Document:

Exhibit
10.2

 

FORM OF SENIOR CONVERTIBLE NOTE

 

NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN
A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES. 
ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS
NOTE, INCLUDING SECTIONS 3(c)(iii) AND 19(a) HEREOF.  THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY,
THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET
FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.

 

Senior Convertible
Note

 

	
  Issuance Date: June 24,
  2003

  	
   

  	
  Principal:
  U.S.
  $                                  

  

 

FOR VALUE RECEIVED, SUPERGEN, INC., a Delaware corporation (the “Company”),
hereby promises to pay to the order of
                                     
or its registered assigns (“Holder”)
the amount set out above as the Principal (as reduced pursuant to the terms
hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the
Maturity Date, on any Installment Date with respect to the Installment Amount
due on such Installment Date (each, as defined herein), acceleration,
redemption or otherwise (in each case, in accordance with the terms hereof) and
to pay interest (“Interest”) on
any outstanding Principal at the rate of 4.00% per annum, subject to periodic
adjustment pursuant to Section 2 (the “Interest
Rate”), from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due
and payable, whether upon an Interest Date, any Installment Date or the
Maturity Date (each, as defined herein), acceleration, conversion, exchange,
redemption or otherwise (in each case in accordance with the terms
hereof).  For avoidance of doubt, any
Principal that comprises a portion of the Conversion Amount pursuant to Section
3(b) in

 

 

connection
with any conversion of this Note pursuant to Section 3(a) (a “Principal Conversion Amount”) shall reduce
the outstanding Principal of this Note. 
This Senior Convertible Note (including all Senior Convertible Notes
issued in exchange, transfer or replacement hereof, this “Note”) is one of an issue of Senior
Convertible Notes issued on the Issuance Date pursuant to the Securities
Purchase Agreement (as defined below) (collectively, the “Notes” and such other Notes, the “Other Notes”).  Certain capitalized terms used herein are defined in Section 29.

 

(1)           PAYMENTS OF PRINCIPAL.  On each Installment Date, the Company shall pay to the Holder an
amount equal to the Installment Amount due on such Installment Date (each, as
defined in Section 8(f)) in accordance with Section 8.  If any Principal remains outstanding on the
Maturity Date (as defined herein), then the Holder shall surrender this Note to
the Company and the Company shall pay to the Holder in cash an amount equal to
any outstanding Principal, accrued and unpaid Interest and accrued and unpaid
Late Charges, if any.  The “Maturity Date” shall be December 31, 2004,
as extended at the option of the Holder (i) in the event that, and for so long
as, an Event of Default (as defined in Section 4(a)) shall have occurred and be
continuing or any event shall have occurred and be continuing which with the
passage of time and the failure to cure would result in an Event of Default and
(ii) through the date that is ten days after a the consummation of a Change of
Control (as defined in Section 5(a)) in the event that a Change of Control is
publicly announced or a Change of Control Notice (as defined in Section 5(a))
is delivered prior to the Maturity Date.

 

(2)           INTEREST; INTEREST RATE.  Interest on this Note shall commence accruing on the Issuance
Date and shall be computed on the basis of a 365-day year and actual days
elapsed and shall be payable during the period beginning on the Issuance Date
and ending on, and including, the Maturity Date, on September 30, 2003,
December 31, 2003, March 31, 2004, June 30, 2004, September 30, 2004, December
31, 2004 and the Maturity Date (if the Maturity Date is not December 31, 2004)
(each, an “Interest Date”).  Interest shall be payable on each Interest
Date, to the record holder of this Note on the fifth Business Day prior to the
applicable Interest Date, in cash or, at the option of the Company, in shares
of Common Stock (“Interest Shares”)
provided that the Interest which accrued during any period shall be payable in
Interest Shares if, and only if, the Company delivers written notice of such
election (“Interest Election Notice”)
to each holder of the Notes at least 10 Trading Days prior to the Interest Date
(each, an “Interest Election Date”).  Interest to be paid on an Interest Date in
Interest Shares shall be paid in a number of fully paid and nonassessable
shares (rounded to the nearest whole share in accordance with Section 3(a)) of
Common Stock equal to the quotient of (a) the amount of Interest payable on
such Interest Date and (b) the Interest Conversion Price in effect on the
applicable Interest Date.  If any
Interest Shares are to be paid on an Interest Date, then the Company shall (X)
issue and deliver on the applicable Interest Date, to such address as specified
by the Holder in writing to the Company at least two Business Days prior to the
applicable Interest Date, a certificate, registered in the name of the Holder
or its designee, for the number of Interest Shares to which the Holder shall be
entitled, or (Y) provided that the Company’s transfer agent (the “Transfer Agent”) is participating in the
Depository Trust Company (“DTC”)
Fast

 

2

 

Automated Securities Transfer Program and such Interest Shares do not
require the placement of any legends restricting transfer of such Interest
Shares, upon the request of the Holder, credit such aggregate number of
Interest Shares to which the Holder shall be entitled to the Holder’s or its
designee’s balance account with DTC through its Deposit Withdrawal Agent
Commission system.  Notwithstanding the
foregoing, the Company shall not be entitled to pay Interest in Interest Shares
and shall be required to pay such Interest in cash on the applicable Interest
Date if (w) any event constituting an Event of Default or an event that with
the passage of time and assuming it were not cured would constitute an Event of
Default has occurred and is continuing on the applicable Interest Election Date
or the Interest Date, unless consented to in writing by the Holder, (x) on each
day during the period beginning on the applicable Interest Election Date and
ending on and including the applicable Interest Date, the Common Stock is not
listed on the Principal Market or The New York Stock Exchange, Inc. (the “NYSE”), and delisting or suspension of the
Common Stock by such market or exchange shall have been threatened either (A)
in writing by such market or exchange or (B) by falling below the minimum
listing maintenance requirements of such market or exchange for the Common
Stock, (y) the Registration Statement (as defined in the Registration Rights
Agreement) covering the Interest Shares is not effective and available for the
resale of all of the Registrable Securities (as defined in the Registration
Rights Agreement) relating to this Note on the Interest Election Date or on the
Interest Date or (z) the Company has not obtained the Stockholder Approval (as
defined in the Securities Purchase Agreement) prior to the Interest Election
Date.  Prior to the payment of Interest
on an Interest Date, Interest on this Note shall accrue at the Interest Rate
and be payable by way of inclusion of the Interest in the Conversion Amount (as
defined below) in accordance with Section 3(b)(i).  From and after the occurrence of an Event of Default, the
Interest Rate shall be increased to 12%. 
In the event that such Event of Default is subsequently cured, the
adjustment referred to in the preceding sentence shall cease to be effective as
of the date of such cure; provided that the Interest as calculated at such
increased rate during the continuance of such Event of Default shall continue
to apply to the extent relating to the days after the occurrence of such Event
of Default through and including the date of cure of such Event of
Default.  The Company shall pay any and
all taxes that may be payable with respect to the issuance and delivery of
Interest Shares; provided that the Company shall not be required to pay
any tax that may be payable in respect of any issuance of Interest Shares to
any Person other than the Holder or with respect to any income tax due by the
Holder with respect to such Interest Shares.

 

(3)           CONVERSION OF NOTES.  This Note shall be convertible into shares of the Company’s
common stock, par value $.001 per share (the “Common
Stock”), on the terms and conditions set forth in this Section 3.

 

(a)           Conversion Right. 
Subject to the provisions of Section 3(d), at any time or times after
the Final Conversion Price Measuring Date, the Holder shall be entitled to
convert any portion of the outstanding and unpaid Conversion Amount into fully
paid and nonassessable shares of Common Stock in accordance with Section 3(c),
at the Conversion Rate

 

3

 

(as defined below) then in effect. 
The Company shall not issue any fraction of a share of Common Stock upon
any conversion.  If the issuance would
result in the issuance of a fraction of a share of Common Stock, the Company
shall round such fraction of a share of Common Stock up to the nearest whole
share.  The Company shall pay any and
all taxes that may be payable with respect to the issuance and delivery of
Common Stock upon conversion of any Conversion Amount; provided that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issue and delivery of Common Stock to any Person
other than the Holder or with respect to any income tax due by the Holder with
respect to such Common Stock issued upon conversion.

 

(b)           Conversion Rate. 
The number of shares of Common Stock issuable upon conversion of any
Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x)
such Conversion Amount by (y) the Conversion Price (as defined below) (the “Conversion Rate”).

 

(i)            “Conversion Amount”
means the sum of (A) the portion of the outstanding Principal to be converted,
redeemed or otherwise with respect to which this determination is being made
(provided that such portion of the Principal shall be equal to $1,000 or an
integral multiple of $1,000 in excess thereof), (B) accrued and unpaid Interest
with respect to such Principal and (C) accrued and unpaid Late Charges with
respect to such Principal and Interest.

 

(ii)           “Conversion Price”
means (A) as of any Conversion Date (as defined below) or other date of
determination (other than with respect to an Installment Amount on an
Installment Date pursuant to a Company Conversion (as defined in Section 8(a))
during the period beginning on the Final Conversion Price Measuring Date and
ending on and including the Maturity Date, the Fixed Conversion Price, and (B)
with respect to any Installment Amount on an Installment Date pursuant to a
Company Conversion, at the option of the Holder, either the Fixed Conversion
Price or the Company Conversion Price (as defined in Section 8(a)), each in
effect as of such date and subject to adjustment as provided herein.

 

(iii)          “Fixed Conversion Price”
means 120% of the arithmetic average of the Weighted Average Price of the
Common Stock on each Trading Day during the twenty Trading Day period (the “Conversion Measuring Period”) immediately
following the Issuance Date (the last day of such period, the “Final Conversion Price Measuring Date”),
subject to adjustment as provided herein; provided, however, that the Fixed
Conversion Price on the Final Conversion Price Measuring Date shall not be
below $6.00 (subject to appropriate adjustments for stock splits, stock
dividends, stock combinations and other similar transactions during the Conversion Measuring Period) and shall not exceed $8.00 (subject
to appropriate adjustments for stock splits, stock dividends, stock
combinations and other similar transactions during the Conversion Measuring Period).

 

4

 

(c)           Mechanics of Conversion.

 

(i)            Optional Conversion.  To convert any Conversion Amount into shares of Common Stock on
any date (a “Conversion Date”),
the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
on or prior to 11:59 p.m., New York City Time, on such date, a copy of an
executed notice of conversion in the form attached hereto as Exhibit I
(the “Conversion Notice”) to the
Company, (B) if required by Section 3(c)(iii), surrender this Note to a common
carrier for delivery to the Company as soon as practicable on or following such
date (or an indemnification undertaking reasonably satisfactory to the Company
with respect to this Note in the case of its loss, theft or destruction) and
(C) pay any transfer taxes or other applicable taxes or duties, if any,
required in connection with the issuance of shares of Common Stock to a Person
other than the Holder.  On or before the first Business Day
following the date of receipt by the Company of a Conversion Notice, the
Company shall transmit by facsimile a confirmation of receipt of such
Conversion Notice to the Holder and the Transfer Agent.  On or before the third Business Day
following the date of receipt by the Company of a Conversion Notice (the “Share Delivery Date”), the Company shall
(X) issue and deliver to the address as specified in the Conversion Notice, a
certificate, registered in the name of the Holder or its designee, for the
number of shares of Common Stock to which the Holder shall be entitled, or (Y)
provided that the Transfer Agent is participating in DTC Fast Automated
Securities Transfer Program and such shares of Common Stock do not require the
placement of any legends restricting transfer of such shares of Common Stock,
upon the request of the Holder, credit such aggregate number of shares of
Common Stock to which the Holder shall be entitled to the Holder’s or its
designee’s balance account with DTC through its Deposit Withdrawal Agent
Commission system.  If this Note is
physically surrendered for conversion as required by Section 3(c)(iii) and the
outstanding Principal of this Note is greater than the Principal portion of the
Conversion Amount being converted, then the Company shall as soon as
practicable and in no event later than three Business Days after receipt of
this Note (the “Note Delivery Date”)
and at its own expense, issue and deliver to the holder a new Note (in
accordance with Section 19(d)) representing the outstanding Principal not
converted.  The Person or Persons
entitled to receive the shares of Common Stock issuable upon a conversion of
this Note shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on the Conversion Date.

 

(ii)           Company’s Failure to Timely Convert.  If the Company shall fail to issue a
certificate to the Holder or credit the Holder’s balance account with DTC for
the number of shares of Common Stock to which the Holder is entitled upon
conversion of any Conversion Amount on or prior to the date which is five
Business Days after the Conversion Date (a “Conversion
Failure”), then (A) the Company shall pay damages to the Holder for
each date of such Conversion Failure in an amount equal to 1.0%  of the

 

5

 

product of (I) the number of
shares of Common Stock not issued to the Holder on or prior to the Share
Delivery Date and to which the Holder is entitled, and (II) the Closing Sale
Price of the Common Stock on the Share Delivery Date and (B) the Holder, upon
written notice to the Company, may void its Conversion Notice with respect to,
and retain or have returned, as the case may be, any portion of this Note that
has not been converted pursuant to such Conversion Notice; provided that the
voiding of a Conversion Notice shall not affect the Company’s obligations to
make any payments which have accrued prior to the date of such notice pursuant
to this Section 3(c)(ii) or otherwise.

 

(iii)          Book-Entry. Notwithstanding anything to the contrary
set forth herein, upon conversion of any portion of this Note in accordance
with the terms hereof, the Holder shall not be required to physically surrender
this Note to the Company unless (A) the full Conversion Amount represented by
this Note is being converted or (B) the Holder has provided the Company with
prior written notice (which notice may be included in a Conversion Notice)
requesting physical surrender and reissue of this Note.  The Company shall maintain records showing
the Principal, Interest and Late Charges converted and the dates of such
conversions or shall use such other method, reasonably satisfactory to the
Holder, so as not to require physical surrender of this Note upon conversion.

 

(iv)          Pro Rata Conversion; Disputes.  In the event that the Company receives a Conversion
Notice from more than one holder of Notes or Separate Notes for the same
Conversion Date and the Company can convert some, but not all, of such portions
of the Notes submitted for conversion, the Company, subject to Section 3(d),
shall convert from each holder of Notes or Separate Notes electing to have
Notes or Separate Notes converted on such date a pro rata amount of such
holder’s portion of its Notes or Separate Notes submitted for conversion based
on the principal amount of Notes and Separate Notes submitted for conversion on
such date by such holder relative to the aggregate principal amount of all
Notes and Separate Notes submitted for conversion on such date.  In the event of a dispute as to the number
of shares of Common Stock issuable to the Holder in connection with a
conversion of this Note, the Company shall issue to the Holder the number of
shares of Common Stock not in dispute and resolve such dispute in accordance
with Section 24.

 

(v)           Application of Conversion Amounts.  Subject to Section 8(b), any Conversion
Amount which the Holder elects to convert in accordance with this Section 3
(other than pursuant to Company Conversions) shall be deducted first from the
Installment Amount relating to the latest Installment Date (i.e., nearest to
the Maturity Date) with respect to which Installment Amounts remain outstanding
and then sequentially from the Installment Amounts relating to the immediately
preceding Installment Dates.

 

(vi)          Holder
Status.  Except as specifically
provided in this Note, the Holder shall not

 

6

 

be entitled to any rights relating to the Common Stock
issuable upon conversion of the Notes until the Holder has converted this Note
into Common Stock.

 

(d)           Limitations on Conversions.

 

(i)            Beneficial Ownership.  The Company shall not effect any conversion of this Note, and the
Holder of this Note shall not have the right to convert any portion of this
Note, pursuant to Section 3(a), Section 8 or otherwise, to the extent that
after giving effect to such conversion, the Holder (together with the Holder’s
affiliates), as set forth on the applicable Conversion Notice, would
beneficially own in excess of 4.99% of the number of shares of Common Stock
outstanding immediately after giving effect to such conversion.  For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common Stock issuable upon
conversion of this Note with respect to which the determination of such
sentence is being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (A) conversion of the remaining, nonconverted
portion of this Note beneficially owned by the Holder or any of its affiliates
and (B) exercise or conversion of the unexercised or nonconverted portion of
any other securities of the Company (including, without limitation, any other
Notes, Separate Notes or warrants) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its affiliates.  Except
as set forth in the preceding sentence, for purposes of this Section 3(d)(i),
beneficial ownership shall be calculated in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended (the “1934 Act”).  For purposes of this Section 3(d)(i), in determining the number
of outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company’s most
recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or the
Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of the
Holder, the Company shall within two Business Days confirm orally and in
writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this Note, by
the Holder or its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported.

 

(ii)           Principal Market Regulation.  The Company shall not be obligated to issue
any shares of Common Stock upon conversion of this Note, whether pursuant to
this Section 3, Section 8 or otherwise, if the issuance of such shares of
Common Stock would exceed that number of shares of Common Stock which the
Company may issue upon conversion of the Notes without breaching the Company’s
obligations under the rules or regulations of the Principal Market (the “Principal Market Cap”), except that such
limitation shall

 

7

 

not apply in the event that
the Company (A) obtains the approval of its stockholders as required by the
applicable rules of the Principal Market for issuances of Common Stock in
excess of such amount or (B) obtains a written opinion from outside counsel to
the Company that such approval is not required, which opinion shall be
reasonably satisfactory to the holders of the Notes representing a majority of
the aggregate principal amount of the Notes then outstanding.  Until such approval or written opinion is
obtained, no purchaser of the Notes pursuant to the Securities Purchase
Agreement (the “Purchasers”) shall
be issued, upon conversion of Notes held by such Purchaser, shares of Common
Stock in an amount greater than the product of the Principal Market Cap
multiplied by a fraction, the numerator of which is the principal amount of
Notes issued to such Purchaser pursuant to the Securities Purchase Agreement on
the Issuance Date and the denominator of which is the aggregate principal
amount of all Notes issued to the Purchasers pursuant to the Securities
Purchase Agreement on the Issuance Date (with respect to each Purchaser, the “Principal Market Cap Allocation”).  In the event that any Purchaser shall sell
or otherwise transfer any of such Purchaser’s Notes, the transferee shall be
allocated a pro rata portion of such Purchaser’s Principal Market Cap
Allocation, and the restrictions of the prior sentence shall apply to such
transferee with respect to the portion of the Principal Market Cap Allocation
allocated to such transferee.  In the
event that any holder of Notes shall convert all of such holder’s Notes into a
number of shares of Common Stock which, in the aggregate, is less than such
holder’s Principal Market Cap Allocation, then the difference between such
holder’s Principal Market Cap Allocation and the number of shares of Common
Stock actually issued to such holder shall be allocated to the respective
Principal Market Cap Allocations of the remaining holders of Notes on a pro
rata basis in proportion to the aggregate principal amount of the Notes then
held by each such holder.

 

(4)           RIGHTS UPON EVENT OF DEFAULT.

 

(a)           Event of Default. 
Each of the following events shall constitute an “Event of Default”:

 

(i)            the failure of any Registration Statement required to be
filed pursuant to the Registration Rights Agreement to be declared effective by
the SEC on or prior to the date that is 60 days after the applicable
Effectiveness Deadline (as defined in the Registration Rights Agreement), or,
while the applicable Registration Statement is required to be maintained
effective pursuant to the terms of the Registration Rights Agreement, the
effectiveness of the applicable Registration Statement lapses for any reason (including,
without limitation, the issuance of a stop order) or is unavailable to any
holder of the Notes for sale of all of such holder’s Registrable Securities (as
defined in the Registration Rights Agreement) in accordance with the terms of
the Registration Rights Agreement, and such lapse or unavailability continues
for a period of 10 consecutive days or for more than an aggregate of 30 days in
any 365-day period (other than days during an Allowable

 

8

 

Grace Period (as defined in
the Registration Rights Agreement));

 

(ii)           the suspension from trading or failure of the Common Stock
to be listed on the Principal Market or the NYSE for a period of five
consecutive days or for more than an aggregate of 10 days in any 365-day
period;

 

(iii)          the Company’s (A) failure to cure a Conversion Failure by
delivery of the required number of shares of Common Stock within 10 Business
Days after the applicable Conversion Date or (B) notice, written or oral, to
any holder of the Notes, including by way of public announcement or through any
of its agents, at any time, of its intention not to comply with a permitted
request for conversion of any Notes into shares of Common Stock that are
tendered for conversion in accordance with the provisions of the Notes (other
than notice delivered by the Company in good faith in connection with a dispute
that is being resolved in accordance with Section 24 as to the appropriate
number of shares of Common Stock to be delivered upon conversion of the Notes);

 

(iv)          at any time following the tenth consecutive Business Day
that the Holder’s Authorized Share Allocation is less than the number of shares
of Common Stock that the Holder would be entitled to receive upon a conversion
of the full Conversion Amount of this Note (without regard to any limitations
on conversion set forth in Section 3(d) or otherwise);

 

(v)           the Company’s failure to pay to the Holder any amount of
Principal, Interest, Late Charges or other amounts when and as due under this Note
(including, without limitation, the Company’s failure to pay any redemption
payments or amounts hereunder), or any other Transaction Document or any other
agreement, document, certificate or other instrument delivered in connection
with the transactions contemplated hereby and thereby to which the Holder is a
party, except, in the case of a failure to pay Interest and Late Charges when
and as due, in which case only if such failure continues for a period of at
least five Business Days;

 

(vi)          any default under, redemption of or acceleration prior to
maturity of any Indebtedness (as defined in Section 3(r) of the Securities
Purchase Agreement) in excess of $500,000 in the aggregate of the Company or
any of its Subsidiaries (as defined in Section 3(a) of the Securities Purchase
Agreement);

 

(vii)         the Company or any of its Significant Subsidiaries pursuant
to or within the meaning of Title 11, U.S. Code, or any similar Federal or
state law for the relief of debtors (collectively, “Bankruptcy Law”), (A) commences a voluntary case, (B)
consents to the entry of an order for relief against it in an involuntary case,
(C) consents to the appointment of a receiver, trustee, assignee, liquidator or
similar official (a “Custodian”),
(D) makes a general assignment for the benefit of its creditors or

 

9

 

(E) admits in writing that
it is generally unable to pay its debts as they become due;

 

(viii)        a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that (A) is for relief against the
Company or any of its Significant Subsidiaries in an involuntary case, (B)
appoints a Custodian of the Company or any of its Significant Subsidiaries or
(C) orders the liquidation of the Company or any of its Significant
Subsidiaries;

 

(ix)           a final judgment or judgments for the payment of money
aggregating in excess of $1,000,000 are rendered against the Company or any of
its Subsidiaries and which judgments are not, within 60 days after the entry
thereof, bonded, discharged or stayed pending appeal, or are not discharged
within 60 days after the expiration of such stay; provided, however, that any
judgment which is covered by insurance or an indemnity from a credit worthy
party shall not be included in calculating the $1,000,000 amount set forth
above so long as the Company provides the Holder a written statement from such
insurer or indemnity provider (which written statement shall be reasonably
satisfactory to the Holder) to the effect that such judgment is covered by
insurance or an indemnity and the Company will receive the proceeds of such
insurance or indemnity within 60 days of the issuance of such judgment;

 

(x)            the Company breaches any representation, warranty,
covenant or other term or condition of this Note, any Other Note or any
Separate Note, any other Transaction Document or any other agreement, document,
certificate or other instrument delivered in connection with the transactions
contemplated thereby and hereby to which the Holder is a party, except, other
than in connection with a breach of Section 31 hereof, (A) to the extent that
such breach would not have a Material Adverse Effect (as defined in Section
3(a) of the Securities Purchase Agreement) and (B) in the case of a breach of a
covenant which is curable, only if such breach continues for a period of at
least five consecutive Business Days;

 

(xi)           any breach or failure in any material respect to comply
with either of Sections 8 or 15 of this Note;

 

(xii)          any Event of Default (as defined in any Other Note or
Separate Note) occurs with respect to any Other Note or Separate Note; or

 

(xiii)         the Company shall, directly or
indirectly, repay, prepay, redeem, defease or otherwise make any payment on any
Indebtedness existing on the Issuance Date (other than Purchase Money
Indebtedness and other than regularly scheduled interest payments on Permitted
Indebtedness at a rate that is not in excess of 7% per annum) in cash or cash
equivalents.

 

10

 

(b)           Redemption Right. 
Promptly after the occurrence of an Event of Default with respect to
this Note or any Other Note, the Company shall deliver written notice thereof
via facsimile and overnight courier (an “Event
of Default Notice”) to the Holder. 
At any time after the earlier of the Holder’s receipt of an Event of
Default Notice and the Holder becoming aware of an Event of Default, the Holder
may require the Company to redeem all or any portion of this Note by delivering
written notice thereof (the “Event of Default
Redemption Notice”) to the Company, which Event of Default
Redemption Notice shall indicate the portion of this Note that the Holder is
electing to redeem.  Each portion of
this Note subject to redemption by the Company pursuant to this Section 4(b)
shall be redeemed by the Company at a price equal to the greater of (i) the
product of (x) the Conversion Amount to be redeemed and (y) the Redemption
Premium and (ii) the product of (A) the Conversion Rate with respect to such
Conversion Amount in effect at such time as the Holder delivers an Event of
Default Redemption Notice and (B) the Closing Sale Price of the Common Stock on
the date immediately preceding such Event of Default (the “Event of Default Redemption Price”).  Redemptions required by this Section 4(b)
shall be made in accordance with the provisions of Section 12.

 

(5)           RIGHTS
UPON CHANGE OF CONTROL.

 

(a)           Change of Control. 
Each of the following events shall constitute a “Change of Control”:

 

(i)            the consolidation, merger or other business combination
(including, without limitation, a reorganization or recapitalization) of the
Company with or into another Person (other than (A) a consolidation, merger or
other business combination (including, without limitation, reorganization or
recapitalization) in which holders of the Company’s voting power immediately
prior to the transaction continue after the transaction to hold, directly or
indirectly, the voting power of the surviving entity or entities necessary to
elect a majority of the members of the board of directors (or their equivalent
if other than a corporation) of such entity or entities, or (B) pursuant to a
migratory merger effected solely for the purpose of changing the jurisdiction
of incorporation of the Company);

 

(ii)           the sale or transfer of all or substantially all of the
Company’s assets; or

 

(iii)          a purchase, tender or exchange consummated pursuant to an
offer made to and accepted by a sufficient number of holders of the outstanding
shares of Common Stock such that after consummation of such purchase, tender or
exchange, the Person or group of Persons proposing such purchase, tender or
exchange beneficially own 50% or more of the outstanding Common Stock.

 

No sooner than 15 days nor later than 10 days
prior to the consummation of a Change of Control, but not prior to the public
announcement of such Change of Control, the Company shall deliver

 

11

 

written notice thereof via facsimile and
overnight courier to the Holder (a “Change of
Control Notice”).

 

(b)           Assumption. 
Prior to the consummation of any Change of Control, the Company will
secure from any Person purchasing the Company’s assets or Common Stock or any
successor resulting from such Change of Control (in each case, an “Acquiring Entity”) a written agreement (in
form and substance satisfactory to the holders of Notes representing at least a
majority of the aggregate principal amount of the Notes then outstanding) to
deliver to each holder of Notes in exchange for such Notes, a security of the
Acquiring Entity evidenced by a written instrument substantially similar in
form and substance to the Notes, including, without limitation, having a
principal amount and interest rate equal to the principal amounts and the
interest rates of the Notes held by such holder, and satisfactory to the
holders of Notes representing at least a majority of the aggregate principal
amount of the Notes then outstanding.

 

(c)           Holder Redemption Right.  At any time during the period beginning after the Holder’s receipt
of a Change of Control Notice and ending on the date of the consummation of
such Change of Control (or, in the event a Change of Control Notice is not
delivered at least 10 days prior to a Change of Control, at any time on or
after the date which is 10 days prior to a Change of Control and ending 10 days
after the consummation of such Change of Control), the Holder may require the
Company to redeem all or any portion of this Note by delivering written notice
thereof (“Change of Control Redemption
Notice”) to the Company, which Change of Control Redemption Notice
shall indicate the Conversion Amount the Holder is electing to redeem.  The portion of this Note subject to
redemption pursuant to this Section 5(c) shall be redeemed by the Company at a
price equal to the greater of (i) the product of (x) the Conversion
Amount being redeemed and (y) the quotient determined by dividing (A) the
Closing Sale Price of the Common Stock on the Trading Day immediately preceding
consummation of such Change of Control by (B) the Conversion Price and (ii)
120% of the Conversion Amount
being redeemed (the “Change of Control
Redemption Price”). 
Redemptions required by this Section 5(c) shall be made in accordance
with the provisions of Section 12 and, to the extent permitted by applicable
law, shall have priority to payments by the Company or the Acquiring Entity, as
applicable, to the stockholders of the Company in connection with a Change of
Control.  Notwithstanding anything to the contrary in this Section 5, but subject
to Section 3(d), until the Change of Control Redemption Price (together with
any interest thereon) is paid in full, the Conversion Amount submitted for
redemption under this Section 5(c) (together with any interest thereon) may be
converted, in whole or in part, by the Holder into Common Stock pursuant to
Section 3.

 

(d)           Company
Redemption Right.  At any time from
and after the delivery of a Change of Control Notice but not later than the day
immediately preceding the consummation of such Change of Control, the Company
at its option may deliver a written notice via facsimile and overnight courier
to the Holder indicating that if the Company shall not receive from the Holder
a Change of Control Redemption Notice in accordance with Section 5(c),

 

12

 

then the Company is electing to redeem all or any portion of the
Principal of this Note, all Other Notes and all Separate Notes (an “Company
Change of Control Redemption Notice”).  The Company Change of Control Redemption Notice shall be
irrevocable.  If the Company shall not
receive from the Holder a Change of Control Redemption Notice in accordance
with Section 6(c) and if the Conditions to Company Change of Control Redemption
(as set forth below) are satisfied or waived in writing by the Holder, then the
Company shall have the right to require the Holder to submit for redemption all
or any such portion of the Principal of this Note designated in the Company
Change of Control Redemption Notice in exchange for (i) an amount in cash,
payable by wire transfer of immediately available funds, equal to the sum of
(A) 120% of the Principal of this Note being redeemed pursuant to this Section
5(d), plus (B) accrued and unpaid Interest with respect to such Principal plus
(C) accrued and unpaid Late Charges with respect to such Principal and (ii)
delivery of the Change of Control Warrants to the Holder, duly executed and
authorized by the Acquiring Entity (the “Company Change of Control Redemption Price”).  “Conditions to Company Change of Control Redemption”
means the following conditions: (i) on each day during the period beginning on
the date of delivery of the Company Change of Control Redemption Notice to each
holder of the Notes and Separate Notes and ending on and including the date
immediately preceding the Company Change of Control Redemption Date, no Grace
Period (as defined in the Registration Rights Agreement) shall be in effect and
either (x) the Registration Statement or Registration Statements required
pursuant to the Registration Rights Agreement shall be effective and available
for the resale of all of the Registrable Securities in accordance with the
terms of the Registration Rights Agreement (and analogous provisions with
respect to the Separate Notes) or (y) all shares of Common Stock issuable upon
conversion of the Notes and Separate Notes shall be eligible for sale without
restriction pursuant to Rule 144(k) and the state securities laws; (ii) the
Company shall have no knowledge of any fact that would cause (x) the
Registration Statements required pursuant to the Registration Rights Agreement
not to be effective and available for the resale of at least all of the
Registrable Securities in accordance with the terms of the Registration Rights
Agreement (and analogous provisions with respect to the Separate Notes) or (y)
any shares of Common Stock issuable upon conversion or redemption of the Notes
and Separate Notes not to be eligible for sale without restriction pursuant to
Rule 144(k) and any applicable state securities laws; (iii) on each day during
the period beginning on the date of delivery of the Company Change of Control
Redemption Notice and ending on and including the date immediately preceding
the Company Change of Control Redemption Date, the Common Stock is designated
for quotation on the Principal Market or the NYSE and shall not have been
suspended from trading on such exchange or market nor shall delisting or
suspension by such market or exchange been threatened or pending either (A) in
writing by such market or exchange or (B) by falling below the minimum listing
maintenance requirements of such market or exchange; (iv) during the period
beginning on the Issuance Date and ending on and including the date immediately
preceding the Company Change of Control Redemption Date, the Company shall have
delivered shares of Common Stock upon any conversion of Conversion Amounts on a
timely basis as set forth in Section 3(c)(i) of this Note (and analogous
provisions under the Other Notes and Separate Notes); and (v) the Company
otherwise shall have been in material compliance with and shall not have

 

13

 

breached, in any material respect, any provision, covenant,
representation or warranty of this Note, any of the Other Notes, and Separate
Notes or any other Transaction Document.

 

(e)           Pro Rata Company Change of Control Redemption
Requirement. If the Company elects to cause a redemption of all or any
portion of the Principal of this Note pursuant to Section 5(d), then it must
simultaneously take the same action with respect to all Other Notes.  If the Company elects to cause the
redemption of this Note pursuant to Section 5(d) (or analogous provisions under
all Other Notes) with respect to less than the aggregate Principal of the Notes
then outstanding, then the Company shall require redemption of Principal from
each of the holders of the Notes equal to the product of (i) the aggregate
Principal amount of Notes which the Company has elected to cause to be redeemed
pursuant to Section 5(d), multiplied by (ii) the fraction, the numerator of
which is the sum of the aggregate Principal amount of the Notes initially
purchased by such holder on the Issuance Date and the denominator of which is
the sum of the aggregate Principal amount of the Notes purchased by all holders
on the Issuance Date (such fraction with respect to each holder is referred to
as its “Change of Control Allocation
Percentage,” and such amount with respect to each holder is referred
to as its “Pro Rata Change of Control
Redemption Amount”).  In the
event that the initial holder of any Notes shall sell or otherwise transfer any
of such holder’s Notes, the transferee shall be allocated a pro rata portion of
such holder’s Change of Control Allocation Percentage.  The Company Change of Control Redemption
Notice shall state (i) the date selected for the redemption in
accordance with Section 5(d), which date shall be the date of consummation of
the Change of Control, (ii) the
aggregate principal amount of the Notes which the Company has elected to redeem
from all of the holders of the Notes pursuant to this Section 5(d) (and
analogous provisions under all Other Notes) and (iii) each holder’s Pro Rata
Change of Control Redemption Amount of the aggregate Principal amount of the
Notes that the Company has elected to redeem pursuant to Section 5(d) (and
analogous provisions under all Other Notes). 
All Principal of this Note redeemed by the Company pursuant to Section
5(d) shall be deducted first from the Installment Amount relating to the
latest Installment Date (i.e., nearest to the Maturity Date) with respect to
which Installment Amounts remain outstanding and then sequentially from the
Installment Amounts relating to the immediately preceding Installment Dates. 
Redemptions under Section 5(d) shall be made in accordance with the
provisions of Section 12.  Notwithstanding anything to the contrary in
this Section 5, but subject to Section 3(d), until the Company Change of
Control Redemption Price (together with any interest thereon) is paid in full,
the Pro Rata Change of Control Redemption Amount (together with any interest
thereon) may be converted, in whole or in part, by the Holder into Common Stock
pursuant to Section 3.

 

(6)           RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER
CORPORATE EVENTS.

 

(a)           Company Purchase Rights.  If at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the

 

14

 

“Company
Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such
Company Purchase Rights, the aggregate Company Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of Common Stock
acquirable upon complete conversion of this Note (without taking into account
any limitations or restrictions on the convertibility of this Note) immediately
before the date on which a record is taken for the grant, issuance or sale of
such Company Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Company Purchase Rights.

 

(b)           Other Corporate Events. Prior to the consummation
of any recapitalization, reorganization, consolidation, merger, spin-off or
other business combination (other than a Change of Control) pursuant to which
holders of Common Stock are entitled to receive securities or other assets with
respect to or in exchange for Common Stock (a “Corporate
Event”), the Company shall make appropriate provision to insure that
the Holder will thereafter have the right to receive upon a conversion of this
Note, (i) in addition to the shares of Common Stock receivable upon such
conversion, such securities or other assets to which the Holder would have been
entitled with respect to such shares of Common Stock had such shares of Common
Stock been held by the Holder upon the consummation of such Corporate Event or
(ii) in lieu of the shares of Common Stock otherwise receivable upon such
conversion, such securities or other assets received by the holders of Common
Stock in connection with the consummation of such Corporate Event in such
amounts as the Holder would have been entitled to receive had this Note
initially been issued with conversion rights for the form of such consideration
(as opposed to shares of Common Stock) at a conversion rate for such
consideration commensurate with the Conversion Rate.  Provision made pursuant to the preceding sentence shall be in a
form and substance satisfactory to the holders of Notes representing at least a
majority of the aggregate principal amount of the Notes then outstanding.

 

(7)           ADJUSTMENT OF FIXED CONVERSION PRICE.

 

(a)           Adjustment of Fixed Conversion Price upon Subdivision
or Combination of Common Stock.  If
the Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Fixed Conversion Price in
effect immediately prior to such subdivision will be proportionately
reduced.  If the Company at any time combines
(by combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Fixed
Conversion Price in effect immediately prior to such combination will be
proportionately increased.

 

(b)           Other Considerations.  All calculations under this Section 7 shall be made
by the Company in good faith.

 

15

 

(8)           COMPANY
INSTALLMENT CONVERSION OR REDEMPTION.

 

(a)           General.  On
each Installment Date, the Company shall pay to the Holder of this Note the
Installment Amount as of such Installment Date by the combination of any of the
following, but subject to and in accordance with the terms of this Section 8,
(i) requiring the conversion of a portion of the applicable Installment Amount,
in whole or in part, in accordance with this Section 8 but subject to the
satisfaction of the Conditions to Company Conversion (as defined below) (a “Company Conversion”) and/or (ii) redeeming
the applicable Installment Amount, in whole or in part, in accordance with this
Section 8 (a “Company Redemption”);
provided that all of the outstanding applicable Installment Amount as of each
such Installment Date must be converted and/or redeemed by the Company on the
applicable Installment Date, subject to the provisions of this Section 8.  On or prior to the date which is at least 21
Trading Days prior to each Installment Date, the Company shall deliver written
notice to the Holder (each, a “Company
Installment Notice”), which Company Installment Notice shall state
(i) the portion, if any, of the applicable Installment Amount which the Company
elects to convert pursuant to a Company Conversion, which amount when added to
the Company Redemption Amount must equal the applicable Installment Amount (the
“Company Conversion Amount”), (ii)
the portion, if any, of the applicable Installment Amount which the Company
elects to redeem pursuant to a Company Redemption (the “Company Redemption Amount”), which amount
when added to the Company Conversion Amount must equal the applicable
Installment Amount and (iv) if the Company has elected, in whole or in part, a
Company Conversion, then the Company Installment Notice shall certify that the
Conditions to Company Conversion are satisfied as of the date of the Company
Installment Notice.  If the Company does
not deliver a Company Installment Notice in accordance with this Section 8(a),
then the “Company Redemption Amount” and the “Company Conversion Amount” with
respect to such Installment Date shall be in such amounts and proportions as
the Holder shall designate in writing to the Company in its sole discretion and
the Company shall be deemed to have delivered a Company Installment Notice
setting forth such amounts.  Each
Company Installment Notice shall be irrevocable.  Except as expressly provided in this Section 8(a), the Company
shall redeem and convert the applicable Installment Amount of this Note
pursuant to this Section 8 and the corresponding Installment Amounts of the
Other Notes pursuant to the corresponding provisions of the Other Notes in the
same ratio of the Installment Amount being redeemed and converted
hereunder.  The Company Redemption
Amount (whether set forth in the Company Installment Notice or by operation of
this Section 8) shall be redeemed in accordance with Section 8(b) and the
Company Conversion Amount shall be converted in accordance with Section 8(c).

 

(b)           Mechanics of Company Redemption.  If the Company elects, or is deemed to have
elected, a Company Redemption in accordance with Section 8(a), then the Company
Redemption Amount, if any, which is to be paid to the Holder on the applicable
Installment Date shall be redeemed by the Company on such Installment Date, and
the Company shall pay to the Holder on such Installment Date, by wire transfer
of immediately available funds (provided that the Holder has provided the
Company with written wire transfer instructions not later than the second
Business Day immediately preceding the Installment Date), an amount in

 

16

 

cash (the “Company
Installment Redemption Price”) equal to the sum of 100% of the
Company Redemption Amount. 
Notwithstanding anything to the contrary in this Section 8(b), but
subject to Section 3(d), until the Company Installment Redemption Price (together
with any interest thereon) is paid in full, the Company Redemption Amount
(together with any interest thereon) may be converted, in whole or in part, by
the Holder into Common Stock pursuant to Section 3.

 

(c)           Mechanics of Company Conversion.  Subject to Sections 3(d) and 8(d), if the
Company delivers a Company Installment Notice and elects or is deemed to have
elected, in whole or in part, a Company Conversion in accordance with Section
8(a), then the applicable Company Conversion Amount, if any, which remains
outstanding shall be converted as of the applicable Installment Date by
converting on such Installment Date such Company Conversion Amount as if the
Holder had delivered a Conversion Notice pursuant to Section 3 with respect to
such Company Conversion Amount on such Installment Date but without the Holder
being required to actually deliver such Conversion Notice; provided that the
Conditions to Company Conversion are satisfied (or waived in writing by the
Holder) on such Installment Date.  If the
Conditions to Company Conversion are not satisfied (or waived in writing by the
Holder) on such Installment Date, then at the option of the Holder designated
in writing to the Company, the Holder may require the Company to do any one or
more of the following: (i) the Company shall redeem all or any part designated
by the Holder of the unconverted Company Conversion Amount (such designated
amount is referred to as the “First
Redemption Amount”) on such Installment Date and the Company shall
pay to the Holder on such Installment Date, by wire transfer of immediately
available funds (provided that the Holder has provided the Company with written
wire transfer instructions not later than the second Business Day immediately
preceding the Installment Date), an amount in cash equal to such First
Redemption Amount or (ii) the Company Conversion shall be null and void with
respect to all or any part designated by the Holder of the unconverted Company
Conversion Amount and the Holder shall be entitled to all the rights of a
holder of this Note with respect to such amount of the Company Conversion
Amount.  If the Company fails to redeem
any First Redemption Amount on the applicable Installment Date by payment of
such amount on the applicable Installment Date, then the Holder shall have the
rights set forth in Section 10(b) as if the Company failed to pay the
applicable Company Redemption Price and all other rights under this Note
(including, without limitation, such failure constituting an Event of Default
described in Section 4(a)(xii)).  In the
event the Holder delivers a Conversion Notice to the Company after the earlier
of the date which is 10 days prior to the applicable Installment Date and the
Holder’s receipt of the Company Installment Notice in respect of such Installment
Date in which the Company elects or is deemed to have elected a Company
Redemption, the Principal amount specified in such Conversion Notice shall be
deducted (1) first, from the Principal represented by the Company Redemption
Amount and then (2) second, in accordance with Section 3(c)(v).

 

(d)           Conditions to Company Conversion.  For purposes of this Section 8, “Conditions to Company Conversion” means (i) during the period beginning on the
Issuance

 

17

 

Date and ending on and including the
applicable Installment Date, the Company shall have delivered shares of Common
Stock upon any conversion of Conversion Amounts on a timely basis as set forth
in Section 3(c)(i) (and analogous provisions under the Other Notes and
Separate Notes); (ii) on each
day during the period beginning on the first Trading Day of the Company Total
Dollar Trading Volume Measuring Period in respect of any Installment Date and
ending on and including the applicable Installment Date, the Common Stock shall
be listed on the Principal Market or the NYSE and delisting or suspension of
the Common Stock by such market or exchange shall not have been threatened
either (A) in writing by such market or exchange or (B) by falling below the minimum
listing maintenance requirements of such market or exchange for the Common
Stock; (iii) during the period beginning on the Issuance Date and ending on and
including the applicable Installment Date, there shall not have occurred either
(x) the public announcement of a pending, proposed or intended Change of
Control which has not been abandoned, terminated or consummated or (y) an Event
of Default; (iv) during the period beginning on the date which is the first
Trading Day of the Company Total Dollar Trading Volume Measuring Period and
ending on and including the applicable Installment Date, there shall not have
occurred an event that with the passage of time or giving of notice, and
assuming it were not cured, would constitute an Event of Default; (v) on each
day of the period beginning on the date of delivery of an Installment Notice
with respect to an Installment Date and ending on the applicable Installment
Date either (x) the Registration Statement or Registration Statements required
pursuant to the Registration Rights Agreement shall be effective and available
for the resale of all of the Registrable Securities in accordance with the
terms of the Registration Rights Agreement (and analogous provisions
under the Separate Notes) or (y) all
shares of Common Stock issuable upon conversion of the Notes and Separate Notes
shall be eligible for sale without restriction (other than any restriction
arising under applicable federal or state securities laws as a result of the
holder of such securities being an Affiliate of the Company) and without the
need for registration under any applicable federal or state securities laws;
(vi) on each day of the period beginning on the applicable Installment Date and
ending thirty Trading Days thereafter either (x) the Registration Statements
required pursuant to the Registration Rights Agreement shall be expected to be
effective and available for the resale of at least all of the Registrable
Securities in accordance with the terms of the Registration Rights Agreement (and
analogous provisions under the Separate Notes) or (y) all shares of Common Stock issuable upon conversion of the Notes
and Separate Notes shall be eligible for sale without restriction (other than
any restriction arising under applicable federal or state securities laws as a
result of the holder of such securities being an Affiliate of the Company) and
without the need for registration under any applicable federal or state
securities laws; (vii) the Company shall have obtained the Stockholder Approval
prior to the date of delivery of the Company Installment Notice; and (viii) the
Company otherwise shall have been in material compliance with and shall not
have breached, in any material respect, any provision, covenant, representation
or warranty of the Securities Purchase Agreement, the Amended and Restated
Pledge Agreement (as defined in the Securities Purchase Agreement), the Amended
and Restated Securities Account Control Agreement (as defined in the Securities
Purchase Agreement), the Cash Collateral Account Control Agreement (as defined
in the Securities Purchase Agreement) or any of the Notes or

 

18

 

Separate Notes.

 

(e)           Limitation on Company Conversion Amounts.  Notwithstanding anything herein to the
contrary, in no event shall the Company be required to remit by way of a
Company Conversion the portion of any Installment Amount elected to be paid by
Company Conversion that exceeds the Company Total Dollar Trading Volume during
the Company Total Dollar Trading Volume Measuring Period applicable to such
Installment Date; provided, however, that, the Company may, by so designating
in the applicable Company Installment Notice, elect to extend the Company Total
Dollar Trading Volume Measuring Period until the Conversion Amount may be paid
to the Holder without violating this Section 8(e), but in no event may such
period be extended past the Trading Day immediately preceding the applicable
Installment Date.  In the event the Company
does not remit any portion of the Installment Amount in the form of a Company
Conversion by virtue of this Section 8(e), such amounts shall be paid in cash
in accordance with Section 8(b).

 

(f)            Certain Definitions.  For purposes of this Section 8, the following capitalized terms
shall have the following meanings:

 

(i)            “Company Conversion
Price” means, as of any date of determination, that price
which shall be computed as 90% of the arithmetic average of the Weighted
Average Price of the Common Stock on any fifteen Trading Days designated by the
Holder of this Note to the Company during the period commencing on the
twentieth (20th) Trading Day immediately preceding such date and
ending on the Trading Day immediately preceding such date.  All such determinations to be appropriately
adjusted for any stock split, stock dividend, stock combination or other
similar transaction that proportionately decreases or increases the Common
Stock during such period.

 

(ii)           “Company Total Dollar Trading Volume” means,
with respect to an Installment Date, the product derived by multiplying (A) the
aggregate dollar amount of the trading volume of shares of Common Stock, as
reported by Bloomberg, during all Trading Days during the Company Total Dollar
Trading Volume Measuring Period by (B) .15.

 

(iii)          “Company Total Dollar Trading Volume Measuring Period”
means, with respect to an Installment Date, the period commencing on and
including the thirty-first (31st) Trading Day immediately preceding
the date of delivery of the Company Installment Notice in respect of such
Installment Date and ending on and including the Trading Day immediately
preceding the date of delivery of the Company Installment Notice in respect of
such Installment Date.

 

(iv)          “Installment Amount” means, with respect to
any Installment Date, the lesser of (A) the quotient of (x) the original
Principal amount of this Note on the Issuance Date divided by (y) 4, and (B)
the Principal amount under this Note as of the

 

19

 

Installment Date.  In the event the Holder shall sell or otherwise transfer any
portion of this Note, the transferee shall be allocated a pro rata portion of
the Installment Amount.

 

(v)           “Installment Date”
means each of March 31, 2004, June 30, 2004, September 30, 2004 and December
31, 2004.

 

(9)           COMPANY’S RIGHT OF OPTIONAL REDEMPTION.  (a) Optional Redemption.  At any time from and after the first
anniversary of the date on which a Registration Statement (as defined in the
Registration Rights Agreement) covering all Registrable Securities (as defined
in the Registration Rights Agreement) in accordance with the Registration
Rights Agreement has been declared effective by the SEC, and if the Conditions
to Optional Redemption (as set forth in Section 9(c)) are satisfied or waived
in writing by the Holder, the Company shall have the right to require the
Holder to submit for redemption all or any such portion of the Principal of
this Note designated in the Optional Redemption Notice for an amount in cash
equal to the sum of (i) 120% of the Principal of this Note being redeemed
pursuant to this Section 9, plus (ii) accrued and unpaid Interest with respect
to such Principal being redeemed plus (iii) accrued and unpaid Late Charges
with respect to such Principal being redeemed (the “Optional Redemption Price”). 
The Company may exercise its right to require redemption under this
Section 9(a) by delivering on the twentieth Trading Date prior to the date on
which the Optional Redemption will be effected (the “Optional Redemption Date”; with the twenty Trading Day period
between delivery of the Optional Redemption Notice (as defined below) and the
Optional Redemption Date being referred to as the “Optional Redemption Measuring Period”)  a written notice thereof by facsimile and
overnight courier to all, but not less than all, of the holders of Notes (the “Optional Redemption Notice” and the date
all of the holders received such notice is referred to as the “Optional Redemption Notice Date”).  The Optional Redemption Notice shall be
irrevocable.

 

(b)           Pro Rata Redemption Requirement.  If the Company elects to cause a redemption
of all or any portion of the Principal of this Note pursuant to Section 9(a),
then it must simultaneously take the same action with respect to all Other
Notes.  If the Company elects to cause
the redemption of this Note pursuant to Section 9(a) (or analogous provisions
under all Other Notes) with respect to less than the aggregate principal amount
of the Notes then outstanding (ignoring for such purposes all principal amounts
that are part of Installment Amounts with respect to which the Company has
delivered a Company Installment Notice prior to the Optional Redemption Notice
Date or the analogous provisions under the Other Notes), then the Company shall
require redemption of a principal amount from each of the holders of the Notes
equal to the product of (i) the aggregate principal amount of Notes which the
Company has elected to cause to be converted pursuant to Section 9(a),
multiplied by (ii) the fraction, the numerator of which is the sum of the
aggregate principal amount of the Notes initially purchased by such holder on
the Issuance Date and the denominator of which is the sum of the aggregate
principal amount of the Notes purchased by all holders on the Issuance Date
(such fraction with respect to each holder is referred to as its “Allocation Percentage,” and such amount
with

 

20

 

respect to each holder is referred to as its
“Pro Rata Redemption Amount”).  In the event that the initial holder of any
Notes shall sell or otherwise transfer any of such holder’s Notes, the
transferee shall be allocated a pro rata portion of such holder’s Allocation
Percentage.  The Optional Redemption
Notice shall state (A) the date selected for the optional redemption in
accordance with Section 9(a), which date shall be the twentieth (20th)
Business Day following the Optional Redemption Notice Date, (B) the aggregate principal amount of the
Notes which the Company has elected to redeem from all of the holders of the
Notes pursuant to this Section 9 (and analogous provisions under all Other
Notes) and (C) each holder’s Pro Rata Redemption Amount of the aggregate
principal amount of the Notes that the Company has elected to redeem pursuant
to this Section 9 (and analogous provisions under all Other Notes).  All Principal of this Note redeemed by the
Company pursuant to this Section 9 shall be deducted first from the
Installment Amount relating to the latest Installment Date (i.e., nearest to
the Maturity Date) with respect to which Installment Amounts remain outstanding
and then sequentially from the Installment Amounts relating to the immediately
preceding Installment Dates.  Redemptions under this Section 9(a) shall be
made in accordance with the provisions of Section 12.  Notwithstanding
anything to the contrary in this Section 9, but subject to Section 3(d), until
the Optional Redemption Price (together with any interest thereon) is paid in
full, the Pro Rata Redemption Amount (together with any interest thereon) may
be converted, in whole or in part, by the Holder into Common Stock pursuant to
Section 3.

 

(c)           Conditions
to Optional Redemption.  For
purposes of this Section 9, “Conditions to
Optional Redemption” means  the
following conditions: (i)
during the period beginning on the Issuance Date and ending on and including
the Optional Redemption Date, the Company shall have delivered shares of Common
Stock upon any conversion of Conversion Amounts on a timely basis as set forth
in Section 3(c)(i) (and analogous provisions under the Other Notes and
Separate Notes); (ii) on each day
during the period beginning on the first Trading Day of the Optional Redemption
Measuring Period and ending on and including the Optional Redemption Date, the
Common Stock shall be listed on the Principal Market or the NYSE and delisting
or suspension by such market or exchange shall not have been threatened either
(A) in writing by such market or exchange or (B) by falling below the minimum
listing maintenance requirements of such market or exchange; (iii) during the
period beginning on the Issuance Date and ending on and including the Optional
Redemption Date, there shall not have occurred either (x) the public
announcement of a pending, proposed or intended Change of Control which has not
been abandoned, terminated or consummated or (y) an Event of Default; (iv)
during the period beginning on the date which is the first Trading Day of the
Optional Redemption Measuring Period and ending on and including the Optional
Redemption Date, there shall not have occurred an event that with the passage
of time or giving of notice, and assuming it were not cured, would constitute
an Event of Default; (v) on each day of the period beginning on the date of
delivery of the Optional Redemption Notice and ending on the Optional
Redemption Date either (x) the Registration Statement or Registration
Statements required pursuant to the Registration Rights Agreement shall be
effective and available for the resale of all of the Registrable Securities in
accordance with the terms of the Registration Rights

 

21

 

Agreement (and analogous provisions
under the Separate Notes) or (y)
all shares of Common Stock issuable upon conversion of the Notes and Separate
Notes shall be eligible for sale without restriction and without the need for
registration under any applicable federal or state securities laws, (vi) if
less than all of the principal amounts under this Note and all Other Notes is
being redeemed by the Company pursuant to this Section 9(a), on each day of the
period beginning on the Optional Redemption Date and ending thirty Trading Days
thereafter either (x) the Registration Statements required pursuant to the
Registration Rights Agreement shall be expected to be effective and available
for the resale of at least all of the Registrable Securities in accordance with
the terms of the Registration Rights Agreement (and analogous provisions
under the Separate Notes) or (y) all
shares of Common Stock issuable upon conversion of the Notes and Separate Notes
shall be eligible for sale without restriction and without the need for
registration under any applicable federal or state securities laws, (vii) the
Company shall have obtained the Stockholder Approval prior to the Optional
Redemption Notice Date and (viii) the Company otherwise shall have been in
material compliance with and shall not have breached, in any material respect,
any provision, covenant, representation or warranty of this Note or any
of the Other Notes or Separate Notes or any other Transaction Document.

 

(10)         NONCIRCUMVENTION. 
The Company hereby covenants and agrees that the Company will not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Note, and will at all
times in good faith carry out all of the provisions of this Note.

 

(11)         RESERVATION OF AUTHORIZED SHARES.

 

(a)           Reservation. 
The Company shall initially reserve out of its authorized and unissued
Common Stock a number of shares of Common Stock for each of the Notes equal to
130% of the Conversion Rate with respect to the Conversion Amount of each such
Note as of the Issuance Date. 
Thereafter, the Company shall, so long as any of the Notes are
outstanding, take all action necessary to reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Notes, 110% of the number of shares of Common Stock as shall
from time to time be necessary to effect the conversion of all of the Notes
then outstanding; provided that at no time shall the number of shares of Common
Stock so reserved be less than the number of shares required to be reserved by
the previous sentence (without regard to any limitations on conversions) (the “Required Reserve Amount”).  The initial number of shares of Common Stock
reserved for conversions of the Notes and each increase in the number of shares
so reserved shall be allocated pro rata among the holders of the Notes based on
the principal amount of the Notes held by each holder on the Issuance Date or
increase in the number of reserved shares, as the case may be (the “Authorized Share Allocation”).  In the event that a holder shall sell or
otherwise transfer any of such holder’s Notes, each transferee shall be
allocated a pro rata portion of such holder’s Authorized Share Allocation.  Any shares of Common Stock reserved and
allocated to any

 

22

 

Person which ceases to hold any Notes shall
be allocated to the remaining holders of Notes, pro rata based on the principal
amount of the Notes then held by such holders.

 

(b)           Insufficient Authorized Shares.  If at any time while any of the Notes remain
outstanding the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve for issuance
upon conversion of the Notes at least a number of shares of Common Stock equal
to the Required Reserve Amount (an “Authorized
Share Failure”), then the Company shall immediately take all action
necessary to increase the Company’s authorized shares of Common Stock to an
amount sufficient to allow the Company to reserve the Required Reserve Amount
for the Notes then outstanding.  Without
limiting the generality of the foregoing sentence, as soon as practicable after
the date of the occurrence of an Authorized Share Failure, but in no event
later than 75 days after the occurrence of such Authorized Share Failure, the
Company shall hold a meeting of its stockholders for the approval of an
increase in the number of authorized shares of Common Stock.  In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use its
reasonable best efforts to solicit its stockholders’ approval of such increase
in authorized shares of Common Stock.

 

(12)         HOLDER’S
REDEMPTIONS.

 

(a)           Mechanics. 
In the event that the Holder has sent a Redemption Notice to the Company
pursuant to Section 4(b) or Section 5(c) or the Company has sent a Redemption
Notice to the Holder pursuant to Section 5(d) or Section 9, the Holder shall
promptly submit this Note to the Company in accordance with this Section
12.  The Company shall deliver the
applicable Event of Default Redemption Price to the Holder within five Business
Days after the Company’s receipt of the Holder’s Event of Default Redemption Notice
and thereafter the Holder shall promptly deliver this Note to the Company.  If the Holder has submitted a Change of
Control Redemption Notice in accordance with Section 5(c) or the Company has
submitted a Company Change of Control Redemption Notice, the Company shall
deliver to the Holder the Change of Control Redemption Price or Company Change
of Control Redemption Price, as applicable, concurrently with the consummation
of such Change of Control if such Change of Control Redemption Notice is received
by the Company prior to the consummation of such Change of Control (or such
Company Change of Control Redemption Notice is delivered by the Company in
accordance with Section 5(d)) and within five Business Days after the Company’s
receipt of such Change of Control Redemption Notice otherwise (the “Company Change of Control Redemption Date”).  The Company shall deliver the applicable
Optional Redemption Price to the Holder on the Optional Redemption Date and
thereafter the Holder shall promptly deliver this Note to the Company.  In the event of a redemption of less than
all of the Conversion Amount of this Note, the Company shall promptly cause to
be issued and delivered to the Holder a new Note (in accordance with Section
19(d)) representing the outstanding Principal which has not been redeemed.  In the event that the Company does not pay
the applicable Redemption Price to the Holder within the time period required,
at any time

 

23

 

thereafter and until the Company pays such
unpaid Redemption Price in full, the Holder shall have the option to, in lieu
of redemption, require the Company to promptly return to the Holder all or any
portion of this Note representing the Conversion Amount that was submitted for redemption
and for which the applicable Redemption Price (together with any Late Charges
thereon) has not been paid.  Upon the
Company’s receipt of such notice, (w) the Redemption Notice shall be null and
void with respect to such Conversion Amount, (x) the Company shall immediately
return this Note, or issue a new Note (in accordance with Section 19(d)) to the
Holder representing such Conversion Amount and (y) the Fixed Conversion Price
of this Note or such new Notes shall be adjusted to the lesser of (A) the Fixed
Conversion Price as in effect on the date on which the Redemption Notice is
voided and (B) the lowest Closing Bid Price of the Common Stock during the
period beginning on and including the date on which the Redemption Notice is
delivered to the Company and ending on and including the date on which the
Redemption Notice is voided.  The
Holder’s delivery of a notice voiding a Redemption Notice and exercise of its
rights following such notice shall not affect the Company’s obligations to make
any payments of Late Charges which have accrued prior to the date of such
notice with respect to the Conversion Amount subject to such notice.

 

(b)           Redemption by Other Holders.  Upon the Company’s receipt of notice from
any of the holders of Other Notes or Separate Notes for redemption or repayment
as a result of an event or occurrence substantially similar to the events or
occurrences described in Section 4(b) or Section 5(c) (each, an “Other Redemption Notice”), the Company
shall immediately forward to the Holder by facsimile a copy of such
notice.  If the Company receives a
Redemption Notice and one or more Other Redemption Notices during the seven
Business Day period beginning on and including the date which is three Business
Days prior to the Company’s receipt of the Holder’s Redemption Notice and
ending on and including the date which is three Business Days after the
Company’s receipt of the Holder’s Redemption Notice and the Company is unable
to redeem all principal, interest and other amounts designated in such
Redemption Notice and such Other Redemption Notices received during such seven
Business Day period, then the Company shall redeem a pro rata amount from each
holder of the Notes (including the Holder) and Separate Notes based on the
principal amount of the Notes and Separate Notes submitted for redemption
pursuant to such Redemption Notice and such Other Redemption Notices received
by the Company during such seven Business Day period.

 

(13)         RESTRICTION ON REDEMPTION AND CASH DIVIDENDS.  Until all of the Notes have been converted,
redeemed, exchanged or otherwise satisfied in accordance with their terms, the
Company shall not, directly or indirectly, redeem, repurchase or declare or pay
any cash dividend or distribution on its capital stock without the prior
express written consent of the holders of Notes representing at least a
majority of the aggregate principal amount of the Notes then outstanding;
provided that the foregoing shall not prevent the Company from repurchasing
Common Stock with an aggregate value not to exceed $1 million (valued at the
actual purchase price of the Common Stock on the Principal Market) in
transactions on the Principal Market pursuant to employee benefit plans and
employment agreements in existence on

 

24

 

the Issuance Date.

 

(14)         VOTING RIGHTS. 
The Holder shall have no voting rights as the holder of this Note,
except as required by law, including, but not limited to, the General
Corporation Law of the State of Delaware, and as expressly provided in this
Note.

 

(15)         RANK; ADDITIONAL INDEBTEDNESS; LIENS.

 

(a)           Rank.    Payments of Principal
and Interest and other payments due under this Note (a) shall rank pari passu with all Other Notes and
Separate Notes and (b) shall be senior to all other Indebtedness (as defined in
Section 3(r) of the Securities Purchase Agreement) of the Company and its
Subsidiaries (as defined in the Securities Purchase Agreement), other than
Purchase Money Indebtedness (as defined below).

 

(b)           Incurrence of Indebtedness.    So
long as this Note is outstanding, the Company shall not, and the Company
shall not permit any of its Subsidiaries to, directly or indirectly, incur or
guarantee, assume or suffer to exist any Indebtedness, other than (i) the
Indebtedness evidenced by this Note, the Other Notes and the Separate Notes,
(ii) Purchase Money Indebtedness and (iii) Permitted Indebtedness.

 

(c)           Existence
of Liens.  So long as this Note is outstanding, the
Company shall not, and the Company shall not permit any of its Subsidiaries to,
directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance
upon or in any property or assets (including accounts and contract rights)
owned by the Company or any of its Subsidiaries other than (i) pursuant
to the Amended and Restated
Pledge Agreement and (ii) Permitted Liens.

 

(16)         PARTICIPATION. 
The Holder, as the holder of this Note, shall be entitled to receive
such dividends paid and distributions made to the holders of Common Stock to
the same extent as if the Holder had converted this Note into Common Stock
(without regard to any limitations on conversion herein or elsewhere) and had
held such shares of Common Stock on the record date for such dividends and
distributions.  Payments under the
preceding sentence shall be made concurrently with the dividend or distribution
to the holders of Common Stock.

 

(17)         VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES.  The affirmative vote at a meeting duly
called for such purpose or the written consent without a meeting, of the
holders of Notes representing not less than two-thirds of the aggregate
principal amount of the then outstanding Notes, shall be required for any
change or amendment to this Note or the Other Notes; provided that the Holder
of this Note may waive any term or provision of this Note without such vote or
written consent.

 

25

 

(18)         TRANSFER.  This Note and any shares of Common Stock
issued upon conversion of this Note may be offered, sold, assigned or
transferred by the Holder without the consent of the Company, subject only to
the provisions of Sections 2(i) and 2(j) of the Securities Purchase Agreement.

 

(19)         REISSUANCE
OF THIS NOTE.

 

(a)           Transfer. 
If this Note is to be transferred, the Holder shall surrender this Note
to the Company, whereupon the Company will forthwith issue and deliver upon the
order of the Holder a new Note (in accordance with Section 19(d)), registered
as the Holder may request, representing the outstanding Principal being
transferred by the Holder and, if less then the entire outstanding Principal is
being transferred, a new Note (in accordance with Section 19(d)) to the Holder
representing the outstanding Principal not being transferred.  The Holder and any assignee, by acceptance
of this Note, acknowledge and agree that, by reason of the provisions of
Section 3(c)(iii), following conversion or redemption of any portion of this
Note, the outstanding Principal represented by this Note may be less than the
Principal stated on the face of this Note.

 

(b)           Lost, Stolen or Mutilated Note.  Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note, and, in the case of loss, theft or destruction, of an
indemnification undertaking by the Holder to the Company, which undertaking
shall be reasonably satisfactory to the Company, and, in the case of
mutilation, upon surrender and cancellation of this Note, the Company shall execute
and deliver to the Holder a new Note (in accordance with Section 19(d))
representing the outstanding Principal.

 

(c)           Note Exchangeable for Different Denominations.  This Note is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a
new Note or Notes (in accordance with Section 19(d) and in principal amounts of
at least $100,000) representing in the aggregate the outstanding Principal of
this Note, and each such new Note will represent such portion of such outstanding
Principal as is designated by the Holder at the time of such surrender.

 

(d)           Issuance of New Notes.  Whenever the Company is required to issue a new Note pursuant to
the terms of this Note, such new Note (i) shall be of like tenor with this
Note, (ii) shall represent, as indicated on the face of such new Note, the
Principal remaining outstanding (or in the case of a new Note being issued
pursuant to Section 19(a) or Section 19(c), the Principal designated by the
Holder which, when added to the principal represented by the other new Notes
issued in connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such issuance of new
Notes), (iii) shall have an issuance date, as indicated on the face of such new
Note which is the same as the

 

26

 

Issuance Date of this Note, (iv) shall have
the same rights and conditions as this Note, and (v) shall represent the
proportionate amount of accrued Interest and Late Charges on the Principal and
Interest of this Note that correspond to the Principal of the new Notes, from
the Issuance Date.

 

(20)         REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Note shall be
cumulative and in addition to all other remedies available under this Note and
any of the other Transaction Documents, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein
shall limit the Holder’s right to pursue actual and consequential damages for
any failure by the Company to comply with the terms of this Note.  Amounts set forth or provided for herein
with respect to payments, conversion and the like (and the computation thereof)
shall be the amounts to be received by the Holder and shall not, except as
expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof).  The
Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holder and that the remedy at law for any such
breach may be inadequate.  The Company
therefore agrees that, in the event of any such breach or threatened breach,
the Holder shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.

 

(21)         PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  If (a) this Note is placed in the hands of
an attorney for collection or enforcement or is collected or enforced through
any legal proceeding or the Holder otherwise takes action to collect amounts
due under this Note or to enforce the provisions of this Note or (b) there
occurs any bankruptcy, reorganization, receivership of the Company or other
proceedings affecting Company creditors’ rights and involving a claim under
this Note, then the Company shall pay the reasonable costs incurred by the
Holder for such collection, enforcement or action or in connection with such
bankruptcy, reorganization, receivership or other proceeding, including, but
not limited to, attorneys’ fees and disbursements.

 

(22)         CONSTRUCTION; HEADINGS.  This Note shall be deemed to be jointly drafted by the Company
and all the Purchasers and shall not be construed against any person as the
drafter hereof.  The headings of this
Note are for convenience of reference and shall not form part of, or affect the
interpretation of, this Note.

 

(23)         FAILURE OR INDULGENCE NOT WAIVER.  No failure or delay on the part of the
Holder in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other right, power or privilege.

 

(24)         DISPUTE RESOLUTION. 
In the case of a dispute as to the determination

 

27

 

of the Closing Bid Price, the Closing Sale
Price, the Weighted Average Price, the Redemption Price or the arithmetic
calculation of the Conversion Rate or the Redemption Price, the Company shall
submit the disputed determinations or arithmetic calculations via facsimile
within one Business Day of receipt of the Conversion Notice or the Redemption
Notice giving rise to such dispute, as the case may be, to the Holder.  If the Holder and the Company are unable to
agree upon such determination or calculation of the Redemption Price or the Conversion
Rate, as applicable, within one Business Day of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within one Business Day submit via facsimile (a) the disputed determination of
the Closing Bid Price, the Closing Sale Price or the Weighted Average Price to
an independent, reputable investment bank selected by the Company and approved
by the Holder or (b) the disputed arithmetic calculation of the Conversion Rate
or the Redemption Price to the Company’s independent, outside accountant.  The Company, at the Company’s expense, shall
use its reasonable best efforts to cause the investment bank or the accountant,
as the case may be, to perform the determinations or calculations and notify
the Company and the Holder of the results no later than five Business Days from
the time it receives the disputed determinations or calculations.  Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all parties
absent demonstrable error.

 

(25)         NOTICES; PAYMENTS.

 

(a)           Notices. 
Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement.  The Company shall provide the Holder with prompt written notice
of all actions taken pursuant to this Note, including in reasonable detail a
description of such action and the reason therefore.  Without limiting the generality of the foregoing, the Company
will give written notice to the Holder (i) immediately upon any adjustment of
the Fixed Conversion Price, setting forth in reasonable detail, and certifying,
the calculation of such adjustment and (ii) at least ten days prior to the date
on which the Company closes its books or takes a record (A) with respect to any
dividend or distribution upon the Common Stock, (B) with respect to any pro
rata subscription offer to holders of Common Stock or (C) for determining
rights to vote with respect to any Change of Control, dissolution or liquidation,
provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to the Holder.  Notwithstanding the foregoing, Section 4(i)
of the Securities Purchase Agreement shall apply to all notices given pursuant
to this Note.

 

(b)           Payments. 
Whenever any payment of cash is to be made by the Company to any Person
pursuant to this Note, such payment shall be made in lawful money of the United
States of America by a check drawn on the account of the Company and sent via
overnight courier service to such Person at such address as previously provided
to the Company in writing (which address, in the case of each of the Purchasers
(as defined in Section 3(d)(ii)), shall initially be as set forth on the
Schedule of Buyers attached to the Securities Purchase

 

28

 

Agreement); provided that the Holder may
elect to receive a payment of cash via wire transfer of immediately available
funds by providing the Company with prior written notice setting out such
request and the Holder’s wire transfer instructions.  Whenever any amount expressed to be due by the terms of this Note
is due on any day which is not a Business Day, the same shall instead be due on
the next succeeding day which is a Business Day and, in the case of any
Interest Date which is not the date on which this Note is paid in full, the
extension of the due date thereof shall not be taken into account for purposes
of determining the amount of Interest due on such date.  Any amount of Interest, Principal or other
amount due under the Transaction Documents (as defined in the Securities
Purchase Agreement) which is not paid when due shall result in a late charge
being incurred and payable by the Company in an amount equal to interest on
such amount at the rate of 18% per annum from the date such amount was due
until the same is paid in full (“Late Charge”).

 

(26)         CANCELLATION. 
After all Principal, accrued Interest and other amounts at any time owed
on this Note have been paid in full, this Note shall automatically be deemed
canceled, shall be surrendered to the Company for cancellation and shall not be
reissued.

 

(27)         WAIVER OF NOTICE. 
To the extent permitted by law, the Company hereby waives demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note and the Securities
Purchase Agreement.

 

(28)         GOVERNING LAW. 
This Note shall be construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance
of this Note shall be governed by, the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York.

 

(29)         CERTAIN
DEFINITIONS.  For purposes of this
Note, the following terms shall have the following meanings:

 

(a)           “Affiliate”
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person.  For the purposes
of this definition, “control”, when used with respect to any specified Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.

 

(b)           “Bloomberg”
means Bloomberg Financial Markets.

 

(c)           “Board of Directors” means the board of directors of the

 

29

 

Company or any authorized committee of the board of
directors.

 

(d)           “Business
Day” means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to
remain closed.

 

(e)           “Change of Control Warrants” means a warrant exercisable
for the consideration that would be received at the time of consummation of the
Change of Control by holders of Common Stock (such consideration for each share
of Common Stock, a “Unit of Consideration”) in substantially the form of the
Warrant attached as Exhibit C to the Securities Purchase Agreement pursuant to
which the Separate Notes were initially issued, except that (i) the warrant
shall be exercisable for a number of Units of Consideration determined by
dividing (A) the Conversion Amount being redeemed pursuant to Section 5(d) by
(B) the Fixed Conversion Price in effect on the date of the Change of Control
(rounded upward in the case of fractional shares), (ii) the exercise price for
each Unit of Consideration shall be equal to the Fixed Conversion Price in
effect on the date of the Change of Control and (iii) the expiration date of
the warrant shall be the weighted average remaining term of the portion of this
Note and the Other Notes that are outstanding immediately prior to the date of
the Change of Control (without giving effect to any redemption thereof pursuant
to Section 5).

 

(f)            “Closing
Bid Price” and “Closing Sale
Price” means, for any security as of any date, the last closing bid
price and last closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins
to operate on an extended hours basis and does not designate the closing bid
price or the closing trade price, as the case may be, then the last bid price or
last trade price, respectively, of such security prior to 4:00:00 p.m., New
York City Time, as reported by Bloomberg, or, if the Principal Market is not
the principal securities exchange or trading market for such security, the last
closing bid price or last trade price, respectively, of such security on the
principal securities exchange or trading market where such security is listed
or traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the average of the
bid prices, or the ask prices, respectively, of any market makers for such
security as reported in the “pink sheets” by Pink Sheets LLC (formerly
the National Quotation Bureau, Inc.).  If the Closing Bid Price or
the Closing Sale Price cannot be calculated for a security on a particular date
on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price,
as the case may be, of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to
agree upon the fair market value of such security, then such dispute shall be
resolved pursuant to Section 24.  All
such determinations to be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction that proportionately
decreases or increases the Common Stock during the applicable calculation
period.

 

30

 

(g)           “Convertible
Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for
Common Stock.

 

(h)           “Issuance
Date” means June 24, 2003.

 

(i)            “Interest
Conversion Price” means, with respect to any Interest Date, that
price which shall be computed as 95% of the arithmetic average of the Weighted
Average Price of the Common Stock on each of the five consecutive Trading Days
ending on the second Trading Day immediately preceding such Interest Date.  All such determinations to be appropriately
adjusted for any stock split, stock dividend, stock combination or other
similar transaction during such period.

 

(j)            “Options”
means any rights, warrants or options to subscribe for or purchase Common Stock
or Convertible Securities.

 

(k)           “Permitted Indebtedness” means Indebtedness
that is unsecured, that is subordinate in right of payment to this Note, the
Other Notes and the Separate Notes, that shall not have require principal
repayments prior to the Maturity Date and that provides for an interest that is
no greater than market rate interests; provided that the amount of
Permitted Indebtedness shall not exceed the sum of $1,000,000 in the aggregate.

 

(l)            “Permitted Liens” means (i) any lien for
taxes not yet due or delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance
with generally acceptable accounting principles in the United States applied on
a consistent basis, (ii) any statutory lien arising in the ordinary course of
business by operation of law with respect to a liability that is not yet due or
delinquent, (iii) any lien created by operation of law, such as materialmen’s
liens, mechanics’ liens and other similar liens, arising in the ordinary course
of business with respect to a liability that is not yet due or delinquent, (iv)
deposits, pledges or liens (other than liens arising under ERISA) securing (A)
obligations incurred in respect of workers’ compensation, unemployment
insurance or other forms of governmental insurance or benefits, (B) the
performance of bids, tenders, leases, contracts (other than for the payment of
money) and statutory obligations or (C) obligations on surety or appeal bonds,
but only to the extent such deposits, pledges or liens are incurred or otherwise
arise in the ordinary course of business and secure obligations not past due or
delinquent, (v) restrictions on the use of real property and minor
irregularities in the title thereto which do not (A) secure obligations for the
payment of money or (B) materially impair the value of such property or its use
in the ordinary course of business, and (vi) any minor imperfection of title or
similar lien which individually or in the aggregate with other such liens would
not reasonably be expected to have a Material Adverse Effect.

 

(m)          “Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other

 

31

 

entity and a government or
any department or agency thereof.

 

(n)           “Principal
Market” means the Nasdaq National Market.

 

(o)           “Purchase
Money Indebtedness” means Indebtedness of the Company or any
Subsidiary incurred solely for the purpose of financing all or any part of the
purchase price, or the cost of construction or improvement of any property in
an aggregate principal amount outstanding at any one time not in excess of
$500,000; provided, however, that the aggregate principal amount
of any such Indebtedness does not exceed the lesser of the fair market value of
such property, as determined in the good faith judgment of the Board of
Directors, or such purchase price or cost, including any refinancing of such
Indebtedness that does not increase the aggregate principal amount (or accreted
amount, if less) thereof as of the date of refinancing.

 

(p)           “Redemption
Notice” means any of an Event of Default Redemption Notice, Change
of Control Redemption Notice, Company Change of Control Redemption Notice,
Company Installment Notice or Optional Redemption Notice.

 

(q)           “Redemption
Price” means any of an Event of Default Redemption Price, Change of
Control Redemption Price, Company Change of Control Redemption Price, Company
Installment Redemption Price or Optional Redemption Price.

 

(r)            “Redemption
Premium” means (i) in the case of the Events of Default described in
Section 4(a)(i) — (vi) and (x) - (xiii), 120% or (ii) in the case of the Events
of Default described in Section 4(a)(vii) - (ix), 100%.

 

(s)           “Registration
Rights Agreement” means that certain registration rights agreement
between the Company and the initial holders of the Notes relating, among other
things, to the registration of the resale of the shares of Common Stock
issuable upon conversion of the Notes.

 

(t)            “SEC”
means the United States Securities and Exchange Commission.

 

(u)           “Securities
Purchase Agreement” means that certain securities purchase agreement
between the Company and the initial holders of the Notes pursuant to which the
Company issued the Notes.

 

(v)           “Separate
Notes” means the senior convertible exchangeable notes issued to the
initial holders of the Notes on February 26, 2003, as amended and restated on
June 24, 2003.

 

(w)          “Significant
Subsidiary” has the meaning assigned to it under Rule 1-02(w)
of Regulation S-X promulgated by the Commission.

 

32

 

(x)            “Trading Day” means any day on which the Common Stock is
traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then traded;
provided that “Trading Day” shall not include any day on which the Common Stock
is scheduled to trade on such exchange or market for less than 4.5 hours or any
day that the Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market does not
designate in advance the closing time of trading on such exchange or market, then
during the hour ending at 4:00 p.m., New York City Time).

 

(y)           “Weighted
Average Price” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market during
the period beginning at 9:30:01 a.m., New York City Time (or such other time as
the Principal Market publicly announces is the official open of trading), and
ending at 4:00:00 p.m., New York City Time (or such other time as the Principal
Market publicly announces is the official close of trading) as reported by
Bloomberg through its “Volume at Price” functions, or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security during
the period beginning at 9:30:01 a.m., New York City Time (or such other time as
the Principal Market publicly announces is the official open of trading), and
ending at 4:00:00 p.m., New York City Time (or such other time as the Principal
Market publicly announces is the official close of trading) as reported by
Bloomberg, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest closing bid
price and the lowest closing ask price of any of the market makers for such
security as reported in the “pink sheets” by Pink Sheets LLC (formerly
the National Quotation Bureau, Inc.).  If the Weighted Average Price
cannot be calculated for a security on a particular date on any of the
foregoing bases, the Weighted Average Price of such security on such date shall
be the fair market value as mutually determined by the Company and the
Holder.  If the Company and the Holder
are unable to agree upon the fair market value of such security, then such dispute
shall be resolved pursuant to Section 24. 
All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during
the applicable calculation period.

 

(30)         SECURITY.  The
Notes shall be secured by and to the extent provided in the Amended and
Restated Pledge Agreement.

 

(31)         NIPENT.  In
the event that the Company or any of it subsidiaries sells, assigns,
pledges, transfers or otherwise disposes its rights to, into or with respect to, grants a participation interest
in, or enters into a joint venture relating to, the drug Nipent, or any
derivative thereof (any of the foregoing, a “Nipent
Event”), then the Company shall be required to establish an escrow
account (the “Nipent Escrow”) and
deposit or cause to be deposited in the Nipent Escrow the consideration or
proceeds from any such Nipent Event concurrently with the consummation of any
such Nipent Event (the “Nipent Event
Proceeds”).  The Nipent
Escrow shall be established with an independent, third-party escrow agent
reasonably

 

33

 

satisfactory to the Company and the holders
of the Notes and Separate Notes representing a majority of the aggregate
principal amount of the Notes and Separate Notes then outstanding.  The Company, the holders of the Notes and
Separate Notes and such escrow agent shall enter into an escrow agreement in a
form that is reasonably acceptable to the Company and to the holders of the
Notes and Separate Notes representing a majority of the aggregate principal
amount of the Notes and Separate Notes then outstanding.  The Company shall be required to maintain in
the Nipent Escrow a balance (the “Required
Nipent Escrow Balance”) at all times equal to the lesser of (x) the
Nipent Event Proceeds and (y) the sum of (A) the outstanding Principal of all
Notes and Separate Notes, (B) accrued and unpaid Interest with respect to such
Principal and (C) accrued and unpaid Late Charges with respect to such
Principal and Interest.  If the
consideration or proceeds from any Nipent Event is in a form other than cash,
the amount of the consideration other than cash received by the Company will be
the fair value of such consideration as reasonably determined in good faith by
the Board of Directors, except where such consideration consists of publicly
traded securities, in which case the amount of consideration received by the
Company will be the Closing Sale Price of such securities on the date of
determination.  If the consideration or
proceeds from any Nipent Event is in a form that is partly cash and partly
other than cash, then the Company shall first deposit all cash in the Nipent
Escrow and then the required value of any non-cash consideration or proceeds.  The Company shall be allowed to withdraw
from the Nipent Escrow any such Nipent Proceeds that exceed the Required Nipent
Escrow Balance and if the balance of the Nipent Escrow consists of cash and
non-cash proceeds or consideration, then any such withdrawal shall first be from
the non-cash portion.  The obligation of
the Company to maintain the Required Nipent Escrow Balance in the Nipent Escrow
Account pursuant to this Section 31 shall be inapplicable to and shall
terminate upon a Change of Control provided that such Change of Control is in
conformity with the provisions of the Transaction Documents.

 

[Signature Page Follows]

 

34

 

IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed as of the Issuance Date set out above.

 

	
   

  	
  SUPERGEN,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Joseph Rubinfeld

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President / Chief
  Executive Officer

  
							

 

35

 

EXHIBIT I

SUPERGEN, INC.

CONVERSION NOTICE

 

TO BE
EXECUTED BY THE REGISTERED HOLDER TO CONVERT THIS NOTE INTO COMMON STOCK

 

Reference is made to the Senior Convertible
Note (the “Note”) issued to the
undersigned by SuperGen, Inc. (the “Company”).  In accordance with and pursuant to the Note,
the undersigned hereby elects to convert the Conversion Amount (as defined in
the Note) of the Note indicated below into shares of Common Stock, par value
$.001 per share (the “Common Stock”),
of the Company as of the date specified below.

 

	
   

  	
  Date of Conversion:

  
	
   

  	
   

  
	
   

  	
  Aggregate Conversion
  Amount to be converted:

  
	
   

  	
   

  
	
  Please confirm the
  following information:

  
	
   

  	
   

  
	
   

  	
  Conversion Price:

  
	
   

  	
   

  
	
   

  	
  Number of shares of Common
  Stock to be issued:

  
	
   

  	
   

  

 

Notwithstanding anything to the contrary contained herein, this
Conversion Notice shall constitute a representation by the holder of the Note
submitting this Conversion Notice that, after giving effect to the conversion
provided for in this Conversion Notice, such holder (together with its
affiliates) will not have beneficial ownership (together with the beneficial
ownership of such Person’s affiliates) of a number of shares of Common Stock
which exceeds 4.99% of the total outstanding shares of Common Stock, all as
determined pursuant to the provisions of Section 3(d)(i) of the Note.

 

Please issue the Common Stock into which the
Note is being converted in the following name and to the following address:

 

	
   

  	
  Issue to:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Facsimile Number:

  
	
   

  	
   

  
	
   

  	
  Authorization:

  

 

36

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  
					

 

	
   

  	
  Account Number:

  
	
   

  	
    (if electronic
  book entry transfer)

  
	
   

  	
   

  
	
   

  	
  Transaction Code Number:

  
	
   

  	
    (if electronic
  book entry transfer)

  

 

37

 

ACKNOWLEDGMENT

 

 

                The
Company hereby acknowledges this Conversion Notice and hereby directs Mellon Investor
Services LLC to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated June 24, 2003 from the
Company and acknowledged and agreed to by Mellon Investor Services LLC.

 

	
   

  	
   

  	
  SUPERGEN,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  

 

38Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as of June 24, 2003, by
and among SuperGen, Inc., a Delaware corporation, with headquarters located at
4140 Dublin Boulevard. Suite 200, Dublin, California 94568 (the “Company”), and the investors listed on the
Schedule of Buyers attached hereto (each, a “Buyer” and collectively, the
“Buyers”).

 

WHEREAS:

 

A.            In connection with the Securities Purchase Agreement by
and among the parties hereto of even date herewith (the “Securities Purchase Agreement”), the Company has agreed, upon the
terms and subject to the conditions of the Securities Purchase Agreement, to
issue and sell on the date hereof to each Buyer senior convertible notes of the
Company (the “Notes”) which will, among other things, be convertible into
shares of the Company’s common stock, par value $.001 per share (the “Common Stock”)
(as converted, the “Conversion Shares”) in accordance with the
terms of the Notes;

 

B.            To induce the Buyers to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and applicable state
securities laws.

 

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

 

1.             Definitions.

 

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

 

a.             “Business Day”
means any day other than Saturday, Sunday or any other day on which commercial
banks in The City of New York are authorized or required by law to remain
closed.

 

b.             “Investor”
means a Buyer, any transferee or assignee thereof to whom a Buyer assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9 and any transferee or assignee
thereof to whom a transferee or assignee assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.

 

c.             “Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and  governmental or any department or agency
thereof.

 

 

d.             “register,”
“registered,” and “registration” refer to a registration
effected by preparing and filing one or more Registration Statements (as
defined below) in compliance with the 1933 Act and pursuant to Rule 415 under
the 1933 Act or any successor rule providing for offering securities on a
continuous or delayed basis (“Rule 415”),
and the declaration or ordering of effectiveness of such Registration
Statement(s) by the United States Securities and Exchange Commission (the “SEC”).

 

e.             “Registrable
Securities” means (i) the Conversion Shares issued or issuable upon
conversion of the Notes, (ii) the Interest Shares (as defined in the Notes)
issued or issuable under the Notes, and (iii) any shares of capital stock
issued or issuable with respect to the Conversion Shares, the Interest Shares
or the Notes as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitations on
conversions of Notes.

 

f.              “Registration
Statement” means a registration statement or registration statements
of the Company filed under the 1933 Act covering the Registrable Securities.

 

Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings set
forth in the Securities Purchase Agreement.

 

2.             Registration.

 

a.             Mandatory Registration.  The Company shall prepare, and, as soon as practicable but in no
event later than 30 days after the Closing Date (as defined in the Securities
Purchase Agreement) (the “Filing Deadline”), file with the SEC a
Registration Statement on Form S-3 covering the resale of all of the
Registrable Securities.  In the event
that Form S-3 is unavailable for such a registration, the Company shall use
such other form as is available for such a registration, subject to the
provisions of Section 2(d).  The
Registration Statement prepared pursuant hereto shall register for resale at
least that number of shares of Common Stock equal to the product of (x) 1.3 and
(y) the number of Registrable Securities as of the trading day immediately
preceding the date the Registration Statement is initially filed with the SEC,
subject to adjustment as provided in Section 2(e).  The Company shall use its best efforts to have the Registration
Statement declared effective by the SEC as soon as practicable, but in no event
later than the date which is (i) in the event that the Registration Statement
is not subject to a full review by the SEC, 90 days after the Closing Date or
(ii) in the event that the Registration Statement is subject to a full
review  by the SEC, 120 days after the
Closing Date (the “Effectiveness Deadline”).

 

b.             Allocation of Registrable Securities.  The initial number of Registrable Securities
included in any Registration Statement and each increase in the number of
Registrable Securities included therein shall be allocated pro rata among the
Investors based on the number of Registrable Securities held by each Investor
at the time the Registration Statement covering such initial number of
Registrable Securities or increase thereof is declared effective by the SEC.  In the event that an Investor sells or
otherwise transfers any of such Investor’s Registrable Securities, each
transferee shall be allocated a pro rata portion of the then remaining number
of Registrable Securities included in such Registration Statement for such transferor.

 

2

 

Any shares of Common
Stock included in a Registration Statement and which remain allocated to any
Person which ceases to hold any Registrable Securities covered by such
Registration Statement shall be allocated to the remaining Investors, pro rata
based on the number of Registrable Securities then held by such Investors which
are covered by such Registration Statement. 
In no event shall the Company include any securities other than
Registrable Securities on any Registration Statement without the prior written
consent of Buyers holding at least a majority of the Registrable Securities.

 

c.             Legal Counsel. 
Subject to Section 5 hereof, the Buyers holding at least a majority of
the Registrable Securities shall have the right to select one legal counsel to
review and oversee any registration pursuant to this Section 2 (“Legal Counsel”), which shall be Schulte
Roth & Zabel LLP or such other counsel as thereafter designated by the
holders of at least a majority of the Registrable Securities.  The Company and Legal Counsel shall
reasonably cooperate with each other in performing the Company’s obligations
under this Agreement.

 

d.             Ineligibility for Form S-3.  In the event that Form S-3 is not available
for the registration of the resale of Registrable Securities hereunder, the
Company shall (i) register the resale of the Registrable Securities on another
appropriate form reasonably acceptable to the holders of at least a majority of
the Registrable Securities and (ii) undertake to register the Registrable
Securities on Form S-3 as soon as such form is available, provided that the
Company shall maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the SEC.

 

e.             Sufficient Number of Shares Registered.  In the event the number of shares available
under a Registration Statement filed pursuant to Section 2(a) is insufficient to
cover all of the Registrable Securities required to be covered by such
Registration Statement or an Investor’s allocated portion of the Registrable
Securities pursuant to Section 2(b), the Company shall amend the applicable
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover at least 130% of
the number of such Registrable Securities as of the trading day immediately
preceding the date of the filing of such amendment or new Registration
Statement, in each case, as soon as practicable, but in any event not later
than fifteen (15) days after the Company becomes aware of the necessity
therefor.  The Company shall use its
best efforts to cause such amendment and/or new Registration Statement to
become effective as soon as practicable following the filing thereof.  For purposes of the foregoing provision, the
number of shares available under a Registration Statement shall be deemed “insufficient
to cover all of the Registrable Securities” if at any time the number of shares
of Common Stock available for resale under such Registration Statement is less
than the product of (i) the number of Registrable Securities issued or issuable
upon conversion of the Notes, if any, covered by such Registration Statement
and (ii) 1.1.  The calculation set forth
in the foregoing sentence shall be made without regard to any limitations on
the conversion of the Notes and such calculation shall assume that the Notes
are then convertible into shares of Common Stock and the maximum number of
Interest Shares under the Notes, assuming the applicable portions of the
initial outstanding principal amount of the Notes remains outstanding through
the applicable scheduled maturity dates and assuming no conversions or
redemptions of the Notes prior to the scheduled maturity date, are issuable at
the then prevailing

 

3

 

Interest Conversion Price
(as defined in the Notes) or Conversion Rate (as defined in the Notes), as
applicable.

 

f.              Effect of Failure to File and Obtain and Maintain
Effectiveness of Registration Statement. 
If (i) a Registration Statement covering all the Registrable Securities
required to be covered thereby and required to be filed by the Company pursuant
to this Agreement is (A) not filed with the SEC on or before the Filing
Deadline (a “Filing Failure”) or
(B) not declared effective by the SEC on or before the Effectiveness Deadline
(an “Effectiveness Failure”) or
(ii) on any day after such Registration Statement has been declared effective
by the SEC sales of all the Registrable Securities required to be included on
such Registration Statement cannot be made (other than during an Allowable
Grace Period (as defined in Section 3(r)) pursuant to such Registration
Statement (including, without limitation, because of a failure to keep such
Registration Statement effective, to disclose such information as is necessary
for sales to be made pursuant to such Registration Statement or to register
sufficient shares of Common Stock)(a “Maintenance
Failure”), then, as partial relief for the damages to any holder by
reason of any such delay in or reduction of its ability to sell the underlying
shares of Common Stock (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to each holder
of Notes relating to such Registration Statement: (I) on each of the day of a
Filing Failure, an Effectiveness Failure and the initial day of a Maintenance
Failure, an amount in cash equal to the product of (i) the aggregate Principal
(as such term is defined in the Notes) of such Investor’s Notes convertible
into Conversion Shares included in such Registration Statement multiplied by
(ii) 0.01, and (II) on the earlier of last day of each 30 day period after a
Filing Failure, an Effectiveness Failure and the initial day of a Maintenance
Failure, as the case may be, or on the third Business Day after any such Filing
Failure, Effectiveness Failure or Maintenance Failure is cured, an amount in
cash equal to the product of (i) the aggregate Principal of such Investor’s
Notes convertible into Conversion Shares included in such Registration
Statement multiplied by (ii) 0.02.  In
the event the Company fails to make any payments pursuant to this Section 2(f)
in a timely manner, such payments shall bear interest at the rate of 1.5% per
month (prorated for partial months) until paid in full.

 

3.             Related Obligations.

 

At such time as the
Company is obligated to file a Registration Statement with the SEC pursuant to
Section 2(a), 2(d) or 2(e), the Company will use its best efforts to effect the
registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the
following obligations:

 

a.             The
Company shall submit to the SEC, within two (2) Business Days after the Company
learns that no review of a particular Registration Statement will be made by
the staff of the SEC or that the staff of the SEC has no further comments on a
particular Registration Statement, as the case may be, a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than 48 hours after the submission of such request.  The Company shall keep each
Registration Statement effective pursuant to Rule 415 at all times until the
earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or successor thereto) promulgated under
the 1933 Act or (ii) the date on which the Investors shall have sold all the
Registrable Securities covered by such Registration Statement (the

 

4

 

“Registration Period”).  The Company shall ensure that each Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein) 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.

 

b.             The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement.  In the case of amendments
and supplements to a Registration Statement which are required to be filed
pursuant to this Agreement (including pursuant to this Section 3(b)) by reason
of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Company shall have
incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the SEC on the
same day on which the 1934 Act report is filed which created the requirement
for the Company to amend or supplement such Registration Statement.

 

c.             The Company shall (A) permit Legal Counsel to review and
comment upon (i) a Registration Statement at least five (5) Business Days prior
to its filing with the SEC and (ii) all amendments and supplements to all
Registration Statements (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K and any similar or
successor reports) within a reasonable number of days prior to their filing
with the SEC, and (B) not file any Registration Statement or amendment or
supplement thereto in a form to which Legal Counsel reasonably objects.  The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto without the prior approval of Legal Counsel, which
consent shall not be unreasonably withheld. 
The Company shall furnish to Legal Counsel, without charge, (i) copies
of any correspondence from the SEC or the staff of the SEC to the Company or
its representatives relating to any Registration Statement, (ii) promptly after
the same is prepared and filed with the SEC, one copy of any Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by an
Investor and not otherwise available on the EDGAR system, and all exhibits and
(iii) upon the effectiveness of any Registration Statement, one copy of the
prospectus included in such Registration Statement and all amendments and
supplements thereto.  The Company shall
reasonably cooperate with Legal Counsel in performing the Company’s obligations
pursuant to this Section 3.

 

d.             The Company shall furnish to each Investor whose
Registrable Securities are included in any Registration Statement, without
charge,  (i) promptly after the

 

5

 

same is prepared and
filed with the SEC, at least one copy of such Registration Statement and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor and
not otherwise available on the EDGAR system, all exhibits and each preliminary
prospectus, (ii) upon the effectiveness of any Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of copies as such
Investor may reasonably request) and (iii) such other documents, including
copies of any preliminary or final prospectus, as such Investor may reasonably
request from time to time in order to facilitate the disposition of the
Registrable Securities owned by such Investor.

 

e.             The Company shall use its best efforts to (i) register
and qualify, unless an exemption from registration and qualification applies,
the resale by Investors of the Registrable Securities covered by a Registration
Statement under such other securities or “blue sky” laws of all applicable
jurisdictions in the United States, (ii) prepare and file in those
jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. 
The Company shall promptly notify Legal Counsel and each Investor 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 actual notice of the
initiation or threatening of any proceeding for such purpose.

 

f.              The Company shall notify Legal Counsel and each
Investor in writing of the happening of any event, as promptly as practicable
after becoming aware of such event, as a result of which the prospectus
included in a Registration Statement, 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, in light of the
circumstances under which they were made, not misleading (provided that in no
event shall such notice contain any material, nonpublic information), and,
subject to Section 3(r), promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or amendment to Legal Counsel and
each Investor (or such other number of copies as Legal Counsel or such Investor
may reasonably request).  The Company
shall also promptly notify Legal Counsel and each Investor in writing (i) when
a prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to
Legal Counsel and each Investor by facsimile on the same day of such
effectiveness and by overnight mail), (ii) of any request by the SEC for amendments
or supplements to a Registration Statement or related prospectus or related

 

6

 

information, and (iii) of
the Company’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.

 

g.             The Company shall use its best efforts to 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 and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify Legal Counsel and each Investor who
holds Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.

 

h.             If any Investor is required under applicable securities
law to be described in the Registration Statement as an underwriter, at the
reasonable request of such Investor, the Company shall furnish to such
Investor, on the date of the effectiveness of the Registration Statement and
thereafter from time to time on such dates as an Investor may reasonably
request (i) a letter, dated 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 Investors, 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, addressed to the Investors.

 

i.              Notwithstanding the provisions of Section 4(i) of the
Securities Purchase Agreement, upon the written request of any Investor in
connection with any Investor’s due diligence requirements, if any, the Company
shall make available for inspection by (i) any Investor, (ii) Legal Counsel and
(iii) one firm of accountants or other agents retained by the Investors
(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
Inspector, and cause the Company’s officers, directors and employees to supply
all information which any Inspector may reasonably request; provided, however,
that each Inspector shall agree in writing to hold in strict confidence and
shall not make any disclosure (except to an Investor) or use of any Record or
other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required
under the 1933 Act, (b) 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 (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
or any other agreement of which the Inspector has knowledge.  Each Investor agrees that it shall, upon
learning that disclosure of such Records is required or 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 any Investor) shall be deemed
to limit the Investors’ ability to sell Registrable Securities in a manner
which is otherwise consistent with applicable laws and regulations.

 

7

 

j.              The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (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
agreement.  The Company agrees that it
shall, upon learning that disclosure of such information concerning an Investor
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to such Investor and allow such
Investor, at the Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.

 

k.             The Company shall use its best efforts either to (i)
cause all the Registrable Securities covered by a Registration Statement to be
listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities covered
by a Registration Statement on the Nasdaq National Market, or (iii) if, despite
the Company’s best efforts to satisfy the preceding clause (i) or (ii), the
Company is unsuccessful in satisfying the preceding clause (i) or (ii), to
secure the inclusion for quotation on The Nasdaq SmallCap Market for such
Registrable Securities and, without limiting the generality of the foregoing,
to use its best efforts to arrange for at least two market makers to register
with the National Association of Securities Dealers, Inc. (“NASD”) as such with respect to such
Registrable Securities.  The Company
shall pay all fees and expenses in connection with satisfying its obligation
under this Section 3(k).

 

l.              The Company shall cooperate with the Investors 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 Investors may reasonably
request and registered in such names as the Investors may request.

 

m.            If requested by an Investor, the Company shall (i) as
soon as practicable incorporate in a prospectus supplement or post-effective
amendment such information as an Investor reasonably requests to be included
therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of
Registrable Securities being offered or sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities to
be sold in such offering; (ii) as soon as practicable make all required filings
of such prospectus supplement or post-effective amendment after being notified
of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) as soon as practicable, supplement or make
amendments to any Registration Statement if reasonably requested by an Investor
holding any Registrable Securities.

 

8

 

n.             The Company shall use its best efforts to cause the
Registrable Securities covered by a Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.

 

o.             The Company shall make generally available to its
security holders as soon as practical, but not later than ninety (90) days
after the close of the period covered thereby, an earnings statement (in form
complying with, and in the manner provided by, the provisions of Rule 158 under
the 1933 Act) covering a twelve-month period beginning not later than the first
day of the Company’s fiscal quarter next following the effective date of a
Registration Statement.

 

p.             The Company shall otherwise use its best efforts to
comply with all applicable rules and regulations of the SEC in connection with
any registration hereunder.

 

q.             Within two (2) Business Days after a Registration
Statement which covers Registrable Securities is ordered effective by the SEC,
the Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.

 

r.              Notwithstanding anything to the contrary herein, at any
time after the Registration Statement has been declared effective by the SEC,
the Company may delay the disclosure of material non-public information
concerning the Company the disclosure of which at the time is not, in the good
faith opinion of the Board of Directors of the Company and its counsel, in the
best interest of the Company and, in the opinion of counsel to the Company,
otherwise required (a “Grace Period”); provided, that the Company
shall promptly (i) notify the Investors in writing of the existence of a Grace
Period in conformity with the provisions of this Section 3(r)(provided that in
each notice the Company will not disclose the content of such material
non-public information to the Investors) and the date on which the Grace Period
will begin, and (ii) notify the Investors in writing of the date on which the
Grace Period ends; and, provided further, that no Grace Period shall exceed ten
(10) consecutive days and during any three hundred sixty five (365) day period
such Grace Periods shall not exceed an aggregate of thirty (30) days and the
first day of any Grace Period must be at least two (2) trading days after the
last day of any prior Grace Period (each, an “Allowable Grace Period”).  For purposes of determining the length of a
Grace Period above, the Grace Period shall begin on and include the date the
Investors receive the notice referred to in clause (i) and shall end on and
include the later of the date the Investors receive the notice referred to in
clause (ii) and the date referred to in such notice.  The provisions of Section 3(g) hereof shall not be applicable
during the period of any Allowable Grace Period.  Upon expiration of the Grace Period, the Company shall again be
bound by the first sentence of Section 3(f) with respect to the information
giving rise thereto unless such material non-public information is no longer
applicable.  Notwithstanding anything to
the contrary, the Company shall cause its transfer agent to deliver unlegended
shares of Common Stock to a transferee of an Investor in accordance with the
terms of the Securities Purchase Agreement in connection with any sale of
Registrable Securities with respect to which an Investor has entered into a
contract for sale, and delivered a copy of the prospectus included

 

9

 

as part of the applicable
Registration Statement, prior to the Investor’s receipt of the notice of a
Grace Period and for which the Investor has not yet settled.

 

4.             Obligations Of The Investors.

 

a.             At least seven (7) Business Days prior to the first
anticipated filing date of a Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor’s Registrable
Securities included in such Registration Statement.  It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.

 

b.             Each Investor, by such Investor’s acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor’s election to exclude all of such Investor’s
Registrable Securities from such Registration Statement.

 

c.             Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
3(g) or the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor’s receipt of the
copies of the supplemented or amended prospectus contemplated by Section 3(g)
or the first sentence of 3(f) or receipt of notice that no supplement or
amendment is required.  Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance
with the terms of the Securities Purchase Agreement in connection with any sale
of Registrable Securities with respect to which an Investor has entered into a
contract for sale prior to the Investor’s receipt of a notice from the Company
of the happening of any event of the kind described in Section 3(g) or the
first sentence of 3(f) and for which the Investor has not yet settled.

 

d.             Each Investor covenants and agrees that it will comply
with the prospectus delivery requirements of the 1933 Act as applicable to it
in connection with sales of Registrable Securities pursuant to a Registration
Statement.

 

5.             Expenses of Registration.

 

All reasonable expenses,
other than underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, and fees and disbursements of counsel for
the Company shall be paid by the Company. 
All underwriting discounts and selling commissions applicable to the
sale of the

 

10

 

Registrable Securities
shall be paid by the Investors, provided, however, that the Company shall
reimburse the Investors for the fees and disbursements of Legal Counsel in
connection with registration, filing or qualification pursuant to Sections 2
and 3 of this Agreement, which amount shall be limited to $5,000.

 

6.             Indemnification.

 

In the event any
Registrable Securities are included in a Registration Statement under this
Agreement:

 

a.             To the fullest extent permitted by law, the Company
will, and hereby does, indemnify, hold harmless and defend each Investor, the
directors, officers, partners, employees, agents, representatives of, and each
Person, if any, who controls any Investor within the meaning of the 1933 Act or
the 1934 Act (each, an “Indemnified Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”),
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 SEC, 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 post-effective amendment thereto or in any
filing made in connection with the qualification of the offering under the
securities or other “blue sky” laws of any jurisdiction in which Registrable
Securities are offered (“Blue Sky Filing”),
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 prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading,
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
Registrable Securities pursuant to a Registration Statement or (iv) any material
violation of this Agreement (the matters in the foregoing clauses (i) through
(iv) being, collectively, “Violations”).  Subject to Section 6(c), the Company shall
reimburse the Indemnified Persons, promptly as such expenses are incurred and
are due and payable, for any legal fees or other reasonable 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
6(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 by such Indemnified Person for such Indemnified Person expressly for
use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus

 

11

 

was timely made available
by the Company pursuant to Section 3(d); (ii) with respect to any preliminary
prospectus, shall not inure to the benefit of any such Person from whom the
Person asserting any such Claim purchased the Registrable Securities that are
the subject thereof (or to the benefit of any Person controlling such Person)
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the Company
pursuant to Section 3(d), and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise to a
violation and such Indemnified Person, notwithstanding such advice, used it or
failed to deliver the correct prospectus as required by the 1933 Act and such
correct prospectus was timely made available pursuant to Section 3(d); (iii)
shall not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available
by the Company, including a corrected prospectus, if such prospectus or
corrected prospectus was timely made available by the Company pursuant to
Section 3(d); 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 Investors pursuant to Section 9.

 

b.             In connection with any Registration Statement in which
an Investor is participating, each such Investor agrees to severally and not
jointly indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement and each Person, if
any, who controls the Company within the meaning of the 1933 Act or the 1934
Act (each, an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
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 Investor expressly for use in connection with such Registration
Statement; and, subject to Section 6(c), such Investor 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 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld or delayed; provided, further, however, that an Investor shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a result of the
sale of Registrable Securities pursuant to such Registration Statement.  Such indemnity 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 Investors pursuant to Section 9. 
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.

 

12

 

c.             Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of 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 6, deliver to the indemnifying party a written notice of the
commencement thereof, 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, 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 fees and expenses of not more than
one counsel for such Indemnified Person or Indemnified Party to be paid by the
indemnifying party, if, in the reasonable opinion of the Indemnified Person or
the Indemnified Party, as the case may be, 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.  In the case
of an Indemnified Person, legal counsel referred to in the immediately
preceding sentence shall be selected by the Investors 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 fully apprized at all times as to 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 release from all liability in
respect to such Claim or litigation. 
Following indemnification as provided for hereunder, 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
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.

 

d.             The indemnification required by this Section 6 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.

 

e.             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

 

13

 

indemnifying party or others,
and (ii) any liabilities the indemnifying party may be subject to pursuant to
the law.

 

7.             Contribution.

 

To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that:  (i) no Person
involved in the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to contribution from any
Person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities pursuant
to such Registration Statement.

 

8.             Reports Under The 1934 Act.

 

With a view to making
available to the Investors the benefits of Rule 144 promulgated under the 1933
Act or any other similar rule or regulation of the SEC that may at any time
permit the Investors to sell securities of the Company to the public without registration
(“Rule 144”), the Company agrees
to:

 

a.             make and keep public information available, as those
terms are understood and defined in Rule 144;

 

b.             file with the SEC in a timely manner all reports and
other documents required of the Company under the 1933 Act and the 1934 Act so
long as the Company remains subject to such requirements (it being understood
that nothing herein shall limit the Company’s obligations under Section 4(c) of
the Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and

 

c.             furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of Rule
144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
to permit the Investors to sell such securities pursuant to Rule 144 without
registration.

 

9.             Assignment of Registration Rights.

 

The rights under this
Agreement shall be automatically assignable by the Investors to any transferee
of all or any portion of such Investor’s Registrable Securities if:  (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment; (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with

 

14

 

written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with respect
to which such registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the 1933 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 the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement.

 

10.           Amendment of Registration Rights.

 

Provisions of this
Agreement may be amended and the observance thereof may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and Investors who then hold at least a
majority of the Registrable Securities. 
Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company.  No such amendment 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.

 

11.           Miscellaneous.

 

a.             A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities.  If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company shall act upon the
basis of instructions, notice or election received from the such record owner
of such Registrable Securities.

 

b.             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:  (i) upon receipt, when delivered personally; (ii) upon receipt,
when sent by facsimile (provided confirmation of transmission is mechanically
or electronically generated and kept on file by the sending party); or (iii)
one Business Day 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:

 

	
  If
  to the Company:

  
	
   

  	
   

  
	
   

  	
  SuperGen, Inc.

  
	
   

  	
  4140 Dublin Boulevard

  
	
   

  	
  Suite 200

  
	
   

  	
  Dublin, California
  94568

  
	
   

  	
  Telephone:

  	
  (925)
  560-0100

  
	
   

  	
  Facsimile:

  	
  (925)
  560-0101

  
	
   

  	
  Attention:

  	
  Chief
  Executive Officer

  

 

15

 

	
  with
  a copy to:

  
	
   

  	
   

  
	
   

  	
  Wilson
  Sonsini Goodrich & Rosati, PC

  
	
   

  	
  650
  Page Mill Road

  
	
   

  	
  Palo
  Alto, California 94304

  
	
   

  	
  Telephone: 

  	
  (650)
  493-9300

  
	
   

  	
  Facsimile

  	
  (650)
  493-6811

  
	
   

  	
  Attention:

  	
  John V. Roos, Esq.

  
	
   

  	
   

  	
   

  
	
  If
  to Legal Counsel:

  
	
   

  	
   

  
	
   

  	
  Schulte
  Roth & Zabel LLP

  
	
   

  	
  919
  Third Avenue

  
	
   

  	
  New
  York, New York  10022

  
	
   

  	
  Telephone: 

  	
  (212)
  756-2000

  
	
   

  	
  Facsimile: 

  	
  (212)
  593-5955

  
	
   

  	
  Attention:

  	
  Eleazer
  Klein, Esq.

  

 

If to a Buyer, to its
address and facsimile number set forth on the Schedule of Buyers attached
hereto, with copies to such Buyer’s representatives as set forth on the
Schedule of Buyers, or to such other address and/or facsimile number and/or to
the attention of such other Person as the recipient party has specified by
written notice given to each other party five (5) days prior to the effectiveness
of such change.  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 rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.

 

c.             Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.

 

d.             All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the non- exclusive
jurisdiction of the state and federal courts sitting The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is improper.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for

 

16

 

such notices to it under
this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.  If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.  EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

e.             This Agreement, the other Transaction Documents (as
defined in the Securities Purchase Agreement) and the instruments referenced
herein and therein constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and thereof.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
and therein.  This Agreement, the other
Transaction Documents and the instruments referenced herein and therein
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.

 

f.              Subject to the requirements of Section 9, this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.

 

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

 

h.             This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. 
This Agreement, once executed by a party, may be delivered to the other
party hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.

 

i.              Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as any
other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

j.              All consents and other determinations required to be
made by the Investors pursuant to this Agreement shall be made, unless
otherwise specified in this Agreement, by Investors holding at least a majority
of the Registrable Securities, determined as if all of the Notes held by
Investors then outstanding have been converted into Registrable Securities
without regard to any limitations on conversion of the Notes.

 

17

 

k.             The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent and no rules
of strict construction will be applied against any party.

 

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

 

* * * * * *

 

18

 

IN WITNESS WHEREOF, the
parties have caused this Registration Rights Agreement to be duly executed as
of day and year first above written.

 

	
  COMPANY:

  	
   

  	
  BUYERS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SUPERGEN, INC.

  	
   

  	
  SMITHFIELD FIDUCIARY LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  Name:

  	
  Adam
  J. Chill

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Joseph
  Rubinfeld

  	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President/Chief
  Executive Officer

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OMICRON MASTER TRUST

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:  Omicron Capital L.P., as investment
  advisor

  
	
   

  	
   

  	
  By:  Omicron Capital Inc., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Olivier Morali

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MAINFIELD
  ENTERPRISES INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Avi Vigder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CRANSHIRE CAPITAL L.P.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Mitchell P. Kopin

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  President-Downsview
  Capital, Inc.,

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  The General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OTAPE LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Richard Cayne

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  General Counsel

  	
   

  	
   

  
														

 

19

 

SCHEDULE OF BUYERS

 

	
  Investor

  	
   

  	
  Investor Address

  and Facsimile Number

  	
   

  	
  Investor’s Representative’s Address

  and Facsimile Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Smithfield Fiduciary LLC

  	
   

  	
  c/o
  Highbridge Capital Management, LLC

  	
   

  	
  Schulte Roth &
  Zabel LLP

  	
   

  
	
   

  	
   

  	
  9
  West 57th Street, 27th Floor

  	
   

  	
  919 Third Avenue

  	
   

  
	
   

  	
   

  	
  New
  York, New York  10019

  	
   

  	
  New York, New York
  10022

  	
   

  
	
   

  	
   

  	
  Attention:  Ari J. Storch

  	
   

  	
  Attn:  Eleazer Klein, Esq.

  	
   

  
	
   

  	
   

  	
  Adam J. Chill

  	
   

  	
  Facsimile:  (212) 593-5955

  	
   

  
	
   

  	
   

  	
  Facsimile:  (212) 751-0755

  	
   

  	
  Telephone:  (212) 756-2000

  	
   

  
	
   

  	
   

  	
  Telephone:
  (212) 287-4720

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Residence:  Cayman Islands

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Omicron
  Master Trust

  	
   

  	
  c/o Omicron Capital
  L.P.

  	
   

  	
  The Law Offices of
  Brian Pusch

  	
   

  
	
   

  	
   

  	
  153 E. 53rd
  Street

  	
   

  	
  29 West 57th  Street

  	
   

  
	
   

  	
   

  	
  48th Floor

  	
   

  	
  New York, New York
  10019

  	
   

  
	
   

  	
   

  	
  New York, New York  10022

  	
   

  	
  Attention:  Brian Pusch, Esq.

  	
   

  
	
   

  	
   

  	
  Attention:  Olivier Morali

  	
   

  	
  Facsimile:  (212) 980-7055

  	
   

  
	
   

  	
   

  	
  Facsimile:  (212) 508-7028

  	
   

  	
  Telephone:  (212) 980-0408

  	
   

  
	
   

  	
   

  	
  Telephone:  (212) 508-7027

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Residence: Bermuda

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mainfield
  Enterprises Inc

  	
   

  	
  c/o Cavallo Capital
  Corp.

  	
   

  	
  Bryan Cave LLP

  	
   

  
	
   

  	
   

  	
  660 Madison Avenue, 18th  Floor,

  	
   

  	
  1290 Ave of the
  Americas

  	
   

  
	
   

  	
   

  	
  New York, New York  10021

  	
   

  	
  New York, New York
  10104

  	
   

  
	
   

  	
   

  	
  Attention:  Mor Sagi

  	
   

  	
  Attention:  Ken Henderson, Esq.

  	
   

  
	
   

  	
   

  	
  Facsimile:  (212) 651-9010

  	
   

  	
  Facsimile:  (212) 541-1357

  	
   

  
	
   

  	
   

  	
  Telephone:  (212) 651-9005

  	
   

  	
  Telephone:  (212) 541-2275

  	
   

  
	
   

  	
   

  	
  Residence:
  British Virgin Islands

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cranshire
  Capital L.P.

  	
   

  	
  c/o Downsview Capital,
  Inc.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The General Partner

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  666
  Dundee Road, Suite 1901

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Northbrook,
  Illinois  60062

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:  Mitchell
  P. Kopin

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:  (847) 562-9031

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:  (847) 562-9030

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Residence: Illinois

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OTAPE
  LLC

  	
   

  	
  c/o OTA LLC

  	
   

  	
  Piper Rudnick LLP

  	
   

  
	
   

  	
   

  	
  1 Manhattanville Rd.

  	
   

  	
  1251 Avenue of the
  Americas

  	
   

  
	
   

  	
   

  	
  Purchase, New York  10577

  	
   

  	
  New York, New York  10020

  	
   

  
	
   

  	
   

  	
  Attention:  Paul Masters

  	
   

  	
  Attention:  Theodore Altman, Esq.

  	
   

  
	
   

  	
   

  	
  Facsimile:  (914) 694-6335

  	
   

  	
  Facsimile:  (212) 835-6001

  	
   

  
	
   

  	
   

  	
  Telephone:  (914) 694-5857  

  	
   

  	
  Telephone:  (212) 835-6000 

  	
   

  
	
   

  	
   

  	
  Residence: Delaware

  	
   

  	
   

  	
   

  

 

20

 

EXHIBIT A

 

FORM OF NOTICE OF
EFFECTIVENESS

OF REGISTRATION
STATEMENT

 

[Transfer Agent]

 

Attn:

 

Re:          SuperGen, Inc.

 

Ladies and Gentlemen:

 

We are counsel to
SuperGen, Inc., a Delaware corporation (the “Company”), and have represented
the Company in connection with that certain Securities Purchase Agreement,
dated as of June   , 2003 (the “Purchase Agreement”), entered
into by and among the Company and the buyers named therein (collectively, the
“Holders”) pursuant to which the Company issued to the Holders its convertible
notes (the “Notes”), convertible into shares of the Company’s common Stock, par
value $.001 per share (the “Common Stock”). 
Pursuant to the Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Holders (the “Registration Rights
Agreement”) pursuant to which the Company agreed, among other things, to
register the resale of the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Company Common Stock
issuable upon conversion of the Notes and the Interest Shares issued or issuable
under the Notes under the Securities Act of 1933, as amended (the “1933
Act”).  In connection with the Company’s
obligations under the Registration Rights Agreement, on
            
   , 200 , the Company filed a Registration Statement on
Form S-3 (File No.
333-             )
(the “Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the Registrable Securities which names each of the Holders
as a selling stockholder thereunder.

 

In connection with the
foregoing, we advise you that a member of the SEC’s staff has advised us by
telephone that the SEC has entered an order declaring the Registration
Statement effective under the 1933 Act at [ENTER
TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [ISSUER’S
  COUNSEL]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  CC:
          [LIST NAMES OF HOLDERS]

  

 

21

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