Document:

Ascendiant agreement

    Exhibit
      10.8

     

    

    
      
        

      

    March
      2l..2006

     

    (Sent
      via
      Electronic Mail)

    Mr.
      Louis
      .L. Knickerbocker

    Chairman
      and CEO

    RG
      Global
      Lifestyles. Inc.

    30021
      Tomas, Suite 200

    Rancho
      Santa Margarita, CA 92688

    

    Dear
      Lou,

    

    Thank
      you
      for the opportunity to work with you and your company.

    

    This
      letter agreement (the "Agreement") confirm that RG Global Lifestyles, Inc.
      ("Client") has engaged Ascendiant Securities. LLC ("Ascendiant") to act on
      a
      best efforts basis as financial advisor and non-exclusive placement agent for
      the Client in connection with the structuring, issuance, and sale (the
      "Transaction(s)") of debt and/or equity securities (the "Securities") for
      financing purposes. Ascendiant Securities, LLC is an investment banking firm
      registered as a broker-dealer with the U.S. Securities and Exchange: Commission
      (SEC), and member of the NASD and SIPC.

    

    Accordingly,
      we mutually agree as follows:

    

    
      	
            	1.	
              Transactions. Ascendiant
                anticipates one
                or more Transactions, involving the sale of the Client's Securities
                to
                institutional and/or accredited investors ("Investor"
                or "Investors").
                The actual terms and structure of each Transaction will depend on
                market
                conditions and will be subject to negotiation between. the Client
                and
                Ascendiant and prospective
                Investors.

            

    

    

    
      	
            	2.	
              Engagment.
                In
                connection herewith, Ascendiant shall provide the following financial
                advisory and placement agent services on a
                best
                efforts
                basis to the Client.

            

    

    

    
      	
            	a.	
              advise
                the Client with respect to the form and structure of each Transaction;
                

            

    

     

    
      	
            	b.	
              assist
                the Client in developing any necessary
                materials;

            

    

     

    
      	
            	c.	
              identify
                and make contact with
                prospective
                Investors;

            

    

     

    
      
        	
              	d.	
                assist
                  the Client
                  in conducting
                  presentations and due diligence meeting,, with prospective Investors;
                  and

              

      

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    
      	
            	e.	
              provide
                such other financial advisory and investment banking services
                as
                are reasonably necessary to consummate each
                Transaction.

            

    

    

    Ascendiant
      shall devote such time and efforts to the affairs of the Client as is reasonably
      necessary to render the services contemplated by this Agreement. Any work or
      task of Ascendiant provided for herein which requires Client to provide certain
      information to assist Ascendiant in completion of the work shall be excused
      (without effect upon any obligation of Client) until such time as Client has
      fully provided all information and cooperation necessary for Ascendiant to
      complete the work. The services of Ascendiant shall not include the rendering
      of
      any legal opinions or the performance of any work that is in the ordinary
      purview of a certified public
      accountant.

    

    It
      is
      expressly understood and
      agreed that Ascendiant shall have no power to bind Client to any Transaction
      or contract
      obligation. Client shall
      have
      the
      right to refuse any
      Transaction proposal presented
      to it without incurring any obligations to Ascendiant. However, if and when
      an
      Ascendiant term
      sheet
      is
      signed by the Client, this
      Agreement
      shall become exclusive and in effect, and any and all financing from any
      investors is accepted by Client during the ninety (90) period
      following the signing of the term sheet, whether or not that occurs during
      the
      term of this
      Agreement, shall trigger the Success Fee and Warrants as described in Sections
      3
      and 4.

    

    It
      is
      understood and agreed that the execution of
      this
Agreement
      shall not be deemed or construed as obligating
      Ascendiant to purchase
      any of
      the
      Securities and there is no obligation
      on the part of Ascendiant
      to place the Securities. Although Ascendiant
      cannot guarantee results
      on behalf of the
      Client, it shall use its best efforts to provide the services listed
      above.

    

    
      	3.	 	
              Success
                Fee.
                Client agrees that should Client accept and complete any Transaction(s),
                which includes
                without limitation proceeds from any common stock offerings,
                convertible debt or equity securities, additional investment rights,
                block
                trade transactions, or exercise of associated warrants or options
                ("Securities") from any Investors introduced by Ascendiant during
                the term
                of this Agreement, which is defined in Section
                6 below,
                or if Client should for a period of thirty-six (36) months following
                the
                termination of this Agreement (including extensions) accept
                financing from any investors introduced,
                or contacted on Client's behalf;
                by Ascendiant, there shall
                become due and payable via wire transfer to Ascendiant immediately
                upon
                consummation of
                each Transaction, a cash fee equal
                to
                eight percent (8%) of
                the gross proceeds
                from the salt: of
                Securities. Should Ascendiant not be paid within five (5) business
                clays
                after the completion of a Transaction,
                a service charge shall accrue from the date of the Transaction at
                the rate
                of 1.5% per
                month.

            

    

    

    
      	4.	 	
              Warrants.
                Client agrees that should Client accept and complete any Transaction(s)
                which includes
                proceeds from any common stock offerings and/or convertible debt
                or equity
                securities,
                or
                completion of a Securities transaction as provided in Section 3 above,
                from any Investors introduced
                by Ascendiant during
                the term of this
                Agreement, which is defined in Section 6 below, or
                if Client should for a period of thirty-six (36) months
                following the termination of this Agreement
                (including extensions) accept
                financing from any investors introduced, or previously contacted
                on Client's behalf, by Ascendiant, there shall become
                due and payable to Ascendiant warrants
                for the purchase of an amount equal to
                eight percent (8%)
                of
                the Securities issuable in connection with the Transaction. The warrants
                shall be exercisable into common stock, and will have
                a term consistent with the warrants issued to the Investors with
                an
                exercise price equal to the closing
                price on the date of the Transaction. The warrants shall contain
                piggyback
                registration rights and a net exercise
                provision.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	5.	 	
              Expenses.
                If
                the Client requests that Ascendiant travel outside of Southern California
                to perform the services described herein, whether or not a Transaction
                is
                consummated, Client shall reimburse Ascendiant for travel-related
                expenses
                and payment shall be trade within seven (7) days of invoice. The
                Client
                agrees that it will engage its legal counsel at its own expense to
                assist
                in
                the preparation of any legal documents or definitive agreements deemed
                necessary to facilitate the Transaction(s) contemplated
                herein.

            

    

    

    
      
        	6.	 	
                Term.
                  The term of this Agreement shall be six (6) months from the date
                  of
                  Client's execution of this Agreement. Additional extensions may
                  be
                  negotiated as necessary at the mutual written consent of the Client
                  and
                  Ascendiant. Should Ascendiant successfully complete a Transaction
                  generating gross proceeds to Client of $2,500,000 or more, Client
                  agrees
                  to extend this Agreement for twelve (12) months from the date of
                  the
                  Transaction, with Ascendiant serving as Client's exclusive placement
                  agent
                  with respect to institutional equity funds managed by groups domiciled
                  in
                  the United States. Upon the
                  completion
                  of the Transaction referenced herein generating gross proceeds
                  to Client
                  of $2,500,000 or more, Client
                  shall, within three business days of the Transaction, issue to
                  Ascendiant
                  270,000 shares of Client's restricted common stock for advisory
                  services
                  to be provided during the extension period. Said shares shall be
                  included
                  in the registration statement to be filed in connection with the
                  Transaction referenced
                  herein.

              

      

    

    

    
      
        	7.	 	
                Representations,
                  Warranties, and Indemnification.
                  Each of Ascendiant and Client represents and warrants to each other
                  that
                  this Agreement has been duly authorized, executed and delivered
                  by it,
                  and, assuming the due execution by the other party, constitutes
                  a legal,
                  valid and binding agreement of it, enforceable against it in accordance
                  with its terms- Each of Ascendiant and Client agrees to comply
                  with all
                  applicable securities laws, and the Client will disclose to Ascendiant
                  all
                  information necessary for Ascendiant to act upon Client's request
                  and to
                  notify Ascendiant promptly of any material changes to such information.
                  Client hereby represents that it shall notify Ascendiant within
                  three (3)
                  business days of the completion of any Securities Transaction(s)
                  occurring during the term of this Agreement and/or
                  involving
                  Investors introduced
                  by
                  Ascendiant. Additionally, each of the Client and Ascendiant agrees
                  to
                  indemnify the other and the other's affiliates in accordance with
                  the
                  terms and conditions contained in Exhibit A to this
                  Agreement.

              

      

    

    

    
      	8.	 	
              Confidentiality.
                Ascendiant and Client each agree to keep confidential and provide
                reasonable security measures to keep confidential information where
                release may be detrimental to their respective business interests.
                Ascendiant and Client shall each require their employees, agents,
                affiliates, other licensees, and others who will have access to the
                information through Ascendiant and
                Client respectively, to abide by the confidentiality provisions
                contemplated by this Agreement in perpetuity. Ascendiant will not,
                either
                during its engagement by the Client pursuant to this Agreement or
                at any
                time thereafter, disclose, use or make known for its or another's
                benefit
                any confidential information, knowledge, or data of the Client or
                any of
                its affiliates in any way acquired or used by Ascendiant during its
                engagement by the Client. Confidential information, knowledge or
                data of
                the Client and its affiliates shall not include any information that
                is,
                or becomes generally available to the public other than as a result
                of a
                disclosure by Ascendiant or its representatives. Notwithstanding
                the
                foregoing, Client hereby authorizes
                Ascendiant to transmit to prospective Investors, information and
                materials
                provided by
                Client and/or developed by Ascendiant on behalf of Client upon approval
                by
                Client of such materials. Additionally, at any time after the consummation
                or other public announcement of the Transaction, Ascendiant may,
                at its
                own expense, place an announcement in such newspapers and publications
                as
                it may choose, stating that Ascendiant has acted as financial advisor
                and
                placement agent to the Client in connection with the Transaction,
                and may
                use, from time to time, the Client's name and logo and a brief description
                of the Transaction in publications and/or marketing materials prepared
                and/or distributed by Ascendiant.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      	9.	 	
              Non-Circumvention.
                In
                and for valuable consideration, Client hereby agrees that Ascendiant
                may
                introduce (whether by written, oral, data, or other form of communication)
                Client to one or more Investors, including, without limitation, natural
                persons, corporations. limited liability companies, partnerships,
                unincorporated businesses, sole proprietorships and similar entities
                (hereinafter an "Investor" or "Investors"). Client further acknowledges
                and agrees that the identity of the subject investors, and all other
                information concerning Investors (including without limitation, all
                mailing information, phone and fax numbers, email addresses and other
                contact information) introduced hereunder are the property of Ascendiant,
                and shall be treated as confidential and proprietary information
                by
                Client, its affiliates, officers, directors, shareholders, employees,
                agents,
                representatives, successors and
                assigns. Client shall not use such information, except in the context
                of
                any arrangement with Ascendiant in which Ascendiant is directly and
                actively involved, and never without Ascendiant's prior written approval,
                Client further agrees that neither it nor its employees, affiliates
                or
                assigns, shall enter into, or otherwise arrange (either for
                it/him/herself, or any other person or entity), any transaction.
                business
                relationship, meeting, phone
                call, or other correspondence with such Investors, either directly
                or
                indirectly, or accept any Transaction, compensation or advantage
                in
                relation to such Investors, except as directly though Ascendiant,
                without
                the prior written approval of Ascendiant. Ascendiant is relying on
                Client's assent to these tests and their intent to be bound by the
                terms
                by evidence of their signature. Without Client's signed, assent to
                these
                terms, Ascendiant would not introduce any Investors or disclose any
                confidential information to Client as herein
                described.

            

    

    

    
      	10.	 	
              Governing
                Law.
                This Agreement shall be governed by and construed in accordance with
                the
                laws of the State of California applicable to contracts executed
                and to be
                wholly performed therein without regard to its conflict of law doctrine.
                The Client and Ascendiant hereby agree that any dispute concerting
                this
                Agreement shall be resolved through binding arbitration before the
                NASD in
                Los Angeles County pursuant to its
                arbitration rules. The prevailing party shall be entitled, in addition
                to
                such other relief that may be granted, to a reasonable sum of attorney's
                fees and any other costs and expenses relating
                thereto.

            

    

    

    
      	11.	 	
              Entire
                Agreement.
                This Agreement represents the entire agreement by and between the
                Client
                and Ascendiant and supersedes any and all other agreements, either
                oral or
                written, with respect to the Agreement. Each party to this Agreement
                acknowledges that no representation, inducements, promises or agreement,
                orally or otherwise, have been made by any party, or anyone acting
                on
                behalf of any
                party,
                which are not embodied herein, and that no other agreement,
                statement, or promise not contained in this Agreement shall be valid
                or
                binding. The Client and Ascendiant hereby agree that the opening
                and
                closing statements of this Agreement are incorporated herein by this
                reference and made a material part of this Agreement. If any part
                of this
                Agreement is found, or deemed by a court of competent jurisdiction,
                to be
                invalid or unenforceable, that part shall be severable horn the remainder
                of the Agreement. This Agreement may be executed simultaneously in
                two or
                more counterparts, each of which shall be deemed an original,
                but all of which shall constitute: one and the same instrument. Any
                modification of this Agreement will be effective only if it is in
                writing
                and signed by the Client and
                Ascendiant.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      	12.	 	
              Survival
                of Certain Provisions.
                Sections 3, 4, 5, 6, 7, 9, 9, 10, 12 and Exhibit A of this Agreement
                shall
                survive this Agreement, and remain operative and in full
                force
                and effect, regardless of, (i) the completion of any Transaction,
                (ii) the
                resignation of Ascendiant or any termination of Ascendiant's services,
                or
                (iii) any amendment, expiration or termination of this Agreement,
                and
                shall be binding upon, and shall inure to the benefit or, any successors,
                assigns, heirs
                and personal representatives of the Client, Ascendiant, and the
                Indemnified Persons.

            

    

    

    Please
      initial each page, sign below, and return an original and one copy of this
      letter to the undersigned to indicate your acceptance of the terms set forth
      herein, whereupon this letter and your acceptance shall constitute a binding
      agreement by and between RG Global Lifestyles, Inc. and Ascendiant Securities,
      LLC as of the date first above written. We appreciate the opportunity to be
      of
      service and look forward to a cooperative working relationship with you and
      your
      staff.

    

    
      	
              Sincerely,

            	 	
              Accepted
                and Agreed:

            
	 	 	 
	
              Ascendiant
                Securities, LLC

            	 	
              RG
                Global Lifestyles, Inc.

            
	 	 	 
	 	 	
              /s/
                signature

            
	
              By:

            	 	
              By:

            
	
              Its:
                Managing Director

            	 	
              Its:
                CEO

            
	
              Date:
                _____________

            	 	
              Date:
                3/28/2006

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      A

    

    This
      Exhibit A is a part of and is incorporated into that certain letter agreement
      between RG Global
      Lifestyles, Inc. (the
      "Client') and Ascendiant Securities, .LLC ("Ascendiant"). The letter agreement
      and this Exhibit A are referred to
      herein
      as the "Agreement".
      Capitalized terms used herein without
      definition shall have the meanings ascribed to them
      in
      the letter agreement.

    

    Each
      of
      the Client and Ascendiant (each an "Indemnifying Party")
      agrees
      to indemnify and hold harmless the other, any affiliates and the respective
      officers, directors, partners, employee, representatives and agents and any
      other persons controlling the other or any affiliates within the meaning of
      the
      Securities Act of 1933 or the Securities Exchange Act of 1934 (each such person
      or entity being referred to as
      an
      "Indemnified Person"), to the fullest extent lawful, from and against; and
      the
      Indemnified Persons shall have no liability to the Indemnifying Party or its
      owners, affiliates, controlling persons, security holders
      or
      creditors for, all claims, liabilities, losses, damages and expenses, including
      without limitation and as incurred, reimbursement of all costs of investigating,
      preparing, pursuing, or defending any such claim or action, including
fees
      and
expenses
      of counsel to, and the per diem costs, and expenses of personnel of, the
      Indemnified Person (collectively, "Losses") whether or not arising out of
      pending or threatened litigation, governmental investigation, arbitration or
      other alternative dispute resolution. or other action or proceeding
      (individually a "Proceeding"
      and collectively "Proceedings"),
      directly
      or indirectly related to or arising out of, or in connection with (i) actions
      taken or omitted to by taken by the Indemnifying Party, its affiliates,
      employees, directors, officers, partners, representatives or agents in
      connection with any transaction, or activities contemplated by this Agreement;
      (ii)
      actions
      taken or omitted to be
      taken
      by any Indemnified Pnrs6n pursuant to the terms of, or in connection with
      services rendered pursuant to, this Agreement, provided that in the case of
      this
      subsection (ii) the Indemnifying Party shall not be responsible for any Losses
      arising out of or based upon the willful misconduct or negligence (as determined
      by the judgment of a court of competent ,jurisdiction,
      no longer subject to appeal or further review) of or by such Indemnified Person;
      and (iii) any untrue statement or alleged untrue statement of material fact
      contained in any information approved by the Client or any omission or alleged
      omission to state a material fact necessary to make the statements therein
      not
      misleading (other than untrue statements or alleged untrue statements in, or
      omissions or alleged
      omissions
      from, information relating to an Indemnified Person furnished in writing by
      or
      on be-half of such Indemnified Person expressly for use in such information).
      If
      the indemnification provided for under this Agreement is unavailable to an
      Indemnified Person in respect of any Losses, then the indemnifying Party, in
      lieu of indemnifying such
      Indemnified
      Person, shall contribute to the amount paid or payable by such Indemnified
      Person as a result of such Losses in such proportion as is appropriate to
      reflect the relative fault of the Client on the one hand and the Indemnified
      Person on the other, as well as any other relevant equitable considerations.
      If
      any Proceeding is commenced as to which an Indemnified Person demands
      indemnification, the Indemnified Person shall have the right to retain counsel
      of its own choice to represent it, the lndemnifying Party shall pay the
      reasonable fees and expenses of such counsel, and such counsel shall to the
      extent consistent with its professional responsibilities cooperate with the
      Indemnifying Party and any counsel designated by the Indemnifying Party ,
      provided, that in no event shall the Indemnifying Party be required to pay
      fees
      and expenses under this indemnity for more than one firm of attorneys for the
      Indemnified Person in any jurisdiction in any one legal action or group of
      related legal actions. The Indemnifying Party shall be liable as provided herein
      for any settlement of any claim against Ascendiant or any Indemnified Person
      made with the Indemnifying Party's written consent which consent shall not
      be
      unreasonably withheld. The Indemnifying Party agrees that it will not, without
      the prior written consent of Ascendiant, settle or compromise or consent to
      the
      entry of any judgment in any Proceeding (whether or not any Indemnified Person
      is a party thereto) unless such settlement, compromise or consent includes
      an
      unconditional release of Ascendiant and each other Indemnified Person from
      all
      liability arising or that may arise out of such Proceeding. The indemnity and
      contribution obligations of the Indemnifying Party set forth herein shall be
      in
      addition to any liability or obligation the Indemnifying Party may have to
      any
      Indemnified Person at common law or otherwise. The Indemnifying Party hereby
      consents to personal jurisdiction, service and venue in any court in which
      any
      claim, which is subject to this Agreement, is brought against Ascendiant or
      any
      other Indemnified Person.<PAGE>

EXHIBIT 4.7

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO RAPTOR NETWORKS TECHNOLOGY, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.

                        RAPTOR NETWORKS TECHNOLOGY, INC.

W-MGRY-01                                           Date of Grant: July 31, 2006

                               WARRANT TO PURCHASE
                             SHARES OF COMMON STOCK

         THIS CERTIFIES THAT, for value received, and subject to the provisions
and upon the terms and conditions hereinafter set forth, MONTGOMERY 2006-5
PARTNERSHIP is entitled to subscribe for and purchase, at an exercise price per
share equal to $0.43948 (as adjusted herein, the "WARRANT PRICE"), Four Hundred
Fifty-Five Thousand Eighty-Four (455,084) shares of the fully paid and
nonassessable Common Stock (as adjusted herein) of RAPTOR NETWORKS TECHNOLOGY,
INC., a Colorado corporation (the "COMPANY") located at 1241 E. Dyer Road, Suite
150, Santa Ana, California 92705. As used herein, (i) "DATE OF GRANT" shall mean
the Date of Grant set forth above, and (ii) "SHARES" shall mean the Common Stock
issued or issuable upon the exercise of this Warrant.

         1. TERM. The purchase right represented by this Warrant is fully vested
and immediately exercisable, in whole or in part, at any time from the date
hereof through July 31, 2013.

         2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT. Subject to
SECTION 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder or holder's assignee hereof, in whole or in part and
from time to time, by (a) the surrender of this Warrant (with the notice of
exercise form attached hereto as EXHIBIT A duly executed) at the principal
office of the Company and (b) unless to the extent this Warrant is being
exercised on a net issuance basis pursuant to Section 8, the payment to the
Company, by cashier's check or wire transfer, of an amount equal to the then
applicable Warrant Price multiplied by the number of Shares then being
purchased. The person or persons in whose name(s) any certificate(s)
representing Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the shares represented thereby (and such
shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised. In the event
of any exercise of the rights represented by this Warrant, certificates for the
shares of stock so purchased shall be delivered to the holder hereof as soon as
possible and in any event within thirty days after such exercise and, unless

<PAGE>

this Warrant has been fully exercised or expired, a new Warrant representing the
portion of the Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to the holder hereof as soon as
possible and in any event within such thirty day period.

         3. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and
kind of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:

                  (a) RECLASSIFICATION OR MERGER. In case of any
reclassification, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), or in case of any merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is the acquiring and the surviving corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant), or in case of any sale of all or substantially all of the assets
of the Company, the Company, or such successor or purchasing corporation, as the
case may be, or its parent corporation, shall duly execute and deliver to the
holder of this Warrant a new Warrant (in form and substance reasonably
satisfactory to the holder of this Warrant), so that the holder of this Warrant
shall have the right to receive, at a total purchase price not to exceed that
payable upon the exercise of the unexercised portion of this Warrant, and in
lieu of the Shares theretofore issuable upon exercise of this Warrant, the kind
and amount of shares of stock, other securities, money and property receivable
upon such reclassification, change or merger by a holder of the number of Shares
then purchasable under this Warrant. Such new Warrant shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this SECTION 3. The provisions of this subparagraph
(a) shall similarly apply to successive reclassifications, changes, mergers,
consolidations, transfers, amendments and waivers.

                  (b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at
any time while this Warrant remains outstanding and unexpired shall subdivide or
combine its outstanding Shares, the Warrant Price shall be proportionately
decreased in the case of a subdivision or increased in the case of a
combination, effective at the close of business on the date the subdivision or
combination becomes effective.

                  (c) STOCK DIVIDENDS AND OTHER DISTRIBUTIONS. In case the
Company shall make or issue, or shall fix a record date for the determination of
eligible holders entitled to receive, a dividend or other distribution with
respect to the Shares (or any shares of stock or other securities at the time
issuable upon exercise of the Warrant) payable in (a) securities of the Company
or (b) assets (excluding cash dividends paid or payable solely out of retained
earnings), then, in each such case, the holder of this Warrant on exercise
hereof at any time after the consummation, effective date or record date of such
dividend or other distribution, shall receive, in addition to the Shares (or
such other stock or securities) issuable on such exercise prior to such date,
and without the payment of additional consideration therefor, the securities or
such other assets of the Company to which such holder would have been entitled
upon such date if such holder had exercised this Warrant on the date hereof and
had thereafter, during the period from the date hereof to and including the date
of such exercise, retained such shares and/or all other additional stock
available by it as aforesaid during such period giving effect to all adjustments
called for by this SECTION 3.

                                      -2-
<PAGE>

                  (d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in
the Warrant Price, the number of Shares purchasable hereunder shall be adjusted,
to the nearest whole share, to the product obtained by multiplying the number of
Shares purchasable immediately prior to such adjustment in the Warrant Price by
a fraction, the numerator of which shall be the Warrant Price immediately prior
to such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.

                  (e) CONVERSION OF SHARES. In the event that all of the
authorized and outstanding Shares are redeemed or converted or reclassified into
other securities or property pursuant to the Company's Articles of Incorporation
or otherwise, or the Shares otherwise ceases to exist, then, in such case, the
holder of this Warrant, upon exercise hereof at any time after the date on which
the Shares are so redeemed or converted, reclassified or ceases to exist (the
"TERMINATION DATE"), shall receive, in lieu of the number of Shares that would
have been issuable upon such exercise immediately prior to the Termination Date,
the securities or property that would have been received if this Warrant had
been exercised in full and the Shares received thereupon had been simultaneously
converted immediately prior to the Termination Date, all subject to further
adjustment as provided in this Warrant. Additionally, the Warrant Price shall be
immediately adjusted to equal the quotient obtained by dividing (x) the
aggregate Warrant Price of the maximum number of Shares for which this Warrant
was exercisable immediately prior to the Termination Date by (y) the number of
Shares for which this Warrant is exercisable immediately after the Termination
Date, all subject to further adjustment as provided herein.

         4. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to SECTION 3 hereof, the
Company shall make a certificate signed by its chief executive officer or chief
financial officer setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the Warrant Price and the number of Shares purchasable
hereunder after giving effect to such adjustment, which shall be sent pursuant
to SECTION 12 hereof to the holder of this Warrant.

         5. FRACTIONAL SHARES. No fractional Shares will be issued in connection
with any exercise hereunder, but in lieu of such fractional Shares the Company
shall make a cash payment therefor based on the fair market value of the Shares
on the date of exercise determined in accordance with SECTION 8(C) hereof.

         6. COMPLIANCE WITH SECURITIES ACT: REGISTRATION RIGHTS; ASSIGNMENT OR
DISPOSITION OF WARRANT OR SHARES OF COMMON STOCK. Subject to the provisions of
this SECTION 6, this Warrant may be assigned or transferred in whole or in part
by the holder hereof. If so assigned, the assignee shall be the subsequent
holder and all provisions contained herein shall apply as if the assignee was
the original holder. The holder of this Warrant, by acceptance hereof, agrees
that this Warrant, and the Shares to be issued upon exercise hereof are being
acquired for investment and that such holder will not offer, sell or otherwise
dispose of this Warrant, or any Shares to be issued upon exercise hereof except
under circumstances which will not result in a violation of the Securities Act
of 1933, as amended (the "Act") and applicable state securities laws. This
Warrant and all Shares issued upon exercise of this Warrant (unless registered
under the Act) shall be stamped or imprinted with a legend in substantially the
following form:

                                      -3-
<PAGE>

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. ("SECURITIES ACT"). SUCH SHARES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SHARES UNDER THE SECURITIES ACT, UNLESS IN THE WRITTEN LEGAL OPINION (REASONABLY
ACCEPTABLE TO THE COMPANY) OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, THE
SECURITIES MAY BE TRANSFERRED WITHOUT REGISTRATION PURSUANT TO AN AVAILABLE
EXEMPTION."

         Notwithstanding the foregoing, unless required by the Company's
transfer agent, no legal opinion shall be required for sales of Shares made in
accordance with Rule 144 under the Act, provided the Company receives customary
broker's documentation and seller's certifications in connection therewith. The
shares to be issued upon exercise of this Warrant shall be subject to certain
registration rights as set forth on EXHIBIT B attached hereto and, by this
reference, made a part hereof, and may bear additional legends relating thereto.

         7. RIGHTS AS STOCKHOLDERS; INFORMATION. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Shares or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.

         8. RIGHT TO CONVERT WARRANT INTO SHARES; NET ISSUANCE.

                  (a) RIGHT TO CONVERT. In addition to and without limiting the
rights of the holder under the terms of this Warrant, the holder shall have the
right to convert this Warrant or any portion thereof (the "CONVERSION RIGHT")
into Shares as provided in this SECTION 8 at any time or from time to time
during the term of this Warrant. Upon exercise of the Conversion Right with
respect to a particular number of shares subject to this Warrant (the "Converted
Warrant Shares"), the Company shall deliver to the holder (without payment by
the holder of any exercise price or any cash or other consideration) (X) that
number of shares of fully paid and nonassessable Shares equal to the quotient
obtained by dividing the value of this Warrant (or the specified portion hereof)
on the Conversion Date (as hereinafter defined), which value shall be determined
by subtracting (A) the aggregate Warrant Price of the Converted Warrant Shares
immediately prior to the exercise of the Conversion Right from (B) the aggregate
fair market value of the Converted Warrant Shares issuable upon exercise of this
Warrant (or the specified portion hereof) on the Conversion Date (as herein
defined) by (Y) the fair market value of one Share on the Conversion Date (as
herein defined).

                                      -4-
<PAGE>

Expressed as a formula, such conversion shall be computed as follows:

                                                  X =  B-A
                                                      -----
                                                        Y

Where:           X  =  The number of Shares that may be issued to holder.

                 Y  =  The fair market value (FMV) of one Share.

                 A  =  The aggregate Warrant Price (i.e., Converted Warrant
                       Shares x Warrant Price).

                 B  =  The aggregate FMV (i.e., FMV x Converted Warrant Shares).

         No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). All references
herein to an "exercise" of the Warrant shall include an exchange pursuant to
this SECTION 8.

                  (b) METHOD OF EXERCISE. The Conversion Right may be exercised
by the holder by the surrender of this Warrant at the principal office of the
Company together with a notice of exercise substantially in the form attached
hereto as EXHIBIT A-1, specifying that the holder thereby intends to exercise
the Conversion Right and indicating the number of shares subject to this Warrant
that are being surrendered (referred to in subsection (a) hereof as the
Converted Warrant Shares) in exercise of the Conversion Right. Such conversion
shall be effective upon receipt by the Company of this Warrant together with the
aforesaid notice of exercise, or on such later date as is specified therein (the
"CONVERSION DATE"), and, at the election of the holder hereof, may be made
contingent upon the closing of the sale of the Company's Common Stock to the
public in an offering pursuant to a Registration Statement under the Act (a
"PUBLIC Offering"). Certificates for the shares issuable upon exercise of the
Conversion Right and, if applicable, a new warrant evidencing the balance of the
shares remaining subject to this Warrant, shall be issued as of the Conversion
Date and shall be delivered to the holder within thirty days following the
Conversion Date.

                  (c) DETERMINATION OF FAIR MARKET VALUE. For purposes of this
SECTION 8, "FAIR MARKET VALUE" of a Share as of a particular date (the
"DETERMINATION DATE") shall mean:

                           (i) If traded on a securities exchange or The Nasdaq
Stock Market, the fair market value of the Common Stock shall be deemed to be
the average of the closing or last reported sale prices of the Common Stock on
such exchange or market over the thirty day period ending five business days
prior to the Determination Date, and the fair market value of the Shares shall
be deemed to be such fair market value of the Common Stock;

                           (ii) If otherwise traded in an over-the-counter
market, the fair market value of the Common Stock shall be deemed to be the
average of the closing ask prices of the Common Stock over the thirty day period
ending five business days prior to the Determination Date, and the fair market
value of the Shares shall be deemed to be such fair market value of the Common
Stock; and

                                      -5-
<PAGE>

                           (iii) If there is no public market for the Common
Stock, then fair market value shall be the price reasonably determined in good
faith by the Board of Directors of the Company.

         9. RESERVATION OF COMMON STOCK. The Company hereby covenants that at
all times following the date hereof there shall be reserved for issuance and
delivery upon exercise of this Warrant such number of Shares as are from time to
time issuable upon exercise of this Warrant. The Company hereby further
covenants that from time to time following the date hereof, the Company will
take all steps necessary to amend its Certificate of Incorporation to provide
sufficient reserves of Shares issuable upon exercise of this Warrant. All such
shares shall be duly authorized, and when issued upon such exercise, shall be
validly issued, fully paid and non-assessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale and
free and clear of all preemptive rights, except encumbrances or restrictions
arising under federal or state securities laws.

         10. MODIFICATION AND WAIVER. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.

         11. NOTICES. Any notice, request, communication or other document
required or permitted to be given or delivered to the holder hereof or the
Company must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally, (ii) one Business Day after deposit with an
overnight courier service, in each case properly addressed to the party to
receive the same, or (iii) four business days after deposit with the United
States Postal Service sent certified or registered mail, postage prepaid; to
each such holder at its address as then shown on the books of the Company or to
the Company at the address indicated therefor on the signature page of this
Warrant, or such other address as either party may specify from time to time by
notice given to the other party in accordance with this SECTION 11.

         12. BINDING EFFECT ON SUCCESSORS. Until the issuance of any new warrant
required to be issued under SECTION 3(A), this Warrant shall be binding upon any
corporation that issues securities in exchange for securities of the class
issuable upon exercise of this Warrant in connection with any merger,
consolidation or acquisition of all or substantially all of the Company's
assets, and all of the obligations of the Company relating to the Shares
issuable upon the exercise or conversion of this Warrant shall survive the
exercise, conversion and termination of this Warrant and all of the covenants
and agreements of the Company shall inure to the benefit of the successors and
assigns of the holder hereof. The Company will, at the time of the exercise or
conversion of this Warrant, in whole or in part, upon request of the holder
hereof, acknowledge in writing its continuing obligation to the holder hereof in
respect of any rights (including, without limitation, any right to registration
of the shares) to which the holder hereof shall continue to be entitled after
such exercise or conversion in accordance with this Warrant; provided, that the
failure of the holder hereof to make any such request shall not affect the
continuing obligation of the Company to the holder hereof in respect of such
rights.

                                      -6-
<PAGE>

         13. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.

         14. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.

         15. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the
internal laws of the State of California without regard to its conflicts of laws
principles and the venue for any controversy concerning this Warrant shall be
the state and federal courts located in Orange County, California.

         16. SURVIVAL. All agreements of the Company and the holder hereof
contained herein shall survive indefinitely until, by their respective terms,
they are no longer operative.

         17. REMEDIES. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the holders hereof (in the
case of a breach by the Company), or the Company (in the case of a breach by a
holder), may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Warrant.

         18. ACCEPTANCE. Receipt of this Warrant by the holder hereof or by any
subsequent holder shall constitute acceptance of and agreement to the terms and
conditions set forth herein.

         19. NO IMPAIRMENT OF RIGHTS. The Company will not, by amendment of its
Articles of Incorporation or through any other means, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment. Without limiting
the generality of the foregoing, the Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable Shares upon exercise of this Warrant.

         20. SEVERABILITY. If any term, provision, covenant, or restriction of
this Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Warrant shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.

         21. NOTICES OF RECORD DATE. In case:

                  (a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any other securities or to receive any other right; or

                                      -7-
<PAGE>

                  (b) of any consolidation or merger of the Company with or into
another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of all
or substantially all of the assets of the Company to another corporation in
which holders of the Company's stock are to receive stock, securities or
property of another corporation; or

                  (c) of any voluntary dissolution, liquidation or winding-up of
the Company; or

                  (d) of any redemption or conversion of all outstanding Common
Stock.

then, and in each such case, the Company will deliver or cause to be delivered
to the holder of this Warrant a notice specifying, as the case may be, (i) the
date on which a record is to be taken for the purpose of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation,
winding-up, redemption or conversion is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock shall be entitled
to exchange their shares of Common Stock, for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up. Such notice shall be
delivered at least seven (7) days prior to the date therein specified.

                            [SIGNATURE PAGE FOLLOWS]

                                      -8-
<PAGE>

         IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.

                                              RAPTOR NETWORKS TECHNOLOGY, INC.

                                              By:     /S/ BOB VAN LEYEN
                                                 -------------------------------

                                              Name:     BOB VAN LEYEN
                                                   -----------------------------

                                              Title:  CHIEF FINANCIAL OFFICER
                                                    ----------------------------

ACKNOWLEDGED AND AGREED:

MONTGOMERY 2006-5 PARTNERSHIP

By:   /S/ DAVID P. MICHAELS
    ----------------------------------

Name:   DAVID P. MICHAELS
      --------------------------------

Title:   PARTNER
       -------------------------------

                                      -9-
<PAGE>

                                    EXHIBIT A

                               NOTICE OF EXERCISE

To:      RAPTOR NETWORKS TECHNOLOGY, INC.

         1. The undersigned hereby elects to purchase __________ shares of
Common Stock of RAPTOR NETWORKS TECHNOLOGY, INC. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.

         2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:

                    ____________________________________________
                                     (Name)

                    ____________________________________________
                                    (Address)

         3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof, the undersigned has executed an Investment Representation
Statement attached hereto as Schedule 1.

                                              __________________________________
                                              Signature
                                              Date

                                      -10-
<PAGE>

                                   EXHIBIT A-1

              NOTICE OF EXERCISE OF NET ISSUANCE CONVERSION RIGHTS

To:      RAPTOR NETWORKS TECHNOLOGY, INC.

         1. The undersigned, the registered holder of the Warrant delivered
herewith (the "Warrant"), hereby elects to exercise the Conversion Right (as
defined in SECTION 8 of the Warrant) as provided herein. __________ shares
subject to the Warrant are being surrendered hereby in exercise of the
Conversion Right. The number of shares to be issued pursuant to this exercise
shall be determined by reference to the formula in SECTION 8(A) of the Warrant,
which requires the use of the "fair market value" of the Company's stock. As of
the Determination Date (as defined in the Warrant), the "fair market value" of
one of the Shares shall be determined in the manner provided in SECTION 8(C) of
the Warrant, which amount has been determined by the undersigned (or agreed to
by the holder of the Warrant and RAPTOR NETWORKS TECHNOLOGY, INC.) to be $_____
per share. Therefore, ___________ shares are to be issued to the undersigned
pursuant to this exercise.

         2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:

                    ____________________________________________
                                     (Name)

                    ____________________________________________
                                    (Address)

         3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof, the undersigned has executed an Investment Representation
Statement attached hereto as Schedule l.

                                              __________________________________
                                              Signature
                                              Date

                                      -11-
<PAGE>

                                   SCHEDULE 1

                       INVESTMENT REPRESENTATION STATEMENT

Purchaser:        _____________________________________________________

Company:          RAPTOR NETWORKS TECHNOLOGY, INC.

Security:         _____________________________________________________

Amount:           _____________________________________________________

Date:             _____________________________________________________

         In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:

         (a) The Purchaser is aware of the Company's business affairs and
financial condition, and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities. The
Purchaser is purchasing the Securities for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Act").

         (b) The Purchaser understands that the Securities have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the Purchaser's investment intent as expressed herein. In this
connection, the Purchaser understands that, in the view of the Securities and
Exchange Commission ("SEC"), the statutory basis for such exemption may be
unavailable if the Purchaser's representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.

         (c) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Act or unless an exemption
from registration is otherwise available. Moreover, the Purchaser understands
that the Company is under no obligation to register the Securities except as set
forth in the Warrant under which the Securities are being acquired. In addition,
the Purchaser understands that the certificate evidencing the Securities will be
imprinted with the legend referred to in the Warrant under which the Securities
are being purchased.

         (d) The Purchaser is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other

                                      -12-
<PAGE>

things: The availability of certain public information about the Company, the
resale occurring not less than one year after the party has purchased and paid
for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities being sold during any three-month period
not exceeding the specified limitations stated therein.

         (e) The Purchaser further understands that at the time it wishes to
sell the Securities there may be no public market upon which to make such a
sale, and that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144 and 144A, and
that, in such event, the Purchaser may be precluded from selling the Securities
under Rule 144 and 144A even if the one-year minimum holding period had been
satisfied.

         (f) The Purchaser further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the Act,
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.

                                      Purchaser:________________________________

                                      Date: _______________, 20____

                                      -13-
<PAGE>

                                    EXHIBIT B

                               REGISTRATION RIGHTS

         1.       Certain Definitions.

         As used in this EXHIBIT B, the following terms shall have the following
respective meanings:

         "COMMISSION" means the United States Securities and Exchange Commission
or any other federal agency at any time administering the Securities Act and the
Exchange Act.

         "COMMON STOCK" means the Common Stock of the Company, any shares into
which such Common Stock shall have been changed, or any shares resulting from
any reclassification of such Common Stock.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor statute thereto, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect at the
time.

         "HOLDER" means the person holding Registrable Securities to whom these
registration rights have been assigned pursuant to this Agreement.

         "PERSON" means an individual, partnership, corporation, association,
trust, joint venture, unincorporated organization and any government,
governmental department or agency or political subdivision thereof.

         "REGISTRABLE SECURITIES" means (i) any Common Stock held by Holder that
was acquired or is issuable upon exercise or conversion of this Warrant, (ii)
any Common Stock issued or issuable as a result of a stock split, stock
dividend, recapitalization or similar event with respect to securities described
in clause (i) above and (iii) securities issued in replacement or exchange of
any of the securities issued in clauses (i) or (ii) above; provided, however,
that notwithstanding anything to the contrary contained herein, "Registrable
Securities" shall not at any time include any shares of Common Stock (i)
registered and sold pursuant to the Securities Act, or (ii) sold to the public
pursuant to Rule 144 promulgated under the Securities Act.

         "REGISTRATION EXPENSES" means all expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all registration, qualification and filing fees, printing expenses, fees and
disbursements of counsel for the Company and accounting fees of the Company
provided, however, that Registration Expenses shall not include underwriter fees
and discounts, selling commissions and share transfer taxes.

         "SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor statute thereto, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect at the time.

                                      -14-
<PAGE>

         2. REGISTRATION.

                  (a) INCIDENTAL REGISTRATION. If the Company for itself or any
of its security holders shall at any time or times after the date hereof
determine to register under the Securities Act any shares of its capital stock
(other than (i) the registration of an offer, sale or other disposition of
securities solely to employees of, or other persons providing services to, the
Company, or any subsidiary pursuant to an employee or similar benefit plan or
(ii) securities to be issued in connection with a merger, acquisition or other
transaction of the type described in Rule 145 under the Securities Act or a
comparable or successor rule, registered on Form S-4 or similar or successor
forms), on each such occasion the Company will notify Holder of such
determination prior to the filing of such registration statement, and upon the
request of Holder given in writing within ten (10) days after the receipt of
such notice, the Company will cause any of the Registrable Securities specified
by Holder to be included in such registration statement to the extent such
registration is permissible under the Securities Act and subject to the
conditions of the Securities Act (an "INCIDENTAL REGISTRATION"); PROVIDED,
HOWEVER, that the Company's registration obligations hereunder shall terminate
upon the earliest to occur of (i) the date as of which the Holder may sell all
of the Registrable Securities pursuant to Rule 144 under the Securities Act (or
any successor thereto) without restriction as to volume or otherwise pursuant to
Rule 144(k) under the Securities Act (or any successor thereto) or (ii) the date
on which the Holder shall have sold all of the Registrable Securities.

                  (b) EXPENSES. The Company shall pay all Registration Expenses
incurred in connection with any Incidental Registration other than underwriter
fees and discounts, selling commissions and share transfer taxes, which shall be
paid pro rata by each holder of Registrable Securities participating in such
registrations.

         3. INDEMNIFICATION AND CONTRIBUTION.

                  (a) INDEMNIFICATION BY THE COMPANY. In the event of any
registration under the Securities Act pursuant to SECTION 2 of any Registrable
Securities covered by such registration, the Company will, and hereby does,
indemnify and hold harmless each Holder of Registrable Securities to be sold
under such registration statement, Holder's legal counsel, each other person who
participates as an underwriter in the offering or sale of such securities (if so
required by such underwriter as a condition to including the Registrable
Securities of the Holder in such registration) and each other person, if any,
who controls or is a member (partner) of Holder or any such underwriter within
the meaning of the Securities Act (collectively, the "INDEMNIFIED PARTIES"),
against any losses, claims, damages or liabilities, joint or several, to which
the Indemnified Parties may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which such securities were registered under the Securities Act,
any preliminary prospectus, final prospectus or summary prospectus contained
therein or any document incorporated therein by reference, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or arise out of any violation by the Company of any rule
or regulation promulgated under the Securities Act or state securities law

                                      -15-
<PAGE>

applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, and the Company will reimburse
the Indemnified Parties for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, however, that the Company shall not
be liable to any Indemnified Party in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Indemnified Party specifically
for use therein; and provided further, that the Company shall not be required to
indemnify any Person against any liability arising from any untrue or misleading
statement or omission contained in any preliminary prospectus if such deficiency
is corrected in the final prospectus or for any liability that arises out of the
failure by an Indemnified Person seeking indemnity hereunder to deliver a
prospectus if and to the extent required by the Securities Act.

                  (b) INDEMNIFICATION BY THE HOLDER. The Company may require, as
a condition to including any Registrable Securities of any person or entity in
any registration statement filed pursuant to SECTION 2, that the Company shall
have received an undertaking reasonably satisfactory to it from such person or
entity to indemnify and hold harmless (in the same manner and to the same extent
as set forth in paragraph (a) of this SECTION 3, including the reimbursement for
any legal or other expenses reasonably incurred by the Company in connection
therewith) the Company, each director of the Company, each officer of the
Company and each other person, if any, who controls the Company within the
meaning of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if, and only if, such statement
or alleged statement or omission or alleged omission was made in reliance upon
and in conformity with information furnished in writing to the Company directly
by or on behalf of such person or entity specifically for use therein; provided,
however, that the obligation of Holder hereunder shall be limited to an amount
equal to the proceeds received by Holder upon the sale of Registrable Securities
sold in the offering covered by such registration.

                  (c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
Indemnified Party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this SECTION 3,
such Indemnified Party will, if a claim in respect thereof is to be made against
a party required to provide indemnification (an "INDEMNIFYING PARTY"), give
written notice to the latter of the commencement of such action, provided,
however, that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligation under the
preceding paragraphs of this SECTION 3, except to the extent that the
Indemnifying Party is actually prejudiced by such failure to give notice. In
case any such action is brought against an Indemnified Party, unless in such
Indemnified Party's reasonable judgment a conflict of interest between such
Indemnified and Indemnifying Parties may exist in respect of such claim, the
Indemnifying Party shall be entitled to participate in and to assume the defense
thereof, jointly with any other Indemnifying Party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
Indemnified Party, and after notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense thereof, the

                                      -16-
<PAGE>

Indemnifying Party shall not be liable to such Indemnified Party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No Indemnifying
Party shall consent to entry of any judgment or enter into any settlement
without the consent of the Indemnified Party which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.

                  (d) INDEMNIFICATION PAYMENT. The indemnification required by
this SECTION 3 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, reasonably promptly after bills are
received or expense, loss, damage or liability is incurred.

                  (e) SURVIVAL OF OBLIGATIONS. The obligations of the Company
and of the Holder under this SECTION 3 shall survive the conversion of the
Warrant and the completion of any offering of Registrable Securities pursuant to
the terms hereof.

                                      -17-

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