforce any required agreement of the Holders
under this Section
6(d).

     

    (e)       Notices. All notices,
requests, consents and other communications under this Agreement shall be in
writing and shall be deemed delivered (i) on the date of transmission when
delivered via facsimile prior to 5:00 p.m. (New York City time) on a Business
Day, (ii) one Business Day after transmission when delivered via facsimile later
than 5:00 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New
York City time) on such date, (iii) upon delivery when delivered personally,
(iv) three (3) days after being sent by registered or certified mail, return
receipt requested, postage prepaid, or (v) one (1) Business Day after being sent
via a reputable nationwide overnight courier service guaranteeing next business
day delivery, in each case to the intended recipient as set forth
below:

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    If to the
Company:

     

    1 Vas.
Sofias & Meg. Alexandrou St

    15124
Maroussi - Athens

    Greece

    Tel: 30
210 812 8199

    Attention:
Chief Financial Officer

     

    With a
copy (which shall not constitute notice) to:

     

    Seward
& Kissel LLP

    One
Battery Park Plaza

    New York,
New York 10004

    Attn:
Gary J. Wolfe, Esq.

    Facsimile:
(212) 480-8421

     

    If to an
Investor, to:

     

    To the
addresses set forth under such Investor’s name on the signature pages to this
Agreement

     

    

    Any party
may change the address to which notices, requests, consents or other
communications hereunder are to be delivered by giving the other parties notice
in the manner set forth in this Section.

     

    (f)       Successors and
Assigns. This Agreement shall be binding upon, shall inure to the benefit
of and shall be enforceable by the parties hereto and their respective
successors and assigns. The Company may not assign its rights or obligations
hereunder without the prior written consent of all of the Holders of the
then-outstanding Registrable Securities, provided a sale of the Company shall
not be deemed an assignment. Each Holder may assign their respective rights
hereunder in the manner and to the Persons as permitted under the Purchase
Agreement.

     

    (g)       Execution in Counterparts;
Facsimile Signatures. This Agreement and any amendment, waiver or consent
hereto may be executed by the parties hereto in separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument. All such
counterparts may be delivered among the parties hereto by facsimile or other
electronic transmission, which shall not affect the validity
thereof.

     

    (h)       Governing Law;
Jurisdiction. This Agreement shall be governed by and construed under the
laws of the State of New York without regard to conflicts of laws principles.
Any legal action or proceeding in connection with this Agreement or the
performance hereof may be brought in the state and federal courts located in the
Borough of Manhattan, City, County and State of New York, and the parties hereby
irrevocably submit to the non-exclusive jurisdiction of such courts for the
purpose of any such action or proceeding.  The parties hereby
irrevocably waive trial by jury in any action, proceeding or claim brought by
any party hereto or beneficiary hereof on any matter whatsoever arising out of
or in an way connected with this agreement.

     

    (i)       Cumulative Remedies.
All remedies, either under this Agreement or by law, afforded to the parties
hereto, shall be cumulative and not alternative.

     

    (j)        Severability. Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.

     

    (k)       Section Headings and
References. The section headings are for the convenience of the parties
and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties. Any reference in this Agreement
to a particular section or subsection shall refer to a section or subsection of
this Agreement, unless specified otherwise.

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (l)        Construction of this
Agreement. If any of the provisions of this Agreement conflict with any
of the other provisions of any the applicable stock purchase agreement or loan
agreement, as the case may be, such conflict shall be resolved in every instance
in favor of the provisions of the stock purchase agreement or loan agreement, as
the case may be.

     

     

    (Remainder
of page intentionally left blank. Signature pages to follow.)

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

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

     

    
      	
              COMPANY:

            	 
      	
              ADDRESS

            
	 	 	 
	
              TOP
      SHIPS INC.

            	 
      	 
      
	 	 	 	 
	
              By:   ______________________________

            	 
      	 
      	 
      
	
                       Name:

            	 
      	 
      	 
      
	
                      
      Title:

            	 
      	 
      	 
      

    

     

    
      	
              INVESTORS:

            	 
      	 
      
	 	 	 
	
              SPHINX
      INVESTMENT CORP.

              Purchaser
      of 2,900,000 Purchased Shares

            	 
      	 
      
	 	 	 	 
	
              By: 
      _______________________________

            	 
      	 
      	 
      
	
              Name:

            	 
      	 
      	 
      
	
              Title:

            	 
      	 
      	 
      

    

     

    
      	
              TORY
      MARITIME LIMITED

              Purchaser
      of 1,130,000 Purchased Shares

            	 
      	 
      
	 	 	 	 
	
              By: 
      _______________________________

            	 
      	 
      	 
      
	
              Name:

            	 
      	 
      	 
      
	
              Title:

            	 
      	 
      	 
      

    

     

    
      	
              SHADOW
      ENTERPRISES S.A.

              Purchaser
      of 920,000 Purchased Shares

            	 
      	 
      
	 	 	 	 
	
              By: 
      _______________________________

            	 
      	 
      	 
      
	
              Name:

            	 
      	 
      	 
      
	
              Title:

            	 
      	 
      	 
      

    

     

    
      	
              PEARL
      VENTURES INC.

              Purchaser
      of 357,143 Purchased Shares

            	 
      	
              11,
      Kanari Street

              106
      71 Athens

              Greece

            	 
      
	 	 	 	 
	
              By: 
      _______________________________

            	 
      	 
      	 
      
	
              Name:

            	 
      	 
      	 
      
	
              Title:

            	 
      	 
      	 
      

    

    

    
      	
              IMPERIAL
      VENTURES INC.

            	 
      	
              c/o
      G.C. Economou

              11,
      Kanari Street

            	 
      
	 	 	106
      71 Athens
	
              By: 
      _______________________________

            	 
      	
              Greece

            
	
              Name:

            	 
      	 
      	
               

            
	
              Title:

            	 
      	 
      	 
      

    

    

    
      	
              PROTEUS
      INVESTMENT INC.

            	 
      	
              c/o
      G.C. Economou

              11,
      Kanari Street

            
	 	 	
              106
      71 Athens

            
	
              By: 
      _______________________________

            	 
      	
              Greece

            
	
              Name:

            	 
      	 
      	
               

            
	
              Title:

            	 
      	 
      	 
      

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    ANNEX A

     

    Plan of
Distribution

     

    The
shares covered by this prospectus may be offered and sold from time to time by
the selling stockholders. The term “selling stockholder” includes
pledgees, donees, transferees or other successors in interest selling shares
received after the date of this prospectus from each selling stockholder as a
pledge, gift, partnership distribution or other sale in any privately negotiated
transaction, or non-sale related transfer. The number of shares beneficially
owned by a selling stockholder will decrease as and when it effects any such
transfers. The plan of distribution for the selling stockholders’ shares sold
hereunder will otherwise remain unchanged, except that the transferees,
pledgees, donees or other successors will be selling stockholders hereunder. To
the extent required, we may amend and supplement this prospectus from time to
time to describe a specific plan of distribution.

     

    The
selling stockholders will act independently of us in making decisions with
respect to the timing, manner and size of each sale. The selling stockholders
may make these sales at prices and under terms then prevailing or at prices
related to the then current market price. The selling stockholders may also make
sales in negotiated transactions. The selling stockholders may offer their
shares from time to time pursuant to one or more of the following
methods:

     

    
      	 	
              ·  

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

            

    

     

    
      	 	
              ·  

            	
              one
      or more 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;

            

    

     

    
      	 	
              ·  

            	
              public
      or privately negotiated
transactions;

            

    

     

    
      	 	
              ·  

            	
              on
      the New York Stock Exchange, American Stock Exchange or NASDAQ Global
      Market (or through the facilities of any national securities exchange or
      U.S. inter-dealer quotation system of a registered national securities
      association, on which the shares are then listed, admitted to unlisted
      trading privileges or included for
quotation);

            

    

     

    
      	 	
              ·  

            	
              through
      underwriters, brokers or dealers (who may act as agents or principals) or
      directly to one or more purchasers;

            

    

     

    
      	 	
              ·  

            	
              to
      cover short sales;

            

    

     

    
      	 	
              ·  

            	
              a
      combination of any such methods of sale;
and

            

    

     

    
      	 	
              ·  

            	
              any
      other method permitted pursuant to applicable
  law.

            

    

     

    In
connection with distributions of the shares or otherwise, the selling
stockholders may:

     

    
      	 	
              ·  

            	
              enter
      into hedging transactions with broker-dealers or other financial
      institutions, which may in turn engage in short sales of the shares in the
      course of hedging the positions they
assume;

            

    

     

    
      	 	
              ·  

            	
              sell
      the shares short and redeliver the shares to close out such short
      positions;

            

    

     

    
      	 	
              ·  

            	
              enter
      into option or other transactions with broker-dealers or other financial
      institutions which require the delivery to them of shares offered by this
      prospectus, which they may in turn resell;
and

            

    

     

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    
      	 	
              ·  

            	
              pledge
      shares to a broker-dealer or other financial institution, which, upon a
      default, they may in turn resell.

            

    

     

    In
addition to the foregoing methods, the selling stockholders may offer their
shares from time to time in transactions involving principals or brokers not
otherwise contemplated above, in a combination of such methods or described
above or any other lawful methods. The selling stockholders may also transfer,
donate or assign their shares to lenders, family members and others and each of
such persons will be deemed to be a selling stockholder for purposes of this
prospectus. The selling stockholders or their successors in interest may from
time to time pledge or grant a security interest in some or all of the shares of
common stock, and if the selling stockholders default in the performance of
their secured obligations, the pledgees or secured parties may offer and sell
the shares of common stock from to time under this prospectus; provided however
in the event of a pledge or then default on a secured obligation by the selling
stockholder, in order for the shares to be sold under this registration
statement, unless permitted by law, we must distribute a prospectus supplement
and/or amendment to this registration statement amending the list of selling
stockholders to include the pledgee, secured party or other successors in
interest of the selling stockholder under this prospectus.

     

    The
selling stockholders may also sell their shares pursuant to Rule 144 under
the Securities Act, which permits limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the availability of certain current public information
concerning the issuer, the resale occurring following the required holding
period under Rule 144 and the number of shares being sold during any
three-month period not exceeding certain limitations.

     

    Sales
through brokers may be made by any method of trading authorized by any stock
exchange or market on which the shares may be listed or quoted, including block
trading in negotiated transactions. Without limiting the foregoing, such brokers
may act as dealers by purchasing any or all of the shares covered by this
prospectus, either as agents for others or as principals for their own accounts,
and reselling such shares pursuant to this prospectus. The selling stockholders
may effect such transactions directly, or indirectly through underwriters,
broker-dealers or agents acting on their behalf. In effecting sales,
broker-dealers or agents engaged by the selling stockholders may arrange for
other broker-dealers to participate. Broker-dealers or agents may receive
commissions, discounts or concessions from the selling stockholders, in amounts
to be negotiated immediately prior to the sale (which compensation as to a
particular broker-dealer might be in excess of customary commissions for routine
market transactions).

     

    In
offering the shares covered by this prospectus, the selling stockholders, and
any broker-dealers and any other participating broker-dealers who execute sales
for the selling stockholders, may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with these sales. Any profits
realized by the selling stockholders and the compensation of such broker-dealers
may be deemed to be underwriting discounts and commissions.

     

    The
Company is required to pay all fees and expenses incident to the registration of
the shares.

     

    Pursuant
to a requirement by the Financial Industry Regulatory Authority, or FINRA, the
maximum commission or discount to be received by any FINRA member or independent
broker/dealer may not be greater than eight percent (8%) of the gross proceeds
received by the selling shareholders for the sale of any securities being
registered pursuant to SEC Rule 415 under the Securities Act of 1933, as
amended.

     

    The
Company has agreed to indemnify the selling stockholders against certain losses,
claims, damages and liabilities, including liabilities under the Securities
Act.

     

    SK 23116 0001
876840

    

     

    

    
      
        
           

        

         

      

      
        A-2form8k070308ex10-1.htm

    WAIVER
AGREEMENT

     

    This
Waiver  (this
“Agreement”) is made and
entered into as of the 30th day of June, 2008, by and between Cistera
Networks, Inc., a Nevada corporation (the “Company”), and Roaring
Fork Capital SBIC, LP, a Delaware limited
partnership (“Roaring
Fork”).

     

    Recitals

     

    Whereas,
Roaring Fork purchased a Convertible Promissory Note in the original principal
amount of $1,000,000 (the “Note”) and a warrant to
purchase 1,000,000 shares of the Company’s common stock (the “Warrant”) from the Company in
April 2007;

     

    Whereas,
in connection with the purchase of the Note and the Warrant, the Company and
Roaring Fork entered into a letter agreement dated April 5, 2007;

     

    Whereas,
the Company is providing temporary incentive to its investors by lowering the
conversion price of outstanding notes (including the Note) and by lowering the
exercise price of outstanding warrants (including the Warrant) (the
“Incentive”);

     

    Whereas,
Roaring Fork has accepted the Incentive with respect to that portion of the
principal amount of the Note equal to $800,000, including all accrued but unpaid
interest and penalties with respect to that portion of the principal, and
delivered to the Company an the Allonge to Promissory Note attached as Appendix A;

     

    Whereas,
Roaring Fork has also accepted the Incentive with respect to the entire Warrant
and has determined to purchase an additional 300,000 shares of the Company’s
common stock at $.30 per share resulting from its exercise of the Warrant; as
provided under the Incentive;

     

    Whereas,
in connection with its acceptance of the Incentive, conversion of the Note,
exercise of the Warrant and purchase of additional shares, Roaring Fork has
delivered to the Company payment of $490,000 and the Company will issue to
deliver to Roaring Fork an aggregate of 3,259,424 shares of the Company’s common
stock (the “Shares”), of which 1,959,424 shares result from the conversion of
the Note and 1,300,000 shares result from the exercise of the Warrant and
purchase of additional shares pursuant to the Incentive.

     

    Whereas,
in connection with the aforementioned transaction, the Company has requested
that Roaring Fork waive the Company’s obligation to register the Shares, and
Roaring Fork has agreed to provide such waiver as set forth in this
Agreement.

     

    Agreement

     

    Now,
Therefore, in
consideration of the mutual promises, covenants and agreements set forth herein,
the sufficiency of which the parties acknowledge, the parties hereby agree as
follows:

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.           Termination
of Registration Obligation and Damages.  The Company’s
obligation to register the shares of common stock underlying the Note and the
Warrant is terminated, and damages related thereto are hereby waived, and the
Company shall deliver to Roaring Fork an irrevocable instruction letter to the
Company’s transfer agent to issue to Roaring Fork 58,777 shares of the Company’s
common stock within five business days of the date of this
Agreement.  The other provisions of the letter agreement dated April
5, 2007 between the Company and Roaring Fork remain in full force and
effect.

     

    2.           Representations,
Warranties and Covenants of the Company. 
The Company hereby represents and warrants to Roaring Fork as follows:

     

    2.1           Corporate Power. 
The Company has all requisite corporate power and authority to execute and
deliver this Agreement, and to carry out and perform the provisions of this
Agreement.

     

    2.2           Authorization.  All
corporate action on the part of the Company, its officers, directors and
stockholders necessary for the authorization, execution and delivery of this
Agreement and the performance of all obligations of the Company hereunder has
been taken.  This Agreement, when executed and delivered by the
Company, will constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.

     

    2.3           Note
Conversions.  The Company had note payables of $3,598,776 at
May 31, 2008.  The Company has made no notes since May 31,
2008.  Since May 31, 2008, the Company has received:  (i)
note conversions of $1,325,723 into the Company’s common stock at $.53 per
share, (ii) warrant exercises at $.40 per share to purchase 729,395 shares of
the Company’s common stock for proceeds of $291,758 and (iii) warrant exercises
at $.30 per share to purchase 180,375 shares of the Company’s common stock for
proceeds of $54,113.

     

    2.4           Agreements with John
Jenkins.  The Company has entered into a Consulting Agreement
with John Jenkins.  The Company’s Board of Directors (the “Board”)
will, within ten business days of the date hereof, elect Jenkins to serve as a
member of the Board and as Chairman of the Board, it being understood that
Jenkins requires that the Company obtain D&O insurance prior to accepting
these positions.  The Company covenants to obtain D&O insurance by
no later than August 31, 2008 and that the Jenkins elections to the Board will
not be revoked.  The Company and its principal stockholders have
entered into an agreement with John Jenkins in the form attached as Appendix C to this
Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.5           Most
Favored Nation.

     

    (a)           If
and whenever, on or after the date hereof and before June 30, 2009 (the “MFN Period”), the Company (i)
permits the conversion of any note payable outstanding as of the date hereof at
a conversion price below $.53 per share, then immediately after such conversion,
the Company shall issue to Roaring Fork additional shares of the common stock
such that Roaring Fork shall receive benefit of the more favorable terms of the
subsequent conversion or issuance(s).  By way of example, if the
Company permits the conversion of a note payable outstanding as of the date
hereof at a conversion price of $.50 per share, then Roaring Fork would receive
an additional 117,494 shares of the common stock (calculated by dividing the
unpaid principal, interest and penalties of the Note, as identified in Section 1
above, in the amount of $1,038,495 by $.50 (2,076,918) and subtracting from that
amount the 1,959,424 shares issued to Roaring Fork pursuant to Section 1 above
(2,076,918 - 1,959,424 = 117,494)).

     

    (b)           If
and whenever, during the MFN Period, the Company permits the exercise of any
warrant outstanding as of the date hereof at an exercise price below $.40 per
share, the Company shall issue to Roaring Fork additional shares of the common
stock such that Roaring Fork shall receive benefit of the more favorable terms
of the subsequent exercise.  By way of example, if the Company permits
the exercise of a warrant outstanding as of the date hereof at an exercise price
of $.30 per share, then Roaring Fork would receive an additional 333,334 shares
of the common stock (calculated by dividing the aggregate exercise price paid
with respect to Roaring Fork’s exercise of the Warrant pursuant to Section 2
above ($400,000) by $.30 (1,333,334) and subtracting from that amount the
1,000,000 shares issued to Roaring Fork pursuant to Section 2 above (1,333,334 -
1,000,000 = 333,334)).

     

    (c)           If,
during the MFN Period, the Company in any manner issues or sells any (i) shares
of its common stock for no consideration or any consideration below $.53 per
share, or (ii) any Convertible Securities (as defined below), other than Options
(as defined below) granted or sold in accordance with any employee equity
incentive plan, and the lowest price per share for which one share of the
Company's common stock is issuable upon such conversion or exchange or exercise
thereof is less than $.53 per share, then such share of common stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the
time of the issuance or sale of such Convertible Securities for such price per
share.  For the purposes of this agreement, the  “lowest
price per share for which one share of the Company's common stock is issuable
upon such conversion or exchange or exercise ” shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the Company
with respect to any one share of its common stock upon the issuance or sale of
the Convertible Security and upon the conversion or exchange or exercise of such
Convertible Security.  Notwithstanding the foregoing, this Section (c)
shall only apply, and the issuances to Roaring Fork described in Sections 2.4(a)
and (b) shall only be made, (x) after the first $200,000 in aggregate gross
proceeds received by the Company with respect to sales of common stock or
Convertible Securities, and thereafter, (y) only if the Company repays, redeems,
repurchases, retires or otherwise terminates the notes payable or warrants
described in Sections 2.4(a) and (b), within 180 days of the issuance of shares
of common stock or Convertible Securities described in this Section
2.4(c).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    For
purposes of this Agreement, issuances of any rights, warrants or options to
subscribe for or purchase shares of common stock of the Company (“Options”) and
issuances of any stock or securities (other than Options) directly or indirectly
convertible into or exercisable or exchangeable for shares of common stock of
the Company (“Convertible Securities”).

    

    (d)           Notwithstanding
this Section 2.4, no issuance of common stock pursuant to this Section 2.4 shall
be made to Roaring Fork with respect to any shares of common stock or
Convertible Securities issued by the Company in connection with the settlement
of its current litigation pending in Dallas, Texas, styled KINGDON R. HUGHES VS.
GREGORY T. ROYAL, CYNTHIA A. GARR, JAMES T. MILLER, JR., CHARLES STIDHAM, CNH
HOLDINGS COMPANY D/B/A CISTERA NETWORKS AND XBRIDGE SOFTWARE, INC.; Cause No.
DV05-0600-G; G-134th District Court, Dallas County, Texas.

     

    2.6           Acknowledgments.  The
Company acknowledges that the provisions of this Section 2 are material to
Roaring Fork’s investment decision to convert the Note, exercise the Warrant and
purchase the additional shares of stock as set forth in Sections 2.3 above and
to terminate the registration obligation in Section 1.

     

    3.           Fees
and Expenses.  The Company agrees to pay Roaring Fork $5,000 at
Closing as reimbursement of Roaring Fork’s legal fees in connection with the
preparation of this Agreement and other expenses.  It is understood
that counsel for Roaring Fork has only rendered legal advice to Roaring Fork,
and not to the Company or any other note holder in connection with the
transactions contemplated hereby, and that each of the Company and Roaring Fork
has relied for such matters on the advice of its own respective
counsel.  Each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement.

     

    4.           Miscellaneous.

     

    4.1           Governing Law.  This
Agreement shall be governed by and construed under the laws of the State of
Colorado in all respects as such laws are applied to agreements among Colorado
residents entered into and performed entirely within Colorado, except for
matters of corporate law, which shall be governed by the laws of the State of
Nevada.  The parties agree that any action brought by either party
under or in relation to this Agreement, including without limitation to
interpret or enforce any provision of this Agreement, shall be brought in, and
each party agrees to and does hereby submit to the jurisdiction and venue of,
any state or federal court located in the County of Denver,
Colorado.

     

    4.2           Survival.  The
representations, warranties, covenants and agreements made herein shall survive
the closing of the transactions contemplated hereby for a period of two years
following the Closing.

     

    4.3           Successors and
Assigns.  Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon the parties
hereto and their respective successors, assigns, heirs, executors and
administrators.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.4           Severability.  In
the event one or more of the provisions of this Agreement should, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.

     

    4.5           Amendment and Waiver.  This Agreement
may be amended or modified only upon the written consent of the Company and
Roaring Fork.

     

    4.6           Titles and
Subtitles.  The titles of the sections and subsections of the
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.

     

    4.7           Counterparts.  This
Agreement may be executed in any number of counterparts and may be delivered by
facsimile or other electronic means, each of which shall be an original, but all
of which together shall constitute one instrument.

     

    4.8           Pronouns.  All
pronouns contained herein, and any variations thereof, shall be deemed to refer
to the masculine, feminine or neutral, singular or plural, as to the identity of
the parties hereto may require.

     

    

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remainder of this page is intentionally left blank.]

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    In Witness
Whereof, each of the parties hereto has executed this Agreement as of the
date first above written.

     

    
      	
              COMPANY:

            	
              ROARING
      FORK:

            
	
              Cistera
      Networks, Inc.

               

               

              By:
      /s/ Derek P. Downs

                    Name:  Derek
      P. Downs

                    Title:    CEO

               

               

            	
              ROARING
      FORK CAPITAL SBIC, L.P.

               

              Roaring
      Fork Capital Management, LLC

              Its
      General Partner

               

              By:
      /s/ G. Michael Machens

              Name:
      G. Michael Machens

              Its:
      Manager

               

               

              Address:5350 South Roslyn
      Street, Suite 380

              Greenwood Village,
      CO  80111-2124

               

               

            
	 
      	 
      
	 
      	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Appendix
      A

            

    

    

    
      	
               
      

            	
              Form
      of Allonge to Promissory Note

            

    

    
      
        
           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Appendix
      B

            

    

    

    
      	
               
      

            	
              Form
      of Warrant Endorsement

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Appendix
      C

            

    

    

    
      	
               
      

            	
              Form
      of Jenkins Agreement

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