Document:

Exhibit
        10.2

      
 

    

    FORM
      OF REGISTRATION RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT
      (this
“Agreement”)
      is
      entered into as of February 14, 2008, by and among New York Mortgage Trust,
      Inc., a Maryland corporation (the “Company”),
      and
      the purchasers listed on the Schedule of Purchasers attached hereto as
Schedule
      A
      (each, a
“Purchaser”
and,
      collectively, the “Purchasers”).

     

    THE
      PARTIES TO THIS AGREEMENT
      enter
      into this Agreement on the basis of the following facts, intentions and
      understandings:

     

    A. The
      Company and the Purchasers have entered into that certain Purchase Agreement,
      dated as of February 14, 2008 (the “Purchase
      Agreement”),
      and,
      upon the terms and subject to the conditions of the Purchase Agreement, the
      Company has agreed to issue and sell, and the Purchasers have agreed to
      purchase, that number of shares of common stock, par value $0.01 per share,
      of
      the Company (the “Common
      Stock”)
      set
      forth opposite their name on Schedule
      A
      attached
      hereto and in the aggregate, up to 15,000,000 shares (the “Shares”).

     

    B. To
      induce
      the Purchasers to execute and deliver the Purchase Agreement, the Company has
      agreed to provide the Purchasers with the benefit of certain registration rights
      under the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder (the “Securities
      Act”),
      on
      the terms and subject to the conditions set forth herein.

     

    NOW,
      THEREFORE,
      in
      consideration of the promises and the mutual covenants contained herein, and
      for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and each of the Purchasers hereby agree as
      follows:

     

    SECTION
      1. Certain Definitions.
      For
      purposes of this Agreement, the following terms shall have the following
      respective meanings:

     

    (a)  Affiliate”
shall
      mean, as to any specified Person, (i) any Person that directly, or indirectly
      through one or more intermediaries, controls or is controlled by, or is under
      common control with, the specified Person, (ii) any executive officer, director,
      trustee or general partner of the specified Person and (iii) any legal entity
      for which the specified Person acts as an executive officer, director, trustee
      or general partner. For purposes of this definition, “control” (including the
      correlative meanings of the terms “controlled by” and “under common control
      with”), as used with respect to any Person, shall mean the possession, directly,
      or indirectly through one or more intermediaries, of the power to direct or
      cause the direction of the management and policies of such Person, whether
      by
      contract, through the ownership of voting securities, partnership interests
      or
      other equity interests or otherwise. An indirect relationship shall include
      circumstances in which a Person’s spouse, children, parents, siblings or
      mother-, father-, sister- or brother-in-law is or has been associated with
      a
      Person.

     

    (b) “Allowable
      Grace Period”
has
      the
      meaning assigned thereto in Section 5
      of this
      Agreement.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    (c) “Business
      Day”
means
      a
      day of the week other than a Saturday, a Sunday or a day which shall be in
      New
      York, New York a legal holiday or a day on which banking institutions are
      authorized or required by law to remain closed.

     

    (d) “Claims”
has
      the
      meaning assigned thereto in Section 8(a)
      of this
      Agreement.

     

    (e) “Closing
      Date”
means
      the date on which the first Share is initially issued and sold by the
      Company.

     

    (f) “Commission”
means
      the Securities and Exchange Commission, or any other federal agency at the
      time
      administering the Exchange Act or the Securities Act, whichever is the relevant
      statute for the particular purpose.

     

    (g) “Effective
      Date”
means
      the date that the applicable Registration Statement has been declared effective
      by the Commission.

     

    (h) “Effectiveness
      Deadline”
has
      the
      meaning assigned thereto in Section
      2(a)
      of this
      Agreement.

     

    (i) “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

     

    (j) “Indemnified
      Damages”
has
      the
      meaning assigned thereto in Section 8(a)
      of this
      Agreement.

     

    (k) “Indemnified
      Party”
has
      the
      meaning assigned thereto in Section 8(b)
      of this
      Agreement.

     

    (l) “Indemnified
      Person”
has
      the
      meaning assigned thereto in Section 8(a)
      of this
      Agreement.

     

    (m) “Person”
means
      a
      corporation, association, partnership, limited liability company, organization,
      business, individual, government or political subdivision thereof or
      governmental agency.

     

    (n) “Piggyback
      Registration”
has
      the
      meaning specified in Section 3(a)
      of this
      Agreement.

     

    (o) “Preferred
      Stock”
means
      the Series A Cumulative Redeemable Convertible Preferred Stock, par value $0.01
      per share, of the Company. 

     

    (p) “Prospectus”
      means
      the prospectus included in the Registration Statement, as amended or
      supplemented by any amendment or prospectus supplement, including post-effective
      amendments. 

     

    (q) “Purchase
      Agreement”
has
      the
      meaning assigned thereto in Recital
      A
      of this
      Agreement.

     

    
      
         

      

      
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    (r) “Registrable
      Securities”
means
      the Shares, and any shares of capital stock of the Company issued or issuable
      with respect to the Shares as a result of any stock split, stock dividend,
      recapitalization, exchange or similar event or otherwise (including, without
      limitation, any merger or sale of the Company or sale of all or substantially
      all of its assets) (for purposes of the proviso in this definition of the term
      “Registrable Securities,” such shares of capital stock of the Company shall also
      be referred to as the “Shares”); provided, however, that such Shares shall cease
      to be Registrable Securities (i) when a registration statement registering
      such
      Shares under the Securities Act has been declared or becomes effective and
      such
      Shares have been sold, or otherwise transferred by a holder thereof pursuant
      to
      such effective registration statement; (ii) when such Shares are sold
      pursuant to Rule 144 under circumstances in which any legend borne by such
      Shares relating to restrictions on transferability thereof under the Securities
      Act is removed; (iii) when such Shares are eligible to be sold pursuant to
      Rule
      144 provided that at least twelve (12) months have lapsed since the Shares
      were
      acquired from the Company or an affiliate of the Company; or (iv) when such
      Shares shall cease to be outstanding.

     

    (s) “Registration
      Expenses”
has
      the
      meaning assigned thereto in Section 7
      of this
      Agreement.

     

    (t) “Registration
      Period”
has
      the
      meaning assigned thereto in Section 4(a)
      of this
      Agreement.

     

    (u) “Registration
      Statement”
means
      a
      registration statement of the Company filed under the Securities Act and
      relating to all of the Registrable Securities pursuant to the provisions of
      this
      Agreement, including the Prospectus, amendments and supplements to such
      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, if any, in such registration
      statement.

     

    (v) “Required
      Holders”
means
      the holder of at least a majority of the shares constituting Registrable
      Securities at the time outstanding; provided, however, that Registrable
      Securities that are owned directly or indirectly by an Affiliate of the Company
      shall not be deemed to be outstanding.

     

    (w) “Rule
      144”
means
      such rule promulgated under the Securities Act, or any successor thereto, as
      amended from time to time.

     

    (x) “Trading
      Day”
means
      a
      day on which the principal securities exchange or automated quotation system
      upon which the Registrable Securities are then listed for public trading) shall
      be open for business.

     

    (y) “Violations”
has
      the
      meaning assigned thereto in Section
      8(a)
      of this
      Agreement. 

     

    Unless
      the context otherwise requires, any reference herein to a “section” or “clause”
refers to a section or clause, as the case may be, of this Agreement, and the
      words “herein,” “hereof” and “hereunder” and other words of similar import refer
      to this Agreement as a whole and not to any particular section or other
      subdivision. Unless the context otherwise requires, any reference to a statute,
      rule or regulation refers to the same (including any successor statute, rule
      or
      regulation thereto) as it may be amended from time to time. 

     

    
      
         

      

      
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    SECTION
      2. Registration Under the Securities Act.
      

     

    (a) The
      Company shall prepare and, as soon as practicable, but in no event later than
      twenty (20) days following the Closing Date, file with the Commission a
      Registration Statement on the appropriate form under the Securities Act (as
      shall be selected by the Company) relating to the resale of all of the
      Registrable Securities by the Purchasers from time to time on a delayed and
      continuous basis pursuant to Rule 415 under the Securities Act, and pursuant
      to
      any method or combination of methods legally available (including, without
      limitation, an underwritten offering, a direct sale to Purchasers or a sale
      through brokers or agents, which may include sales over the internet). The
      Company shall use its commercially reasonable best efforts, subject to receipt
      of necessary information from the Purchasers, to have the Registration Statement
      declared effective by the Commission as soon as practicable and in any event
      within ninety (90) days after the initial filing of the Registration Statement
      (the “Effectiveness
      Deadline”).
      In
      the event that the Commission notifies the Company that not all of the
      Registrable Securities may be registered for resale pursuant to a Registration
      Statement on the form used by the Company, the Company shall use its
      commercially reasonable best efforts to register, and have declared effective,
      the maximum percentage of Registrable Securities permitted to be included on
      such Registration Statement (distributed pro rata among the holders of the
      Registrable Securities on the basis of the number of Registrable Securities
      owned by such holders), and as soon as practicable thereafter, to register
      the
      additional Registrable Securities on such additional Registration Statements
      as
      may be required to register the resale of all of the Registrable Securities.
      By
      9:30 a.m. on the Business Day immediately following the Effective Date of the
      applicable Registration Statement, the Company shall file with the Commission
      in
      accordance with Rule 424 under the Securities Act the final prospectus to be
      used in connection with sales pursuant to such Registration Statement. In no
      event shall the Company include securities other than Registrable Securities
      on
      any Registration Statement filed pursuant to this Section
      2
      without
      the prior written consent of the Required Holders. The Company shall use its
      commercially reasonable best efforts to keep such Registration Statement
      continuously effective under the Securities Act during the entire Registration
      Period. 

     

    (b) Notwithstanding
      anything to the contrary contained in this Agreement, in the event the
      Commission seeks to characterize any offering pursuant to a Registration
      Statement filed pursuant to this Agreement as constituting an offering of
      securities by or on behalf of the Company, or in any other manner, such that
      the
      Commission does not permit such Registration Statement to become effective
      and
      used for resales in a manner that does not constitute such an offering and
      that
      permits the continuous resale at the market by the holders of Registrable
      Securities participating therein (or as otherwise may be acceptable to each
      such
      holder) without being named therein as an “underwriter,” then the Company shall
      reduce the number of shares to be included in such Registration Statement until
      such time as the Commission shall so permit such Registration Statement to
      become effective as aforesaid. In making such reduction, the Company shall
      first
      reduce or eliminate the shares to be included by any Person other than a holder
      of Registrable Securities (if such shares were permitted to be initially
      included by the Required Holders). If, following such reduction, such
      characterization still exists, the Company shall then reduce the number of
      shares to be included by all holders of Registrable Securities on a pro rata
      basis (based upon the number of Registrable Securities otherwise required to
      be
      included for each such holder). In no event shall a Purchaser be required to
      be
      named as an “underwriter” in a Registration Statement without such Purchaser’s
      prior written consent. 

     

    
      
         

      

      
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    SECTION
      3. Right to Piggyback Registration.
      

     

    (a) If
      at any
      time following the date of this Agreement and prior to the time one or more
      Registration Statements covering all Registrable Securities is no longer
      required to be effective pursuant to this Agreement, there is not an effective
      Registration Statement covering all of the Registrable Securities and the
      Company proposes for any reason to register any shares of Common Stock under
      the
      Securities Act (other than pursuant to a registration statement on Form S-4
      or
      Form S-8 (or a similar or successor form)) with respect to an offering of Common
      Stock by the Company for its own account or for the account of any of its
      stockholders, it shall at each such time promptly give written notice to the
      holders of the Registrable Securities of its intention to do so (but in no
      event
      less than 30 days before the anticipated filing date) and include in such
      registration all Registrable Securities with respect to which the Company has
      received written requests for inclusion therein within fifteen (15) days after
      receipt of the Company’s notice (a “Piggyback
      Registration”).
      Such
      notice shall offer the holders of the Registrable Securities the opportunity
      to
      register such number of shares of Registrable Securities as each such holder
      my
      request and shall indicate the intended method of distribution of such
      Registrable Securities. 

     

    (b) Notwithstanding
      the foregoing, (A) if such registration involves a public offering, the
      Purchasers must sell their Registrable Securities to, if applicable, the
      underwriter(s) at the same price and subject to the same underwriting discounts
      and commissions as apply to the Company (it being acknowledged that the Company
      shall be responsible for other expenses as set forth in Section
      7)
      and
      subject to the Purchasers entering into customary underwriting documentation
      for
      selling stockholders in a registered offering, and (B) if, at any time after
      giving written notice of its intention to register any Registrable Securities
      pursuant to this Section
      3
      and
      prior to the effective date of the registration statement filed in connection
      with such registration, the Company shall determine for any reason not to cause
      such registration statement to become effective under the Securities Act, the
      Company shall deliver written notice to the Purchasers and, thereupon, shall
      be
      relieved of its obligation to register any Registrable Securities in connection
      with such registration; provided,
      however,
      that
      nothing contained in this Section
      3(b)
      shall
      limit the Company’s liabilities and/or obligations under this Agreement
      including, without limitation, the obligation to pay liquidated damages under
      Section 5(b).

     

    SECTION
      4. Related Obligations.

     

    (a) The
      Company shall, subject to the terms and conditions of this Agreement, including
      Section 5
      hereof,
      use its commercially reasonable best efforts to keep the Registration Statement
      current and effective at all times, other than during an Allowable Grace Period,
      until the earlier of (i) the date as of which all of the Purchasers may sell
      all
      of the Registrable Securities without restriction pursuant to Rule 144 (or
      any
      successor rule thereto) promulgated under the Securities Act (provided that
      at
      least twelve (12) months have lapsed since the Shares were acquired from the
      Company or an affiliate of the Company) or (ii) the date on which all of the
      Purchasers shall have sold for the first time all of the Registrable Securities
      pursuant to the Registration Statement (the “Registration
      Period”),
      which
      Registration Statement, (i) shall be available for the sale of the Registrable
      Securities by the Purchasers, (ii) shall comply as to form in all material
      respects with the requirements of the applicable form and include or incorporate
      by reference all financial statements required by the Commission to be included
      therein, (iii) shall comply in all material respects with the requirements
      of
      the Securities Act and the Exchange Act and (iv) shall not contain any 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 the case of
      prospectuses, in the light of the circumstances in which they were made) not
      misleading.

     

    
      
         

      

      
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    (b) Subject
      to the terms and conditions of this Agreement, including Section5
      hereof,
      the Company agrees to use its commercially reasonable best efforts to prepare
      and file with the Commission such amendments and post-effective amendments
      to
      the Registration Statement and cause each Prospectus to be supplemented by
      any
      required prospectus supplement, in each case as may be necessary to comply
      with
      the provisions of the Securities Act with respect to the disposition of the
      Registrable Securities, or as may be reasonably requested by a Purchaser in
      order to incorporate information concerning such Purchaser or such Purchaser’s
      intended method of distribution (subject to the Company receiving notification
      and all necessary information from the Purchasers described therein and their
      respective transferees, assignees and donees).

     

    (c) Not
      less
      than three (3) Trading Days prior to the filing of a Registration Statement
      or
      any amendment thereto, the Company shall furnish to the Purchasers copies of
      all
      such documents proposed to be filed, which documents shall be subject to the
      review of such Purchasers. In connection with the Purchasers’ review of such
      documents, the Purchasers agree that they shall provide a written consent or
      any
      written comments relating to such documents to the Company within two (2)
      Trading Days after receipt of such document.

     

    (d) The
      Company shall promptly notify the Purchasers (i) when the Company has been
      notified by the Commission whether or not a Registration Statement or any
      amendment thereto will be subject to a review by the Commission and (ii) if
      reviewed, when the Company has been notified by the Commission that a
      Registration Statement or amendment thereto will not be subject to further
      review. Upon the request of a Purchaser, the Company shall provide such
      Purchaser true and complete copies of all correspondence from and to the
      Commission relating to a Registration Statement (with all material, non-public
      information regarding the Company redacted from such copies). The Company shall
      respond as promptly as reasonably practicable to any comments received from
      the
      Commission with respect to the Registration Statement or any amendments thereto.
      The Company shall promptly file with the Commission a request for acceleration
      of effectiveness in accordance with Rule 461 promulgated under the Securities
      Act after the Company is notified (orally or in writing, whichever is earlier)
      by the Commission that a Registration Statement will not be reviewed, or will
      not be subject to further review, such that the Registration Statement shall
      be
      declared effective no later than five (5) Trading Days after such
      notification.

     

    (e) The
      Company shall furnish to the Placement Agent and each Purchaser whose
      Registrable Securities are included in the Registration Statement, without
      charge to such Purchaser, (i) promptly after the same is prepared and filed
      with
      the Commission, one copy of such Registration Statement and all amendments
      and
      supplements thereto, and (ii) upon the effectiveness of each Registration
      Statement, such number of copies of the Prospectus and all amendments and
      supplements thereto, as such Purchaser may reasonably request in writing in
      order to facilitate the disposition of the Registrable Securities.

     

    
      
         

      

      
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    (f) Subject
      to the terms and conditions of this Agreement, including Section 5
      hereof,
      the Company shall use its commercially reasonable best efforts to promptly
      register and qualify, unless an exemption from registration and qualification
      applies, the resale of the Registrable Securities under such other securities
      or
“blue sky” laws of the applicable jurisdictions in the United States as any
      Purchaser reasonably requests in writing and keep such registration or
      qualification in effect during the Registration Period, other than during an
      Allowable Grace Period; provided,
      however,
      that
      the Company shall not be required to qualify to do business, subject itself
      to
      taxation or consent to general service of process in any jurisdiction in which
      it is not now so qualified or has not so consented (i.e., service of process
      which is not limited solely to securities laws violations). The Company shall
      promptly notify each Purchaser who holds Registrable Securities of the receipt
      by the Company of any notification with respect to the suspension of the
      registration or qualification of any of the Registrable Securities for sale
      under the securities or “blue sky” laws of any jurisdiction in the United States
      or its receipt of notice of the initiation or threatening of any proceeding
      for
      such purpose.

     

    (g) Notwithstanding
      anything to the contrary set forth herein, as promptly as practicable after
      becoming aware of such event, the Company shall notify each Purchaser of the
      happening of any event as a result of which (i) the Registration Statement
      or
      any amendment or post-effective amendments thereto, as then in effect, includes
      an untrue statement of a material fact or omission to state a material fact
      required to be stated therein or necessary to make the statements therein not
      misleading, or (ii) the Prospectus or any amendment or supplement thereto
      includes an untrue statement of a material fact or omission 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
      (provided that in no event shall such notice contain any material, non-public
      information regarding the Company), and, subject to the terms and conditions
      of
      this Agreement, including Section 5
      hereof,
      promptly prepare an amendment to such Registration Statement and supplement
      to
      such Prospectus to correct such untrue statement or omission, and deliver such
      number of copies of such supplement or amendment to each Purchaser as such
      Purchaser may reasonably request. The Company shall also promptly notify each
      Purchaser (i) when a Prospectus and each Prospectus supplement or amendment
      thereto has been filed, and when a Registration Statement and each amendment
      (including post-effective amendments) and supplement thereto has been declared
      effective by the Commission (notification of such effectiveness shall be
      delivered to each Purchaser by facsimile or a similar means as soon as
      practicable, but in any event, no later than two (2) Business Days after such
      effectiveness,
      (ii) of any request by the Commission for amendments or supplements to a
      Registration Statement or related Prospectus, and (iii) of the Company’s
      reasonable determination that an amendment (including any post-effective
      amendment) or supplement to a Registration Statement or Prospectus would be
      appropriate (subject to the terms and conditions of this Agreement including
      Section 5
      hereof).

     

    (h) Subject
      to the terms and conditions of this Agreement, including Section 5
      hereof,
      the Company shall use its commercially reasonable best efforts to (i) prevent
      the issuance of any stop order or other suspension of effectiveness of a
      Registration Statement, or the suspension of the qualification of any of the
      Registrable Securities for sale in any jurisdiction in the United States, and
      (ii) if such an order or suspension is issued, obtain the withdrawal of such
      order or suspension at the earliest practicable moment and notify each holder
      of
      Registrable Securities of the issuance of such order and the resolution thereof
      or its receipt of notice of the initiation or threat of any proceeding for
      such
      purpose.

     

    
      
         

      

      
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    (i) If
      any
      Purchaser may be required under applicable securities law to be described in
      the
      Registration Statement as an underwriter and such Purchaser consents to so
      being
      named an underwriter, at the request of any Purchaser, the Company shall furnish
      to such Purchaser, on the date of the effectiveness of the Registration
      Statement and thereafter from time to time on such dates as a Purchaser may
      reasonably request (i) a letter, dated as of such date, from the Company’s
      independent certified public accountants in form and substance as is customarily
      given by independent certified public accountants to underwriters in an
      underwritten public offering, addressed to the Purchasers, and (ii) an opinion,
      dated as of such date, of counsel representing the Company for purposes of
      such
      Registration Statement, in form, scope and substance as is customarily given
      in
      an underwritten public offering by the Company’s counsel consistent with such
      counsel’s opinion practice, addressed to the Purchasers.

     

    (j) If
      any
      Purchaser may be required under applicable securities law to be described in
      the
      Registration Statement as an underwriter and such Purchaser consents to so
      being
      named an underwriter, upon the written request of such Purchaser, the Company
      shall make available for inspection by (i) such Purchaser, (ii) legal counsel
      for such Purchaser and (iii) one (1) firm of accountants or other agents
      retained by such Purchaser (collectively, the “Inspectors”),
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the “Records”),
      as
      shall be reasonably deemed necessary by each Purchaser, and cause the Company’s
      officers, directors and employees to supply all information which any Purchaser
      may reasonably request; provided, however, that such Purchaser shall agree
      in
      writing to hold in strict confidence and not to make any disclosure (except
      to
      such Purchaser) or use of any Record or other information which the Company
      determines in good faith to be confidential, and of which determination such
      Purchaser is so notified, unless (a) the release of such Records is ordered
      pursuant to a final, non-appealable subpoena or order from a court or government
      body of competent jurisdiction, or (b) the information in such Records has
      been
      made generally available to the public other than by disclosure in violation
      of
      this Agreement or any other Operative Agreement. Such Purchaser agrees that
      it
      shall, upon learning that disclosure of such Records is sought in or by a court
      or governmental body of competent jurisdiction or through other means, give
      prompt notice to the Company and allow the Company, at its expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, the Records deemed confidential. Nothing herein (or in any other
      confidentiality agreement between the Company and such Purchaser, if any) shall
      be deemed to limit any Purchaser’s ability to sell Registrable Securities in a
      manner which is otherwise consistent with applicable laws and
      regulations.

     

    (k) The
      Company shall hold in confidence and not make any disclosure of information
      concerning a Purchaser provided to the Company unless (i) disclosure of such
      information is necessary to comply with federal or state securities laws or,
      if
      applicable, the rules and regulations of the Financial Industry Regulatory
      Authority, (ii) the disclosure of such information is necessary to avoid or
      correct a misstatement or omission in any Registration Statement or is otherwise
      required to be disclosed in the Registration Statement pursuant to the
      Securities Act, (iii) the release of such information is ordered pursuant to
      a
      subpoena or other final, non-appealable order from a court or governmental
      body
      of competent jurisdiction, or (iv) such information has been made generally
      available to the public other than by disclosure in violation of this Agreement
      or any other Operative Agreement. The Company agrees that it shall, upon
      learning that disclosure of such information concerning a Purchaser is sought
      in
      or by a court or governmental body of competent jurisdiction or through other
      means, give prompt written notice to such Purchaser and allow such Purchaser,
      at
      the Purchaser’s expense, to undertake appropriate action to prevent disclosure
      of, or to obtain a protective order for, such information.

     

    
      
         

      

      
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    (l) The
      Company shall use its commercially reasonable best efforts to cause all Shares
      to be listed on each securities exchange (including the NASDAQ Stock Market)
      on
      which similar securities issued by the Company are then listed, and if not
      so
      listed, to be listed on the OTC Bulletin Board and, if listed on the OTC
      Bulletin Board, use its commercially reasonable best efforts to secure
      designation of all such Shares covered by such Registration Statement as a
      “national market system security” within the meaning of Rule 11Aa2-1 of the
      Commission, no later than the effective date of the Registration
      Statement.

     

    (m) 
      In
      connection with any sale or transfer of Registrable Securities pursuant to
      the
      Registration Statement, the Company shall use its commercially reasonable best
      efforts to cooperate with the Purchasers who hold Registrable Securities being
      offered and, to the extent applicable, facilitate the timely preparation and
      delivery of certificates (not bearing any restrictive legend) representing
      the
      Registrable Securities to be offered pursuant to a Registration Statement and
      enable such certificates to be in such denominations or amounts, as the case
      may
      be, as the Purchasers may reasonably request and, registered in such names
      as
      the Purchasers may request.

     

    (n) The
      Company shall comply in all material respects with all applicable rules and
      regulations of the Commission in connection with any registration
      hereunder.

     

    (o) The
      Company will use its commercially reasonable best efforts to cause Deloitte
      & Touche LLP to express their opinion with respect to the financial
      statements which are included in or incorporated by reference into the
      Registration Statement and the Prospectus; provided,
      however,
      that
      the opinion shall only be in the form and substance necessary for the Company
      to
      file the Registration Statement on the appropriate form under the Securities
      Act.

     

    (p) The
      Company shall use its commercially reasonable best efforts to prepare and file
      in a timely manner all documents and reports required by the Exchange Act and,
      to the extent the Company’s obligation to file such reports pursuant to
Section
      15(d)
      of the
      Exchange Act expires prior to the expiration of the Registration Period, the
      Company shall use its commercially reasonable best efforts to register the
      Registrable Securities under the Exchange Act and shall use its commercially
      reasonable best efforts to maintain such registration through the Registration
      Period.

     

    (q) The
      Company shall provide a CUSIP number for all Registrable Securities, not later
      than the initial effective date of the Registration Statement.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (r) 
      The
      Company shall provide and cause to be maintained a registrar and transfer agent
      for all Registrable Securities covered by any Registration Statement from and
      after a date not later than the initial effective date of such Registration
      Statement.

     

    (s) The
      Company shall not file a registration statement to register any shares of Common
      Stock (other than the Registrable Securities), any Preferred Stock or any other
      securities convertible or exchangeable into Common Stock prior to the
      effectiveness of the Registration Statement unless the Shares may be freely
      resold pursuant to an effective registration statement or Rule 144 under the
      Securities Act.

     

    (t) The
      Company shall use its commercially reasonable best efforts to become eligible
      to
      use Form S-3 (or any successor form thereto) for the registration of the resale
      of the Registrable Securities.

     

    SECTION
      5. Grace Period; Liquidated Damages.
      

     

    (a) Grace
      Period.
      Notwithstanding anything to the contrary herein, after a good faith resolution
      of the Board of Directors of the Company that pending negotiations relating
      to,
      or the consummation of, a transaction or the occurrence of an event (x) that
      would require additional disclosure of material information by the Company
      in
      the Registration Statement and which has not been so disclosed, (y) as to which
      the Company has a bona fide business purpose for preserving confidentiality,
      or
      (z) that renders the Company unable to comply with Commission requirements,
      in
      each case under circumstances that would make it impractical or inadvisable
      to
      cause the Company to promptly amend or supplement the Registration Statement
      on
      a post-effective basis, as applicable, the Company may delay the disclosure
      of
      material non-public information concerning the Company (a “Grace
      Period”);
      provided,
      however,
      that
      the Company shall promptly (i) notify the Purchasers in writing of a Grace
      Period (and a Grace Period shall begin on the date of receipt of notification),
      and (ii) notify the Purchasers in writing of the date on which the Grace Period
      ends; provided, further, that (A) with respect to a resale registration
      statement of Form S-3, (x) no single Grace Period shall exceed twenty (20)
      consecutive days, and (y) during any three hundred sixty-five (365) day period
      thereof, the aggregate of all of the Grace Periods shall not exceed an aggregate
      of twenty (20) days, and (B) with respect to a resale registration
      statement on Form S-11, (x) no single Grace Period shall exceed forty-five
      (45)
      consecutive days and (y) during any three hundred sixty-five (365) day period
      thereof, the aggregate of all Grace Periods shall not exceed an aggregate of
      ninety (90) days (any Grace Period which satisfies the criteria in clauses
      (A)
      and
(B)
      inclusive, an “Allowable
      Grace Period”).
      For
      purposes of determining the length of a Grace Period, the Grace Period shall
      be
      deemed to begin on and include the date the Purchasers receive the notice
      referred to in clause
      (i)
      and
      shall end on and include the later of (x) the date the Purchasers receive
      the notice referred to in clause (ii) and (y) the date referred to in such
      notice; provided,
      however,
      that no
      Grace Period shall be longer than an Allowable Grace Period. Each Purchaser
      shall keep confidential the fact that the Company has issued the notice referred
      to in clause (i) and the contents thereof, provided that the contents of such
      notice shall not disclose material, non-public information concerning the
      Company without the prior consent of the Purchaser.

     

    (b) Liquidated
      Damages.
      If any
      of the following events (each, an “Event”)
      shall
      occur and be continuing, then for each day that such Event shall occur and
      be
      continuing the Company shall pay to each Purchaser as liquidated damages an
      amount equal to the product of (x) Four Dollars ($4.00) for each share of
      Registrable Securities then held by such Purchaser and (y) one-sixtieth of
      one
      percent (1/60%) for the first 90 days after the occurrence of an Event, and
      one-thirtieth of one percent (1/30%) thereafter. 

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (i) a
      Registration Statement covering the resale of all of the Registrable Securities
      is not filed with the Commission within the time specified therefor in
Section
      2(a)
      of this
      Agreement, or a subsequent Registration Statement is not filed within 30 days
      after the date the Commission shall indicate as being the first date such filing
      may be made;

     

    (ii) a
      Registration Statement covering the resale of all the Registrable Securities,
      or
      such lesser number of Registrable Securities in the event the number of
      securities to be registered are reduced in accordance with Section
      2(b)
      of this
      Agreement, is not declared effective by the Commission (i) within the time
      specified therefor in Section
      2(a)
      of this
      Agreement, or (ii) within ten (10) Trading Days after the Company is notified
      (orally or in writing, whichever is earlier) by the Commission that a
      Registration Statement will not be reviewed, or will not be subject to further
      review, or (iii) with respect to a subsequent Registration Statement, within
      ninety (90) days after the date on which such filing is made; provided, however,
      that the liquidated damages shall be prorated to the extent that some, but
      not
      all, of the Registrable Securities have been registered for resale under the
      Registration Statement;

     

    (iii) after
      a
      Registration Statement has initially been declared effective, such Registration
      Statement is not continuously effective except during an Allowable Grace Period;
      

     

    (iv) a
      Grace
      Period exceeds an Allowable Grace Period;

     

    (v) the
      Registrable Securities may not be sold pursuant to Rule 144 because the Company
      does not meet the adequate public information condition of Rule 144(c); or
      

     

    (vi) the
      Company has not obtained Nasdaq Stock Market listing for the Registrable
      Securities on or before first date the Registration Statement is declared
      effective.

     

    provided,
      however,
      that if
      multiple Events have occurred and are simultaneously continuing, then in all
      events liquidated damages for only one such Event shall accrue (without any
      duplication of accrual or multiple accruals) with respect to any share of
      Registrable Securities held by a particular Purchaser. The Company shall pay
      the
      applicable Purchasers the liquidated damages that have accrued on the applicable
      shares of Registrable Securities with respect to a particular Event within
      thirty (30) days after such Event is no longer continuing and in any event
      within forty-five (45) days after such Event occurs, and, if applicable, every
      thirty (30) days thereafter. If the Company fails to pay any liquidated damages
      pursuant to this Section 5(b)
      in full
      within seven (7) days after the date payable, the Company will pay interest
      thereon at a rate of twelve percent (12%) per annum (or such lesser maximum
      amount that is permitted to be paid by applicable law) to the Purchasers,
      accruing daily from the date such liquidated damages are due until such amounts,
      plus all such interest thereon, are paid in full.

     

    The
      parties to this Agreement agree that the Purchasers that hold shares of
      Registrable Securities may suffer damages in the event that an Event has
      occurred and is continuing, and that it would not be possible to ascertain
      the
      amount of such damages. The parties to this Agreement further agree that the
      liquidated damages provided for in this Section 5(b)
      of this
      Agreement constitute a reasonable estimate of the damages that may be incurred
      by the Purchasers by reason of an Event. 

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    SECTION
      6. Purchaser’s Obligations.

     

    (a) Each
      Purchaser acknowledges that a condition precedent to the obligations of the
      Company pursuant to Sections
      2
      and
4
      of this
      Agreement with respect to the Registrable Securities of a particular Purchaser
      shall be that (i) such Purchaser shall complete or cause to be completed the
      Registration Statement Questionnaire attached hereto as Appendix I
      and
      deliver such completed and executed Registration Statement Questionnaire to
      the
      Company within five (5) Business Days of the date of this Agreement, and (ii)
      the information in such Registration Statement Questionnaire shall be true,
      correct and complete as of the date hereof and will be true, correct and
      complete as of the effective date of the Registration Statement and each day
      thereafter (provided that, if necessary to make the statement accurate, such
      Purchaser shall be entitled to update such information prior to the effective
      date of the Registration Statement), and (iii) shall execute such documents
      in
      connection with such registration as the Company may reasonably request. Each
      Purchaser shall promptly notify the Company of any material change with respect
      to such information previously provided to the Company by such
      Purchaser.

     

    (b) Each
      Purchaser agrees that, upon receipt of any notice from the Company of the
      happening of any event of the kind described in Sections 4(h)
      or the
      first sentence of Section 4(g)
      of this
      Agreement, such Purchaser will immediately discontinue disposition of
      Registrable Securities pursuant to the Registration Statement covering such
      Registrable Securities until such Purchaser’s receipt of the copies of the
      amended or supplemented Prospectus contemplated by Section 4(g)
      of this
      Agreement or receipt of notice that no amendment or supplement is required
      and,
      if so directed by the Company, such Purchaser shall deliver to the Company
      (at
      the expense of the Company) or destroy (and deliver to the Company a certificate
      of destruction) all copies of the Prospectus covering such Registrable
      Securities current at the time of receipt of such notice (other than a single
      file copy, which such Purchaser may keep) in such Purchaser’s possession. Each
      transferee of such Registrable Securities agrees, by acquisition of the
      Registrable Securities, that no holder of Registrable Securities shall be
      entitled to sell any of such Registrable Securities pursuant to the Registration
      Statement or to receive or use a Prospectus relating thereto, unless such
      holder, prior to use of such Registration Statement for the disposition of
      Registrable Securities, (i) agrees to be bound by the terms of this Agreement,
      and (ii) has furnished the Company with the completed Registration Statement
      Questionnaire required to be provided by each Purchaser under Section 6(a)
      above.

     

    (c) The
      Purchaser agrees that it will not effect any disposition of the Shares or its
      right to purchase the Shares that would constitute a sale within the meaning
      of
      the Securities Act or any applicable state securities laws, except as
      contemplated in the Registration Statement or as otherwise permitted by
      law.

     

    SECTION
      7. Registration Expenses.
      The
      Company agrees to bear and to pay or to cause to be paid promptly, upon request
      being made therefor, all Registration Expenses (defined below) incident to
      the
      Company’s performance of or compliance with this Agreement, including (a) all
      Commission and registration and filing fees and expenses of any exchange on
      which the securities are listed, (b) all fees and expenses in connection with
      the qualification of the Registrable Securities for offering and sale under
      the
      State securities and blue sky laws referred to in Section 4(f)
      hereof,
      (c) all expenses relating to the preparation, and reproduction of the
      Registration Statement, and any Piggyback Registration, required to be filed
      hereunder, each Prospectus included therein or prepared for distribution
      pursuant hereto, each amendment or supplement to the foregoing, the certificates
      representing the Registrable Securities and all other documents relating hereto,
      (d) internal expenses (including all salaries and expenses of the Company’s
      officers and employees performing legal or accounting duties), and (e) the
      reasonable fees, disbursements and expenses of one (1) counsel for the
      Purchasers, as selected by the Company (unless reasonably objected to by holders
      of at least a majority in aggregate of the Registrable Securities being
      registered), which shall not exceed Fifty Thousand Dollars ($50,000), and
      reasonable fees, expenses and disbursements of any other persons, including
      special experts, retained by the Company in connection with such registration
      (collectively, the “Registration
      Expenses”).
      To
      the extent that any out-of-pocket Registration Expenses are actually paid by
      any
      holder of Registrable Securities, the Company shall reimburse such person for
      the full amount of the Registration Expenses so paid promptly after receipt
      of
      all documents requested by the Company in connection therewith. Notwithstanding
      the foregoing, the holders of the Registrable Securities being registered shall
      pay all agency fees and commissions and underwriting discounts, commissions
      and
      transfer taxes, if any, attributable to the sale of such Registrable Securities
      and the fees and disbursements of any counsel or other advisors or experts
      retained by such holders (severally or jointly). 

     

    
      
         

      

      
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    SECTION
      8. Indemnification.

     

    (a) Indemnification
      by the Company.
      In
      connection with the Registration Statement, the Company shall indemnify and
      hold
      harmless each Purchaser, the directors, officers, members, partners, employees,
      agents and representatives of each Purchaser, and each Person, if any, who
      controls any Purchaser within the meaning of the Securities Act or the Exchange
      Act (each, an “Indemnified
      Person”),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, reasonable attorneys’ fees, amounts paid in settlement (which
      settlement shall be approved by the Company in accordance with the provisions
      of
      this Section
      8(a))
      or
      expenses (collectively, “Claims”)
      actually incurred in investigating, preparing or defending any action, claim,
      suit, inquiry, proceeding, investigation or appeal taken from the foregoing
      by
      or before any court or governmental, administrative or other regulatory agency,
      body or the Commission, whether pending or threatened, whether or not an
      indemnified party is or may be a party thereto (“Indemnified
      Damages”),
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon (i) any untrue statement or alleged untrue statement of a
      material fact in a Registration Statement or any amendment (including
      post-effective amendments) or supplement thereto in which Registrable Securities
      are offered, or the omission or alleged omission to state a material fact
      required to be stated therein or necessary to make the statements therein not
      misleading, (ii) any untrue statement or alleged untrue statement of a
      material fact contained in any preliminary or final Prospectus (as amended
      or
      supplemented, if any) or the omission or alleged omission to state therein
      any
      material fact necessary to make the statements made therein, in light of the
      circumstances under which the statements therein were made, not misleading
      (the
      matters in the foregoing clauses (i) through (ii) being, collectively,
“Violations”).
      Subject to Section 8(c)
      of this
      Agreement, the Company shall reimburse the Indemnified Persons, promptly as
      such
      expenses are incurred and are due and payable, for any reasonable legal fees
      or
      other expenses incurred by them in connection with investigating or defending
      any such Claim. Notwithstanding anything to the contrary contained herein,
      the
      indemnification agreement contained in this Section 8(a):
      (i)
      shall not apply to a Claim by an Indemnified Person arising out of or based
      upon
      a Violation which occurs in reliance upon and in conformity with information
      furnished in writing to the Company or an underwriter by any Indemnified Person
      expressly for use in connection with the preparation of the Registration
      Statement of any such amendment thereof or supplement thereto; (ii) shall not
      be
      available to the extent such Claim is based on a failure of the Purchaser to
      deliver or to cause to be delivered the Prospectus made available by the Company
      (to the extent applicable), including a corrected Prospectus, if such Prospectus
      or corrected Prospectus was timely made available by the Company pursuant to
      Section 4
      of this
      Agreement, (iii) if the Company shall have notified the Purchaser in a timely
      manner, shall not apply to any use of any Registration Statement or Prospectus
      during a period when a stop order has been issued in respect thereof or any
      actions or proceedings for that purpose have been initiated, or use of a
      Registration Statement or Prospectus during an Allowable Grace Period; and
      (iv)
      shall not apply to amounts paid in settlement of any Claim if such settlement
      is
      effected without the prior written consent of the Company, which consent shall
      not be unreasonably withheld or delayed. Such indemnity shall remain in full
      force and effect regardless of any investigation made by or on behalf of the
      Indemnified Person and shall survive the transfer of the Registrable Securities
      by the Purchasers pursuant to Section 10(b)
      of this
      Agreement.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (b) Indemnification
      by each Purchaser.
      In
      connection with the Registration Statement, each such Purchaser agrees to
      severally, and not jointly, indemnify, hold harmless and defend, the Company,
      the directors, officers, members, partners, employees, agents and
      representatives of the Company, and each Person, if any, who controls the
      Company within the meaning of the Securities Act or the Exchange Act (each,
      an
“Indemnified
      Party”),
      against any Claims or Indemnified Damages to which any of them may become
      subject, under the Securities Act, the Exchange Act or otherwise, insofar as
      such Claims or Indemnified Damages arise out of or are based upon any Violation,
      in each case to the extent, and only to the extent, that such Violation occurs
      in reliance upon and in conformity with written information furnished to the
      Company by such Purchaser expressly for use in connection with such Registration
      Statement and, subject to Section 8(c)
      of this
      Agreement, such Purchaser will reimburse any legal or other expenses reasonably
      incurred by an Indemnified Party in connection with investigating or defending
      any such Claim; provided,
      however,
      that
      the indemnity agreement contained in this Section 8(b)
      and the
      agreement with respect to contribution contained in Section 8(d)
      of this
      Agreement shall not apply to amounts paid in settlement of any Claim if such
      settlement is effected without the prior written consent of such Purchaser,
      which consent shall not be unreasonably withheld or delayed; provided, further,
      that the Purchaser shall be liable under this Section 8(b)
      for only
      that amount of the Claims and Indemnified Damages as does not exceed the
      proceeds to such Purchaser as a result of the sale of Registrable Securities
      pursuant to such Registration Statement. Such indemnification agreement shall
      remain in full force and effect regardless of any investigation made by or
      on
      behalf of such Indemnified Party and shall survive the transfer of the
      Registrable Securities by the Purchasers pursuant to Section 10(b)
      of this
      Agreement. In no event shall any Purchaser have any liability or obligation
      to
      pay for or contribute to any damages caused solely and directly by any other
      Purchaser.

     

    
      
         

      

      
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    (c) Notice.
      Promptly after an Indemnified Person or Indemnified Party under this
Section 8
      has
      knowledge of any Claim as to which such Indemnified Person reasonably believes
      indemnity may be sought or promptly after such Indemnified Person or Indemnified
      Party receives notice of the commencement of any action or proceeding (including
      any governmental action or proceeding) involving a Claim, such Indemnified
      Person or Indemnified Party shall, if a Claim in respect thereof is to be made
      against any indemnifying party under this Section 8,
      deliver
      to the indemnifying party a written notice of such Claim, and the indemnifying
      party shall have the right to participate in, and, to the extent the
      indemnifying party so desires, jointly with any other indemnifying party
      similarly noticed under this Agreement, to assume control of the defense thereof
      with counsel mutually satisfactory to the indemnifying party and the Indemnified
      Person or the Indemnified Party, as the case may be; provided, however, that
      an
      Indemnified Person or Indemnified Party shall have the right to retain its
      own
      counsel with the reasonable fees and expenses of such counsel to be paid by
      the
      indemnifying party if: (i) the indemnifying party shall have failed to assume
      the defense of such Claim within three (3) Business Days after receipt of notice
      of the Claim and to employ counsel reasonably satisfactory to such Indemnified
      Person or the Indemnified Party, as the case may be; or (ii) in the reasonable
      opinion of counsel retained by the indemnifying party, the representation by
      such counsel of the Indemnified Person or Indemnified Party and the indemnifying
      party would be inappropriate due to actual or potential differing interests
      between such Indemnified Person or Indemnified Party and any other party
      represented by such counsel in such proceeding; provided, further, that, in
      the
      case of clause (ii) above, the indemnifying party shall not be responsible
      for
      the reasonable fees and expense of more than one (1) separate legal counsel
      for
      such Indemnified Person or Indemnified Party. In the case of an Indemnified
      Person, the legal counsel referred to in the immediately preceding sentence
      shall be selected by the Purchasers holding at least a majority in interest
      of
      the Registrable Securities included in the Registration Statement to which
      the
      Claim relates. The Indemnified Party or Indemnified Person shall cooperate
      fully
      with the indemnifying party in connection with any negotiation or defense of
      any
      such action or Claim by the indemnifying party and shall furnish to the
      indemnifying party all information reasonably available to the Indemnified
      Party
      or Indemnified Person which relates to such action or Claim. The indemnifying
      party shall keep the Indemnified Party or Indemnified Person reasonably apprised
      of the status of the defense or any settlement negotiations with respect
      thereto. No indemnifying party shall be liable for any settlement of any action,
      claim or proceeding effected without its prior written consent; provided,
      however, that the indemnifying party shall not unreasonably withhold, delay
      or
      condition its consent. No indemnifying party shall, without the prior written
      consent of the Indemnified Party or Indemnified Person, consent to entry of
      any
      judgment or enter into any settlement or other compromise which does not include
      as an unconditional term thereof the giving by the claimant or plaintiff to
      such
      Indemnified Party or Indemnified Person of a full release from all liability
      in
      respect to such Claim and action and proceeding. After indemnification as
      provided for under this Agreement, the rights of the indemnifying party shall
      be
      subrogated to all rights of the Indemnified Party or Indemnified Person with
      respect to all third parties, firms or corporations relating to the matter
      for
      which indemnification has been made. The failure to deliver written notice
      to
      the indemnifying party as provided in this Agreement shall not relieve such
      indemnifying party of any liability to the Indemnified Person or Indemnified
      Party under this Section 8,
      except
      to the extent that the indemnifying party is materially and adversely prejudiced
      in its ability to defend such action.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    (d) Contribution.
      Each
      party hereto agrees that, if for any reason the indemnification provisions
      contemplated by Section 8(a)
      or
Section 8(b)
      are
      unavailable to or insufficient to hold harmless an Indemnified Party in respect
      of any losses, claims, damages or liabilities (or actions in respect thereof)
      (“Losses”)
      referred to therein, then each indemnifying 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 the Indemnified Party in connection with the statements or omissions
      which 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 the
      untrue or alleged untrue statement of a material fact or omission or alleged
      omission to state a material fact relates to information supplied by such
      indemnifying party or by such Indemnified Party, and the parties’ relative
      intent, knowledge, access to information and opportunity to correct or prevent
      such statement or omission. The parties hereto agree that it would not be just
      and equitable if contributions pursuant to this Section 8(d)
      were
      determined by pro rata allocation (even if the Purchasers were treated as one
      entity for such purpose) or by any other method of allocation which does not
      take account of the equitable considerations referred to in this Section 8(d).
      The
      amount paid or payable by an indemnified party as a result of the Losses
      referred to above shall be deemed to include any reasonable legal or other
      fees
      or expenses actually incurred by such indemnified party in connection with
      investigating or defending any such action or claim. Notwithstanding the
      provisions of this Section 8(d),
      no
      Purchaser shall be required to contribute any amount in excess of the amount
      by
      which the dollar amount of the gross proceeds received by such Purchaser from
      the sale of any Registrable Securities exceeds the amount of any damages which
      such Purchaser has otherwise been required to pay by reason of such untrue
      or
      alleged untrue statement or omission or alleged omission. No person guilty
      of
      fraudulent misrepresentation (within the meaning of Section 11(f)
      of the
      Securities Act) shall be entitled to contribution from any person who was not
      guilty of such fraudulent misrepresentation. The Purchasers’ obligations in this
Section 8(d)
      to
      contribute shall be several in proportion to the number of Registrable
      Securities registered or underwritten, as the case may be, by them and not
      joint.

     

    (e) Payment
      of Indemnified Damages.
      The
      indemnification required by this Section 8
      shall be
      made by periodic payments of the amount thereof during the course of the
      investigation or defense, as and when bills are received or Indemnified Damages
      are incurred.

     

    (f) Remedies
      Not Exclusive.
      The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of
      action or similar right of the Indemnified Party or Indemnified Person against
      the indemnifying party or others, and (ii) any liabilities the indemnifying
      party may be subject to pursuant to law.

     

    (g) Representation;
      Waiver.
      The
      parties to this Agreement hereby acknowledge that they are sophisticated
      business persons who were represented by counsel, other than the Company’s
      counsel, during the negotiations regarding the provisions of this Section 8
      and are
      fully informed regarding said provisions. They further acknowledge that the
      provisions of this Section 8
      fairly
      allocate the risks in light of the ability of the parties to investigate the
      Company and its business in order to assure that adequate disclosure is made
      in
      the Registration Statement as required by the Securities Act and the Exchange
      Act. The parties are advised that federal or state public policy as interpreted
      by the courts in certain jurisdictions may be contrary to certain of the
      provisions of this Section 8,
      and the
      parties hereto hereby expressly waive and relinquish any right or ability to
      assert such public policy as a defense to a claim under this Section 8
      and
      further agree not to attempt to assert any such defense.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    SECTION
      9. Rule 144.
      With a
      view to making available the benefits of certain rules and regulations of the
      Commission that may permit the sale of the Registrable Securities to the public
      without registration, the Company agrees to, so long as any Purchaser owns
      any
      Registrable Securities:

     

    (a) use
      its
      commercially reasonable best efforts to make and keep public information
      available, as those terms are understood and defined in Rule 144(c) under the
      Securities Act; 

     

    (b) use
      its
      commercially reasonable best efforts to file with the Commission in a timely
      manner all reports and other documents required to be filed by the Company
      under
      the Securities Act and the Exchange Act (at any time after it has become subject
      to such reporting requirements); and

     

    (c) furnish
      to any Purchaser promptly upon request (i) a written statement by the Company
      that it has complied with the reporting requirements of Rule 144, the Securities
      Act and the Exchange Act, or that it qualifies as a registrant whose securities
      may be resold pursuant to the appropriate form under the Securities Act (at
      any
      time after it so qualifies), (ii) a copy of the most recent annual or quarterly
      report of the Company and such other reports and documents of the Company,
      and
      (iii) such other information as a Purchaser may reasonably request in availing
      itself of any rule or regulation of the Commission allowing a Purchaser to
      sell
      any such Registrable Securities without registration or pursuant to such form.
      

     

    SECTION
      9. Miscellaneous.
      

     

    (a) Notices.
      Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (x) upon receipt, when delivered personally; (y) upon
      receipt, when sent by facsimile; or (z) two (2) Business Days after deposit
      with a nationally recognized overnight delivery service, in each case properly
      addressed to the party to receive the same. The addresses and facsimile numbers
      for such communications shall be: 

     

    (i) if
      to the
      Company, to: 

     

    
      	 	 	 
	 	New York Mortgage Trust, Inc.
	 	 
	 	
              1301
                Avenue of the Americas

              New
                York, New York 10019

              Facsimile: (212)
                655-6269

              Attention: President

            

    

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    
      

    with
      a
      copy to:

    
      	 	 	 
	 	
              Hunton
                & Williams LLP

              951
                East Byrd Street

              Richmond,
                Virginia 23219

              Facsimile: (804)
                788-8218

              Attention: Daniel
                M. LeBey, Esq.

            

    

     

    (ii) if
      to a
      Purchaser, at its address as set forth on the Schedule of Purchasers attached
      hereto as Schedule
      A,
      or at
      such other address or addresses as may have been furnished to the Company in
      writing.

     

    Written
      confirmation of receipt (A) given by the recipient of such notice, consent,
      waiver or other communication, (B) mechanically or electronically generated
      by
      the sender’s facsimile machine containing the time, date, recipient facsimile
      number and an image of the first page of such transmission, or (C) provided
      by a
      courier or overnight courier service shall be evidence of receipt of personal
      service, receipt by facsimile or receipt from a nationally recognized overnight
      delivery service in accordance with clause
      (x),
      (y)
      or
(z)
      above,
      respectively.

     

    (b) Assignment.
      This
      Agreement shall be binding upon and shall inure to the benefit of the parties
      hereto and their respective permitted successors, heirs and legal
      representatives; provided, however, that the rights of the Purchasers hereunder
      may be assigned by a Purchaser to any transferee or assignee of such Purchaser’s
      Registrable Securities if and only if: (i) such Purchaser agrees in writing
      with the transferee or assignee to assign such rights, and a draft copy of
      such
      agreement is furnished to the Company prior to the purported assignment and
      an
      executed copy of such agreement is furnished to the Company within a reasonable
      time after such assignment, with each such agreement in a form reasonably
      acceptable to the Company; (ii) the Company is, within a reasonable time after
      such transfer or assignment, furnished with written notice of (a) the name
      and
      address of such transferee or assignee, and (b) the securities with respect
      to which such rights are being transferred or assigned; (iii) immediately
      following such transfer or assignment, the further disposition of such
      securities by such transferee or assignee is restricted under the Securities
      Act
      and applicable state securities laws; (iv) at or before the time the Company
      receives the written notice contemplated by clause
      (ii)
      of this
      sentence, such transferee or assignee agrees in writing with the Company to
      be
      bound by all of the obligations of a Purchaser under this Agreement by executing
      a counterpart signature page to this Agreement; (v) such transfer or
      assignment shall have been made in accordance with the applicable requirements
      of the Purchase Agreement; and (vi) such transfer or assignment shall have
      been conducted in accordance with all applicable federal and state securities
      laws.

     

    (c) Survival.
      Notwithstanding any investigation made by any party to this Agreement, all
      representations and warranties made by the Company and the Purchasers herein
      shall survive the execution of this Agreement, the delivery to the Purchasers
      of
      the Registrable Securities being purchased and the payment therefor pursuant
      to
      the Purchase Agreement for a period of two (2) years from the Closing
      Date.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    (d) Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York, without regard to conflict of laws provisions.

     

    (e) Headings.
      The
      headings of the various sections of this Agreement have been inserted for
      convenience of reference only and shall not be deemed to be part of this
      Agreement.

     

    (f) Entire
      Agreement; Amendments.
      This
      Agreement and the Purchase Agreement contain the entire understanding of the
      parties with respect to its subject matter. This Agreement supersedes all prior
      agreements and understandings between the parties with respect to its subject
      matter. This Agreement may be amended and the observance of any term of this
      Agreement may be waived (either generally or in a particular instance and either
      retroactively or prospectively) only by a written instrument duly executed
      by
      the Company and the Required Holders; provided
      that any
      Purchaser may give a waiver in writing as to itself. Each holder of any
      Registrable Securities at the time or thereafter outstanding shall be bound
      by
      any amendment or waiver effected pursuant to this Section 10(f),
      whether
      or not any notice, writing or marking indicating such amendment or waiver
      appears on such Registrable Securities or is delivered to such holder. No such
      amendment or waiver (unless given by a Purchaser as to itself) shall be
      effective to the extent that it applies to less than all of the holders of
      the
      Registrable Securities. No consideration shall be offered or paid to any Person
      to amend or consent to a waiver or modification of any provision of any of
      this
      Agreement unless the same consideration also is offered to all of the parties
      to
      this Agreement.

     

    (g) Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      constitute an original, but all of which, when taken together, shall constitute
      but one instrument, and shall become effective when one or more counterparts
      have been signed by each party hereto and delivered to the other parties.
      Facsimile signatures shall be deemed original signatures.

     

    (h) Severability. In
      case
      any provision contained in this Agreement should be invalid, illegal or
      unenforceable in any respect, the validity, legality and enforceability of
      the
      remaining provisions contained herein shall not in any way be affected or
      impaired thereby.

     

    [Remainder
      Of This Page Has Been Intentionally Left Blank]

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF,
      the
      parties hereto have caused this Agreement to be executed by their duly
      authorized representatives as of the day and year first above
      written.

    
      	 	 	 
	 	
              “COMPANY”

            
	 	 
	 	NEW YORK MORTGAGE TRUST,
              INC.
	 
 	 
 	 
 
	
            	By:  	 
	 	
              
Name:
              Title:

            
	 	
               

            

    

     

    [SIGNATURE
      PAGE TO REGISTRATION RIGHTS AGREEMENT]

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    
      	 	 	 
	 	“PURCHASER”
	 	 
	 	Name of Purchaser:
	 	 
	 	
              

            
	 	 
	 	By (Name of Individual representing
              Purchaser):
	 	 
	 	
              

            
	 	 
	 	Title of Individual representing
              Purchaser:
	 	 
	 	
              
 
	 	Address:
	 	
              
 
	 	
              
 
	 	
              
 
	 	 
	 	
              Telephone:
                __________________________________

              Facsimile: 
                ___________________________________

            

    

    
 

    [SIGNATURE
      PAGE TO REGISTRATION RIGHTS AGREEMENT]

     

    
      
         

      

      
        S-1

        
          

        

      

      
         

      

    

    
 

    APPENDIX
      I

     

    NEW
      YORK MORTGAGE TRUST, INC.

     

    REGISTRATION
      STATEMENT QUESTIONNAIRE

     

    In
      connection with the preparation of the Registration Statement, please provide
      us
      with the following information:

     

    1. Pursuant
      to the “Selling Shareholder” section of the Registration Statement, please state
      your or your organization’s name exactly as it should appear in the Registration
      Statement:

     

    ___________________________________________

    

     

    2. Please
      provide the number of shares of New York Mortgage Trust, Inc. that you or your
      organization will beneficially own immediately after Closing, including those
      Shares purchased by you or your organization pursuant to this Purchase Agreement
      and those shares purchased by you or your organization through other
      transactions:

     

    ___________________________________________

    

    3. Have
      you
      or your organization had any position, office or other material relationship
      within the past three years with the Company or its affiliates?

     

    _____
      Yes
      _____ No

     

    If
      yes,
      please indicate the nature of any such relationships below:

     

    ______________________________________________________________

    ______________________________________________________________

    

    4. Are
      you
      (i) an NASD Member (see definition), (ii) a Controlling (see definition)
      shareholder of an NASD Member, (iii) a Person Associated with a Member of the
      NASD (see definition), or (iv) an Underwriter or a Related Person (see
      definition) with respect to the proposed offering; or (b) do you own any shares
      or other securities of any NASD Member not purchased in the open market; or
      (c)
      have you made any outstanding subordinated loans to any NASD
      Member?

     

    Answer:
      [___] Yes [___] No If “yes,” please describe below:

     

    ______________________________________________________________

    ______________________________________________________________

    ______________________________________________________________

    

    
      
         

      

      
        Schedule
          A-1

        
          

        

      

      
         

      

    

    

    NASD
      Member. The term “NASD member” means either any broker or dealer admitted to
      membership in the National Association of Securities Dealers, Inc. or an
      (“NASD”). (NASD Manual, By-laws Article I, Definitions, as incorporated into the
      rules of the Financial Regulatory Authority)

     

    Control.
      The term “control” (including the terms “controlling,” “controlled by” and
“under common control with”) means the possession, direct or indirect, of the
      power, either individually or with others, to direct or cause the direction
      of
      the management and policies of a person, whether through the ownership of voting
      securities, by contract, or otherwise. (Rule 405 under the Securities Act of
      1933, as amended) 

     

    Person
      Associated with a Member of the NASD. The term “person associated with a member
      of the NASD” means every sole proprietor, partner, officer, director, branch
      manager or executive representative of any NASD Member, or any natural person
      occupying a similar status or performing similar functions, or any natural
      person engaged in the investment banking or securities business who is directly
      or indirectly controlling or controlled by a NASD Member, whether or not such
      person is registered or exempt from registration with the NASD pursuant to
      its
      bylaws. (NASD Manual, By-laws Article I, Definitions) 

     

    Underwriter
      or a Related Person. The term “underwriter or a related person” means, with
      respect to a proposed offering, underwriters, underwriters’ counsel, financial
      consultants and advisors, finders, members of the selling or distribution group,
      and any and all other persons associated with or related to any of such persons.
      (NASD Interpretation)Exhibit
      4.1

     

    NOTE
      PURCHASE AGREEMENT

     

    This
      NOTE
      PURCHASE AGREEMENT dated as of January 14, 2008 (this “Agreement”)
      by and
      among Interactive Systems Worldwide Inc., a Delaware corporation (the
“Company”),
      and
      each of the purchasers of the non-negotiable promissory notes of the Company
      whose names are set forth on Exhibit
      A
      attached
      hereto (each a “Purchaser”
and
      collectively, the “Purchasers”).
      

    

    The
      parties hereto agree as follows:

     

    ARTICLE
      I

     

    PURCHASE
      AND SALE OF NOTES AND WARRANTS

     

    Section
      1.1 Purchase
      and Sale of Notes.

     

    (a) Upon
      the
      terms and conditions set forth herein, the Company agrees to issue and sell
      to
      the Purchasers, and the Purchasers, severally but not jointly, agree to purchase
      (in the amounts set forth as Exhibit A
      hereto)
      from the Company, non-negotiable 14% promissory notes due July 31, 2008
      in
      substantially the form attached hereto as Exhibit
      B
      (the
“Notes”),
      in
      the aggregate principal amount of a minimum of One Hundred Seventy-Five Thousand
      Dollars ($175,000) (the “Minimum”) and a maximum of up to Five Hundred Thousand
      Dollars ($500,000), at a purchase price equal to 100% of the principal amount
      of
      the Notes being purchased. The Company and the Purchasers are executing and
      delivering this Agreement in accordance with and in reliance upon the exemption
      from securities registration afforded by Section 4(2) of the U.S. Securities
      Act
      of 1933, as amended, and the rules and regulations promulgated thereunder (the
      “Securities
      Act”),
      including Regulation D (“Regulation
      D”),
      and/or upon such other exemption from the registration requirements of the
      Securities Act as may be available with respect to the investments to be made
      hereunder. 

     

    Section
      1.2 Closing.

     

    The
      Notes
      may be sold and funded in separate closings (each a “Closing”),
      provided that each Purchaser executes a signature page hereto and thereby agrees
      to be bound by and subject to the terms and conditions hereof. The initial
      Closing under this Agreement (the “Initial
      Closing”)
      shall
      take place on or about January 14, 2008 (the “Initial
      Closing Date”)
      and
      shall be funded in the amount of at least the Minimum. Each subsequent Closing
      under this Agreement shall take place upon the mutual agreement of the Company
      and such Purchasers, but in no event later than February 29, 2008 (each, a
      “Subsequent
      Closing Date”).
      The
      Initial Closing Date and each Subsequent Closing Date are sometimes referred
      to
      in this Agreement as the “Closing
      Date”.
      Each
      Closing shall take place at the offices of Friedman Kaplan Seiler & Adelman
      LLP (“FKSA”), 1633 Broadway (46th
      Floor),
      New York, New York 10019. At each Closing the Company shall deliver to the
      Purchasers acquiring Notes at such Closing its Notes for the principal amount
      set forth opposite the name of such Purchaser on Exhibit
      A
      hereto,
      against payment of the purchase price therefor by wire transfer to an account
      designated by the Company or by release of funds previously delivered and held
      by FKSA in its escrow account. The Company shall update Exhibit A hereto to
      reflect all Purchasers who have entered into this Agreement. Each Note shall
      be
      dated the applicable Closing Date.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
      1.3 Release
      from Escrow.

     

    Each
      Purchaser who has escrowed funds with FKSA pursuant to a letter from FKSA to
      such Purchaser, authorizes and directs FKSA to release from the escrow at the
      Initial Closing such Purchaser’s escrowed funds, for delivery to the
      Company.

     

    ARTICLE
      II

     

    REPRESENTATIONS
      AND WARRANTIES

     

    Section
      2.1 Representations
      and Warranties of the Company.

     

    The
      Company represents and warrants to the Purchasers, as of the date hereof and
      as
      of each Closing Date, that:

     

    (a) Organization,
      Good Standing and Power.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Delaware and has the requisite corporate power
      to
      own, lease and operate its properties and assets and to conduct its business
      as
      it is now being conducted. 

     

    (b) Authorization
      and Power; Enforcement.
      The
      Company has the requisite power and authority to enter into and perform its
      obligations under this Agreement and the Notes (the “Transaction Documents”).
      The execution, delivery and performance of the Transaction Documents by the
      Company have been duly and validly authorized by all necessary corporate action.
      When executed and delivered by the Company, each of the Transaction Documents
      shall constitute valid and binding obligations of the Company enforceable
      against the Company in accordance with their terms, except as such
      enforceability may be limited by applicable bankruptcy, reorganization,
      moratorium, liquidation, conservatorship, receivership or similar laws relating
      to, or affecting generally the enforcement of, creditor's rights and remedies
      or
      by other equitable principles of general application.

     

    Section
      2.2 Representations
      and Warranties of the Purchasers.

     

    Each
      of
      the Purchasers represents and warrants to the Company with respect solely to
      itself and not with respect to any other Purchaser as of the date hereof and
      as
      of each Closing Date on which it purchases Notes, that:

     

    (a) Organization
      and Standing of the Purchasers.
      If the Purchaser is an entity, such Purchaser is a corporation, limited
      liability company or partnership duly incorporated or organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      incorporation or organization and has not been organized for the specific
      purposes of purchasing the Notes and is not prohibited from doing
      so.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (b) Authorization
      and Power; Enforcement.
      Such
      Purchaser has the requisite power and authority to enter into and perform its
      obligations under this Agreement and to purchase the Notes being sold to it
      hereunder. The execution, delivery and performance of this Agreement by such
      Purchaser has been duly authorized by all necessary corporate, partnership
      or
      limited liability company action. When executed and delivered by such Purchaser,
      this Agreement shall constitute valid and binding obligations of such Purchaser
      enforceable against such Purchaser in accordance with its terms, except as
      such
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation, conservatorship, receivership or
      similar laws relating to, or affecting generally the enforcement of, creditor's
      rights and remedies or by other equitable principles of general
      application.

     

    (c) Investment
      Purpose.
      Such
      Purchaser is acquiring the Notes as principal for its own account for investment
      only and not with a view toward, or for resale in connection with, the public
      sale or distribution thereof. 

     

    (d) Accredited
      Investor Status.
      Such
      Purchaser is an “Accredited Investor” as that term is defined in Rule 501(a)(3)
      of Regulation D, as further indicated by his or its responses to the Purchaser
      Questionnaire which it has submitted to the Company.

     

    (e) Reliance
      on Exemptions.
      Such
      Purchaser understands that the Notes are being offered and sold to it in
      reliance on specific exemptions from the registration requirements of United
      States federal and state securities laws and that the Company is relying upon
      the truth and accuracy of, and such Purchaser’s compliance with, the
      representations, warranties, agreements, acknowledgments and understandings
      of
      such Purchaser set forth herein in order to determine the availability of such
      exemptions and the eligibility of such Purchaser to acquire the
      Notes.

     

    (f) Information;
      Able to Bear Risk.
      Such
      Purchaser specifically acknowledges that it has read the Company’s Annual Report
      on Form 10-KSB for the year ended September 30, 2006 and, if filed with the
      SEC
      prior to the date of this Agreement, the Company’s Annual Report on Form 10-KSB
      for the year ended September 30, 2007, including without limitation the Risk
      Factors section set forth and therein, and the Company’s Quarterly Reports on
      Form 10-QSB for the periods ended December 31, 2006, March 31, 2007 and June
      30,
      2007, and all Current Reports on Form 8-K since the filing of its Annual Report
      on Form 10-KSB for the year ended September 30, 2006. Such Purchaser and its
      advisors (and/or its counsel, if any) have been furnished with all materials
      relating to the business, finances and operations of the Company and information
      which it deemed material to making an informed investment decision regarding
      its
      purchase of the Notes, which have been requested by such Purchaser. Such
      Purchaser and its advisors, if any, have been afforded the opportunity to ask
      questions of the Company and its management. Such Purchaser is not relying
      (for
      purposes of making any investment decision or otherwise) upon any advice,
      information, or representations from the Company, written or oral, other than
      the representations set forth in this Agreement. Such Purchaser is fully aware
      of the precarious financial condition of the Company and understands that such
      Purchaser’s investment in the Notes is speculative and involves an extremely
      high degree of risk, and that the Company does not currently have the financial
      resources to repay the Notes. Such Purchaser, either alone or with its
      representatives, has such knowledge, sophistication and experience in business
      and financial matters so as to be capable of evaluating the merits and risks
      of
      the prospective investment hereunder and such Purchaser is able to bear the
      economic risk of such investment, and is able to afford a complete loss of
      such
      investment. Such Purchaser is in a position regarding the Company, based upon
      employment, directorship, family relationship or economic bargaining power,
      which enabled and enables such Purchaser to obtain information from the Company
      in order to evaluate the merits and risks of this investment. Such Purchaser
      has
      sought such accounting, legal and tax advice, as it has considered necessary
      to
      make an informed investment decision with respect to its acquisition of the
      Notes. Such Purchaser is not making the investment as a result of any
      advertisement, article, notice or other communication published or broadcast
      in
      any media or any general solicitation or advertising.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (g) No
      Governmental Review.
      Such
      Purchaser understands that no United States federal or state agency or any
      other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Notes, or the fairness or suitability of an investment in
      the
      Notes, nor have such authorities passed upon or endorsed the merits of the
      offering of the Notes.

     

    (h) Transfer
      or Resale.
      Such
      Purchaser understands that: (i) the Notes are non-negotiable and (without the
      consent of the Company) non-transferable; (ii) the Notes have not been and
      are
      not being registered under the Securities Act or any state securities laws,
      and
      (even if the Company were to consent to a transfer of the Notes) may not be
      offered for sale, sold, assigned or transferred by Purchaser unless (A)
      subsequently registered for resale thereunder, or (B) such Purchaser shall
      have
      delivered to the Company an opinion of counsel, in form, substance and scope
      acceptable to the Company, to the effect that the Notes to be sold, assigned
      or
      transferred may be sold, assigned or transferred pursuant to a specified
      exemption from such registration requirements; and (iii) neither the Company
      nor
      any other person is under any obligation to register the Notes under the
      Securities Act or any state securities laws or to comply with the terms and
      conditions of any exemption thereunder. Such Purchaser acknowledges that it
      is
      familiar with Rule 144 of the rules and regulations of the Commission, as
      amended, promulgated pursuant to the Securities Act (“Rule
      144”),
      and
      that such Purchaser has been advised that Rule 144 permits resales only under
      certain circumstances. Such Purchaser understands that to the extent that Rule
      144 is not available, such Purchaser will be unable to sell the Notes without
      either registration under the Securities Act or the existence of another
      exemption from such registration requirement. Such Purchaser understands that
      no
      public market exists or will exist for the Notes.

     

    (i) Legends.
      Such
      Purchaser understands that the Notes shall bear a restrictive legend in
      substantially the following form:

     

    THIS
      NOTE
      HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED
      FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF IN
      THE
      ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE NOTES UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE
      AND SCOPE SATISFACTORY TO THE ISSUER OF THIS NOTE, THAT REGISTRATION IS NOT
      REQUIRED UNDER SAID ACT. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (j) Receipt
      of Documents.
      Such
      Purchaser and his or its counsel has received and read in their entirety: (i)
      the Transaction Documents; (ii) all due diligence and other information which
      it
      has requested; and (iii) answers to all questions such Purchaser submitted
      to
      the Company regarding an investment in the Company; and such Purchaser [has
      not
      been furnished any other documents, literature, memorandum or prospectus and]
      has relied only on the representations set forth in the Transaction Documents
      and on the Company’s filings with the Securities and Exchange
      Commission.

     

    (k) No
      Legal Advice From either Company.
      Such
      Purchaser acknowledges that it had the opportunity to review this Agreement
      and
      the transactions contemplated by this Agreement with his or its own legal
      counsel and investment and tax advisors. Such Purchaser is relying solely on
      such counsel and advisors and not on any statements or representations of the
      Company or any of its representatives or agents for legal, tax or investment
      advice with respect to this investment, the transactions contemplated by this
      Agreement or the securities laws of any jurisdiction. 

     

    (l) Use
      of
      Proceeds.
      Such
      Purchaser acknowledges that it knows that a substantial portion of the proceeds
      of the sale of the Notes will be used to pay past due and current accounts
      payable of the Company.

     

    ARTICLE
      III

     

    COVENANTS

     

    The
      Company covenants with each Purchaser that:

     

    Section
      3.1 Use
      of
      Proceeds.

     

    The
      net
      proceeds from the sale of the Notes (after payment of expenses of the offering
      of the Notes, including but not limited to the Company’s legal fees) shall be
      used by the Company for working capital and general corporate purposes,
      including but not limited to payment of past due and current accounts payable
      of
      the Company.

     

    Section
      3.2 Distributions.

     

    Until
      the
      earlier of (a) payment of all principal and accrued interest on the Notes,
      or
      (b) August 1, 2008, the Company agrees that it shall not (i) declare or pay
      any
      cash dividends or make any cash distributions on its common stock or preferred
      stock or (ii) purchase or otherwise acquire for value, directly or indirectly,
      any of its outstanding common stock or preferred stock.

     

    Section
      3.3 Salary
      Increases.

     

    Until
      the
      earlier of (a) payment of all principal and accrued interest on the Notes,
      or
      (b) August 1, 2008, the Company agrees that it shall not increase the salary
      of
      any Company officer above the salary which such officer is being paid as of
      the
      date of this Agreement.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Section
      3.4 Stay,
      Extension and Usury Laws.

     

    It
      shall
      not at any time insist upon, plead, or in any manner whatsoever claim or take
      the benefit or advantage of, any stay, extension or usury law or other law
      wherever enacted, now or at any time hereafter in force, that may affect the
      performance of its obligations under the Transaction Documents; and the Company
      hereby expressly (a) waives to the extent that it may lawfully do so, all
      benefit or advantage of any such law and (b) covenants that it shall not, by
      resort to any such law, hinder, delay or impede the execution of any power
      granted herein or under the Notes to the Purchasers, but shall suffer and permit
      the execution of every such power as though no such law has been
      enacted.

     

    ARTICLE
      IV

     

    MISCELLANEOUS

     

    Section
      4.1 Fees
      and Expenses.

     

    Each
      party shall pay the fees and expenses of its advisors, 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 and the Notes.

     

    Section
      4.2 Confidentiality
      Agreement.

     

    Each
      Purchaser agrees with the Company that any Confidentiality Agreement, previously
      signed by such Purchaser and the Company, remains in full force and effect
      and
      shall survive the Closings.

     

    Section
      4.3 Entire
      Agreement; Amendment.

     

    This
      Agreement and the Notes contain the entire understanding and agreement of the
      parties with respect to the matters covered hereby and, except as specifically
      set forth in the Transaction Documents, neither the Company nor any Purchaser
      make any representation, warranty, covenant or undertaking with respect to
      such
      matters and the Transaction Documents supersede all prior understandings and
      agreements with respect to said subject matter, all of which are merged herein.
      Any provision of this Agreement or the Notes may be waived or amended by a
      written instrument signed by the Company and Purchasers holding not less than
      662⁄3% of the aggregate principal amount of the Notes then outstanding;
provided
      that the
      maturity date and interest rate on a Note may not be changed as to a Purchaser
      without the written consent of such Purchaser. Subject to the immediately
      preceding proviso, any amendment or waiver effected in accordance with this
      Section 4.3 shall be binding upon each Noteholder and the Company. 

     

    Section
      4.4 Notices.

     

    Any
      notice, demand, request, waiver or other communication required or permitted
      to
      be given hereunder shall be in writing and shall be effective (a) upon hand
      or
      express courier service delivery or by telecopy or facsimile at the address
      or
      number designated below (if delivered on a business day during normal business
      hours where such notice is to be received), or the first business day following
      such delivery (if delivered other than on a business day during normal business
      hours where such notice is to be received) or (b) on the fifth business day
      following the date of mailing, addressed to such address, or upon actual receipt
      of such mailing, whichever shall first occur. The addresses for such
      communications shall be:

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              If
                to the Company:

               

            	 	
              Interactive
                Systems Worldwide Inc.

              2
                Andrews Drive

              West
                Paterson, NJ 07424

              Attention:
                Bernard Albanese

              Tel.
                No.: (973) 256-8181

              Fax
                No.: (973) 256-8211

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

            	 	 
	 	 	
              Friedman
                Kaplan Seiler & Adelman LLP

              1633
                Broadway

              New
                York, NY 10019

              Attention:
                Richard M. Hoffman, Esq.

              Tel.
                No.: (212) 833-1116

              Fax
                No.: (212) 833-1250

            
	 	 	 
	
              If
                to any Purchaser:

            	 	
              At
                the address or number of such Purchaser set forth on Exhibit
                A
                to
                this Agreement.

            

    

     

    Any
      party
      hereto may from time to time change its address for notices by giving written
      notice of such changed address to the other party hereto pursuant to the
      provisions of this Section 4.4.

     

    Section
      4.5 Waivers.

     

    No
      waiver
      by a party of any default with respect to any provision, condition or
      requirement of this Agreement or the Notes shall be deemed to be a continuing
      waiver in the future or a waiver of any other provision, condition or
      requirement hereof, nor shall any delay or omission of any party to exercise
      any
      right hereunder or thereunder in any manner impair the exercise of any such
      right accruing to it thereafter. 

     

    Section
      4.6 Headings.

     

    The
      article, section and subsection headings in this Agreement are for convenience
      only and shall not constitute a part of this Agreement for any other purpose
      and
      shall not be deemed to limit or affect any of the provisions
      hereof.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Section
      4.7 Successors
      and Assigns.

     

    This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The rights and obligations under this
      Agreement may not be assigned by a Purchaser.

     

    Section
      4.8 No
      Third Party Beneficiaries.

     

    This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

     

    Section
      4.9 Governing
      Law.

     

    This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York, without giving effect to any of the conflicts
      of
      law principles which would result in the application of the substantive law
      of
      another jurisdiction. This Agreement shall not be interpreted or construed
      with
      any presumption against the party causing this Agreement to be
      drafted.

     

    Section
      4.10 Survival.

     

    The
      representations and warranties of the Company and the Purchasers hereunder
      shall
      survive the Closings.

     

    Section
      4.11 Counterparts.

     

    This
      Agreement may be executed in any number of counterparts and by facsimile, all
      of
      which taken together shall constitute one and the same instrument and shall
      become effective as to the Company and a Purchaser when counterparts have been
      signed by the Company and such Purchaser and delivered by the one to the other,
      it being understood that all parties need not sign the same counterpart.

     

    Section
      4.12 Severability.

     

    The
      provisions of the Transaction Documents are severable and, in the event that
      any
      court of competent jurisdiction shall determine that any one or more of the
      provisions or part of the provisions contained in the Transaction Documents
      shall, for any reason, be held to be invalid, illegal or unenforceable in any
      respect, such invalidity, illegality or unenforceability shall not affect any
      other provision or part of a provision of the Transaction Documents and the
      Transaction Documents shall be reformed and construed as if such invalid or
      illegal or unenforceable provision, or part of such provision, had never been
      contained herein, so that such provisions would be valid, legal and enforceable
      to the maximum extent possible.

     

    Section
      4.13 Further
      Assurances.

     

    From
      and
      after the date of this Agreement, upon the request of the Purchasers or the
      Company, the Company and each Purchaser shall execute and deliver such
      instruments, documents and other writings as may be reasonably necessary or
      desirable to confirm and carry out and to effectuate fully the intent and
      purposes of this Agreement and the Notes.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Note Purchase Agreement
      to
      be duly executed as of the date first above written.

    

      
        	 	
                INTERACTIVE
                  SYSTEMS WORLDWIDE INC.

              
	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                By:
                  

              	
                                       
                            
                  

              
	
                 

              	 	
                Name:
                  

              	
                Bernard
                  Albanese

              
	
                 

              	 	
                Title:
                  

              	
                Chairman
                  of the Board, 

              
	
                 

              	
                 

              	 	
                President
                  and Chief Executive Officer

              
	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                PURCHASER:

              
	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                By:
                  

              	
                                          
                                
                  

              
	
                 

              	 	
                Name:

              	
                 

              
	
                 

              	 	
                Title:

              	
                 

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      A

    LIST
      OF PURCHASERS

    

    
      	
              Names
                and Addresses (including Fax No. or E-Mail Address) of
                Purchasers

            	
              Principal
                Amount of 

              Notes
                Purchased

            	
              Closing
                Date

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]