Document:

Exhibit 10.4

 

	
  

  	
  LIMITED LIABILITY PARTNERSHIP

  

 

 

MR
JOSEPH S. GALLAGHER

 

AND

 

MEDICOR
LTD.

 

 

 

PUT AND
CALL OPTION AGREEMENT

 

 

 

	
  THIS
  AGREEMENT is made on

  	
  2006

  

 

BETWEEN:

 

(1)         MEDICOR LTD., a
company existing and organized under the laws of the State of Delaware, having
its registered office at 4560 S. Decatur Blvd, Ste 300, Las Vegas, Nevada,
89103-5253 (“MediCor”); and

 

(2)         JOSEPH S. GALLAGHER, of 44 Glendockart Drive, Craigmarloch, Cumbernauld, G68 0FJ (“JG”).

 

WHEREAS:

 

(A)        Pursuant to the Share Purchase Agreement, the Sellers agreed to sell
and MediCor agreed to purchase all of the Shares on the terms and subject to
the conditions contained in the Share Purchase Agreement.

 

(B)         The Purchase Price under the Share Purchase Agreement was satisfied
in part by the issue of the Consideration Shares by MediCor to the Sellers.

 

(C)         MediCor and the Sellers have agreed to grant each other put and call
options in respect of the Consideration Shares.

 

(D)        JG is the registered and beneficial owner of the Option Shares. This
Agreement sets out the terms and conditions pursuant to which MediCor and JG
have agreed to grant each other put and call options in respect of the Option
Shares.

 

THE PARTIES AGREE as follows:

 

1.           INTERPRETATION

 

1.1         In
this Agreement:

 

“Call Expiry Date” means the earlier
of: (a) the first date on which the closing price of the Common Stock as
reported on the principal stock exchange or automated quotation system on which
it is traded has been equal to or greater than US$20.00 for 30 out of the 45
previous consecutive trading days; and (b) the first date on which JG no longer
holds any Option Shares pursuant to transactions made in accordance with this
Agreement;

 

“Call Option” means the right granted
to MediCor by clause 3.1;

 

“Call Option Notice” means the written
notice in the form set out in Schedule 2;

 

“Commercialisation Date” means the
date that the BioSil inflatable saline breast implant is approved by the United
States Food and Drug Administration for unrestricted commercialisation in the
United States;

 

“Exercise Date” means the date falling
eighteen months after the Commercialisation Date;

 

1

 

“Option Shares” means any of the
66,000 shares of Common Stock issued to JG (or his nominee) in accordance with
the Share Purchase Agreement held by JG (or his nominee) from time to time,
together with any additional or replacement shares issued to JG as a
consequence of the operation of clause 5;

 

“Nine-Month Date” means the date
falling nine months after the Commercialisation Date;

 

“Option Date” means the date on which
a Call Option Notice pursuant to clause 2.2 or a Put Option Notice pursuant to
clause 3.2, is deemed to be given to either JG or MediCor, as the case may be,
by virtue of clause 8;

 

“Public Offer” means an offer by any person
to acquire the whole of the issued share capital of MediCor, whether structured
as a tender offer, merger or otherwise;

 

“Put Expiry Date” means earliest of:
(a) the first date on which the closing price of the Common Stock as reported
on the principal stock exchange or automated quotation system on which it is
traded has been equal to or greater than US$10.00 for any 30 out of the
previous 45 consecutive trading days; (b) the first date on which JG no longer
holds any Option Shares; and (c) 30 days after the Put Option becomes
exercisable pursuant to clause 2.8;

 

“Put Option” means the right granted to JG by clause 2;

 

“Put Option Notice” means the written notice in the form set out in schedule 1;

 

“Recommended Offer” means a Public Offer
which the Directors of MediCor have recommended MediCor shareholders to accept;

 

“Reorganisation” means any transaction instigated by MediCor,
whether at the direction of its board of directors or of one or more of its
shareholders, that causes the holders of Common Stock in MediCor as a whole
(and including JG in particular), without making or receiving any payment of
cash, to hold a different number and/or class of securities in MediCor after
the transaction than they held before the transaction;

 

“Share Purchase Agreement” means the
share purchase agreement dated 13 September 2005 entered into between MediCor
and the Sellers; and

 

“Silicone Approval Date” means the
date that any approval is obtained from the United States Food and Drug
Administration (or any successor authority) for the commercialisation of
silicone filled breast implants in the United States, other than the existing
approvals for such commercialisation for compassionate use.

 

1.2         In
this Agreement, a reference to a clause, paragraph or schedule, unless the
context otherwise requires, is a reference to a clause or paragraph of, or
schedule to, this Agreement.

 

2

 

1.3         Terms
defined in the Share Purchase Agreement shall have the same meanings in this
Agreement.

 

1.4         The
headings in this Agreement do not affect its interpretation.

 

2.           PUT OPTION

 

2.1         In
consideration of the mutual promises contained in this Agreement, and subject
to the terms of this Agreement, MediCor grants to JG an option to sell, and to
require MediCor to buy, all or any of the Option Shares.

 

2.2         The
Put Option may be exercised on the terms of this Agreement by JG from time to
time on or after the Exercise Date until the Put Expiry Date (the “Put Option Period”) by JG delivering to
MediCor a Put Option Notice, provided that if the Put Expiry Date occurs prior
to the Exercise Date then JG shall have no right to exercise the Put Option.

 

2.3         JG
may at any time, upon notice to MediCor, elect to terminate the Put Option
when, notwithstanding clause 2.2 the Put Option shall terminate and,
notwithstanding clause 3.2, the Call Option shall also terminate.

 

2.4         Subject
to clause 5, where sold pursuant to the Put Option, the purchase price per
Option Share (the “Put Option Price”)
shall be as follows:

 

2.4.1         US$5.50 if the Silicone Approval Date has occurred on or before the
Nine-Month Date;

 

2.4.2         US$6.50 if the Silicone Approval Date has occurred after the
Nine-Month Date and on or before the Exercise Date; or

 

2.4.3         US$7.50 if the Silicone Approval Date has not occurred on or before
the Exercise Date.

 

2.5         The
Option Shares shall be sold with full title guarantee free from any Encumbrance
and with all rights attaching to the Option Shares at the date on which the Put
Option is exercised including, without limitation, the right to receive any
dividend, distribution or return of capital declared, paid or made in respect
of the Option Shares in respect of periods starting on or after the date on
which the Put Option is exercised.

 

2.6         Subject
to clause 2.9, JG agrees that at any time:

 

2.6.1         the maximum number of Option Shares in respect of which JG may serve
a Put Option Notice; and

 

2.6.2         the maximum number of Option Shares which JG may otherwise transfer
to a third party (other than a Seller or connected person of any Seller),

 

shall be
660,000 less the aggregate of

 

3

 

2.6.3         the aggregate number of shares of Common Stock obliged to be
acquired by MediCor from JG or any of the other Sellers, whether under this
Agreement or any Put and Call Option Agreement entered into by MediCor with any
of the other Sellers, in the three months prior to the date of the Put Option
Notice; and

 

2.6.4         the aggregate number of Consideration Shares transferred to third
parties (other than a Seller or any connected person of a Seller) by JG or any
of the other Sellers in the three months prior to the date of the Put Option
Notice,

 

and any
Put Option Notice shall be deemed null and void to the extent that it purports
to require the acquisition by MediCor of a number of Option Shares in excess of
this amount.

 

2.7         For
the avoidance of doubt, JG may exercise the Put Option more than once.

 

2.8         Notwithstanding
anything else in this Agreement, if following a Public Offer, but prior to the
Exercise Date (unless the Put Expiry Date has first occurred), a person becomes
entitled to compulsorily acquire the Common Stock which it does not own, then
the Put Option shall become immediately exercisable and the Put Option Price
shall be:

 

2.8.1         the price set out in clause 2.4 if the Silicone Approval Date and
the Commercialisation Date have both occurred by that time; and

 

2.8.2         $6.50 otherwise.

 

2.9         Notwithstanding
the provisions of clause 2.6, while any Recommended Offer remains open for
acceptance JG may:

 

2.9.1         accept the Recommended Offer for any number of Option Shares; or

 

2.9.2         transfer any number of Option Shares to the person making the
Recommended Offer.

 

3.           CALL OPTION

 

3.1         In
consideration of the mutual promises contained in this Agreement, and subject
to the terms of this Agreement, JG grants to MediCor an option to buy, and to
require JG to sell, all or any of the Option Shares.

 

3.2         Subject
to clause 3.3, the Call Option may be exercised by MediCor from time to time on
or after the Commercialisation Date until the Call Expiry Date (the “Call Option Period”) by MediCor delivering
to JG a Call Option Notice provided that if the Call Expiry Date occurs prior
to the Commercialisation Date then MediCor shall have no right to exercise the
Call Option.

 

3.3         Notwithstanding
clause 3.2, the Call Option will automatically terminate upon termination by JG
of the Put Option in accordance with clause 2.3.

 

4

 

3.4         Subject
to clause 5, where sold pursuant to the Call Option, the purchase price per
Option Share  (the “Call Option Price”)
shall be as follows:

 

3.4.1         US$7.50 if the Call Option is exercised on or before the Nine-Month
Date;

 

3.4.2         US$10.00 if the Call Option is exercised after the Nine-Month Date
but on or before the Exericse Date;

 

3.4.3         US$15.00 if the Call Option is exercised after the Exercise Date.

 

3.5         The
Option Shares shall be sold with full title guarantee free from any Encumbrance
and with all rights attaching to the Option Shares at the date on which the
Call Option is exercised including, without limitation, the right to receive
any dividend, distribution or return of capital declared, paid or made in
respect of the Option Shares in respect of periods starting on or after the
date on which the Call Option is exercised.

 

3.6         JG
acknowledges that MediCor may cancel the Option Shares which are the subject of
the Call Option upon completion of the exercise of the Call Option in
accordance with this Agreement, without the requirement for any actions
whatsoever to be taken by JG

 

3.7         For
the avoidance of doubt, MediCor may exercise the Call Option more than once.

 

4.           RESTRICTIONS

 

JG acknowledges that his rights under this Agreement are personal to him
and that the following or substantially similar wording may be included on the
share certificates representing the Option Shares:

 

“The Shares represented by this certificate are subject to a
Put and Call Option Agreement with MediCor. The rights granted to the holder of
the Shares represented by this certificate under the Put and Call Option
Agreement may not be transferred, assigned, encumbered or otherwise disposed of
other than in accordance with the terms of the Put and Call Option Agreement. A
copy of the Put and Call Option Agreement is on file at the principal executive
office of MediCor.”

 

Upon any
permitted transfer of the Option Shares, the foregoing legend shall be removed
from the certificates representing such shares and the Put Option and the Call
Option shall terminate with respect to such Option Shares.

 

5.           REORGANISATIONS

 

5.1         The
Put Option Price and the Call Option Price shall each be adjusted following any
Reorganisation so that the amount payable by MediCor to JG upon the exercise in
full of the Put Option or the Call Option would be the same after as before
such Reorganisation, taking into account any MediCor securities or rights
attaching to or deriving from the Option Shares to receive MediCor securities,
in either case received as a result of such Reorganisation and which shall all
be subject to the Call Option and the Put Option on such terms as are necessary
to give effect to this provision. Clause 2.6

 

5

 

shall be amended correspondingly. MediCor shall promptly
notify JG of any such adjustments following consummation of any Reorganisation.

 

5.2         If
a Reorganisation takes place after the Option Date but before completion of the
transfer or cancellation of the Option Shares in connection with the exercise
of the Put Option or Call Option (as the case may be), JG shall either renounce
or, where permissible and requested by MediCor, assign to MediCor all rights
deriving from the Option Shares which are the subject of the Put Option or Call
Option as a result of the Reorganisation.

 

6.           FURTHER ASSURANCE

 

Each party
shall, at the request of the other party, execute or procure the execution of
all documents and do or procure the doing of such acts and things as may
reasonably be required for the purpose of completing the transfer of the Option
Shares in accordance with the terms of this Agreement.

 

7.           GENERAL

 

7.1         Subject
to clause 4, JG shall as soon as reasonably practical and in any event with 5
Business Days inform MediCor of any transfer by him of any Option Shares.

 

7.2         A
variation of this Agreement is valid only if it is in writing and signed by or
on behalf of each party.

 

7.3         The
failure to exercise or delay in exercising a right or remedy provided by this
Agreement or by law does not impair or constitute a waiver of the right or
remedy or an impairment of or a waiver of other rights or remedies. No single
or partial exercise of a right or remedy provided by this Agreement or by law
prevents further exercise of the right or remedy or the exercise of another
right or remedy.

 

7.4         No
party may (and may not purport to) assign or transfer or declare a trust of the
benefit of or in any other way alienate any of its rights under this Agreement
in whole or in part.

 

8.           NOTICES

 

8.1         A
notice or other communication under or in connection with this Agreement (a “Notice”) shall be:

 

8.1.1         in writing;

 

8.1.2         in the English language; and

 

8.1.3         delivered personally or sent by first class post (and air mail if
overseas) or by fax to the party due to receive the Notice to the address set
out in clause 8.3 or to another address, person or fax number specified by
that party by not less than 7 days’ written notice to the other party received
before the Notice was despatched.

 

6

 

8.2         Unless
there is evidence that it was received earlier, a Notice is deemed given if:

 

8.2.1         delivered personally, when left at the address referred to in
clause 8.3;

 

8.2.2         sent by mail, five Business Days after posting it; and

 

8.2.3         sent by fax, when confirmation of its transmission has been recorded
by the sender’s fax machine.

 

8.3         The
address referred to in clause 8.1.3 is:

 

	
  Name of party

  	
   

  	
  Address

  	
   

  	
  Fax No.

  	
   

  	
  Marked for the attention of

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Joseph S. Gallagher

  	
   

  	
  Global House

  Isle of Man

  Business Park

  Douglas

  Isle of Man

  British Isles

  	
   

  	
  +44 1624 661
  656

  	
   

  	
  Sellers’
  Representative

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  With a copy to

  	
   

  	
  Brodies LLP
15 Atholl

  Crescent
Edinburgh
EH3 8HA

  	
   

  	
  +44 131 228 3878

  	
   

  	
  Mr Iain Young/Mr Grant Campbell

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MediCor

  	
   

  	
  4560 Decatur

  Boulevard

  Suite 300

  Las Vegas

  Nevada

  89103-5253

  USA

  	
   

  	
  +1 70 2932 4563

  	
   

  	
  Mr Donald K.
  McGhan

  

 

9.           GOVERNING LAW AND
JURISDICTION

 

9.1         This
Agreement is governed by and shall be construed in accordance with English law.

 

9.2         The
parties irrevocably agree that the courts of England have exclusive
jurisdiction to settle any dispute arising from or connected with this
Agreement (a “Dispute”) including a dispute
regarding the existence, validity or termination of this Agreement or the
consequences of its nullity.

 

9.3         The
parties agree that the courts of England are the most appropriate and
convenient courts to settle any Dispute and, accordingly, that they will not
argue to the contrary.

 

9.4         The
parties agree that the documents which start any proceedings and any other
documents required to be served in relation to those proceedings may be served
on JG

 

7

 

in accordance with clause 8. These documents may,
however, be served in any other manner allowed by law. This clause applies to
all proceedings wherever started.

 

9.5         MediCor
irrevocably appoints Biosil Limited of Tournament Way, Ivanhoe Industrial
Estate, Off Smisby Road, Ashby de la Zouch, Leicestershire (the “Agent”) or such other person in England and
Wales as MediCor may from time to time nominate in writing to JG as agent to
accept process in England in any legal action or proceedings arising out of or
in connection with this Agreement and the documents to be entered into pursuant
to it.

 

9.6         MediCor
irrevocably agrees that any claim, judgement, or other notice process or any
written communication in connection with this Agreement or the documents to be
entered into pursuant to it shall be sufficiently and effectively served on it
if delivered to the Agent for the time being at the UK address notified to JG
whether or not forwarded to or received by MediCor.

 

9.7         If
the Agent ceases to be able to act as such or ceases to have an office in
England where process or written communications may be served, in either case
for any reason whatever, or MediCor elects to replace such Agent, MediCor
irrevocably agrees to appoint a new process agent in England acceptable to the
Sellers’ Representative (acting reasonably) and to deliver to the Sellers’
Representative within 14 days a copy of written acceptance of appointment by
the process agent, some other person or persons resident in England or Wales as
its agent for the purposes of this clause and forthwith to notify the Sellers’
Representative in writing of such appointment. Nothing in this Agreement shall
affect the right to serve process in any other manner permitted by law.

 

10.         COUNTERPARTS

 

This Agreement
may be executed in any number of counterparts, each of which when executed and
delivered is an original and all of which together evidence the same agreement.

 

11.         INVALIDITY

 

If at any time
any provision of this Agreement is or becomes illegal, invalid or unenforceable
in any respect under the law of any jurisdiction, that shall not affect or
impair:

 

11.1       the
legality, validity or enforceability in that jurisdiction of any other
provision of this Agreement; or

 

11.2       the
legality, validity or enforceability under the law of any other jurisdiction of
that or another provision of this Agreement.

 

12.         CONFIDENTIALITY AND
ANNOUNCEMENTS

 

12.1       Subject
to clause 12.2, no party may, at any time make or send a public announcement,
communication or circular concerning the transactions referred to in this
Agreement

 

8

 

unless it has first obtained each other party’s prior
written consent which may not be unreasonably withheld or delayed.

 

12.2       Clause
12.1 does not apply to a public announcement, communication or circular
required by law by a rule of a listing authority on which MediCor’s Shares are
listed, a stock exchange on which MediCor’s Shares are listed or traded or by a
Governmental Authority or other authority with relevant powers to which either
party is subject or submits, whether or not the requirement has force of law
provided that any public announcement, communication or circular will so far as
is practicable be made after consultation with the other party after taking
into account the reasonable requirements of the other party as to its timing,
content and manner of making or dispatch.

 

13.         COSTS

 

13.1       Each
party shall pay its own costs and expenses relating to the negotiation,
preparation, execution, enforcement and performance by it of this Agreement and
of each document referred to in it.

 

14.         SUCCESSORS AND
ASSIGNS

 

14.1       MediCor
agrees that the benefit of every provision in this Agreement is given to JG for
himself and for his successors in title. This Agreement is personal to and
otherwise not assignable by JG.

 

15.         PAYMENTS FREE OF
WITHHOLDING

 

15.1       If
there is a deduction or withholding required by law from a payment made
pursuant to this Agreement, the sum due from the relevant party shall be
increased to the extent necessary to ensure that, after the making of any
deduction or withholding, the recipient receives a sum equal to the sum it
would have received had no deduction of withholding been made.

 

16.         CONTRACT (RIGHTS OF
THIRD PARTIES) ACT 1999

 

16.1       A
person who is not a party to this Agreement has no rights under the Contracts
(Rights of Third Parties) Act 1999 to enforce any term of this Agreement.

 

9

 

SCHEDULE 1

 

FORM
OF PUT OPTION NOTICE

 

To:          MediCor Ltd.

4560 Decatur
Boulevard

Suite 300

Las Vegas

Nevada 89103-5253

USA

 

Fax:

 

Attention: Mr
Donald K. McGhan

 

Date:       [insert date]

 

PUT
OPTION NOTICE

 

1.           I refer to the Put and Call Option Agreement dated              2005
between Mr Joseph S. Gallagher and MediCor
Ltd (the “Option
Agreement”).

 

2.           Terms defined in the Option Agreement shall have the same meanings
in this Put Option Notice unless the context requires otherwise.

 

3.           I hereby notify you pursuant to clause 2.2 of the Option Agreement
that I wish to exercise the Put Option in relation to [/[state number]] of
Option Shares at the Put Option Price of $• for an aggregate consideration of $• to be paid to [specify account].

 

4.           I certify that the number of Consideration Shares transferred in the
last three months, whether by myself or any of the other Sellers, is •.

 

5.           I enclose a stock certificate for [•] Option Shares and a duly executed stock power for [•] Option Shares. [Please issue me a new stock certificate for
[balance of] shares of Common Stock.]

 

6.           Please complete the acquisition of the above Option Shares on [no
fewer than 30 and no more than 60 Days later.]

 

 

	
   

  	
   

  
	
   

  
	
  Signed by Joseph S. Gallagher

  

 

10

 

SCHEDULE
2

 

FORM
OF CALL OPTION NOTICE

 

[MEDICOR’S
LETTERHEAD]

 

To:          Mr John A. Alsop

Global House

Isle of Man
Business Park

Douglas

Isle of Man

British Isles

 

Fax:

 

Date:       [insert date]

 

CALL
OPTION NOTICE

 

1.           We refer to the Put and Call Option Agreement dated            2005
between Mr Joseph S. Gallagher and MediCor Ltd (the
“Option Agreement”).

 

2.           Terms defined in the Option Agreement shall have the same meanings
in this Call Option Notice unless the context requires otherwise.

 

3.           We hereby notify you pursuant to clause 3.2 of the Option Agreement
that we wish to exercise the Call Option in relation to [/[state number]] of
Option Shares at the Call Option Price of $• per share and for an aggregate consideration of $•.

 

4.           Within 10 Business Days of receiving this notice please:

 

4.1         send us the stock certificate for at least this number of Option
Shares and a duly executed stock power in respect of [•] Option Shares; and

 

4.2         notify us of the account to which the above consideration should be
paid.

 

5.           No later than 10 Business Days following your compliance with
paragraph 4 above, we will complete the sale and purchase, pay you the above
consideration and issue you (if applicable) with a new stock certificate,
provided that we reserve all rights to cancel these shares as permitted by
clause 3.6 of the Option Agreement whether or not paragraph 4 is complied with.

 

 

	
   

  	
   

  
	
   

  
	
  Signed by [    ]

  
	
  for and on behalf of MediCor Ltd.

  

 

11

 

	
  EXECUTED by the parties:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    Signature

  	
   

  
	
   

  	
   

  
	
  Mr Joseph S.
  Gallagher

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signed by

  	
  )

  	
   

  
	
  for

  	
  )

  	
   

  
	
  and on
  behalf of

  	
  )

  	
   

  
	
  MediCor
  Ltd.:

  	
  )

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    SignatureExhibit 10.5

 

MEDICOR LTD.

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS
AGREEMENT (this “Agreement”), is made as of               2006, by and among MediCor Ltd.,
a Delaware corporation (MediCor Ltd. and any successor by way of corporate
reorganization or otherwise is referred to as (the “Company”)), the
holders of equity securities of the Company listed on Exhibit A
hereto (each, a “Holder” and together, the “Holders”).

 

The parties hereby agree
as follows:

 

ARTICLE I

REGISTRATION RIGHTS

 

1.1                               Certain
Definitions.  For purposes of
this Agreement:

 

(a)                                  “Agreement
for Sale and Purchase” shall mean the Agreement for the Sale and Purchase
of the Shares of Biosil Limited and Nagor Limited, dated 13 September 2005,
between the Company and the Sellers identified therein.

 

(b)                                 The
term “Common Stock” means the Company’s common stock, par value $0.001
per share.

 

(c)                                  The
term “Form S-3” means such form under the Securities Act as in
effect on the date hereof or any successor form under the Securities Act.

 

(d)                                 The
term “Holder” means any person owning Registrable Securities or any
assignee thereof in accordance with Section 1.11 of this Agreement.

 

(e)                                  The
term “Institutional Investor” shall mean a purchaser of at least
$5,000,000 of Common Stock for cash pursuant to an offering of at least
$20,000,000 in cash and which purchase must occur within one hundred eighty
(180) days following the Completion Date under the Agreement for Sale and
Purchase.

 

(f)                                    The
terms “register,” “registered,” and “registration” refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933 (the “Securities
Act”), and the declaration or ordering of effectiveness of such
registration statement or document.

 

(g)                                 The
term “Registrable Securities” means the Common Stock issued to the
Holders pursuant to the Agreement for Sale and Purchase; provided, however,
that the foregoing definition shall exclude in all
cases (i) shares of Common Stock that have been disposed of under any
effective registration statement relating to such Registrable Securities, and (ii) shares
of Common Stock sold or otherwise transferred pursuant to the safe harbor
provided by Rule 144 promulgated under the Securities Act or other
applicable exemption from registration under the Securities Act.

 

(h)                                 The
number of shares of “Registrable Securities then outstanding” shall be
determined by the number of shares of Common Stock outstanding which are, and
the number of shares

 

 

of
Common Stock issuable pursuant to then exercisable or convertible securities
which are, Registrable Securities.

 

(i)                                     The
term “SEC” means the Securities and Exchange Commission.

 

1.2                               Demand
Registration.

 

(a)                                  If
the Company shall receive a written request from a Holder or Holders of
Registrable Securities, that the Company file a registration statement under
the Securities Act covering the registration of such Registrable Securities
held by such Holder or Holders as such Holder or Holders (each an “Initiating
Holder” or collectively, the “Initiating Holders”) may specify
(provided that the anticipated aggregate gross proceeds, before underwriting
discounts and commissions, from the sale of such Registrable Securities to the
Holders would exceed $2,500,000), then the Company shall, within ten (10) days
of the receipt thereof, give written notice of such request to all Holders (the
“Company Notice”) and shall, subject to the limitations of subsection 1.2(b),
use its reasonable best efforts to effect as soon as practicable, and in any
event within ninety (90) days of the receipt of such request, the registration
under the Securities Act of all Registrable Securities which the Initiating
Holders and any other Holders electing to participate in such registration request
to be registered; provided however, that the Company shall not be
obligated to register such securities until the earlier of (i) the date it
is eligible to file a registration statement on Form S-3 (provided that
the Company continues to be eligible to use a Form S-3 for the entire
period of such registration) and (ii) ninety (90) days subsequent to the
Completion Date under the Agreement for Sale and Purchase (the “Registration
Start Date”).  The Company shall effect a
registration on Form S-3, if such form is then available for use by the
Company and, if not, on such form promulgated by the SEC for which the Company
qualifies.  Any such election to
participate in such registration shall be received by the Company within thirty
(30) days of the mailing of the Company Notice by the Company in accordance
with Section 2.3.

 

(b)                                 If
the Initiating Holders intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to this Section 1.2 and the
Company shall include such information in the written notice referred to in subsection 1.2(a).  The underwriter (or underwriters) will be
selected by the Company and shall be reasonably acceptable to a majority of the
Initiating Holders.  In such event, the
right of any other Holder to include its, his or her Registrable Securities in
such registration shall be conditioned upon such Holder’s participation in such
underwriting and the inclusion of such Holder’s Registrable Securities in the
underwriting to the extent provided herein. 
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company as provided in subsection 1.4(e) and
any other stockholders of the Company distributing their securities through
such underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the
Company.  Notwithstanding any other
provision of this Section 1.2, if the underwriter (or lead managing
underwriter in the case of multiple underwriters) advises the Company in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall so advise all Holders of Registrable
Securities which would otherwise be included in the underwriting pursuant
hereto, and the number of shares of Registrable Securities of Holders that may
be included in the underwriting shall be allocated among all such Holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities
of the Company owned by each such Holder; provided, however, that
the number of shares of Registrable Securities of the Initiating Holders to be
included in such underwriting shall not be reduced unless all other securities
are first entirely excluded from the underwriting.  No Registrable Securities excluded from the
underwriting by reason of the underwriter’s marketing limitation shall be
included in such registration.

 

2

 

(c)                                  Notwithstanding
the foregoing, if the Company shall furnish to the Initiating Holders
requesting a registration statement pursuant to this Section 1.2, a
certificate signed by the Chief Executive of the Company stating that it would
be seriously detrimental to the Company and its stockholders for such
registration statement to be filed, the Company shall have the right to defer
such filing for a period of not more than ninety (90) days after receipt of the
request of the Initiating Holder; provided, however, that the Company
may not utilize this right more than once in any twelve month period.

 

(d)                                 In
addition, the Company shall not be obligated to effect, or to take any action
to effect, any registration pursuant to this Section 1.2:

 

(i)                                     After
the Company has effected four registrations pursuant to this Section 1.2,
including any registration that has been withdrawn pursuant to Section 1.8;

 

(ii)                                  During
the period starting with the date sixty (60) days prior to the Company’s good
faith estimate of the date of filing of, and ending on a date ninety (90) days
after the effective date of, a registration subject to Section 1.3 hereof
(or such longer period, not to exceed 180 days, as the Company may be required
to keep such registration effective pursuant to Section 1.4(a)), provided
that the Company is using its reasonable best efforts to cause such
registration statement to become effective; or

 

(iii)                               If
the Company exercises its rights pursuant to Section 1.8(d).

 

(e)                                  Notwithstanding
the Registration Start Date, the Initiating Holders may, on or prior to the
Completion Date under the Agreement for Sale and Purchase, elect to have any or
all of their Registrable Securities included in the Registration Statement on Form SB-2,
first filed with the SEC on January 4, 2005.  Such registration shall count against the
limit identified in Section 1.2(d)(i). 

 

(f)                                    The
Company shall not be required to file a Registration Statement under this Section 1.2
with respect to any Registrable Securities owned by a Holder registered by an
effective Registration Statement on Form S-3 pursuant to Rule 415
under the Securities Act requested by such Holder for so long as such
Registration Statement remains effective and shares may be sold freely pursuant
to such Registration Statement. 

 

1.3                               Company
Registration.  If (but without
any obligation to do so) at any time the Company proposes to register any of
its securities for sale under the Securities Act in connection with the public
offering of such securities (for the Company’s own account or for the account
of stockholders of the Company other than the Holders) solely for cash (other
than a registration relating solely to the sale of securities to participants
in a Company stock plan, a registration relating solely to a Rule 145
transaction under the Securities Act, or any registration on any form which
does not include (or incorporate) substantially the same information as would
be required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give each
Holder written notice of such registration. 
Upon the written request of each Holder given within thirty (30) days
after mailing of such notice by the Company in accordance with Section 2.3,
the Company shall, subject to the provisions of Section 1.7 and Section 1.8,
cause to be registered under the Securities Act all of the Registrable
Securities that each such Holder has requested to be registered.  The Company shall have the right to terminate
or withdraw any registration initiated by it under this Section 1.3 prior
to the effectiveness of such registration if the Company has elected to abandon
its proposal to register its securities, whether or not any Holder has elected
to include securities in such registration without thereby incurring any
liability to any Holder.  The expenses of
any such withdrawn registration shall be borne by the Company in accordance
with Section 1.8 hereof.

 

3

 

1.4                               Obligations
of the Company.  Whenever
required under this Article I to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible:

 

(a)                                  Prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its reasonable best efforts to cause such registration
statement to become effective, and, upon the request of the Holders of a
majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to ninety (90) days or such shorter
period until the Registrable Securities are sold; provided, however,
that such 90-day period shall be extended for a period of time equal to the
period the Holder refrains from selling any securities included in such
registration at the request of an underwriter of Common Stock (or other
securities) of the Company. Notwithstanding the foregoing or any other
provision of this Agreement, such Holder or Holders understand that there may
be periods during which the Company may determine, in good faith, that it is in
the best interests of the Company and its security holders to defer disclosure
of material, non-public information that it has a bona-fide business purpose
for preserving as confidential until such information has reached a more
advanced stage and that during such periods the Company shall have the right to
suspend or delay sales of Registrable Securities and the effectiveness of any
registration statement covering Registrable Securities for an aggregate period
not to exceed 90 days in any twelve-month period.  Such Holder or Holders agree that upon
receipt of any notice from the Company of the development of any such
non-public information, such Holder or Holders will forthwith discontinue such
Holder’s or Holders’ disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until such
Holder’s or Holders’ receipt of copies of an appropriately supplemented or
amended prospectus and, if so directed by the Company, such Holder or Holders
will use its commercially reasonable best efforts to deliver to the Company (at
the Company’s expense) all copies, other than permanent file copies then in
such Holder’s or Holders’ possession, of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice.  In the event the Company shall give any such
notice, the applicable time period during which a Registration Statement is to
remain effective shall be extended by the number of days during the period from
and including the date of the giving of such notice to and including the date
when each seller of a Registrable Security covered by such registration
statement shall have received the copies of the appropriate supplemented or
amended prospectus.

 

(b)                                 Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration
statement as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities covered by
such registration statement and to use its reasonable best efforts to keep it
effective for up to ninety (90) days (or such longer period as required
pursuant to Section 1.4(a)).

 

(c)                                  Furnish
to the Holders such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.

 

(d)                                 Use
its commercially reasonable efforts to register and qualify the securities
covered by such registration statement under such other United States federal
securities or state Blue Sky laws as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any jurisdiction unless the Company is
already subject to service in such jurisdiction and except as may be required
by the Act.

 

(e)                                  In
the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing

 

4

 

underwriter
of such offering and, as applicable, use its reasonable best efforts to cause
any other parties thereto to enter into such agreement.  Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement.

 

(f)                                    Notify
each Holder of Registrable Securities covered by such registration statement at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, such obligation to
continue for up to ninety (90) days from the effective date of such
registration statement (or such longer period as required pursuant to Section 1.4(a)).

 

(g)                                 Cause
all such Registrable Securities registered pursuant hereunder to be listed on
each securities exchange or nationally recognized quotation system on which
similar securities issued by the Company are then listed.

 

(h)                                 Provide
a transfer agent and registrar for all Registrable Securities registered
pursuant hereunder and a CUSIP number for all such Registrable Securities, in
each case not later than the effective date of such registration.

 

(i)                                     Use
it reasonable best efforts to cause to be furnished, at the request of any
Holder requesting registration of Registrable Securities pursuant to this Article I,
on the date that such Registrable Securities are delivered to the underwriters
for sale in connection with a registration pursuant to this Article I, if
such securities are being sold through underwriters, or, if such securities are
not being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities
and (ii) a letter dated such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.

 

(j)                                     In
the event that any contemplated public offering is underwritten, use its
commercially reasonable efforts to obtain a “comfort” letter from the Company’s
independent registered public accountants in customary form and covering such
matters of the type customarily covered by “comfort” letters as the Holders of
a majority (by number of shares) of the Registrable Securities being registered
thereunder reasonably request, and provided that such request is reasonable in
the underwriter’s point of view.

 

1.5                               Furnish
Information.  It shall be a
condition precedent to the obligations of the Company to take any action
pursuant to this Article I with respect to the Registrable Securities of
any selling Holder that such Holder shall furnish to the Company, upon the
Company’s written request, such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such
securities as shall be required to effect the registration of such Holder’s
Registrable Securities.  The Company
shall have no obligation with respect to any registration requested pursuant to
Section 1.2 of this Agreement if, as a result of the application of the
preceding sentence, the number of shares or the anticipated aggregate offering
price of the Registrable Securities to be included in the registration does not
equal or exceed the number of shares or the anticipated aggregate offering
price required to originally trigger the Company’s obligation to initiate such
registration as specified in subsection 1.2(a).

 

5

 

1.6                               Expenses
of Registration.

 

(a)                                  Demand Registration.  All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to Section 1.2, including (without limitation) all
federal and state and stock exchange or quotation system registration, filing
and qualification fees, printers’ and accounting fees, fees and disbursements
of counsel for the Company, and the reasonable and documented fees and
disbursements of one counsel for the selling Holders selected by them, in an
amount not to exceed $25,000 per registration, shall
be borne by the Company; provided, however, that the Company
shall not be required to pay for any expenses of any registration proceeding
initiated pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Initiating Holders (in which case
such Initiating Holders shall bear such expenses); provided  further,
however, that if at the time of such withdrawal, the Holders have
learned of a material adverse change in the condition or business of the
Company from that known to the Holders at the time of their request and have
withdrawn the request with reasonable promptness following disclosure by the
Company of such material adverse change, then the Holders shall not be required
to pay any of such expenses and shall retain their rights.

 

(b)                                 Company Registration.  All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications of Registrable Securities pursuant to Section 1.3 for each
Holder, including (without limitation) all federal and state and stock exchange
or quotation system registration, filing, stock exchange or quotation system,
and qualification fees, printers’ and accounting fees, fees and disbursements
of counsel for the Company and the reasonable fees and disbursements of one
counsel for the selling Holder or Holders selected by them, in an amount not to
exceed $25,000 per registration, shall be borne by the Company.

 

1.7                               Underwriting
Requirements.  In connection with
any offering involving an underwriting of shares of the Company’s capital
stock, the Company shall not be required under Section 1.3 to include any
of the Holders’ securities in such underwriting unless they accept the terms of
the underwriting as agreed upon between the Company and the underwriters
selected by it, and then only in such quantity as the underwriters determine
that, due to marketing factors, will not jeopardize the success of the offering
by the Company or any holders of superior registration rights.  Each Holder proposing to distribute its
securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for the
offering.  If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company (and by Institutional Investors having superior registration
rights, if applicable) that the underwriters determine that, due to marketing
factors, is incompatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters determine
in their reasonable discretion will not jeopardize the success of the offering
but in no event shall (i) any Registrable Securities be excluded from such
offering unless all securities of selling stockholders (other than holders of
superior registration rights) other than Holders of Registrable Securities
shall have been excluded on a pro  rata basis according to the
amount of securities requested by each such Holder to be included in the
offering or (ii) the amount of securities of the selling Holders included
in the offering be reduced below twenty-five percent (25%) of the total amount
of securities included in such offering. 
If any Registrable Securities are to be excluded from the offering, the
amount to be excluded shall be apportioned among the selling Holders pro
rata according to the amount of Registrable Securities requested by each
such Holder to be included in the offering. 
For purposes of the preceding sentences concerning apportionment, for
any selling Holder of Registrable Securities or other holder of securities
which is a partnership or corporation, the partners, retired partners and
stockholders of such holders, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing Persons shall each be deemed to be a single “selling Holder,”
and any pro-rata reduction with respect to such “selling

 

6

 

Holder”
shall be based upon the aggregate amount of shares carrying registration rights
owned by all entities and individuals included in such “selling Holder,” as
defined in this sentence.

 

1.8                               Delays
and Withdrawals.  

 

(a)                                  No
Holder shall have any right to obtain or seek an injunction restraining or otherwise
delaying any such registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this Article I.

 

(b)                                 If,
at any time after giving written notice pursuant to Section 1.3 of its
intention to register any equity securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine not to register or to delay registration of such equity
securities, the Company may, at its election, give written notice of such
determination to all Holders and, in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such abandoned registration, without prejudice,
however, to the rights of Holders under Sections 1.2 and 1.6.

 

(c)                                  If,
at any time after having requested the Company to file a registration statement
pursuant to Section 1.2, an Initiating Holder shall determine for any
reason to withdraw such registration, such Initiating Holder may, at its
election, give notice of such determination to the Company and any other
Holders proposing to participate in the registration of such
determination.  On receipt of such notice
the Company shall be relieved of its obligation to effect such
registration.  Subject to the second
proviso of Section 1.6(a), the expenses of such registration incurred by
the Company shall be borne by the Initiating Holders.  Any notice of withdrawal given by an
Initiating Holder pursuant to this Section 1.8(c) shall be
irrevocable.

 

(d)                                 The
Company may at any time within ten (10) days of its receipt of a notice
from an Initiating Holder requesting a registration pursuant to Section 1.2
elect to convert the proposed demand registration into a Company registration
subject to Section 1.3 by notifying the Initiating Holders in
writing.  Upon making any such election,
the Company shall notify all Holders (including the Initiating Holders) of its
intent to file a registration statement in accordance with Section 1.3 and
such Holders shall have the right (subject to the provisions of this Article I)
to include some or all of their Registrable Securities in such
registration.  Anything in this Agreement
to the contrary notwithstanding, the Company shall use its reasonable best
efforts to effect as soon as practicable, and in any event within ninety (90)
days after making such election, such registration.

 

(e)                                  Any
Holder (other than an Initiating Holder) shall have the right to withdraw its
request for inclusion of its Registrable Securities in any registration
statement filed pursuant to this Article I by giving written notice to the
Company of its request to withdraw; provided, that (i) such request
must be made in writing prior to the earlier of the execution of the
underwriting agreement or the execution of the custody agreement with respect
to such registration and (ii) such withdrawal shall be irrevocable and,
after making such withdrawal, a Holder shall no longer have any right to
include Registrable Securities in the registration as to which such withdrawal
was made.

 

1.9                               Indemnification.  In the event any Registrable Securities are
included in a registration statement under this Article I:

 

(a)                                  The
Company will indemnify and hold harmless each Holder, any underwriter (as
defined in the Securities Act) for such Holder and each of its officers,
directors, and partners, and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), against any losses,
claims, damages,

 

7

 

or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other United States federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively, a “Violation”):  (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading; and the Company will
pay to each such Holder, and each of its officers, directors, and partners,
underwriter or controlling person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 1.9(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld or delayed), nor
shall the Company be liable to any Holder, underwriter or controlling person
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs (I) in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by any such Holder, underwriter or
controlling person or (II) as the result of the failure of any Holder to
deliver a prospectus or a prospectus or prospectus supplement containing
corrected or supplemented information.

 

(b)                                 Each
selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, any underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or other Holder,
against any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Securities Act, the
Exchange Act or other United States federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 1.9(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder (which consent
shall not be unreasonably withheld or delayed); provided, that in no event
shall any indemnity under this subsection 1.9(b) exceed the net
proceeds from the offering received by such Holder.

 

(c)                                  Promptly
after receipt by an indemnified party under this Section 1.9 of notice of
the commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 1.9, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party (together with all other indemnified
parties which may be represented without conflict by one counsel) shall have
the right to retain one separate counsel, with the reasonable fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceeding.  The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this

 

8

 

Section 1.9,
but the omission so to deliver written notice to the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.9.

 

(d)                                 If
the indemnification provided for in this Section 1.9 is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect
to any loss, liability, claim, damage or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage or
expense as well as any other relevant equitable considerations; provided,
that in no event shall any contribution by a Holder under this subsection 1.9(d) exceed
the net proceeds from the offering received by such Holder.  The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.

 

(e)                                  Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall control.

 

(f)                                    The
obligations of the Company and Holders under this Section 1.9 shall
survive the completion of any offering of Registrable Securities in a
registration statement under this Article I.

 

1.10                        Reports
Under the Exchange Act.  With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of
the SEC that may at any time permit a Holder to sell securities of the Company
to the public without registration or pursuant to a registration on Form S-3,
the Company agrees to:

 

(a)                                  make
and keep public information available, as those terms are understood and
defined in SEC Rule 144, at all times after ninety (90) days after the
effective date of the first registration statement filed by the Company for a
public offering;

 

(b)                                 file
with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and

 

(c)                                  furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request (i) a written statement by the Company that it has complied
with the reporting requirements of SEC Rule 144, the Securities Act and
the Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a
copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities without
registration or pursuant to such form.

 

1.11                        Assignment
of Registration Rights.  The
rights to cause the Company to register Registrable Securities pursuant to this
Article I may be assigned (but only with all related obligations) by a
Holder to a transferee or assignee of at least 250,000 shares of Registrable
Securities; provided that the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and

 

9

 

address
of such transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided  further,
that such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act; and provided  further,
still, that the right to demand a registration pursuant to Section 1.2
may only be assigned to a transferee or assignee acquiring all shares of
Registrable Securities then held by a Holder entitled to exercise rights under Section 1.2.  For the purposes of determining the number of
shares of Registrable Securities held by a transferee or assignee, the holdings
of transferees and assignees of a partnership who are partners or retired
partners of such partnership (including spouses and ancestors, lineal
descendants and siblings of such partners or spouses who acquire Registrable
Securities by gift, will or intestate succession) shall be aggregated together
and with the partnership; provided that all assignees and transferees
who would not qualify individually for assignment of registration rights shall
have a single attorney-in-fact for the purpose of exercising any rights,
receiving notices or taking any action under Article I.

 

1.12                        Limitations
on Subsequent Registration Rights. 
As of September 6, 2005, the Company has not granted, and there are
no holders or prospective holders of, any registration (or similar) rights
equal to or more favorable than those granted to the Holders pursuant to this
Agreement.  From and after the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of a majority of the then outstanding Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company which would allow such holder or prospective holder (a) to
include such securities in any registration filed under Section 1.2
hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of his Securities will not reduce the amount of the
Registrable Securities of the Holders which is included, (b) to make a
demand registration which could result in such registration statement being
declared effective prior to the earlier of either of the dates set forth in subsection 1.2(a) or
within ninety (90) days of the effective date of any registration effected
pursuant to Section 1.2 or (c) to exercise any rights more favorable
than those granted to the Holders pursuant to this Agreement.  The terms of this Section 1.12 shall not
apply to Institutional Investors to the extent provided in any agreement with
such Institutional Investors.

 

1.13                        “Market Stand-Off” Agreement.  Each Holder hereby agrees that, for a period
of ninety (90) days (or such shorter period as may be specified in writing by
the Company and an underwriter of Common Stock or other securities of the
Company), following the date of the final prospectus distributed in connection
with a public offering, it shall not, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale or hedging
arrangement), grant any option to purchase or otherwise transfer or dispose of
(other than to donees who agree to be similarly bound) any Registrable
Securities held by it at any time during such period (other than in connection
with the respective Put and Call Option Agreement dated as of the date hereof
between the Company and each of Gordon Evans, Nancy Evans, John Alsop and
Joseph Gallagher) except Registrable Securities included in such registration; provided,
however, that:

 

(a)                                  all
executive officers and directors of the Company, all five-percent
securityholders, and all other Persons with registration rights (whether or not
pursuant to this Agreement) shall be similarly bound; and

 

(b)                                 any
waiver or termination of the prohibition set forth in this Section 1.13 by
the Company or any underwriter shall apply to all Persons who are subject
hereto or any similar such obligation on a pro rata basis.

 

In order to enforce the foregoing covenant, the
Company may impose stop transfer instructions with respect to the Registrable
Securities of each Holder (and the shares or securities of every

 

10

 

other Person subject to the foregoing restriction) until the end of
such period, and each Holder agrees that, if so requested, such Holder will
execute an agreement in the form provided by the underwriter containing terms
which are consistent with the provisions of this Section 1.13.

 

Notwithstanding the foregoing, the obligations
described in this Section 1.13 shall not apply to a registration relating
solely to employee benefit plans on Form S-1 or Form S-8 or similar
forms which may be promulgated in the future, or a registration relating solely
to an SEC Rule 145 transaction on Form S-4 or similar forms which may
be promulgated in the future.  The terms
of this Section 1.13 shall not apply to Institutional Investors to the
extent provided in any agreement with such Institutional Investors.

 

1.14                        Termination
of Registration Rights.  No
Holder shall be entitled to exercise any right provided for in this Article I
after the earlier of (i) five (5) years from the date hereof, or (ii) such
time as Rule 144 or another similar exemption under the Securities Act is
available for the sale of all of such Holder’s shares during a three (3)-month
period without registration.

 

ARTICLE II

 

MISCELLANEOUS

 

2.1                               Successors
and Assigns.  Except as otherwise
provided in this Agreement, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective permitted successors
and assigns of the parties (including transferees of any Registrable
Securities).  Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

 

2.2                               Amendments
and Waivers.  Any term of this
Agreement may be amended or waived in writing and only with the written consent
of the Company and the holders of a majority of the Registrable Securities then
outstanding, except that Sections 1.2 and 1.12 may only be amended or waived
with the consent of the holders of a majority of the then outstanding
Registrable Securities in addition to the consent of the Company and the
holders of a majority of the Registrable Securities then outstanding.  Any amendment or waiver effected in
accordance with this Section 2.2 shall be binding upon each Holder of any
Registrable Securities then outstanding, each future Holder of all such
Registrable Securities, and the Company.

 

2.3                               Notices.  Unless otherwise provided, any notice
required or permitted by this Agreement shall be in writing and shall be deemed
effective either (i) upon delivery, when delivered personally or by
overnight courier or sent by fax, or (ii) four (4) Business Days
after being deposited in the U.S. mail as certified or registered mail with
postage prepaid, and addressed to the party to be notified at such party’s
address or fax number as set forth below or on Exhibit A hereto or
as subsequently modified by written notice. 
A copy of such notice shall also be delivered via electronic mail For
purposes of this Agreement, the term “Business Day” shall mean any day
other than (i) a Saturday or Sunday, or (ii) any day on which banking
institutions located in New York, New York are authorized or obligated to
close.

 

2.4                               Severability.  If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
automatically reformed so as to be enforceable while as nearly as possible
preserving the original intent of the parties.

 

2.5                               Governing
Law.  This Agreement and all acts
and transactions pursuant hereto shall be governed, construed and interpreted
in accordance with the laws of the State of New York.

 

11

 

2.6                               Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

2.7                               Titles
and Subtitles.  The titles and
subtitles used in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.

 

2.8                               Aggregation
of Stock.  All Registrable
Securities held or acquired by Affiliated Entities or Persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.  For
purposes of this Agreement, “Affiliated Entity or Person” means, with
respect to any Person, any other Person that, directly or indirectly Controls,
or is Controlled by, or is under common Control with such specified Person, and
(i) with respect to any Person that is an individual, his or her Immediate
Family Members, or any trust (including a charitable remainder trust) limited
partnership or limited liability companies Controlled by or for the benefit of
the Immediate Family Member of such individual, and (ii) with respect to
any partnership, the general or limited partners thereof and the record owners
of equity securities of such general or limited partners.  Notwithstanding the foregoing, neither the
Company nor any Person Controlled by the Company shall be deemed to be an
Affiliate of any Holder for purposes of this Agreement.  For purposes of this Agreement, “Control”
(including the terms “Controlling,” “Controlled by” and “under
common Control with” as used with respect to any Person, means the power to
direct the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.  For purposes of this Agreement, the term “Immediate
Family Member” means, with respect to any individual, the spouse, parents,
parents-in-law, siblings, siblings-in-law, children and grandchildren of such
individual, and includes step and adoptive relationships.  For purposes of this Agreement, the term “Person”
means any individual, company, limited liability company, limited or general
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.

 

[remainder of page left intentionally blank]

 

12

 

EXHIBIT A

 

Holders:

 

John Gordon Evans of 1, Sea Cliff Road, Onchan, Isle of Man, IM3 2JE

 

Jessie Anne Evans (known as Nancy Evans) of 1, Sea Cliff Road, Onchan,
Isle of Man, IM3 2JE

 

John A. Alsop of The Old Stables, Harbour Road, Onchan, Isle of Man IM3
IBG

 

Joseph
S.Gallagher, of 44 Glendockart Drive, Craigmarloch, Cumbernauld, G68 0FG

 

13

 

The parties have executed
this Registration Right Agreement as of the date first above written.

 

	
   

  	
  Company:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDICOR LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  4560 South Decatur Boulevard

  
	
   

  	
   

  	
  Suite 300

  
	
   

  	
   

  	
  Las Vegas, Nevada 89103

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attn: Theodore Maloney

  	
   

  
	
   

  	
  Tel:  +1 (702) 932-4564

  	
   

  
	
   

  	
  Fax: +1 (702) 932-4561

  	
   

  
	
   

  	
  E-mail:  tmaloney@medicorltd.com

  	
   

  
						

 

 

	
   

  	
  Holders:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signed by:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mr John Gordon Evans

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mr Jessie Anne Evans

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mr John A. Alsop

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mr Joseph S. Gallagher

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  

 

2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]