Document:

Exhibit 4.1

 

2008

OMNIBUS STOCK AND INCENTIVE PLAN

FOR

THOMAS GROUP, INC.

 

 

TABLE
OF CONTENTS

 

	
  1.

  	
  Purpose

  	
  1

  
	
  2.

  	
  Definitions

  	
  1

  
	
   

  	
  (a)

  	
  “Administrator”

  	
  1

  
	
   

  	
  (b)

  	
  “Agreed Price”

  	
  1

  
	
   

  	
  (c)

  	
  “Applicable Laws”

  	
  1

  
	
   

  	
  (d)

  	
  “Award”

  	
  1

  
	
   

  	
  (e)

  	
  “Board”

  	
  1

  
	
   

  	
  (f)

  	
  “Cause”

  	
  1

  
	
   

  	
  (g)

  	
  “Change in Control”

  	
  1

  
	
   

  	
  (h)

  	
  “Change in Control
  Price”

  	
  2

  
	
   

  	
  (i)

  	
  “Code”

  	
  2

  
	
   

  	
  (j)

  	
  “Committee”

  	
  2

  
	
   

  	
  (k)

  	
  “Common Stock”

  	
  2

  
	
   

  	
  (l)

  	
  “Company”

  	
  2

  
	
   

  	
  (m)

  	
  “Consultant”

  	
  2

  
	
   

  	
  (n)

  	
  “Date of Grant”

  	
  2

  
	
   

  	
  (o)

  	
  “Director”

  	
  2

  
	
   

  	
  (p)

  	
  “Disability”

  	
  2

  
	
   

  	
  (q)

  	
  “Effective Date”

  	
  3

  
	
   

  	
  (r)

  	
  “Eligible Person(s)”

  	
  3

  
	
   

  	
  (s)

  	
  “Employee(s)”

  	
  3

  
	
   

  	
  (t)

  	
  “Fair Market Value”

  	
  3

  
	
   

  	
  (u)

  	
  “Holder”

  	
  3

  
	
   

  	
  (v)

  	
  “Incentive Stock Option”

  	
  3

  
	
   

  	
  (w)

  	
  “Non-Qualified Stock
  Option”

  	
  3

  
	
   

  	
  (x)

  	
  “Option”

  	
  3

  
	
   

  	
  (y)

  	
  “Option Price”

  	
  3

  
	
   

  	
  (z)

  	
  “Performance Award”

  	
  3

  
	
   

  	
  (aa)

  	
  “Performance Measures”

  	
  3

  
	
   

  	
  (bb)

  	
  “Performance Period”

  	
  3

  
	
   

  	
  (cc)

  	
  “Plan”

  	
  3

  
	
   

  	
  (dd)

  	
  “Plan Year”

  	
  3

  
	
   

  	
  (ee)

  	
  “Reserved Shares”

  	
  5

  
	
   

  	
  (ff)

  	
  “Restriction(s)”

  	
  4

  
	
   

  	
  (gg)

  	
  “Restricted Period”

  	
  4

  
	
   

  	
  (hh)

  	
  “Restricted Shares”

  	
  4

  
	
   

  	
  (ii)

  	
  “Restricted Share Award”

  	
  4

  
	
   

  	
  (jj)

  	
  “Restricted Share
  Distributions”

  	
  4

  
	
   

  	
  (kk)

  	
  “SAR”

  	
  4

  
	
   

  	
  (ll)

  	
  “Share(s)”

  	
  4

  
	
   

  	
  (mm)

  	
  “Shareholders”

  	
  4

  
	
   

  	
  (nn)

  	
  “Spread”

  	
  4

  
	
   

  	
  (oo)

  	
  “Separation”

  	
  4

  
	
   

  	
  (pp)

  	
  “Subsidiary”

  	
  4

  
	
   

  	
  (qq)

  	
  “1933 Act”

  	
  4

  
	
   

  	
  (rr)

  	
  “1934 Act”

  	
  4

  
	
   

  	
  (ss)

  	
  “Vested”

  	
  4

  
	
   

  	
  (tt)

  	
  “10% Person”

  	
  4

  
	
  3.

  	
  Award of Reserved
  Shares

  	
  5

  
	
  4.

  	
  Conditions for Grant of
  Awards

  	
  5

  
	
  5.

  	
  Grant of Options

  	
  5

  
	
  6.

  	
  Option Price

  	
  6

  

 

 

	
  7.

  	
  Exercise of Options

  	
  6

  
	
  8.

  	
  Vesting of Award

  	
  6

  
	
  9.

  	
  Termination of Option
  Period

  	
  6

  
	
  10.

  	
  Acceleration

  	
  7

  
	
  11.

  	
  Adjustment of Reserved
  Shares

  	
  7

  
	
  12.

  	
  Transferability of
  Awards

  	
  8

  
	
  13.

  	
  Issuance of Reserved
  Shares

  	
  9

  
	
  14.

  	
  Exercise of Discretion
  and Administration of the Plan

  	
  9

  
	
  15.

  	
  Tax Withholding

  	
  10

  
	
  16.

  	
  Restricted Share Awards

  	
  10

  
	
  17.

  	
  Performance Awards

  	
  11

  
	
  18.

  	
  Stock Appreciation
  Rights

  	
  11

  
	
  19.

  	
  Section 83(b) Election

  	
  13

  
	
  20.

  	
  Interpretation

  	
  13

  
	
  21.

  	
  Amendment and
  Discontinuation of the Plan

  	
  13

  
	
  22.

  	
  Effective Date and
  Termination Date

  	
  13

  

 

 

2008
OMNIBUS STOCK AND INCENTIVE PLAN FOR

 

THOMAS
GROUP, INC.

 

1.             Purpose.  The purpose of this Plan is to advance the
interests of Thomas Group, Inc., and increase Shareholder value by
providing additional incentives to attract, retain and motivate those qualified
and competent employees and consultants, upon whose efforts and judgment its
success is largely dependent.

 

2.             Definitions.  As used herein, the following terms shall
have the meaning indicated:

 

(a)           “Administrator” shall mean the person(s) designated
by the Committee to carry out nondiscretionary administrative duties with
respect to the Plan and Awards.

 

(b)           “Agreed
Price” shall
relate to the grant of an Award in the form of an SAR, and shall mean the value
assigned to the Award’s Reserved Shares which will form the basis for
calculating the Spread on the date of exercise of the SAR, which assigned value
shall be the Fair Market Value of such Reserved Shares on the Date of Grant.

 

(c)           “Applicable
Laws” means the
requirements relating to the administration of stock option plans under U.S.
state corporate laws, U.S. federal and state securities laws, and the Code; and
the similar laws of any foreign country or jurisdiction where Options are, or
will be, granted.

 

(d)           “Award” shall mean either an Option, an SAR, a
Restricted Share Award, or a Performance Award, except that where it shall be
appropriate to identify the specific type of Award, reference shall be made to
the specific type of Award; and provided, further, that references to Award
shall be deemed to be references to the written agreement evidencing such
Award, and provided, finally, without limitation, that unless expressly
provided to the contrary in the terms of the Award, in the event of a conflict
between the terms of the Plan and the terms of an Award, the terms of the Plan
are controlling.

 

(e)           “Board” shall mean the Board of Directors of the
Company.

 

(f)            “Cause” shall mean the occurrence of any one or
more of the following: (i) Holder engages in any act of gross misconduct
that is injurious to the Company or its business: (ii) Holder engages in
any act of dishonesty, misconduct, fraud, misappropriation, embezzlement,
theft, moral turpitude or the like; (iii) Holder refuses to perform the
duties or responsibilities properly assigned to him by the Company, or the
dereliction of duty by Holder; or (iv) a material breach or a violation by
Holder of any material provision of Holder’s employment agreement.

 

(g)           “Change
in Control” shall mean the first date, if any, upon which any of the
following occurs:

 

(1)           any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a “Person”) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50 percent or more of the
combined voting power of the Company’s then outstanding securities; provided, however, that the term “Person”
shall not include (A) the Company, (B) any employee benefits plan of
the Company, (C) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company and acting in such capacity, (D) a
subsidiary of a corporation owned, directly or indirectly, by the Shareholders
in substantially the same proportions as their ownership of voting securities
of the Company, (E) any other person whose acquisitions of shares of
voting securities is approved in advance by a majority of the Board, or (F) General
John T. Chain, Jr. or Edward P. Evans;

 

(2)           individuals
who, as of March 1, 2008, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute more than 50 percent of the members of the
Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose election
or nomination for election by the Company’s Shareholders was approved by a vote
of at least two-thirds of the directors then 

 

1

 

constituting
the Incumbent Board, shall be considered as though such individual were a member
of the Incumbent Board;

 

(3)           Shareholders
approve a merger, consolidation, or reorganization of the Company with or into
another corporation or other legal person and, as a result of such merger,
consolidation or reorganization, the holders of the Company’s Shares
immediately prior to such transaction do not have the same proportionate
ownership of the common stock of the surviving entity immediately after such
transaction;

 

(4)           Shareholders
approve a sale or disposition of all or substantially all of the Company’s
assets to any other corporation or other legal person and as a result of such
transaction, the holders of the Company’s Shares immediately prior to such
transaction do not have the same proportionate ownership of the common stock of
the surviving entity immediately after such transaction;

 

(5)           Shareholders
approve a plan of liquidation or dissolution of the Company;

 

(6)           a
public announcement is made of a tender or exchange offer by any Person for
fifty percent or more of the outstanding voting securities of the Company, and
the Board approves or fails to oppose that tender or exchange offer in its
statements in Schedule 14D-9 under the Exchange Act; or

 

(7)           in
a Title 11 Bankruptcy Proceeding, there is the appointment of a trustee or the
conversion of a case involving the Company to a case under Chapter 7.

 

(h)           “Change in
Control Price”
shall mean the higher of (i) the highest price per Share paid in any
transaction reported on the NASDAQ or such other exchange or market as is the
principal trading market for the Shares, or (ii) the highest price per
Share paid in any bona fide transaction related to a Change in Control, at any
time during the 60 day period immediately preceding such occurrence; with such
occurrence date to be determined by the Committee.

 

(i)            “Code” shall mean the Internal Revenue Code of
1986, as now or hereafter amended.

 

(j)            “Committee” shall mean the Compensation and
Corporate Governance Committee of the Board, provided, further, that in
granting Performance Awards, Committee shall refer to only those members of the
Compensation and Corporate Governance Committee who are “Outside Directors”
within the meaning of Section 162(m) of the Code.

 

(k)           “Common
Stock” shall mean
the common stock, par value $.01 per Share, of the Company.

 

(l)            “Company” shall mean the Thomas Group, Inc.

 

(m)          “Consultant” shall mean, any person or entity who or
which is engaged by the Company or a Subsidiary to render consulting services
and is compensated for such consulting services, and meets the definition of “employee”
as set forth in the instructions to Form S-8 Registration Statement under
the 1933 Act.

 

(n)           “Date of
Grant” shall mean
the date on which the Committee takes formal action to grant an Award, provided
that it is followed, as soon as reasonably practicable, by written notice to
the Eligible Person receiving the Award.

 

(o)           “Director” shall mean a member of the Board of the
Company.

 

(p)           “Disability” shall mean a Holder’s present incapacity
resulting from an injury or illness (either mental or physical) which, in the
reasonable opinion of the Committee based on such medical evidence as it deems
necessary, will result in death or can be expected to continue for a period of
at least twelve (12) months and will prevent the Holder from performing the
normal services required of the Holder by the Company; provided, however, 

 

2

 

that such disability did
not result, in whole or in part:  (i) from
chronic alcoholism; (ii) from addiction to narcotics; (ii) from a
felonious undertaking; or (iv) from an intentional self inflicted wound.

 

(q)           “Effective
Date” shall mean March 1,
2008.

 

(r)           “Eligible
Person(s)” shall
mean those persons or entities, as applicable, who are Employees, or
Consultants.

 

(s)           “Employee(s)” shall mean each person who is designated
as an employee on the books of the Company, including, without limitation,
persons so designated who are employed by a Subsidiary.

 

(t)            “Fair
Market Value” per
Share shall be determined by the Committee and, on the date of reference, shall
be the Closing Price on such date, provided, further, that if the actual
transaction involving the Shares occurs at a time when the NASDAQ National
Market System (“NASDAQ”) (or other
exchange on which Shares are traded) is closed for regular trading, then it
shall be the most recent Closing Price; provided, further, that “Closing Price”
means the closing price of the Shares on the NASDAQ as reported in any
newspaper of general circulation, or in the absence of such report, as
reflected on the records of the system on which the Shares are reported or
quoted.

 

(u)           “Holder” shall mean, at each time of reference,
each person with respect to whom an Award is in effect; provided, further, that
following the death of a Holder, it shall refer to the person who succeeds to
the rights of such Holder.

 

(v)            “Incentive
Stock Option”
shall mean an Option that is an incentive stock option as defined in Section 422
of the Code.

 

(w)           “Non-Qualified
Stock Option”
shall mean an Option that is not an Incentive Stock Option.

 

(x)           “Option” (when capitalized) shall mean the grant
of the right to purchase Reserved Shares through the payment of the Option
Price and taking the form of either an Incentive Stock Option or a
Non-Qualified Stock Option; except that, where it shall be appropriate to
identify a specific type of Option, reference shall be made to the specific
type of Option; provided, further, without limitation, that a single Option may
include both Incentive Stock Option and Non-Qualified Stock Option provisions.

 

(y)           “Option
Price” shall mean
the price per Reserved Share which is required to be paid by the Holder in
order to exercise his or her right to acquire the Reserved Share under the
terms of the Option.

 

(z)           “Performance
Award” shall mean
the award which is granted contingent upon the attainment of the performance
objectives during the Performance Period, all as described more fully in Section 17.

 

(aa)         “Performance
Measures” shall
mean one or more of the following: (i) Share price (ii) earnings per
Share, (iii) return on average common equity, (iv) pre-tax income, (iv) pre-tax
operating income, (v) net revenue, (vi) net income, (vii) profits
before taxes, (viii) Fair Market Value per Share, (ix) net asset
value, (x) net asset value per Share, (xi) operating cost reductions, or
(xii) such other similar measures as the Committee may select, and provided
that such measures may be made before or after adjustments as determined by the
Committee at the time of the grant of the Award and designated in writing in
the Award, provided, without limitation, that while a performance standard can
include remaining in the employ of the Company for a period of time, it shall
not be based on merely remaining in the employ of the Company for a specified period
of time.

 

(bb)         “Performance
Period” shall
mean the period selected by the Committee with respect to which the performance
objectives relate or a measured.

 

(cc)         “Plan” shall mean this 2008 Omnibus Stock and
Incentive Plan for Thomas Group, Inc.

 

(dd)         “Plan Year” shall mean the calendar year.

 

3

 

(ee)         “Reserved
Shares” shall
mean, at each time of reference, the total number of Shares described in Section 3 with respect to which the
Committee may grant an Award, all of which Reserved Shares shall be held in the
Company’s treasury or shall be made available from the Company’s authorized and
unissued Shares.

 

(ff)           “Restriction(s)”  “Restricted”
and similar terms shall mean the restrictions applicable to Reserved Shares
subject to an Award which constitute “a substantial risk of forfeiture” of such
Reserved Shares within the meaning of Section 83(a)(1) of the Code.

 

(gg)         “Restricted
Period” shall
mean the period during which Restricted Shares are subject to Restrictions.

 

(hh)         “Restricted
Shares” shall
mean the Reserved Shares granted to an Eligible Person which are subject to
Restrictions; provided, further, that the Committee may, in its sole
discretion, determine that the Restrictions which otherwise would have been
imposed have been fully satisfied on the Date of Grant by reason of prior
service and/or other considerations, and thus provide that such Restricted
Shares shall be fully Vested on the Date of Grant.

 

(ii)           “Restricted
Share Award”
shall mean the award of Restricted Shares.

 

(jj)           “Restricted
Share Distributions”
shall mean any amounts, whether Shares, cash or other property (other than
regular cash dividends) paid or distributed by the Company with respect to
Restricted Shares during a Restricted Period.

 

(kk)        “SAR” shall mean a stock appreciation right as
defined in Section 18 hereof.

 

(ll)           “Share(s)” shall mean a share or shares of Common
Stock.

 

(mm)       “Shareholders” shall mean persons owning one or more
Shares at the time of reference.

 

(nn)         “Spread” shall mean the difference between the
Option Price, or the Agreed Price, as the case may be, of the Share(s) on
the Date of Grant of the Award, and the Fair Market Value of such Share(s) on
the later date of reference.

 

(oo)         “Separation” shall mean the date on which a Holder
ceases to have an employment relationship with the Company for any reason,
including death or Disability; and provided, further, without limitation, such
employment relationship will cease, in the case of a consultant, upon his or her
ceasing to render services to the Company, as determined by the Committee in
its sole discretion; provided, however, that a Separation will not be
considered to have occurred while an Employee is on sick leave, military leave,
or any other leave of absence approved by the Company, if the period of such
leave does not exceed 90 days, or, if longer, so long as the Employee’s right
to redeployment with the Company is guaranteed either by statute or by
contract.

 

(pp)         “Subsidiary” shall mean, where the Award is an
Incentive Stock Option, a “subsidiary
corporation”, as defined in Section 424(f) of the Code, and where the
Award is not an Incentive Stock Option, any entity which would be a “subsidiary
corporation” as defined in Section 424(f) of the Code if it were a
corporation.

 

(qq)         “1933 Act” shall mean the Securities Act of 1933,
as amended.

 

(rr)         “1934 Act” shall mean the Securities Exchange Act
of 1934, as amended.

 

(ss)         “Vested” and similar terms shall mean the number
of Option Shares which have become nonforfeitable and the portion of an Award
on which the Restrictions have lapsed; provided, further, and without
limitation, that the lapse of Restrictions based on the attainment of
performance objectives may also be a Vesting event to the extent provided in the
Award.

 

(tt)           “10%
Person” shall
mean a person who owns directly (or indirectly through attribution under Section 424(d) of
the Code) at the Date of Grant of an Incentive Stock Option, stock possessing
more than 10% of 

 

4

 

the total combined voting
power of all classes of voting stock (as defined in Section 424 of the
Code) of the Company on the Date of Grant.

 

3.             Award
of Reserved Shares.

 

(a)           As of the Effective Date, One Million
(1,000,000) Shares shall automatically, and without further action, become
Reserved Shares.  To the extent any Award
shall terminate, expire or be canceled, the Reserved Shares subject to such
Award (or with respect to which the Award is measured), shall remain Reserved
Shares.  Where an Award is settled on a
basis other than the issuance of Reserved Shares, the Reserved Shares which
measured the amount of such Award settlement shall be canceled and no longer
considered Reserved Shares.

 

(b)           Notwithstanding any provision in this Plan
to the contrary, in order to insure that Performance Awards are
performance-based compensation within the meaning of Section 162(m) of
the Code, no person whose compensation may be subject to the limitations on
deductibility under Section 162(m) of the Code shall be eligible for
a grant during a single calendar year of an Award with respect to, or measured
by, more than Seven Hundred Thousand (700,000) Reserved Shares.  The limitation under this Section 3(b) shall be construed
so as to comply with the requirements of Section 162(m) of the Code.

 

4.             Conditions
for Grant of Awards.

 

(a)           Without limiting the generality of the
provisions hereof which deal specifically with each form of Award, Awards shall
only be granted to such one or more Eligible Persons as shall be selected by
the Committee.

 

(b)           In granting Awards, the Committee shall
take into consideration the contribution the Eligible Person has made or may be
reasonably expected to make to the success of the Company and such other
factors as the Committee shall determine. 
The Committee shall also have the authority to consult with and receive
recommendations from officers and other personnel of the Company with regard to
these matters.  The Committee may from
time to time in granting Awards under the Plan prescribe such terms and
conditions concerning such Awards as it deems appropriate, including, without
limitation, relating an Award to achievement of specific goals established by
the Committee or to the continued employment of the Eligible Person for a
specified period of time, provided that such terms and conditions are not
inconsistent with the provisions of this Plan.

 

(c)           Incentive Stock Options may be granted
only to Employees, and all other Awards may be granted to any Eligible Person.

 

(d)           The Plan shall not confer upon any Holder
any right with respect to continuation of employment by the Company, or any
right to provide services to the Company, nor shall it interfere in any way
with his or her right or the Company’s right to terminate his or her employment
at any time.

 

(e)           The Awards granted to Eligible Persons
shall be in addition to regular salaries, pension, life insurance or other
benefits (if any) related to their service to the Company, and nothing herein
shall be deemed to limit the ability of the Company to enter into any other
compensation arrangements with any Eligible Person.

 

(f)            The Committee shall determine in each
case whether periods of military or government service shall constitute a
continuation of employment or service for the purposes of this Plan or any
Award.

 

(g)           Notwithstanding any provision hereof to
the contrary, each Award which in whole or in part involves the issuance of
Reserved Shares may provide for the issuance of such Reserved Shares for
consideration consisting of cash or cash equivalents, or such other
consideration as the Committee may determine, including (without limitation) as
compensation for past services rendered.

 

5.             Grant
of Options.

 

(a)           The Committee may grant Options to
Eligible Persons from time to time, alone, in addition to, or in tandem with,
other Awards granted under the Plan.  An
Option granted hereunder shall be either an Incentive Stock Option or a
Non-Qualified Stock Option, and shall clearly state whether it is (in whole or
in part) an Incentive 

 

5

 

Stock Option or a
Non-Qualified Stock Option; provided, further, that failure of an Option
designated as an Incentive Stock Option to qualify as an Incentive Stock Option
will not affect its validity, and the portion which does not qualify as an
Incentive Stock Option shall be a Non-Qualified Stock Option.

 

(b)           If both Incentive Stock Options and
Non-Qualified Stock Options are granted to a Holder, the right to exercise, to
the full extent thereof, Options of either type shall not be contingent in
whole or in part upon the exercise of, or failure to exercise, Options of the
other type.

 

(c)           The aggregate Fair Market Value
(determined as of the Date of Grant) of the Reserved Shares with respect to
which any Incentive Stock Option is exercisable for the first time by a Holder
during any calendar year under the Plan and all such plans of the Company (as
defined in Section 424 of the Code) shall not exceed $100,000; provided,
further, without limitation, that any portion of an Option designated as an
Incentive Stock Option which exceeds such $100,000 limit will, notwithstanding
such designation, be a validly granted Non-Qualified Stock Option.

 

(d)           The Committee may at any time offer to
buy out for a payment in cash, an Option previously granted, based on such
terms and conditions as the Committee shall establish and as communicated to
the Holder by the Committee at the time that such offer is made.

 

6.             Option
Price.

 

(a)           The Option Price shall be any price
determined by the Committee which is not less than one hundred percent (100%)
of the Fair Market Value per Share as determined under the terms of the Plan on
the Date of Grant; provided, however, that in the case of an Incentive Stock
Option granted to a 10% Person the Option Price shall not be less than 110% of
the Fair Market Value per Share as determined under the terms of the Plan on
the Date of Grant.  The Committee shall
determine the Fair Market Value per Share.

 

(b)           Unless further limited by the Committee
in any Option, the Option Price may be paid in cash, by certified or cashier’s
check, by wire transfer, by money order, through a Broker Assisted Exercise,
with Shares (but with Shares only if expressly permitted by the terms of the
Option), or by a combination of the above; provided, however, that the
Committee may accept a personal check in full or partial payment.  If the
Option Price is permitted to be, and is, paid in whole or in part with Shares,
the value of the Shares surrendered shall be the Shares’ Fair Market Value on
the date delivered to the Administrator.

 

7.             Exercise
of Options.  An Option
shall be deemed exercised when (i) the Administrator has received written
notice of such exercise in accordance with the terms of the Option, and (ii) full
payment of the aggregate Option Price plus required withholding tax amounts, if
any, described in Section 15,
of the Reserved Shares as to which the Option is exercised has been made.  Separate stock certificates shall be issued
by the Company for any Reserved Shares acquired as a result of exercising an
Incentive Stock Option and a Non-Qualified Stock Option.

 

8.             Vesting
of Award

 

(a)           Without limitation, each Award shall Vest
in whole or in part, and shall expire, according to the terms of the Award.

 

(b)           The Committee, in its sole discretion,
may accelerate the date on which all or any portion of an otherwise unvested
Award shall Vest.

 

9.             Termination
of Option Period.

 

(a)           Unless the terms of an Option expressly
provide for a different date of termination, the unexercised portion of an
Option shall automatically and without notice terminate and become null and
void at the time of the earliest to occur of the following:

 

6

 

(1)           on
the 90th day following Holder’s Separation for any reason except death,
Disability or for Cause; or

 

(2)           immediately
upon Separation as a result, in whole or in material part, of a discharge for
Cause; or

 

(3)           on
the one hundred-eightieth (180th) day following a Separation by reason of death
or Disability;

 

(4)           in
the case of a 10% Person, on the fifth (5th ) anniversary of the Date of Grant;
or

 

(5)           on
the tenth (10th) anniversary of the Date of Grant.

 

(b)           Notwithstanding any provision of the Plan
to the contrary, in the event of the proposed dissolution or liquidation of the
Company, or in the event of a proposed sale of all or substantially all of the
assets of the Company, or the proposed merger of the Company with or into
another corporation (collectively, the “Transaction”), unless otherwise
expressly provided (by express reference to this Section 9(b)) in the terms of an Option, after the public
announcement of the Transaction, the Committee may, in its sole discretion,
deliver a written notice (“Cancellation
Notice”) to any Holder of an Option, canceling the unexercised
Vested portion (including the portion which becomes Vested by reason of
acceleration), if any, of such Option, effective on the date specified in the
Cancellation Notice (“Cancellation Date”).  Notwithstanding the forgoing, the
Cancellation Date may not be earlier than the last to occur of (i) the
15th day following delivery of the Cancellation Notice, and (ii) the 60th
day prior to the proposed date for the consummation of the Transaction (“Proposed Date”).  Without limitation, the Cancellation Notice
will provide that, unless the Holder elects in writing to waive, in whole or in
part, a Conditional Exercise, the exercise of the Option will be a Conditional
Exercise.  A “Conditional Exercise” shall mean that in the event the
Transaction does not occur within 180 days of the Proposed Date, the exercising
Holder shall be refunded any amounts paid to exercise such Holder’s Option,
such Option will be reissued, and the purported exercise of such Option shall
be null and void ab intitio.

 

10.          Acceleration.  In the event of a Change in Control, in the
sole discretion of the Committee, the Committee may provide that an Award will
become fully or partially exercisable, Vested, or the Restricted Period shall
terminate, as the case may be (hereafter, in this Section 10, such Award shall be “accelerated”), and (ii) thereafter,
in the sole discretion of the Committee, the value of some or all Vested Awards
may be cashed out on the basis of the Change in Control Price, at any time
during the 60-day period immediately preceding any bona fide transaction
related to a Change in Control; provided, further, that if a date prior to such
occurrence is selected for a cash out, any subsequent increase in the Change in
Control Price shall be computed with respect to such Awards which have been
cashed out and will be paid to each Holder on the date of such occurrence, or
as soon thereafter as reasonably possible.

 

11.          Adjustment
of Reserved Shares.

 

(a)           If at any time while the Plan is in
effect or Awards with respect to Reserved Shares are outstanding, there shall
be any increase or decrease in the number of issued and outstanding Shares
through the declaration of a stock dividend or through any recapitalization
resulting in a stock split up, combination or exchange of Shares, then and in
such event:

 

(i)            appropriate
adjustment shall be made in the maximum number of Reserved Shares which may be
granted under Section 3, and
equitably in the Reserved Shares which are then subject to each Award, so that
the same proportion of the Company’s issued and outstanding Common Stock shall
continue to be subject to grant under Section 3,
and to such Award, and

 

(ii)           in
addition, and without limitation, in the case of each Award (including, without
limitation, Options) which requires the payment of consideration by the Holder
in order to acquire Reserved Shares, an appropriate equitable adjustment shall
be made in the consideration (including, without limitation the Option Price)
required to be paid to acquire the each Reserved Share, so that (i) the
aggregate consideration to acquire all of the Reserved Shares subject to the
Award remains the same and, 

 

7

 

(ii) so far as possible, (and without disqualifying
an Incentive Stock Option) the relative cost of acquiring each Reserved Share
subject to such Award remains the same; and

 

(iii)          in
addition, shall make appropriate adjustment in the Performance Measures for
each Performance Award so as to reasonably insure that the same level of
performance will result in the same Vesting and other material rights and
benefits under the Performance Award.

 

All such determinations
shall be made by the Board in its sole discretion.

 

(b)           The Committee may change, or may direct
the Administrator to change, the terms of Awards outstanding under this Plan
when, in the Committee’s judgment, such adjustments become appropriate by
reason of a corporate transaction (as defined in Treasury Regulation § 1.424
1(a)(1)(ii)); provided, however, that if by reason of such corporate
transaction an Incentive Stock Option is assumed or a new Incentive Stock
Option is substituted therefor, the Committee, or at the direction of the
Committee, the Administrator, may only change the terms of such Incentive Stock
Option such that (i) the excess of the aggregate Fair Market Value of the
Reserved Shares subject to the substituted Incentive Stock Option immediately
after the substitution or assumption, over the aggregate Option Price of such
Reserved Shares at such time, is not more than the excess of the aggregate Fair
Market Value of all Reserved Shares subject to the Incentive Stock Option
immediately before such substitution or assumption over the aggregate Option
Price of such Reserved Shares at such time, and (ii) the substituted
Incentive Stock Option, or the assumption of the original Incentive Stock
Option does not give the Holder additional benefits which such Holder did not
have under the original Incentive Stock Option. 
Without limiting the generality of any other provisions hereof,
including, without limitation, Section 21,
except to the minimum extent, if any, required by Section 424(a) of
the Code with respect to Incentive Stock Options, no change made under the
authority of this Section 11(b) in
the terms of an Award shall alter such Award’s material provisions in a way
that makes such Award less valuable to its Holder.

 

(c)           Except as otherwise expressly provided
herein, the issuance by the Company of shares of its capital stock of any
class, or securities convertible into shares of capital stock of any class,
either in connection with direct sale for adequate consideration, or upon the
exercise of rights or warrants to subscribe therefore, or upon conversion of
Shares or obligations of the Company convertible into such Shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, Reserved Shares subject to Awards granted under the Plan;
provided, further, that such issuance shall require the Committee to make such
adjustments as are required under Section 11(a)(iii).

 

(d)           Without limiting the generality of the
foregoing, except for making the adjustments required under Section 11(a)(iii), the existence of
outstanding Awards with respect to Reserved Shares granted under the Plan shall
not affect in any manner the right or power of the Company to make, authorize
or consummate (1) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its
business; (2) any merger or consolidation of the Company; (3) any
issue by the Company of debt securities, or preferred or preference stock which
would rank above the Reserved Shares subject to outstanding Awards; (4) the
dissolution or liquidation of the Company; (5) any sale, transfer or
assignment of all or any part of the assets or business of the Company; or (6) any
other corporate act or proceeding, whether of a similar character or otherwise.

 

12.          Transferability
of Awards.  Each Award
which is an Incentive Stock Option shall not be transferable by the Holder
otherwise than (i) by will or the laws of descent and distribution, or (ii) pursuant
to a domestic relations order as that term is defined in section 414(p)(1)(B) of
the Internal Revenue Code, provided that such order satisfies Section 414(p)(1)(A) of
the Internal Revenue Code; and in the case of each other Award, subject to the
same transfer restrictions in (i) and (ii) except that, if expressly
provided in the Award, it is transferable, in whole or in part, without payment
of consideration (i) to members of the Holder’s Immediate Family, (ii) to
trusts for such Immediate Family members, or (iii) to partnerships whose
only partners are such Immediately Family members, or (iv) except as prohibited
by Rule 16b-3, to a person or other entity for which the Holder is
entitled to a deduction for a “charitable contribution” under Section 170(a)(i) of
the Code (provided, in each such case that no further transfer by any such
permitted transferee(s) shall be permitted); provided, further that,
except for the right to exercise an Award which is subject to exercise, the
Holder retains all of the rights, duties and obligations under the Award
(including, without limitation, satisfaction of the Vesting requirements and
the payment of withholding.)

 

8

 

13.          Issuance
of Reserved Shares.  No Holder
shall be, or have any of the rights or privileges of, the owner of Reserved
Shares subject to an Award unless and until certificates representing such
Shares shall have been issued and delivered to such Holder or, where Vested
Shares are held by the Company to ensure compliance with specific requirements
of an Award, to the extent expressly provided in the Award.  As a condition of any issuance of Shares, the
Administrator may obtain such agreements or undertakings, if any, as the
Administrator may deem necessary or advisable to assure compliance with any
such law or regulation or Shareholder agreement including, but not limited to,
a representation, warranty or agreement to be bound by any legends that are, in
the opinion of the Administrator, necessary or appropriate to comply with the
provisions of any securities law deemed by the Administrator to be applicable
to the issuance of the Reserved Shares and which are endorsed upon the Share
certificates.

 

Share certificates issued
to the Holder receiving such Reserved Shares who is a party to any Shareholders
agreement, voting trust, or any similar agreement shall bear the legends
contained in such agreements. 
Notwithstanding any provision hereof to the contrary, no Reserved Shares
shall be required to be issued with respect to an Award unless counsel for the  Company shall be reasonably satisfied
that such issuance will be in compliance with applicable federal or state
securities laws.

 

In no event shall the
Company be required to sell or issue Reserved Shares under any Award if the
sale or issuance thereof would constitute a violation of applicable federal or
state securities law or regulation or a violation of any other law or
regulation of any governmental authority or any national securities
exchange.  As a condition to any sale or
issuance of Reserved Shares, the Company may place legends on Reserved Shares,
issue stop transfer orders, and require such agreements or undertakings as the
Company may deem necessary or advisable to assure compliance with any such law
or regulation.

 

Without limitation, the
Company shall use its best efforts to register the Reserved Shares with the
Securities and Exchange Commission.

 

14.          Exercise
of Discretion and Administration of the Plan.

 

(a)           The Plan shall be administered by the
Administrator and, except for the powers expressly reserved to the Board and
the Committee, the Administrator shall have all of the administrative powers
under Plan.  Notwithstanding the
forgoing, except as provided in Section 13,
the Administrator shall only exercise nondiscretionary and purely ministerial
authority hereunder.

 

(b)           The Administrator, from time to time, may
adopt rules and regulations for carrying out the administrative purposes
of the Plan.  The determinations under,
and the interpretations of, any provision of the Plan or an Award by the
Committee (or the Administrator in the exercise of its administrative
authority) shall, in all cases, be in its sole discretion, and shall be final
and conclusive.

 

(c)           Any and all determinations and
interpretations of the Committee (and the Administrator solely in the exercise
of administrative authority) shall be made either (i) by a majority vote
of the members at a meeting duly called, with at least 2 days prior notice, or (ii) without
a meeting, by the written approval of all members.

 

(d)           No member of the Committee, or the
Administrator, shall be liable for any action taken or omitted to be taken by
such member or by any other member of the Committee or by the Administrator
with respect to the Plan, and to the extent of liabilities not otherwise
insured under a policy purchased by the Company, the Company does hereby
indemnify and agree to defend and save harmless any member of the Committee,
and the Administrator, with respect to any liabilities asserted or incurred in
connection with the exercise and performance of their powers and duties
hereunder, unless such liabilities are judicially determined to have arisen out
of such person’s gross negligence, fraud or bad faith.  Such indemnification shall include attorney’s
fees and all other costs and expenses reasonably incurred in defense of any
action arising from such act of commission or omission.  Nothing herein shall be deemed to limit the
Company’s ability to insure itself with respect to its obligations hereunder.

 

(e)           In particular, and without limitation,
except for the authority granted to the Administrator under Section 13, the Committee shall have
the sole authority, consistent with the terms of the Plan:

 

9

 

(i)            to determine whether and to what
extent Awards are to be granted hereunder to one or more Eligible Persons;

 

(ii)           to
determine the number of Reserved Shares to be covered by each such Award
granted hereunder;

 

(iii)          to
determine the terms and conditions of any Award granted hereunder, and to amend
or waive any such terms and conditions except to the extent, if any, expressly
prohibited by the Plan;

 

(iv)          to
determine whether and under what circumstances an Option may be settled in
Restricted Shares instead of Reserved Shares;

 

(v)           to
determine whether, to what extent, and under what circumstances Awards under
the Plan are to be made, and operate, on a tandem basis vis-a-vis other Awards
under the Plan; and

 

(vi)          to
determine (or to delegate to the Administrator the authority to determine)
whether to permit payment of tax withholding requirements in Reserved Shares.

 

(f)            Without limitation, Committee, and the
Administrator solely with respect to its ministerial duties, shall have the
authority to adopt, alter, and repeal any or all of its rules, guidelines, and
practices with respect to the Plan, and all questions of interpretation, with
respect to the Plan or any Award shall be decided by the Committee or, if
purely ministerial, by the Administrator, as the case maybe, whose decision
shall be final, conclusive and binding upon the Company and each other affected
party.

 

(g)           Without limitation, the Committee in its
sole discretion may limit the ministerial authority granted hereunder to the
Administrator by notifying the Administrator in writing of such limitation.

 

15.          Tax
Withholding.  On or
immediately prior to the date on which a payment is made to a Holder hereunder
or, if earlier, the date on which an amount is required to be included in the
income of the Holder as a result of the lapse of a restriction on an Award, the
Holder shall be required to pay to the Company, in cash, or in Shares (but in
Shares or Reserved Shares only if expressly permitted in the Award, or by
written authorization of the Administrator, and then only in the minimum amount
required to satisfy the minimum withholding requirements with respect to such
Award), the amount (if any) which the Company reasonably determines to be
necessary in order for the Company to comply with applicable federal or state
tax withholding requirements, and the collection of employment taxes; provided,
further, without limitation, that the Committee may require that such payment
be made in cash.

 

16.          Restricted
Share Awards.

 

(a)           The Committee may grant Awards of
Restricted Shares to any Eligible Person, for no cash consideration, for such
minimum consideration as may be required by applicable law, or for such other
consideration as may be specified in the grant.  The terms and conditions
of Restricted Shares shall be specified in the Award.  The Committee, in
its sole discretion, shall determine what rights, if any, the person to whom an
Award of Restricted Shares is made shall have in the Restricted Shares during
the Restriction Period and the Restrictions applicable to the particular Award,
including whether the holder of the Restricted Shares shall have the right to
vote the Restricted Shares and the extent, if any, of Holder’s right to receive
Restricted Share Distributions.  Unless otherwise provided in the
Restricted Share Award, upon the expiration of Restrictions, the Restricted
Shares shall cease to be Restricted Shares.

 

(b)           The Restrictions on Restricted Shares
shall lapse in whole, or in installments, over whatever Restricted Period shall
be selected by the Committee.

 

(c)           Without limitations, the Committee may
accelerate the date on which Restrictions lapse with respect to any Restricted
Shares.

 

10

 

(d)           During the Restricted Period, the
certificates representing the Restricted Shares, and any Restricted Share
Distributions, shall be registered in the Holder’s name and bear a restrictive
legend disclosing the Restrictions, the existence of the Plan, and the
existence of such Restricted Share Award. 
Such certificates shall be deposited by the Holder with the Company, together
with stock powers or other instruments of assignment, each endorsed in blank,
which will permit the transfer to the Company of all or any portion of the
Restricted Shares, and any assets constituting Restricted Share Distributions,
which shall be forfeited in accordance with the terms of such Restricted Share
Award.  Restricted Shares shall
constitute issued and outstanding Common Stock for all corporate purposes and
the Holder shall have all rights, powers and privileges of a holder of unrestricted
Shares except those that are expressly excluded under the terms of the
Restricted Share Award, and Holder will not be entitled to delivery of the
stock certificates until all Restrictions shall have terminated and after such
period, for any additional period specified in the Award, and the Company will
retain custody of all related Restricted Share Distributions (which will be
subject to the same Restrictions, terms, and conditions as the related
Restricted Shares) until the conclusion of the Restricted Period with respect
to the related Restricted Shares or for such additional period as may be
provided in the Award; and provided, further, that any Restricted Share
Distributions shall not bear interest or be segregated into a separate account
but shall remain a general asset of the Company, subject to the claims of the
Company’s creditors, until the date of their distribution; and provided,
finally, that any material breach of any terms of the Restricted Share Award,
as reasonably determined by the Committee, will cause a forfeiture of both
Restricted Shares and Restricted Share Distributions.

 

17.          Performance
Awards.

 

(a)           Performance Awards during a Plan Year may
be granted to any Eligible Persons.

 

(b)           Without limitation, the Committee’s grant
of Performance Awards may, in its sole discretion, be made in Reserved Shares,
or in cash, or in a combination of Reserved Shares and cash, but the cash
portion of each such Award granted to each Eligible Person may not exceed
$1,000,000 in a Plan Year.

 

(c)           The Committee shall select the Performance
Measures which will be required to be satisfied during the Performance Period
in order to earn the Performance Award.  Such Performance Measures, and
the duration of any Performance Period, may differ with respect to each
Eligible Person, or with respect to separate Performance Awards issued to the
same Eligible Person.  The selected
Performance Measures, the Performance Period(s), and any other conditions to
the Company’s obligation to pay a Performance Award shall be set forth in each
Performance Award on or before the first to occur of (i) the 90th day of
the selected Performance Period, (ii) the first date on which more than
25% of the Performance Period has elapsed, and (iii) the first date, if
any, on which satisfaction of the Performance Measure(s) is no longer
substantially uncertain.

 

(d)           Performance Awards may be payable in a
single payment or in installments but may not be paid in whole or in part prior
to the date on which the Performance Measures are attained, except that such
payment may be accelerated upon the death or Disability of the Eligible Person,
or as a result of a Change in Control, it being understood that if such
acceleration events occur prior to the attainment of the Performance Measures,
the Performance Award will not be exempt from Section 162(m) of the
Code.

 

(e)           The extent to which any applicable
performance objective has been achieved shall be conclusively determined by the
Committee, but may be specifically delegated to the Administrator.  Without limitation, where an Eligible Person
has satisfied the Performance Measures with respect to a Performance Award, if
permitted under the terms of such Performance Award, the Committee, in its sole
discretion, may reduce the maximum amount payable under such Performance Award.

 

18.          Stock
Appreciation Rights.

 

(a)           The Committee shall have authority to
grant (i) an SAR with respect to Reserved Shares, including, without
limitation, Reserved Shares covered by any Option (“Related Option”), or a Performance Award (“Related Performance Award”).  An SAR granted with respect to a Related
Option or Related Performance Award must be granted on the Date of Grant of
such Related Option or Related Performance Award.

 

(1)           For
the purposes of this Section 18,
the following definitions shall apply:

 

11

 

(i)          The
term “SAR” shall mean a right
granted under this Plan, including, without limitation, a right granted in
tandem with an Award, that shall entitle the Holder thereof to the number of
Reserved Shares which have a Fair Market Value equal to the SAR Spread payable
as described in Section 18(a)(ii).

 

(ii)         The
term “SAR Spread” shall mean with
respect to each SAR an amount equal to the product of (1) the excess of (A) the
Fair Market Value per Share on the date of exercise, over (B) (x) if
the SAR is granted in tandem with an Option, then the Option Price per Reserved
Share of the Related Option, (y) if the SAR is granted in tandem with a
Performance Award, the Agreed Price under the Related Performance Award, or (z) if
the SAR is granted by itself with respect to a designated number of Reserved
Shares, the Agreed Price which, without limitation, is the Fair Market Value of
the Reserved Shares on the Date of Grant, in each case multiplied by (2) the
number of Reserved Shares with respect to which such SAR is being exercised;
provided, however, without limitation, that with respect to any SAR granted in
tandem with an Incentive Stock Option, in no event shall the SAR Spread exceed
the amount permitted to be treated as the SAR Spread under applicable Treasury
Regulations or other legal authority without disqualifying the Option as an
Incentive Stock Option.

 

(b)           To exercise the SAR the Holder shall:

 

(i)            Give
written notice thereof to the Company, specifying the SAR being exercised and
the number or Reserved Shares with respect to which such SAR is being
exercised, and

 

(ii)           If
requested by the Company, deliver within a reasonable time the agreement
evidencing the SAR being exercised and, if applicable, the Related Option
agreement, or Related Performance Award agreement, to the Secretary of the
Company who shall endorse or cause to be endorsed thereon a notation of such
exercise and return all agreements to the Holder.

 

(c)           As soon as practicable after the exercise
of an SAR, the Company shall transfer to the Holder Reserved Shares having a
Fair Market Value on the date the SAR is exercised equal to either the SAR
Spread; provided, however, without limiting the generality of Section 15, that the Company, in its sole
discretion, may withhold from such transferred Reserved Shares any amount
necessary to satisfy the Company’s minimum obligation for federal and state
withholding taxes with respect to such exercise.

 

(d)           An SAR may be exercised only if and to
the extent that it is permitted under the terms of the Award which, in the case
of a Related Option, shall be only when such Related Option is eligible to be
exercised.

 

(e)           Upon the exercise or termination of a
Related Option, or the payment or termination of a Related Performance Award,
the SAR with respect to such Related Option or Related Performance Award
likewise shall terminate.

 

(f)            An SAR shall be transferable (i) only
to the extent, if any, provided in the agreement evidencing the SAR, or (ii) if
granted with respect to a Related Option, or Related Performance Award, only to
the extent, if any, that such Related Option, or Related Performance Award, is
transferable, and under the same conditions.

 

(g)           Each SAR shall be on such terms and
conditions not inconsistent with this Plan as the Committee may determine.

 

(h)           The Holder shall have no rights as a
stockholder with respect to the related Reserved Shares as a result of the
grant of an SAR.

 

(i)            With respect to a Holder who, on the date
of a proposed exercise of an SAR, is an officer (as that term is used in Rule 16a-1
promulgated under the 1934 Act or any similar rule which may subsequently
be in effect), such proposed exercise may only occur as permitted by Rule 16b-3,
including without limitation paragraph 

 

12

 

(e)(3)(iii) (or any
similar rule which may subsequently be in effect promulgated pursuant to Section 16(b) of
the 1934 Act).

 

19.          Section 83(b) Election.  If as a result of receiving an Award, a Holder
receives Restricted Shares, then such Holder may elect under Section 83(b) of
the Code to include in his or her gross income, for his or her taxable year in
which the Restricted Shares are transferred to such Holder, the excess of the
Fair Market Value (determined without regard to any Restriction other than one
which by its terms will never lapse), of such Restricted Shares at the Date of
Grant, over the amount (if any) paid for the Restricted Shares.  If the
Holder makes the Section 83(b) election described above, the Holder
shall (i) make such election in a manner that is satisfactory to the
Administrator, (ii) provide the Administrator with a copy of such
election, (iii) agree to promptly notify the Company if any Internal
Revenue Service or state tax agent, on audit or otherwise, questions the
validity or correctness of such election or of the amount of income reportable
on account of such election, and (iv) agree to pay the withholding amounts
described in Section 15.

 

20.          Interpretation.

 

(a)           If any provision of the Plan is held
invalid for any reason, such holding shall not affect the remaining provisions
hereof, but instead the Plan shall be construed and enforced as if such
provision had never been included in the Plan.

 

(b)           THIS PLAN
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS.

 

(c)           Headings contained in this Agreement are
for convenience only and shall in no manner be construed as part of this Plan.

 

(d)           Any reference to the masculine, feminine,
or neuter gender shall be a reference to such other gender as is appropriate.

 

(e)           Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to Shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific
cases.

 

21.          Amendment
and Discontinuation of the Plan.  The Board, or the Committee (subject to the
prior written authorization of the Board), may from time to time amend the Plan
or any Award; provided, however, that (except to the extent provided in Section 9(b)) no such amendment may,
without approval by the Shareholders, (a) increase the number of Reserved
Shares or change the class of Eligible Persons, (b) permit the granting of
Awards which expire beyond the maximum 10-year period described in Section 9(a)(5), or (c) make any
change for which applicable law or regulatory authority (including the
regulatory authority of the NASDAQ or any other market or exchange on which the
Common Stock is traded) would require Shareholder approval or for which
Shareholder approval would be required under Section 162(m) of the
Code to secure complete deductibility of all compensation paid as a result of
Awards; and provided, further, that no amendment or suspension of the Plan or
any Award issued hereunder shall, except as specifically permitted in this Plan
or under the terms of such Award, substantially impair any Award previously
granted to any Holder without the consent of such Holder.

 

22.          Effective
Date and Termination Date.  The
Plan shall be effective as of its Effective Date, and shall terminate on the
tenth anniversary of such Effective Date; provided, further, without
limitation, that unless otherwise expressly provided in an Award, the
termination of the Plan shall not terminate an Award which is outstanding on
such date.

 

13EXHIBIT 10.1

 

AMENDMENT

TO

REGISTRATION
RIGHTS AGREEMENT

 

This Amendment to Registration Rights
Agreement (this “Amendment”) is made and entered into as of October 6,
2008, by and among Neose Technologies, Inc., a Delaware corporation (the “Company”),
and the signatories hereto (each such signatory, an “Investor” and
collectively, the “Investors”).

 

WHEREAS, the Registration Rights Agreement
dated as of March 9, 2007 by and among the Company and the other
signatories thereto (the “Original Registration Rights Agreement”), which is
attached hereto as Exhibit A, provides that it may be amended or
modified with the written consent of the Holders of at least 67% of the then
outstanding Registrable Securities; and

 

WHEREAS, the Company and the Investors
executing this Amendment (which Investors represent Holders of at least 67% of
the currently outstanding Registrable Securities) desire to amend the Original
Registration Rights Agreement as set forth below; and

 

WHEREAS, all capitalized terms used, but not
otherwise defined, herein shall have the meaning ascribed to them in the
Original Registration Rights Agreement.

 

NOW, THEREFORE, in consideration of the
foregoing, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

1.             Amendment to Section 2(b).  The following shall be added to the end of Section 2(b).

 

“Notwithstanding anything to the contrary
herein, if after the Effectiveness Date of the Initial Registration Statement or
any other Registration Statement, such Initial Registration Statement or other
Registration Statement ceases for any reason to remain continuously effective
as to all Registrable Securities included in such Initial Registration
Statement or other Registration Statement, as applicable, or the Holders are
otherwise not permitted to utilize the Prospectus therein to resell such
Registrable Securities, after the closings of the Asset Purchase Agreement
dated September 17, 2008 by and between the Company and Novo Nordisk A/S
and the Asset Purchase Agreement dated September 17, 2008 by and between
the Company and BioGeneriX AG, then the Company shall pay to each Holder an
amount in cash, as liquidated damages and not as a penalty, equal to 12% of the
aggregate purchase price paid by such Holder pursuant to the Purchase Agreement
for any Registrable Securities then held by such Holder (the “Asset Sale
Liquidated Damages”).  If the Company
fails to pay any Asset Sale Liquidated Damages in full within seven days after
the date payable, the Company will pay interest thereon at a rate of 18% per
annum (or such lesser maximum amount that is permitted to be paid by applicable
law) to the Holder, accruing daily from the date such Asset Sale Liquidated
Damages are due until such amounts, plus all such interest thereon, are paid in
full.

 

1

 

2.             Full Force and Effect.  Except as specifically provided herein, the
Original Registration Rights Agreement, as amended by this Amendment, shall
remain in full force and effect.

 

3.             Defined Terms.  Capitalized terms not otherwise defined
herein have the meanings set forth in the Original Registration Rights
Agreement.

 

4.             Counterparts.  This Amendment may be executed in two or more
counterparts and by facsimile or pdf, each of which shall be binding as of the
date first written above, and all of which shall constitute one and the same
instrument.  Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Amendment to produce or account for more than one such counterpart.

 

[the rest of the page left intentionally
blank]

 

2

 

The parties have executed this Amendment as
of the date first written above.

 

	
   

  	
   

  	
    NEOSE TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/  A.
  Brian Davis

  
	
   

  	
   

  	
   

  	
  Name:

  	
  A. Brian Davis

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President and
  Chief Financial Officer

  

 

 

[SIGNATURE PAGE OF INVESTORS FOLLOWS]

 

4

 

	
  Name of Investor:

  	
  MHR Capital Partners (100) LP

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of
  Investor:

  	
  /s/ Hal Goldstein

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  Hal Goldstein

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Principal

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name of Investor:

  	
  MHR Capital Partners Master Account LP

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of
  Investor:

  	
  /s/ Hal Goldstein

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  Hal Goldstein

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Principal

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name of Investor:

  	
  Domain Partners V, L.P.

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of
  Investor:

  	
  /s/ Brian H. Dovey

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  Brian H. Dovey

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Partner

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name of Investor:

  	
  DP V Associates, L.P.

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of
  Investor:

  	
  /s/ Brian H. Dovey

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  Brian H. Dovey

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Member

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name of Investor:

  	
  BB BIOTECH VENTURES II LP

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of
  Investor:

  	
  /s/ Pascal Mahieux

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  Pascal Mahieux

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Director

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name of Investor:

  	
  Caduceus Capital Master Fund Limited

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of
  Investor:

  	
  /s/ Samuel D. Isaly

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  Samuel D. Isaly

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Partner

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name of Investor:

  	
  Caduceus Capital II, L.P.

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of
  Investor:

  	
  /s/ Samuel D. Isaly

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  Samuel D. Isaly

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Partner

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name of Investor:

  	
  UBS Eucalyptus Fund, LLC

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of
  Investor:

  	
  /s/ Samuel D. Isaly

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  Samuel D. Isaly

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Partner

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name of Investor:

  	
  PW Eucalyptus Fund, Ltd.

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of
  Investor:

  	
  /s/ Samuel D. Isaly

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  Samuel D. Isaly

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Partner

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name of Investor:

  	
  ABINGWORTH BIOVENTURES V L.P.

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of
  Investor:

  	
  /s/ James Abell*

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  James Abell

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Partner

  	
   

  
						

 

* ABINGWORTH BIOVENTURES V L.P. ACTING BY ITS MANAGER ABINGWORTH L.L.P.

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name
  of Investor: 

  	
  ABINGWORTH
  BIOEQUITIES MASTER FUND LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Authorized Signatory of Investor: 

  	
  /s/
  James Abell

  	
   

  
	
   

  	
   

  	
   

  
	
  Name
  of Authorized Signatory: 

  	
  James
  Abell

  	
   

  
	
   

  	
   

  	
   

  
	
  Title
  of Authorized Signatory: 

  	
  Authorized
  Signatory

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name
  of Investor: 

  	
  Potomac
  Capital Partners, LP

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Authorized Signatory of Investor: 

  	
  /s/
  Paul J. Solit

  	
   

  
	
   

  	
   

  	
   

  
	
  Name
  of Authorized Signatory: 

  	
  Paul
  J. Solit

  	
   

  
	
   

  	
   

  	
   

  
	
  Title
  of Authorized Signatory: 

  	
  Managing
  Member of the General Partner

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name
  of Investor: 

  	
  Potomac
  Capital International, Ltd

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Authorized Signatory of Investor: 

  	
  /s/
  Paul J. Solit

  	
   

  
	
   

  	
   

  	
   

  
	
  Name
  of Authorized Signatory: 

  	
  Paul
  J. Solit

  	
   

  
	
   

  	
   

  	
   

  
	
  Title
  of Authorized Signatory: 

  	
  President
  of the Investment Manager

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name
  of Investor: 

  	
  Pleiades
  Investment Partners LP

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Authorized Signatory of Investor: 

  	
  /s/
  Paul J. Solit

  	
   

  
	
   

  	
   

  	
   

  
	
  Name
  of Authorized Signatory: 

  	
  Paul
  J. Solit

  	
   

  
	
   

  	
   

  	
   

  
	
  Title
  of Authorized Signatory: 

  	
  Authorized
  Signatory

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name
  of Investor: 

  	
  Medical
  Strategy GmbH, on behalf of PHARMA/wHEALTH

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Authorized Signatory of Investor: 

  	
  /s/
  Dr. Michael Fischer

  	
   

  
	
   

  	
   

  	
   

  
	
  Name
  of Authorized Signatory: 

  	
  Dr.
  Michael Fischer

  	
   

  
	
   

  	
   

  	
   

  
	
  Title
  of Authorized Signatory: 

  	
  CEO

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name
  of Investor: 

  	
  Oppenheim
  Asset Management Services S.à.r.l. (formerly Oppenheim

  	
   

  
	
   

  	
  Pramerica
  Asset Management S.à.r.l) on behalf of FCP OP MEDICAL

  	
   

  
	
   

  	
  BioHe@lth-Trends

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Authorized Signatory of Investor: 

  	
  /s/
  Andreas Jockel    /s/ Julia Brouckmann

  	
   

  
	
   

  	
   

  	
   

  
	
  Name
  of Authorized Signatory: 

  	
  Andreas
  Jockel  /  Julia Brouckmann

  	
   

  
	
   

  	
   

  	
   

  
	
  Title
  of Authorized Signatory: 

  	
  Managing
  Director / Senior Associate

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

	
  Name
  of Investor: 

  	
  ARLENE
  HOLDEN TRUST

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Authorized Signatory of Investor: 

  	
  /s/
  Charles W. Orr

  	
   

  
	
   

  	
   

  	
   

  
	
  Name
  of Authorized Signatory: 

  	
  Charles
  W. Orr

  	
   

  
	
   

  	
   

  	
   

  
	
  Title
  of Authorized Signatory: 

  	
  Trustee

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

4

 

EXHIBIT A

 

REGISTRATION
RIGHTS AGREEMENT

 

This Registration Rights
Agreement (this “Agreement”) is made and entered into as of March 8,
2007, by and among Neose Technologies, Inc., a Delaware corporation (the “Company”),
and the several purchasers signatory hereto (each such purchaser, a “Purchaser”
and collectively, the “Purchasers”).

 

This Agreement is made
pursuant to the Securities Purchase Agreement, dated as of the date hereof,
between the Company and each Purchaser (the “Purchase Agreement”).

 

The Company and each
Purchaser hereby agrees as follows:

 

1.             Definitions.
Capitalized terms used and not otherwise defined herein that are defined in the
Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:

 

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

 

“Effectiveness Date”
means, with respect to the Initial Registration Statement, July 15, 2007
and, with respect to any additional Registration Statements which may be
required pursuant to Section 3(c), the 60th calendar day following the
date on which the additional Registration Statement is required to be filed
hereunder; provided, however, that in the event the Company is
notified by the Commission that one of the above Registration Statements will
not be reviewed or is no longer subject to further review and comments, the
Effectiveness Date as to such Registration Statement shall be the fifth Trading
Day following the date on which the Company is so notified if such date
precedes the dates required above.

 

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

 

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

 

“Event Date” shall
have the meaning set forth in Section 2(b).

 

“Filing Date” means,
with respect to the Initial Registration Statement, May 15, 2007 and, with
respect to any additional Registration Statements which may be required
pursuant to Section 3(c), the earliest practicable date on which the Company
is permitted by SEC Guidance to file such additional Registration Statement
related to the Registrable Securities.

 

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

 

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

 

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

 

1

 

“Initial Registration
Statement” means the initial Registration Statement filed pursuant to this
Agreement.

 

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

 

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

 

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

 

“Registrable Securities”
means all of (i) the Shares, (ii) the Warrant Shares, (iii) any
additional shares issuable in connection with any anti-dilution provisions in
the Warrants (without giving effect to any limitations on exercise set forth in
the Warrant) and (iv) any shares of Common Stock issued or issuable upon
any stock split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing. Upon the sale, pursuant to a Registration
Statement declared effective by the SEC or an exemption from registration under
the Securities Act (such that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale), of any of
the securities described in clauses (i), (ii), (iii) and (iv) of the
preceding sentence, such securities shall no longer be Registrable Securities.

 

“Registration Statement”
means the registration statements required to be filed hereunder and any
additional registration statements contemplated by Section 3(c), including
(in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

 

“Rule 415” means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.

 

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

 

“Selling Stockholder
Questionnaire” shall have the meaning set forth in Section 3(a).

 

2

 

“SEC Guidance” means (i) any
publicly-available written guidance, or rule of general applicability of
the Commission staff, or (ii) written comments, requirements or requests
of the Commission staff to the Company in connection with the review of the
Registration Statements.

 

2.             Shelf
Registration.

 

(a)           On or prior to each Filing
Date, the Company shall prepare and file with the Commission a Registration
Statement covering the resale of all, or such portion as permitted by SEC
Guidance (provided that, the Company shall use commercially reasonable efforts
to advocate with the Commission for the registration of all or the maximum
number of the Registrable Securities as permitted by SEC Guidance), of the
Registrable Securities on such Filing Date that are not then registered on an
effective Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form S-3
(except if the Company fails to meet one or more of the Registrant Requirements
specified in General Instruction I.A. on Form S-3, such registration shall
be on another appropriate form in accordance herewith) and shall contain
(unless otherwise directed by Holders of at least 85% of the then outstanding
Registrable Securities) substantially the “Plan of Distribution”
attached hereto as Annex A. Subject to the terms of this Agreement, the
Company shall use commercially reasonable efforts to cause a Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event on or prior to the
applicable Effectiveness Date, and shall use commercially reasonable efforts to
keep such Registration Statement continuously effective under the Securities
Act until all Registrable Securities covered by such Registration Statement
have been sold, or may be sold without volume restrictions pursuant to Rule 144(k),
as determined by the counsel to the Company pursuant to a written opinion
letter to such effect, addressed and acceptable to the Company’s transfer agent
and the affected Holders (the “Effectiveness Period”). The Company shall
telephonically request effectiveness of a Registration Statement as of 5:00 p.m.
New York City time on a Trading Day. The Company shall immediately notify the
Holders via facsimile or by e-mail delivery of a “.pdf” format data file of the
effectiveness of a Registration Statement on the same Trading Day that the
Company telephonically confirms effectiveness with the Commission, which shall
be the date requested for effectiveness of a Registration Statement. The
Company shall, by 9:30 a.m. New York City time on the Trading Day after
the Effective Date, file a final Prospectus with the Commission as required by Rule 424.
Failure to so notify the Holder within 1 Trading Day of such notification of
effectiveness or failure to file a final Prospectus as foresaid shall be deemed
an Event under Section 2(b). Notwithstanding any other provision of this
Agreement and subject to the payment of liquidated damages in Section 2(b),
if any SEC Guidance sets forth a limitation of the number of Registrable
Securities to be registered on a particular Registration Statement (and
notwithstanding that the Company used commercially reasonable efforts to
advocate with the Commission for the registration of all or a greater number of
Registrable Securities), unless otherwise directed in writing by a Holder as to
its Registrable Securities, the number of Registrable Securities to be
registered on such Registration Statement will first be reduced by Registrable
Securities represented by Warrant Shares (applied, in the case that some
Warrant Shares may be registered, to the 

 

3

 

Holders on a pro rata basis based on the total
number of unregistered Warrant Shares held by such Holders on a fully diluted
basis), and second by Registrable Securities represented by Shares (applied, in
the case that some Shares may be registered, to the Holders on a pro rata basis
based on the total number of unregistered Shares held by such Holders).

 

(b)           If: (i) the Initial Registration
Statement and any other Registration Statement is not filed on or prior to its
Filing Date (if the Company files the Initial Registration Statement or any
other Registration Statement without affording the Holders the opportunity to
review and comment on the same as required by Section 3(a) herein,
the Company shall be deemed to have not satisfied this clause (i)), or (ii) the
Company fails to file with the Commission a request for acceleration in
accordance with Rule 461 promulgated under the Securities Act, within 5
Trading Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that the Initial Registration Statement
or any other Registration Statement will not be “reviewed” or not be subject to
further review, or (iii) prior to the Effectiveness Date of the Initial
Registration Statement or any other Registration Statement, the Company fails
to file a pre-effective amendment and otherwise respond in writing to comments
made by the Commission in respect of such Initial Registration Statement or any
other Registration Statement within 10 calendar days after the receipt of
comments by or notice from the Commission that such amendment is required in
order for such Initial Registration Statement or any other Registration
Statement to be declared effective, or (iv) subject to the tolling
provisions contained herein, as to, in the aggregate among all Holders on a
pro-rata basis based on their purchase of the Shares pursuant to the Purchase
Agreement, the lesser of (A) all of the Registrable Securities
constituting the Shares and (B) the maximum number of Shares permitted by
SEC Guidance (collectively, the “Initial Shares”), a Registration Statement
registering for resale all of the Initial Shares is not declared effective by
the Commission by the Effectiveness Date of the Initial Registration Statement,
or (v) subject to the tolling provisions contained herein, all of the
Registrable Securities constituting the Shares other than the Initial Shares
are not registered for resale pursuant to one or more effective Registration
Statements on or before March 31, 2008, or (vi) after the
Effectiveness Date of the Initial Registration Statement or any other
Registration Statement, such Initial Registration Statement or other
Registration Statement ceases for any reason to remain continuously effective
as to all Registrable Securities included in such Initial Registration
Statement or other Registration Statement, as applicable, or the Holders are
otherwise not permitted to utilize the Prospectus therein to resell such
Registrable Securities, for more than 10 consecutive calendar days or more than
an aggregate of 15 calendar days during any 12-month period (which need not be
consecutive calendar days) (any such failure or breach being referred to as an “Event”,
and for purposes of clause (i), (iv) or (v) the date on which such
Event occurs, or for purposes of clause (ii) the date on which such 5
Trading Day period is exceeded, or for purposes of clause (iii) the date
which such 10 calendar day period is exceeded, or for purposes of clause (vi) the
date on which such 10 or 15 calendar day period, as applicable, is exceeded
being referred to as “Event Date”), then, in addition to any other
rights the Holders may have hereunder or under applicable law, on each such
Event Date and on each monthly anniversary of each such Event Date (if the
applicable Event shall 

 

4

 

not have been cured by such date) until the applicable Event is cured,
the Company shall pay to each Holder an amount in cash, as partial liquidated
damages and not as a penalty, equal to 1% of the aggregate purchase price paid
by such Holder pursuant to the Purchase Agreement for any Registrable
Securities then held by such Holder (as applicable under clauses (iv) and
(v)). The parties agree that the maximum aggregate liquidated damages payable
to a Holder under this Agreement shall be twenty four percent (24%) of the
aggregate Subscription Amount paid by such Holder pursuant to the Purchase
Agreement. If the Company fails to pay any partial liquidated damages pursuant
to this Section in full within seven days after the date payable, the
Company will pay interest thereon at a rate of 18% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law) to the Holder,
accruing daily from the date such partial liquidated damages are due until such
amounts, plus all such interest thereon, are paid in full. The partial
liquidated damages pursuant to the terms hereof shall apply on a daily pro-rata
basis for any portion of a month prior to the cure of an Event.

 

3.             Registration
Procedures

 

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

 

(a)           Not less than five Trading Days prior to the
filing of each Registration Statement and not less than 1 Trading Day prior to
the filing of any related Prospectus or any amendment or supplement thereto,
the Company shall, (i) furnish to each Holder copies of all such documents
proposed to be filed, which documents (other than those incorporated or deemed
to be incorporated by reference) will be subject to the review of such Holders,
and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of respective counsel to each Holder, to
conduct a reasonable investigation within the meaning of the Securities Act.
The Company shall not file a Registration Statement or any such Prospectus or
any amendments or supplements thereto to which the Holders of 67% of the
Registrable Securities shall reasonably object in good faith, provided that the
Company is notified of such objection in writing no later than 5 Trading Days
after the Holders have been so furnished copies of a Registration Statement or
1 Trading Day after the Holders have been so furnished copies of any related Prospectus
or amendments or supplements thereto. Each Holder agrees to furnish to the
Company a completed questionnaire in the form attached to this Agreement as
Annex B (a “Selling Stockholder Questionnaire”) not less than 2 Trading
Days prior to the Filing Date or by the end of the 4th Trading Day following
the date on which such Holder receives draft materials in accordance with this
Section. During any periods that the Company is unable to meet its obligations
hereunder with respect to the registration of the Registrable Securities
because the Holders of 67% of the Registrable Securities exercise their rights
under this section to object to the filing of a Registration Statement, any
liquidated damages that are accruing, at such time shall be tolled and any
Event that may otherwise occur because of the exercise of such rights or such
delay shall be suspended, until the Holders of 67% of the Registrable
Securities no longer object to the filing of such Registration Statement
(provided that such tolling shall only occur if the Company uses commercially
reasonable efforts to resolve such objection). If any Holder fails to furnish 

 

5

 

its Selling Stockholder Questionnaire related to a particular
Registration Statement not less than 2 Trading Days prior to the Filing Date or
by the end of the 4th Trading Day
following the date on which such Holder receives draft materials in accordance
with this Section any liquidated damages that are accruing, as well as any
other rights of such Holder under this Agreement with regard to such
Registration Statement, including without limitation, the right to include such
Holder’s Registrable Securities in such Registration Statement, shall be tolled
as to such Holder until such information is received by the Company; provided,
however, that the Company shall use commercially reasonable efforts to
include such Registrable Securities in such Registration Statement or the next
most available Registration Statement as soon as possible after such
information is furnished to the Company.

 

(b)           (i) Prepare and file with the
Commission such amendments, including post-effective amendments, to a
Registration Statement and the Prospectus used in connection therewith as may
be necessary to keep a Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement (subject to the terms of this Agreement), and as
so supplemented or amended to be filed pursuant to Rule 424; (iii) respond
as promptly as reasonably possible to any comments received from the Commission
with respect to a Registration Statement or any amendment thereto and provide
as promptly as reasonably possible to the Holders true and complete copies of
all correspondence from and to the Commission relating to a Registration
Statement (provided that the Company may excise any information contained
therein which would constitute material non-public information as to any Holder
which has not executed a confidentiality agreement with the Company); and (iv) comply
in all material respects with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all Registrable Securities
covered by a Registration Statement during the applicable period in accordance
(subject to the terms of this Agreement) with the intended methods of
disposition by the Holders thereof set forth in such Registration Statement as
so amended or in such Prospectus as so supplemented.

 

(c)           If during the Effectiveness Period, subject
to Section 2(a), the number of Registrable Securities at any time exceeds
100% of the number of shares of Common Stock then registered in a Registration
Statement, then the Company shall file as soon as reasonably practicable an
additional Registration Statement covering the resale by the Holders of not
less than the number of such Registrable Securities.

 

(d)           Notify the Holders of Registrable Securities
to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof,
be accompanied by an instruction to suspend the use of the Prospectus until the
requisite changes have been made) as promptly as reasonably possible (and, in
the case of (i)(A) below, not less than 1 Trading Day prior to such
filing) and (if requested by any such Person) confirm such notice in writing no
later than one Trading Day following the day (i)(A) when a Prospectus or
any Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed; (B) when the Commission notifies the
Company whether there will be a “review” 

 

6

 

of such Registration Statement and whenever the Commission comments in
writing on such Registration Statement; and (C) with respect to a
Registration Statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information; (iii) of
the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation
of any Proceedings for that purpose; (iv) of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; (v) of the occurrence of any event or passage of time that makes
the financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in a Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to a Registration
Statement, Prospectus or other documents so that, in the case of a Registration
Statement or the Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and (vi) the
occurrence or existence of any pending corporate development with respect to
the Company that the Company believes may be material and that, in the
determination of the Company, makes it not in the best interest of the Company
to allow continued availability of a Registration Statement or Prospectus,
provided that any and all of such information shall remain confidential to each
Holder until such information otherwise becomes public, unless disclosure by a
Holder is required by law; provided, further, that
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.

 

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

 

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

 

(g)           Subject to the terms of this Agreement, the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto, except after the giving of any notice
pursuant to Section 3(d).

 

7

 

(h)           The Company shall effect a filing with
respect to the public offering contemplated by the Registration Statement (an “Issuer
Filing”) with the National Association of Securities Dealers, Inc. (“NASD”)
Corporate Financing Department pursuant to NASD Rule 2710(b)(10)(A)(i) within
1 Trading Day of the date that the Registration Statement is first filed with
the Commission and pay the filing fee required by such Issuer Filing. The
Company shall use commercially reasonable efforts to pursue the Issuer Filing
until the NASD issues a letter confirming that it does not object to the terms
of the offering contemplated by the Registration Statement. A copy of the
Issuer Filing and all related correspondence with respect thereto shall be
provided to FWS.

 

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

 

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

 

(k)           Upon the occurrence of any event
contemplated by this Section 3, as promptly as reasonably possible under
the circumstances taking into account the Company’s good faith assessment of
any adverse consequences to the Company and its stockholders of the premature
disclosure of such event, prepare a supplement or amendment, including a
post-effective amendment, to a Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as thereafter
delivered, neither a Registration Statement nor such Prospectus will contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If the Company
notifies the Holders in accordance with clauses (iii) through (vi) of
Section 3(d) above to suspend the use of any Prospectus until the
requisite changes to such Prospectus have been made, then the Holders shall
suspend use of such Prospectus. The Company will use its best efforts to ensure
that the use of the Prospectus may be resumed as promptly as is practicable. The
Company shall be entitled to exercise its right under this Section 3(k) to
suspend the 

 

8

 

availability of a Registration Statement and Prospectus, subject to the
payment of partial liquidated damages pursuant to Section 2(b), for a
period not to exceed 60 calendar days (which need not be consecutive days) in
any 12 month period.

 

(l)            Comply with all applicable rules and
regulations of the Commission.

 

(m)          The Company may require each selling Holder
to furnish to the Company a certified statement as to the number of shares of
Common Stock beneficially owned by such Holder and, if required by the
Commission, the natural persons thereof that have voting and dispositive
control over the Shares. During any periods that the Company is unable to meet
its obligations hereunder with respect to the registration of the Registrable
Securities solely because any Holder fails to furnish such information within 3
Trading Days of the Company’s request, any liquidated damages that are accruing
at such time as to such Holder only, as well as any other rights of such Holder
under this Agreement, including without limitation, the right to include such
Holder’s Registrable Securities in a Registration Statement shall be tolled and
any Event that may otherwise occur solely because of such delay shall be suspended
as to such Holder only, until such information is delivered to the Company; provided,
however, that the Company shall use commercially reasonable efforts to
include such Registrable Securities in such Registration Statement or the next
most available Registration Statement as soon as possible after such
information is furnished to the Company.

 

4.             Registration
Expenses. All fees and expenses incident
to the performance of or compliance with this Agreement by the Company shall be
borne by the Company whether or not any Registrable Securities are sold
pursuant to a Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration
and filing fees (including, without limitation, fees and expenses) (A) with
respect to filings required to be made with any Trading Market on which the
Common Stock is then listed for trading, (B) in compliance with applicable
state securities or Blue Sky laws reasonably agreed to by the Company in
writing (including, without limitation, fees and disbursements of counsel for
the Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities) and (C) if not previously paid by the Company in
connection with an Issuer Filing, with respect to any filing that may be
required to be made by any broker through which a Holder intends to make sales
of Registrable Securities with NASD Regulation, Inc. pursuant to the NASD Rule 2710,
so long as the broker is receiving no more than a customary brokerage
commission in connection with such sale, (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities, (iii) messenger, telephone and delivery expenses, (iv) fees
and disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. In addition,
the Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for 

 

9

 

any broker or similar commissions of any Holder or, except
to the extent provided for in the Transaction Documents, any legal fees or
other costs of the Holders.

 

5.             Indemnification.

 

(a)           Indemnification by the Company. The
Company shall, notwithstanding any termination of this Agreement, indemnify and
hold harmless each Holder, the officers, directors, members, partners, agents,
brokers (including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a margin call
of Common Stock), investment advisors and employees (and any other Persons with
a functionally equivalent role of a Person holding such titles, notwithstanding
a lack of such title or any other title) of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers,
directors, members, stockholders, partners, agents and employees (and any other
Persons with a functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title)of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”),
as incurred, arising out of or relating to (1) any untrue or alleged
untrue statement of a material fact contained in a Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, or (2) any violation or alleged violation
by the Company of the Securities Act, Exchange Act or any state securities law,
or any rule or regulation thereunder, in connection with the performance
of its obligations under this Agreement, except to the extent, but only to the
extent, that (i) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such information
relates to such Holder or such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in a Registration Statement, such Prospectus or
such form of Prospectus or in any amendment or supplement thereto (it being
understood that each Holder has approved Annex A hereto for this
purpose) or (ii) in the case of an occurrence of an event of the type
specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated
or defective Prospectus after the Company has notified such Holder in writing
that the Prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 6(d). The Company shall
notify the Holders promptly of the institution, threat or assertion of any
Proceeding arising from or in connection with the transactions contemplated by
this Agreement of which the Company is aware.

 

(b)           Indemnification by Holders. Each
Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who
controls the Company (within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act), and the directors, officers,
agents or

 

10

 

employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the extent
arising out of or based solely upon: (x) such Holder’s failure to comply
with the prospectus delivery requirements of the Securities Act or (y) any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading (i) to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing
by such Holder to the Company specifically for inclusion in such Registration
Statement or such Prospectus or (ii) to the extent that such information
relates to such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement (it being understood that each
Holder has approved Annex A hereto for this purpose), such Prospectus or
such form of Prospectus or in any amendment or supplement thereto or (iii) in
the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi),
the use by such Holder of an outdated or defective Prospectus after the Company
has notified such Holder in writing that the Prospectus is outdated or  defective and prior to the receipt by such
Holder of the Advice contemplated in Section 6(d). In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.

 

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

 

An Indemnified Party shall
have the right to employ separate counsel in any such Proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties unless:  (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (2) the Indemnifying Party shall
have failed promptly to assume the defense of such Proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and counsel to the Indemnified Party shall reasonably believe that a
material conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the 

 

11

 

Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable fees and expenses of no more than one separate counsel shall be
at the expense of the Indemnifying Party). The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld or delayed. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

 

Subject to the terms of this
Agreement, all reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party, provided that the Indemnified Party shall promptly reimburse the
Indemnifying Party for that portion of such fees and expenses applicable to
such actions for which such Indemnified Party is judicially determined to be
not entitled to indemnification hereunder.

 

(d)           Contribution. If the indemnification
under Section 5(a) or 5(b) is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses,
then each Indemnifying Party shall contribute to the amount paid or payable by
such Indemnified Party, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the limitations set
forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred
by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party in accordance with its
terms.

 

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

 

12

 

alleged untrue statement or
omission or alleged omission, except in the case of fraud by such Holder.

 

The indemnity and
contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

 

6.             Miscellaneous.

 

(a)           Remedies. In the event of a breach by
the Company or by a Holder of any of their respective obligations under this
Agreement, each Holder or the Company, as the case may be, in addition to being
entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, shall be entitled to specific performance of its
rights under this Agreement. The Company and each Holder agree that monetary
damages would not provide adequate compensation for any losses incurred by reason
of a breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, it shall not assert or shall waive the defense that a remedy at
law would be adequate.

 

(b)           No Piggyback on Registrations. Except
as set forth on Schedule 6(b) attached hereto, neither the Company
nor any of its security holders (other than the Holders in such capacity
pursuant hereto) may include securities of the Company in the Registration
Statement(s) other than the Registrable Securities. The Company shall not
file any other registration statements (other than on Form S-4 or Form S-8)
until the Initial Registration Statement required hereunder is declared
effective by the Commission, provided that this Section 6(b) shall
not prohibit the Company from filing amendments to registration statements
filed prior to the date of this Agreement.

 

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

 

(d)           Discontinued Disposition. By its
acquisition of Registrable Securities, each Holder agrees that, upon receipt of
a notice from the Company of the occurrence of any event of the kind described
in Section 3(d), such Holder will forthwith discontinue disposition of
such Registrable Securities under a Registration Statement until it is advised
in writing (the “Advice”) by the Company that the use of the applicable
Prospectus (as it may have been supplemented or amended) may be resumed. The
Company will use its best efforts to ensure that the use of the Prospectus may
be resumed as promptly as it practicable. The Company agrees and acknowledges
that any periods during which the Holder is required to discontinue the
disposition of the Registrable Securities hereunder shall be subject to the
provisions of Section 2(b).

 

(e)           Piggy-Back Registrations. Subject to
the permissibility of registering additional Registrable Securities pursuant to
SEC Guidance, if at any time during the Effectiveness Period there is not an
effective Registration Statement covering all of the Registrable Securities and
the Company shall determine to prepare and file with the 

 

13

 

Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated
under the Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with the stock option
or other employee benefit plans, then the Company shall send to each Holder a
written notice of such determination and, if within 15 calendar days after the
date of such notice, any such Holder shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided, however,
that, the Company shall not be required to register any Registrable Securities
pursuant to this Section 6(e) that are eligible for resale pursuant
to Rule 144(k) promulgated under the Securities Act or that are the
subject of a then effective Registration Statement.

 

(f)            Amendments and Waivers. The
provisions of this Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and the Holders of at least 67% of the then
outstanding Registrable Securities. If a Registration Statement does not
register all of the Registrable Securities pursuant to a waiver or amendment
done in compliance with the previous sentence, then the number of Registrable
Securities to be registered for each Holder shall be reduced pro  rata
among all Holders and each Holder shall have the right to designate which of
its Registrable Securities shall be omitted from such Registration Statement.
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders and that does not directly or indirectly affect the rights of
other Holders may be given by Holders of all of the Registrable Securities to
which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence.

 

(g)           Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be delivered as set forth in the Purchase
Agreement.

 

(h)           Successors and Assigns. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties and shall inure to the benefit of each
Holder. The Company may not assign its rights (except by merger) or obligations
hereunder without the prior written consent of Holders holding at least 67% of
the then outstanding Registrable Securities. Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.

 

(i)            No Inconsistent Agreements. Neither
the Company nor any of its Subsidiaries has entered, as of the date hereof, nor
shall the Company or any of its Subsidiaries, on or after the date of this
Agreement, enter into any agreement with respect to its securities, that would
have the effect of impairing the rights granted to the Holders 

 

14

 

in this Agreement or otherwise conflicts with the provisions hereof. Except
as set forth on Schedule 6(i), neither the Company nor any of its
subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person that
have not been satisfied in full.

 

(j)            Execution and Counterparts. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.

 

(k)           Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be determined in accordance with the provisions of the Purchase
Agreement.

 

(l)            Cumulative Remedies. The remedies
provided herein are cumulative and not exclusive of any other remedies provided
by law.

 

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

 

(n)           Headings. The headings in this
Agreement are for convenience only, do not constitute a part of this Agreement,
and shall not be deemed to limit or affect any of the provisions hereof.

 

(o)           Independent Nature of Holders’
Obligations and Rights. The obligations of each Holder hereunder are
several and not joint with the obligations of any other Holder hereunder, and
no Holder shall be responsible in any way for the performance of the
obligations of any other Holder hereunder. Nothing contained herein or in any
other agreement or document delivered at any closing, and no action taken by
any Holder pursuant hereto or thereto, shall be deemed to constitute the
Holders as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Holders are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Holder shall be entitled to protect and enforce its
rights, including without limitation the rights arising out of this 

 

15

 

Agreement, and it shall not be necessary for any other Holder to be
joined as an additional party in any proceeding for such purpose.

 

(p)           With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, so long as the Holders still own Registrable Securities, the
Company shall use its reasonable best efforts to: (i) make and keep public
information available, as those terms are understood and defined in Rule 144
under the Securities Act, at all times; (ii) file with the SEC in a timely
manner all reports and other documents required of the Company under the
Exchange Act; and (iii) so long as a Holder owns any Registrable Securities,
furnish to such Holder, upon any reasonable request, a written statement by the
Company as to its compliance with Rule 144 under the Securities Act a copy
of the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company as such Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing a Holder to
sell any such securities without registration.

 

16

 

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

 

	
   

  	
  NEOSE TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ George
  J. Vergis

  
	
   

  	
   

  	
  Name: George J. Vergis, Ph.D.

  
	
   

  	
   

  	
  Title:
  President and CEO

  

 

 

[SIGNATURE PAGE OF HOLDERS
FOLLOWS]

 

 

[SIGNATURE PAGE OF HOLDERS TO
NTEC RRA]

 

	
  Name of Holder:

  	
  MHR Capital Partners (100) LP

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Hal Goldstein

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  MHR Advisors LLC, by Hal Goldstein

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Principal

  	
   

  
							

 

 

[SIGNATURE PAGES CONTINUE]

 

 

[SIGNATURE PAGE OF HOLDERS TO
NTEC RRA]

 

	
  Name of Holder:

  	
  MHR Capital Partners Master Account LP

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Hal Goldstein

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  MHR Advisors LLC, by Hal Goldstein

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Principal

  	
   

  
							

 

 

[SIGNATURE PAGES CONTINUE]

 

 

[SIGNATURE PAGE OF HOLDERS TO
NTEC RRA]

 

	
  Name of Holder:

  	
  Domain Partners V, L.P.*

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Kathleen K. Schoemaker*

  	
   

  
	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
  Kathleen K. Schoemaker

  	
   

  
	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Member

  	
   

  
							

 

* By One Palmer Square Associates V, LLC

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  DP V Associates, L.P.*

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Kathleen K. Schoemaker*

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Kathleen K. Schoemaker

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Member

  	
   

  
						

 

* By One Palmer Square Associates V, LLC

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  BB BIOTECH VENTURES II LP

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Ben Morgan

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Ben Morgan

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  Director of its General Partner

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  Visium Balanced Fund, LP

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Mark
  Gottlieb

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Mark
  Gottlieb

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  CCO

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  Visium Balanced Offshore Fund, LTD.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Mark Gottlieb

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Mark Gottlieb

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  CCO

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  Visium Long Bias Fund, LP

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Mark Gottlieb

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Mark Gottlieb

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  CCO

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  Visium Long Bias Offshore Fund, LTD

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Mark Gottlieb

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Mark Gottlieb

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  CCO

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  Atlas Master Fund, LTD

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Scott Schroeder

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Scott Schroeder

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  Authorized Signatory

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  Tang Capital Partners, LP

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Kevin C. Tang

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Kevin C. Tang

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Director

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  HFR SHC Aggressive Master Trust

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Dora Hines

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Dora Hines

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  Attorney-in-fact*

  	
   

  
						

 

* For and on behalf of HFR Asset Management,
LLC as attorney in fact.

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  Caduceus Capital Master Fund Limited

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Samuel D. Isaly

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Samuel D. Isaly

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Member, Orbimed Advisors LLC

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  Caduceus Capital II, L.P.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Samuel D. Isaly

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Samuel D. Isaly

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Member, Orbimed Advisors LLC

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  UBS Eucalyptus Fund, LLC

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Samuel D. Isaly

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Samuel D. Isaly

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Member, Orbimed Advisors LLC

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  PW Eucalyptus Fund, Ltd.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Samuel D. Isaly

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Samuel D. Isaly

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  Managing Member, Orbimed Advisors LLC

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  ABINGWORTH BIOVENTURES V L.P.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ James Abell*

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  James Abell

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  Member

  	
   

  
						

 

*on behalf of ABINGWORTH L.L.P. in its capacity as Manager of
ABINGWORTH BIOVENTURES V L.P.

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  ABINGWORTH BIOEQUITIES MASTER FUND LTD.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ James Abell

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  James Abell

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  Authorized Signatory

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  Baker/Tisch Investments, L.P.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Julian Baker

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Julian Baker

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  *

  	
   

  
						

 

* Julian Baker is the Managing Member of Baker/Tisch Capital (GP), LLC,
which is the General Partner of Baker/Tisch Capital, L.P., which is the General
Partner of Baker/Tisch Investments, L.P.

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  Baker Bros. Investments II, L.P.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Julian Baker

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Julian Baker

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  *

  	
   

  
						

 

 

* Julian Baker is the Managing Member of Baker Bros. Capital (GP), LLC,
which is the General Partner of Baker Bros. Capital, L.P., which is the General
Partner of Baker Bros. Investments II, L.P.

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  Baker Biotech Fund I, L.P.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Julian Baker

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Julian Baker

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  *

  	
   

  
						

 

* Julian Baker is the Managing Member of Baker Biotech Capital (GP),
LLC, which is the General Partner of Baker Biotech Capital, L.P., which is the
General Partner of Baker Biotech Fund I, L.P.

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  Baker Brothers Life Sciences, L.P.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Julian Baker

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Julian Baker

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  *

  	
   

  
						

 

* Julian Baker is the Managing Member of Baker Brothers Life Sciences
Capital (GP), LLC, which is the General Partner of Baker Brothers Life Sciences
Capital, L.P., which is the General Partner of Baker Brothers Life Sciences,
L.P.

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  14159, L.P.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Julian Baker

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
  Julian Baker

  	
   

  
	
   

  
	
  Title of Authorized Signatory:

  	
  *

  	
   

  
						

 

* Julian Baker is the Managing Member of 14159 Capital (GP), LLC, which
is the General Partner of 14159 Capital, L.P., which is the General Partner of
14159, L.P.

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  MPM BioEquities Investors Fund LLC

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder: 

  	
  /s/ Kurt von Emster

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Kurt von Emster

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  Member

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  MPM BioEquities Master Fund LP

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder: 

  	
  /s/ Kurt von Emster*

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Kurt von Emster

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  Manager

  	
   

  
						

 

*
As Manager of MPM BioEquities GP, LLC, which is the General Partner of MPM
BioEquities GP, L.P. which is the General Partner of MPM BioEquities Master
Fund LP.

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  Potomac Capital Partners LP

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Kenneth Berkow

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Kenneth Berkow

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  CFO

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  Potomac Capital International Ltd

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder: 

  	
  /s/ Kenneth Berkow

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Kenneth Berkow

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  CFO

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  Pleiades Investment Partners LP

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder: 

  	
  /s/ Kenneth Berkow

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Kenneth Berkow

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  CFO

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder: 

  	
  Medical Strategy GmbH,

  	
   

  
	
   

  	
  on behalf of PHAMA/wHEALTH

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder: 

  	
  /s/ Dr. Michael Fischer

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Dr. Michael Fischer

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  CEO

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder: 

  	
  Oppenheim Pramerica Asset Management S.à.r.l.*

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder: 

  	
  /s/ Max von Frantzius        /s/
  Johann Will

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Max von
  Frantzius        Johann Will

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  Vice
  President                 Senior
  Associate

  	
   

  
						

 

*
On behalf of FCP OP MEDICAL BioHe@lth-Trends

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder: 

  	
  Cranshire Capital, L.P.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder: 

  	
  /s/ Mitchell P. Kopin

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mitchell P. Kopin

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  President – Downsview Capital The General Partner

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder: 

  	
  Otaga Partners, LLC

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder: 

  	
  /s/ Lindsay A. Rosenwald, MD

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Lindsay A. Rosenwald, MD

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  Managing Member

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder: 

  	
  Aries Domestic Fund, LP

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder: 

  	
  /s/ Lindsay A. Rosenwald, MD

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Lindsay A. Rosenwald, MD

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  Chairman, Paramount Biocapital Asset Management Inc.*

  	
   

  
						

 

*
General Partner of Aries Domestic Fund, LP.

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  Aries Domestic Fund II, LP

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Lindsay A. Rosenwald, MD

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Lindsay A. Rosenwald, MD

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  Chairman, Paramount Biocapital Asset
  Management Inc.*

  	
   

  
						

 

	
  * General Partner of Aries Domestic Fund
  II, LP.

  

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  The Aries Master Fund II

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Lindsay A. Rosenwald, MD

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Lindsay A. Rosenwald, MD

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  Chairman, Paramount Biocapital Asset
  Management Inc.*

  	
   

  
						

 

	
  * Investment Manager,  The Aries Master Fund II

  

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  ARLENE HOLDEN TRUST

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Mathew Arens

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mathew Arens

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  EVP, Senior Portfolio Manager

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

	
  Name of Holder:

  	
  DOUGLAS SHARPE CRUT

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Mathew Arens

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mathew Arens

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  EVP, Senior Portfolio Manager

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  DOUGLAS SHARPE TRUST

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Mathew Arens

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mathew Arens

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  EVP, Senior Portfolio Manager

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  SHARPE FAMILY FOUNDATION

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Mathew Arens

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mathew Arens

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  EVP, Senior Portfolio Manager

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  HENRY SHARPE

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Mathew Arens

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mathew Arens

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  EVP, Senior Portfolio Manager

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  HENRY SHARPE CRUT

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Mathew Arens

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mathew Arens

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  EVP, Senior Portfolio Manager

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  HENRY SHARPE TRUST

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Mathew Arens

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mathew Arens

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  EVP, Senior Portfolio Manager

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  SHARPE 1990 GRANDCHILDRENS TRUST

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Mathew Arens

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mathew Arens

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  EVP, Senior Portfolio Manager

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  PEGGY SHARPE TRUST

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Mathew Arens

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mathew Arens

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  EVP, Senior Portfolio Manager

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  SARAH SHARPE CRUT

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Mathew Arens

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mathew Arens

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  EVP, Senior Portfolio Manager

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  SARAH SHARPE TRUST

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:

  	
  /s/ Mathew Arens

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mathew Arens

  	
   

  
	
   

  
	
  Title of Authorized Signatory: EVP, 

  	
  Senior Portfolio Manager

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  MATTHEWS INTL. CORP. EMPLOYEES RETIREMENT
  PLAN

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Mathew Arens

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Mathew Arens

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  EVP, Senior Portfolio Manager

  	
   

  
						

 

 

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[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  Iroquois Master Fund Ltd.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Joshua Silverman

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Joshua Silverman

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  Authorized Signator

  	
   

  
						

 

 

[SIGNATURE PAGES CONTINUE]

 

 

[SIGNATURE PAGE OF HOLDERS TO NTEC RRA]

 

 

	
  Name of Holder:

  	
  Bristol Investment Fund, Ltd.

  	
   

  
	
   

  
	
  Signature of Authorized Signatory of Holder:
  

  	
  /s/ Paul Kessler

  	
   

  
	
   

  
	
  Name of Authorized Signatory: 

  	
  Paul Kessler

  	
   

  
	
   

  
	
  Title of Authorized Signatory: 

  	
  Director

  	
   

  
						

 

 

[SIGNATURE PAGES CONTINUE]

 

 

ANNEX A

 

Plan of
Distribution

 

Each selling stockholder (the “Selling
Stockholders”) of the common stock and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on the NASDAQ Global Market or any other stock exchange, market
or trading facility on which the shares are traded or in private
transactions.  These sales may be at
fixed or negotiated prices.  A Selling
Stockholder may use any one or more of the following methods when selling
shares:

 

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

 

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

 

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

 

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

 

·                  privately
negotiated transactions;

 

·                  settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a part;

 

·                  broker-dealers
may agree with the Selling Stockholders to sell a specified number of such
shares at a stipulated price per share;

 

·                  through
the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;

 

·                  a
combination of any such methods of sale; or

 

·                  any
other method permitted pursuant to applicable law.

 

The Selling Stockholders may also sell shares
under Rule 144 under the Securities Act of 1933, as amended (the “Securities
Act”), if available, rather than under this prospectus.

 

Broker-dealers engaged by the Selling
Stockholders may arrange for other brokers-dealers to participate in
sales.  Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated, but, except as set forth in a supplement to this
prospectus, in the case of an agency transaction not in excess of a customary
brokerage commission in compliance with NASDR Rule 2440; and in the case
of a principal transaction a markup or markdown in compliance with NASDR
IM-2440.

 

 

In connection with the sale of the common
stock or interests therein, the Selling Stockholders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of the Common Stock in the course of hedging the
positions they assume.  The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities.  The Selling Stockholders may also enter into
option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).

 

The Selling Stockholders and any broker-dealers
or agents that are involved in selling the shares may be deemed to be “underwriters”
within the meaning of the Securities Act in connection with such sales.  In such event, any commissions received by
such broker-dealers or agents and any profit on the resale of the shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.  Each Selling
Stockholder has informed the Company that it does not have any written or oral
agreement or understanding, directly or indirectly, with any person to
distribute the Common Stock. In no event shall any broker-dealer receive fees,
commissions and markups which, in the aggregate, would exceed eight percent
(8%).

 

The Company is required to pay certain fees
and expenses incurred by the Company incident to the registration of the
shares.  The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

 

Because Selling Stockholders may be deemed to
be “underwriters” within the meaning of the Securities Act, they will be
subject to the prospectus delivery requirements of the Securities Act including
Rule 172 thereunder.  In addition,
any securities covered by this prospectus which qualify for sale pursuant to Rule 144
under the Securities Act may be sold under Rule 144 rather than under this
prospectus.  There is no underwriter or
coordinating broker acting in connection with the proposed sale of the resale
shares by the Selling Stockholders.

 

We agreed to keep this prospectus effective
until the earlier of (i) the date on which the shares may be resold by the
Selling Stockholders without registration and without regard to any volume
limitations by reason of Rule 144(k) under the Securities Act or any
other rule of similar effect or (ii) all of the shares have been sold
pursuant to this prospectus or Rule 144 under the Securities Act or any
other rule of similar effect.  The
resale shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states, the resale shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied
with.

 

Under applicable rules and regulations
under the Exchange Act, any person engaged in the distribution of the resale
shares may not simultaneously engage in market making activities with respect
to the common stock for the applicable restricted period, as defined in
Regulation

 

 

M, prior to the commencement
of the distribution.  In addition, the
Selling Stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including Regulation M,
which may limit the timing of purchases and sales of shares of the common stock
by the Selling Stockholders or any other person.  We will make copies of this prospectus
available to the Selling Stockholders and have informed them of the need to
deliver a copy of this prospectus to each purchaser at or prior to the time of
the sale (including by compliance with Rule 172 under the Securities Act).

 

 

Annex B

 

NEOSE TECHNOLOGIES,
INC.

 

Selling Securityholder
Notice and Questionnaire

 

The undersigned beneficial
owner of common stock (the “Registrable Securities”) of Neose
Technologies, Inc., a Delaware corporation (the “Company”),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”) a registration statement (the
“Registration Statement”) for the registration and resale under Rule 415
of the Securities Act of 1933, as amended (the “Securities Act”), of the
Registrable Securities, in accordance with the terms of the Registration Rights
Agreement (the “Registration Rights Agreement”) to which this document
is annexed.  A copy of the Registration
Rights Agreement is available from the Company upon request at the address set
forth below.  All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Registration Rights Agreement.

 

Certain legal consequences
arise from being named as a selling securityholder in the Registration
Statement and the related prospectus. 
Accordingly, holders and beneficial owners of Registrable Securities are
advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling securityholder in the
Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial
owner (the “Selling Securityholder”) of Registrable Securities hereby
elects to include the Registrable Securities owned by it in the Registration
Statement.

 

 

The undersigned hereby provides the following
information to the Company and represents and warrants that such information is
accurate:

 

QUESTIONNAIRE

 

1.                                      Name.

 

                                                (a)           Full Legal Name
of Selling Securityholder

 

 

                                                (b)           Full Legal Name
of Registered Holder (if not the same as (a) above) through which
Registrable Securities are held:

 

 

                                                (c)           Full Legal Name
of Natural Control Person (which means a natural person who directly or
indirectly alone or with others has power to vote or dispose of the securities
covered by the questionnaire):

 

 

2. 
Address for Notices to Selling Securityholder:

 

 

  Telephone:

  Fax:

Contact Person:

 

3.  Broker-Dealer Status:

 

                                                (a)           Are you a broker-dealer?

 

                                                                Yes   o  No   o

 

                                                (b)           If “yes” to Section 3(a),
did you receive your Registrable Securities as compensation for investment
banking services to the Company.

 

                                                                Yes   o  No   o

 

 

                                                Note:      If no, the
Commission’s staff has indicated that you should be identified as an
underwriter in the Registration Statement.

 

                                                (c)           Are you an
affiliate of a broker-dealer?

 

                                                                Yes   o  No   o

 

                                                (d)           If you are an
affiliate of a broker-dealer, do you certify that you bought the Registrable
Securities in the ordinary course of business, and at the time of the purchase
of the Registrable Securities to be resold, you had no agreements or understandings,
directly or indirectly, with any person to distribute the Registrable
Securities?

 

                                                                Yes   o  No   o

 

                                                Note:      If no, the Commission’s staff has
indicated that you should be identified as an underwriter in the Registration
Statement.

 

4. 
Beneficial Ownership of Other Securities of the Company Owned by the
Selling Securityholder.

 

Except as set forth below in this Item 4, the undersigned is
not the beneficial or registered owner of any securities of the Company other
than the securities issuable pursuant to the Purchase Agreement.

 

                                                (a)           Type and Amount of other securities
beneficially owned by the Selling Securityholder:

 

 

(b)                                 Shared or sole
ownership?  If shared, please indicate
the name and relationship of the party with whom ownership is shared:

 

 

5.  Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any
of its affiliates, officers, directors or principal equity holders (owners of
5% of more of the equity securities of the undersigned) has held any position
or office or has had any other material relationship with the Company (or its
predecessors or affiliates) during the past three years.

 

 

                                                State any
exceptions here:

 

 

The undersigned agrees to
promptly notify the Company of any inaccuracies or changes in the information
provided herein that may occur subsequent to the date hereof at any time while
the Registration Statement remains effective.

 

By signing below, the
undersigned consents to the disclosure of the information contained herein in
its answers to Items 1 through 5 and the inclusion of such information in the
Registration Statement and the related prospectus and any amendments or
supplements thereto.  The
undersigned understands that such information will be relied upon by the
Company in connection with the preparation or amendment of the Registration
Statement and the related prospectus.

 

IN WITNESS WHEREOF the
undersigned, by authority duly given, has caused this Notice and Questionnaire
to be executed and delivered either in person or by its duly authorized agent.

 

	
  Dated:

  	
   

  	
   

  	
  Beneficial
  Owner:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
							

 

PLEASE FAX A COPY OF THE COMPLETED AND
EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL,
TO:

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