Document:

Exhibit 4.2

 

WARRANT

 

NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO
RULE 144 OR RULE 144A UNDER SAID ACT. 
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.

 

VASO ACTIVE PHARMACEUTICALS, INC.

 

Warrant To Purchase Class A
Common Stock

 

Warrant No.: W-1

Number of Shares: 166,667

Date of Issuance: March 16, 2004 (“Issuance
Date”)

 

 

Vaso Active Pharmaceuticals,
Inc., a Delaware corporation (the “Company”),
hereby certifies that, for Ten United States Dollars ($10.00) and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, THE RIVERVIEW GROUP LLC, the registered holder hereof or its
permitted assigns, is entitled, subject to the terms set forth below, to
purchase from the Company, at the Exercise Price (as defined below) then in
effect, upon surrender of this Warrant to Purchase Class A Common Stock
(including all Warrants to Purchase Class A Common Stock issued in exchange,
transfer or replacement hereof, the “Warrant”),
at any time or times on or after the date hereof, but not after 11:59 P.M., New
York Time, on the Expiration Date (as defined below), One Hundred Sixty Six
Thousand Six Hundred Sixty Seven (166,667) fully paid nonassessable shares of
Class A Common Stock (as defined below)  (the
“Warrant Shares”).  Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth in Section
15.  This Warrant is one of the Warrants
to Purchase Class A Common Stock (the “SPA
Warrants”) issued pursuant to Section 1 of that certain Securities
Purchase Agreement, dated as of March 16, 2004 (the “Initial Issuance Date”), among the Company and the buyers
(the “Buyers”) listed on the
Schedule of Buyers attached thereto (the “Securities
Purchase Agreement”).

 

1.             EXERCISE
OF WARRANT.

 

(a)           Mechanics
of Exercise.  Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)),
this Warrant may be

 

 

exercised by the holder hereof
on any day from and after the date hereof, in whole or in part, by
(i) delivery of a written notice, in the form attached hereto as Exhibit
A (the “Exercise Notice”), of
such holder’s election to exercise this Warrant and (ii) (A) payment to
the Company of an amount equal to the applicable Exercise Price multiplied by
the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or by
wire transfer of immediately available funds or (B) by notifying the Company
that this Warrant is being exercised pursuant to a Cashless Exercise (as
defined in Section 1(d)).  The holder
hereof shall not be required to deliver the original Warrant in order to effect
an exercise hereunder.  Execution and
delivery of the Exercise Notice with respect to less than all of the Warrant
Shares shall have the same effect as cancellation of the original Warrant and
issuance of a new Warrant evidencing the right to purchase the remaining number
of Warrant Shares.  On or before the
first Business Day following the date on which the Company has received each of
the Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless Exercise)
(the “Exercise Delivery Documents”),
the Company shall transmit by facsimile an acknowledgment of confirmation of
receipt of the Exercise Delivery Documents to the holder and the Company’s
transfer agent (the “Transfer Agent”).
On or before the third Business Day following the date on which the Company has
received all of the Exercise Delivery Documents (the “Share Delivery Date”), the Company shall
(X) provided that the Transfer Agent is participating in The Depository Trust
Company (“DTC”) Fast Automated
Securities Transfer Program, upon the request of the holder, credit such
aggregate number of shares of Class A Common Stock to which the holder is
entitled pursuant to such exercise to the holder’s or its designee’s balance
account with DTC through its Deposit Withdrawal Agent Commission system, or (Y)
if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, issue and dispatch by overnight courier to the address as
specified in the Exercise Notice, a certificate, registered in the name of the
holder or its designee, for the number of shares of Class A Common Stock to
which the holder is entitled pursuant to such exercise.  Upon delivery of the Exercise Notice and
Aggregate Exercise Price referred to in clause (ii)(A) above or notification to
the Company of a Cashless Exercise referred to in Section 1(d), the holder
shall be deemed for all corporate purposes to have become the holder of record
of the Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of the certificates evidencing such
Warrant Shares.  If this Warrant is
submitted in connection with any exercise pursuant to this Section 1(a) and the
number of Warrant Shares represented by this Warrant submitted for exercise is
greater than the number of Warrant Shares being acquired upon an exercise, then
the Company shall as soon as practicable and in no event later than three
Business Days after any exercise and at its own expense, issue a new Warrant (in
accordance with Section 7(d)) representing the right to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which this Warrant
is exercised.  No fractional shares of
Class A Common Stock are to be issued upon the exercise of this Warrant, but
rather the number of shares of Class A Common Stock to be issued shall be
rounded up to the nearest whole number. 
The Company shall pay any and all taxes, including without limitation,
all documentary stamp, transfer or similar taxes, or other incidental expense
that may be payable with respect to the issuance and delivery of Warrant Shares
upon exercise of this Warrant.

 

(b)           Exercise
Price.  For purposes of this Warrant,
“Exercise Price” means $8.75,
subject to adjustment as provided herein.

 

2

 

(c)           Company’s
Failure to Timely Deliver Securities. 
Subject to Section 1(f), if the Company shall fail for any reason or for
no reason to issue to the holder within three Business Days of receipt of the
Exercise Delivery Documents, a certificate for the number of shares of Class A
Common Stock to which the holder is entitled or to credit the holder’s balance
account with DTC for such number of shares of Class A Common Stock to which the
holder is entitled upon the holder’s exercise of this Warrant, the Company
shall pay as additional damages in cash to such holder on each day after such
third  Business Day that the issuance
of such Class A Common Stock certificate is not timely effected an amount equal
to 1.0% of the product of (A) the sum of the number of shares of Class A Common
Stock not issued to the holder on a timely basis and to which the holder is
entitled and (B) the Closing Sale Price of the Class A Common Stock on the
trading day immediately preceding the last possible date which the Company
could have issued such Class A Common Stock to the holder without violating
Section 1(a).  In addition, the holder, upon written notice
to the Company, may void its Exercise Notice with respect to, and have
returned, any portion of this Warrant that has not been exercised pursuant to
such Exercise Notice; provided that the voiding of an Exercise Notice shall not
affect the Company’s obligations to make any payments which have accrued prior
to the date of such notice pursuant to this Section 1(c) or otherwise.

 

(d)           Cashless
Exercise.  Notwithstanding anything
contained herein to the contrary, if at any time during the period commencing
ten (10) Business Days prior to the holder’s delivery of an Exercise Notice and
ending on the day of delivery of the Exercise Notice, a Registration Statement
(as defined in the Registration Rights Agreement) covering the Warrant Shares
that are the subject of the Exercise Notice (the “Unavailable Warrant Shares”) is not available for the resale
of such Unavailable Warrant Shares, the Holder may, in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in payment
of the Aggregate Exercise Price, elect instead to receive upon such exercise
the “Net Number” of shares of Class A Common Stock determined according to the
following formula  (a “Cashless
Exercise”):

 

	
  Net Number = (A x B) - (A x C)

  
	
   

  	
  B

  	
   

  
	
   

  	
   

  
	
   

  	
  For purposes of the foregoing formula:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A= the total number of shares with respect to which this Warrant is
  then being exercised.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B= the Closing Sale Price of the Class A Common Stock (as reported by
  Bloomberg) on the date immediately preceding the date of the Exercise Notice.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  C= the Exercise Price then in effect for the applicable Warrant
  Shares at the time of such exercise.

  
				

 

3

 

(e)           Disputes.  In the case of a dispute as to the
determination of the Exercise Price or the arithmetic calculation of the
Warrant Shares, the Company shall promptly issue to the holder the number of
Warrant Shares that are not disputed and resolve such dispute in accordance
with Section 12.

 

(f)            Limitations
on Exercises.

 

(i)            Beneficial
Ownership.  The Company shall not
effect the exercise of this Warrant, and no Person (as defined below) who is a
holder of this Warrant shall have the right to exercise this Warrant, to the
extent that after giving effect to such exercise, such Person (together with
such Person’s affiliates) would beneficially own in excess of 9.99% of the
shares of the Class A Common Stock outstanding immediately after giving effect
to such exercise.  For purposes of the
foregoing sentence, the aggregate number of shares of Class A Common Stock
beneficially owned by such Person and its affiliates shall include the number
of shares of Class A Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such sentence is being made, but shall
exclude shares of Class A Common Stock which would be issuable upon (i)
exercise of the remaining, unexercised portion of this Warrant beneficially
owned by such Person and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
beneficially owned by such Person and its affiliates (including, without
limitation, any debentures, convertible notes or convertible preferred stock or
warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein.  Except as
set forth in the preceding sentence, for purposes of this paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended. 
For purposes of this Warrant, in determining the number of outstanding
shares of Class A Common Stock a holder may rely on the number of outstanding
shares of Class A Common Stock as reflected in (1) the Company’s most recent
Form 10-Q, Form 10-K or other public filing with the Securities and Exchange
Commission, as the case may be, (2) a more recent public announcement by the
Company or (3) any other notice by the Company or its Transfer Agent setting
forth the number of shares of Class A Common Stock outstanding.  For any reason at any time, upon the written
or oral request of the holder of this Warrant, the Company shall within one
Business Day confirm in writing to the holder of this Warrant the number of
shares of Class A Common Stock then outstanding.  In any case, the number of outstanding shares of Class A Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including the SPA Securities and the SPA Warrants,
by the holder of this Warrant and its affiliates since the date as of which
such number of outstanding shares of Class A Common Stock was reported.

 

(ii)           Principal
Market Regulation.  The Company
shall not be obligated to issue any shares of Class A Common Stock upon
exercise of this Warrant if the

 

4

 

issuance of such shares of Class A Common Stock would exceed that
number of shares of Class A Common Stock which the Company may issue upon
exercise of this Warrant (including, as applicable, any shares of Class A
Common Stock issued upon conversion of or as payment of any interest under the
SPA Securities) without breaching the Company’s obligations under the rules or
regulations of the Principal Market (the “Exchange
Cap”), except that such limitation shall not apply in the event that
the Company (A) obtains the approval of its shareholders as required by the
applicable rules of the Principal Market for issuances of Class A Common Stock
in excess of such amount or (B) obtains a written opinion from outside counsel
to the Company that such approval is not required, which opinion shall be
reasonably satisfactory to the holders of the SPA Warrants representing at
least a majority of the shares of Class A Common Stock underlying the SPA
Warrants then outstanding.  Until such
approval is obtained, no Buyer shall be issued, upon exercise of any SPA
Warrants, shares of Class A Common Stock in an amount greater than the product
of the Exchange Cap multiplied by a fraction, the numerator of which is the
total number of shares of Class A Class A Common Stock underlying the SPA
Warrants issued to such Buyer pursuant to the Securities Purchase Agreement on
the Initial Issuance Date and the denominator of which is the aggregate number
of shares of Class A Common Stock underlying all the Warrants issued to the
Buyers pursuant to the Securities Purchase Agreement on the Initial Issuance
Date (with respect to each Buyer, the “Exchange
Cap Allocation”).  In the
event that any Buyer shall sell or otherwise transfer any of such Buyer’s SPA
Warrants, the transferee shall be allocated a pro rata portion of such Buyer’s
Exchange Cap Allocation, and the restrictions of the prior sentence shall apply
to such transferee with respect to the portion of the Exchange Cap Allocation
allocated to such transferee.  In the
event that any holder of SPA Warrants shall exercise all of such holder’s SPA
Warrants into a number of shares of Class A Common Stock which, in the
aggregate, is less than such holder’s Exchange Cap Allocation, then the
difference between such holder’s Exchange Cap Allocation and the number of
shares of Class A Common Stock actually issued to such holder shall be allocated
to the respective Exchange Cap Allocations of the remaining holders of SPA
Warrants on a pro rata basis in proportion to the shares of Class A Common
Stock underlying the SPA Warrants then held by each such holder.  In the event that the Company is prohibited
from issuing any Warrant Shares for which an Exercise Notice has been received
as a result of the rules and regulations of the Principal Market, the Company
shall pay cash in exchange for cancellation of such Warrant Shares, at a price
per Warrant Share equal to the difference between the Closing Sale Price and
the Exercise Price as of the date of the attempted exercise.

 

2.             ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The Exercise Price and the number of Warrant Shares shall be
adjusted from time to time as follows:

 

(a)           Adjustment
upon Issuance of Class A Common Stock. 
If and whenever on or after the date of issuance of this Warrant the
Company issues or sells, or in accordance

 

5

 

with this Section 2 is deemed
to have issued or sold, any shares of Class A Common Stock (including the
issuance or sale of shares of Class A Common Stock owned or held by or for the
account of the Company, but excluding Excluded Securities (as defined in the
SPA Securities)) for a consideration per share less than a price (the “Applicable Price”) equal to the Exercise
Price in effect immediately prior to such issue or sale or deemed issuance or
sale (the foregoing, a “Dilutive Issuance”),
then immediately after such Dilutive Issuance the Exercise Price then in effect
shall be reduced to an amount equal to the product of (x) the Exercise Price in
effect immediately prior to such Dilutive Issuance and (y) the quotient
determined by dividing (1) the sum of the product of the Applicable Price and
the number of shares of Class A Common Stock Deemed Outstanding immediately
prior to such Dilutive Issuance and the consideration, if any, received by the
Company upon such Dilutive Issuance, by (2) the product of the Applicable Price
multiplied by the number of shares of Class A Common Stock Deemed Outstanding
immediately after such Dilutive Issuance. 
Upon each such adjustment of the Exercise Price hereunder, the number of
Warrant Shares shall be adjusted to the number of shares of Class A Common
Stock determined by multiplying the Exercise Price in effect immediately prior
to such adjustment by the number of Warrant Shares acquirable upon exercise of
this Warrant immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.  For purposes of determining the adjusted
Exercise Price under this Section 2(a), the following shall be applicable:

 

(i)            Issuance
of Options.  If the Company in any
manner grants any Options and the lowest price per share for which one share of
Class A Common Stock is issuable upon the exercise of any such Option or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option is less than the Applicable Price, then such share
of Class A Common Stock shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the granting or sale of such
Option for such price per share.  For
purposes of this Section 2(a)(i), the “lowest price per share for which one
share of Class A Common Stock is issuable upon exercise of such Options or upon
conversion, exercise or exchange of such Convertible Securities” shall be equal
to the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Class A Common Stock
upon the granting or sale of the Option, upon exercise of the Option and upon
conversion, exercise or exchange of any Convertible Security issuable upon
exercise of such Option.  No further
adjustment of the Exercise Price or number of Warrant Shares shall be made upon
the actual issuance of such Class A Common Stock or of such Convertible
Securities upon the exercise of such Options or upon the actual issuance of
such Class A Common Stock upon conversion, exercise or exchange of such
Convertible Securities.

 

(ii)           Issuance
of Convertible Securities.  If the
Company in any manner issues or sells any Convertible Securities and the lowest
price per share for which one share of Class A Common Stock is issuable upon
the conversion, exercise or exchange thereof is less than the Applicable Price,
then such share of Class A Common Stock shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the issuance or sale
of such Convertible

 

6

 

Securities for such price per share. 
For the purposes of this Section 2(a)(ii), the “lowest price per share
for which one share of Class A Common Stock is issuable upon the conversion,
exercise or exchange” shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to
one share of Class A Common Stock upon the issuance or sale of the Convertible
Security and upon conversion, exercise or exchange of such Convertible
Security.  No further adjustment of the
Exercise Price or number of Warrant Shares shall be made upon the actual
issuance of such Class A Common Stock upon conversion, exercise or exchange of
such Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustment of this
Warrant has been or is to be made pursuant to other provisions of this Section
2(a), no further adjustment of the Exercise Price or number of Warrant Shares
shall be made by reason of such issue or sale.

 

(iii)          Change
in Option Price or Rate of Conversion. 
If the purchase price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any
Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exercisable or exchangeable for Class A Common Stock
increases or decreases at any time, the Exercise Price and the number of
Warrant Shares in effect at the time of such increase or decrease shall be
adjusted to the Exercise Price and the number of Warrant Shares which would
have been in effect at such time had such Options or Convertible Securities
provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the case may be, at
the time initially granted, issued or sold. 
For purposes of this Section 2(a)(iii), if the terms of any Option or
Convertible Security that was outstanding as of the date of issuance of this
Warrant are increased or decreased in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the Class A
Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such increase or
decrease.  No adjustment pursuant to
this Section 2(a) shall be made if such adjustment would result in an increase
of the Exercise Price then in effect or a decrease in the number of Warrant
Shares.

 

(iv)          Calculation
of Consideration Received.  If case
any Option is issued in connection with the issue or sale of other securities
of the Company, together comprising one integrated transaction in which no
specific consideration is allocated to such Options by the parties thereto, the
Options will be deemed to have been issued for a consideration of $0.0001.  If any Class A Common Stock, Options or
Convertible Securities are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor will be deemed to be the net
amount received by the Company therefor. 
If any Class A Common Stock, Options or Convertible Securities are
issued or sold for a consideration other than cash, the amount of such
consideration received by the Company will be the fair value of such
consideration, except where such consideration consists

 

7

 

of securities, in which case the amount of consideration received by
the Company will be the Closing Sale Price of such security on the date of
receipt.  If any Class A Common Stock,
Options or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor will be deemed to be the fair
value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Class A Common Stock, Options or Convertible
Securities, as the case may be.  The
fair value of any consideration other than cash or securities will be
determined jointly by the Board of Directors of the Company and the holders of
SPA Warrants representing at least a majority of the shares of Class A Common
Stock obtainable upon exercise of the SPA Warrants then outstanding.  If such parties are unable to reach
agreement within 10 days after the occurrence of an event requiring valuation
(the “Valuation Event”), the fair
value of such consideration will be determined within fifteen Business Days
after the tenth day following the Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the holders of SPA Warrants
representing at least a majority of the shares of Class A Common Stock
obtainable upon exercise of the SPA Warrants then outstanding.  The determination of such appraiser shall be
final and binding upon all parties absent manifest error and the fees and
expenses of such appraiser shall be borne by the Company.

 

(v)           Record
Date.  If the Company takes a record
of the holders of Class A Common Stock for the purpose of entitling them
(A) to receive a dividend or other distribution payable in Class A Common
Stock, Options or in Convertible Securities or (B) to subscribe for or
purchase Class A Common Stock, Options or Convertible Securities, then such
record date will be deemed to be the date of the issue or sale of the shares of
Class A Common Stock deemed to have been issued or sold upon the declaration of
such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.

 

(b)           Adjustment
upon Subdivision or Combination of Class A Common Stock.  If the Company at any time after the date of
issuance of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Class A Common Stock into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced
and the number of Warrant Shares will be proportionately increased.  If the Company at any time after the date of
issuance of this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Class A Common
Stock into a smaller number of shares, the Exercise Price in effect immediately
prior to such combination will be proportionately increased and the number of Warrant
Shares will be proportionately decreased. 
Any adjustment under this Section 2(b) shall become effective at the
close of business on the date the subdivision or combination becomes effective.

 

8

 

(c)           Other Events.  If any event occurs of the type contemplated
by the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company’s Board of Directors will make an appropriate adjustment in the
Exercise Price and the number of Warrant Shares so as to protect the rights of
the holder of this Warrant; provided that no such adjustment pursuant to this
Section 2(c) will increase the Exercise Price or decrease the number of Warrant
Shares as otherwise determined pursuant to this Section 2.

 

3.             RIGHTS
UPON DISTRIBUTION OF ASSETS.  In
addition to any adjustments pursuant to Section 2 above, if the Company shall
declare or make any dividend or other distribution of its assets (or rights to
acquire its assets) to holders of Class A Common Stock, by way of return of
capital or otherwise (including, without limitation, any distribution of cash,
stock or other securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement or other similar transaction) (a “Distribution”), at any time after the
issuance of this Warrant, then, in each such case:

 

(a)           any
Exercise Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of Class A Common Stock
entitled to receive the Distribution shall be reduced, effective as of the
close of business on such record date, to a price determined by multiplying
such Exercise Price by a fraction of which (i) the numerator shall be the
Closing Bid Price of the Class A Common Stock on the trading day immediately
preceding such record date minus the value of the Distribution (as determined
in good faith by the Company’s Board of Directors) applicable to one share of
Class A Common Stock, and (ii) the denominator shall be the Closing Bid Price
of the Class A Common Stock on the trading day immediately preceding such
record date; and

 

(b)           the
number of Warrant Shares shall be increased to a number of shares equal to the
number of shares of Class A Common Stock obtainable immediately prior to the
close of business on the record date fixed for the determination of holders of
Class A Common Stock entitled to receive the Distribution multiplied by the
reciprocal of the fraction set forth in the immediately preceding paragraph
(a); provided that in the event that the Distribution is of common stock (“Other Common Stock”) of a company whose
common stock is traded on a national securities exchange or a national
automated quotation system, then the holder of this Warrant may elect to
receive a warrant to purchase Other Common Stock in lieu of an increase in the
number of Warrant Shares, the terms of which shall be identical to those of
this Warrant, except that such warrant shall be exercisable into the number of
shares of Other Common Stock that would have been payable to the holder of this
Warrant pursuant to the Distribution had the holder exercised this Warrant
immediately prior to such record date and with an aggregate exercise price
equal to the product of the amount by which the exercise price of this Warrant
was decreased with respect to the Distribution pursuant to the terms of the
immediately preceding paragraph (a) and the number of Warrant Shares calculated
in accordance with the first part of this paragraph (b).

 

9

 

4.             PURCHASE
RIGHTS; ORGANIC CHANGE.

 

(a)           Purchase
Rights.  In addition to any
adjustments pursuant to Section 2 above, if at any time the Company grants,
issues or sells any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property pro rata to the record holders of
any class of Class A Common Stock (the “Purchase
Rights”), then the holder of this Warrant will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such holder could have acquired if such holder had held the
number of shares of Class A Common Stock acquirable upon complete exercise of
this Warrant (without regard to any limitations on the exercise of this
Warrant) immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of Class A Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.

 

(b)           Organic
Change.  Any recapitalization,
reorganization, reclassification, consolidation, merger, sale of all or
substantially all of the Company’s assets to another Person or other
transaction, in each case which is effected in such a way that holders of Class
A Common Stock are entitled to receive securities or assets with respect to or
in exchange for Class A Common Stock is referred to herein as an “Organic Change.”  Subject to Section 4(k) of the Securities Purchase Agreement,
prior to the consummation of any (i) sale of all or substantially all of the
Company’s assets to an acquiring Person or (ii) other Organic Change following
which the Company is not a surviving entity, the Company will secure from the
Person purchasing such assets or the Person issuing the securities or providing
the assets in such Organic Change (in each case, the “Acquiring Entity”) a written agreement (in
form and substance reasonably satisfactory to the holders of SPA Warrants
representing at least a majority of the shares of Class A Common Stock
obtainable upon exercise of the SPA Warrants then outstanding) to deliver to
the holder of this Warrant in exchange for this Warrant, a security of the
Acquiring Entity evidenced by a written instrument substantially similar in
form and substance to this Warrant and reasonably satisfactory to the holder of
this Warrant (including, an adjusted exercise price equal to the value for the
Class A Common Stock reflected by the terms of such consolidation, merger or
sale, and exercisable for a corresponding number of shares of Class A Common
Stock acquirable and receivable upon exercise of this Warrant (without regard
to any limitations on the exercise of this Warrant), if the value so reflected
is less than the Exercise Price in effect immediately prior to such
consolidation, merger or sale).  In the
event that an Acquiring Entity is directly or indirectly controlled by a
company or entity whose common stock or similar equity interest is listed,
designated or quoted on a securities exchange or trading market, the holder of
this Warrant may elect to treat such Person as the Acquiring Entity for
purposes of this Section 4(b).  Prior to
the consummation of any other Organic Change, the Company shall be required to
make appropriate provision (in form and substance reasonably satisfactory to
the holders of SPA Warrants representing at least a majority of the shares of
Class A Common Stock obtainable upon exercise of the SPA Warrants then
outstanding) to insure that the holder of this Warrant thereafter will have the
right to acquire and receive in lieu of or in addition to (as the case may be)
the shares of Class A Common Stock immediately theretofore acquirable and
receivable upon the exercise of this Warrant (without regard to any limitations
on the exercise of this Warrant including those set forth in Sections 1(f)(i)
and 1(f)(ii) of this Warrant), such shares of stock, securities or assets that
would have been issued or payable in such Organic Change with

 

10

 

respect to or in exchange for
the number of shares of Class A Common Stock which would have been acquirable
and receivable upon the exercise of this Warrant as of the date of such Organic
Change (without regard to any limitations on the exercise of this Warrant
including those set forth in Sections 1(f)(i) and 1(f)(ii) of this Warrant).

 

5.             NONCIRCUMVENTION.  The Company hereby covenants and agrees that
the Company will not, by amendment of its Certificate of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, and will at all times in good faith carry out all the provisions of
this Warrant and take all action as may be required to protect the rights of
the holder of this Warrant.  Without
limiting the generality of the foregoing, the Company (i) will not
increase the par value of any shares of Class A Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect,
(ii) will take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Class A Common Stock upon the exercise of this Warrant,
and (iii) will, so long as any of the SPA Warrants are outstanding, take all
action necessary to reserve and keep available out of its authorized and
unissued Class A Common Stock, solely for the purpose of effecting the exercise
of the SPA Warrants, 130% of the number of shares of Class A Common Stock as
shall from time to time be necessary to effect the exercise of the SPA Warrants
then outstanding (without regard to any limitations on exercise).

 

6.             WARRANT
HOLDER NOT DEEMED A STOCKHOLDER. 
Except as otherwise specifically provided herein, no holder, solely in
such Person’s capacity as a holder, of this Warrant shall be entitled to vote
or receive dividends or be deemed the holder of shares of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the holder hereof, solely in such Person’s capacity as a holder of this
Warrant, any of the rights of a shareholder of the Company or any right to
vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the holder of
this Warrant of the Warrant Shares which such Person is then entitled to
receive upon the due exercise of this Warrant. 
In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on such holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company.  Notwithstanding this Section
6, the Company will provide the holder of this Warrant with copies of the same
notices and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the stockholders.

 

7.             REISSUANCE
OF WARRANTS.

 

(a)           Transfer
of Warrant.  If this Warrant is to
be transferred, the holder shall surrender this Warrant to the Company,
whereupon the Company will forthwith issue and deliver upon the order of the
holder of this Warrant a new Warrant (in accordance with Section 7(d)),
registered as the holder of this Warrant may request, representing the right to
purchase the number of Warrant Shares being transferred by the Holder and, if
less then the total number of Warrant Shares then underlying this Warrant is
being transferred, a new Warrant (in accordance

 

11

 

with Section 7(d)) to the
holder of this Warrant representing the right to purchase the number of Warrant
Shares not being transferred.

 

(b)           Lost,
Stolen or Mutilated Warrant.  Upon
receipt by the Company of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant, and, in the case of
loss, theft or destruction, of any indemnification undertaking by the holder of
this Warrant to the Company in customary form, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall execute and
deliver to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then underlying this
Warrant.

 

(c)           Warrant
Exchangeable for Multiple Warrants. 
This Warrant is exchangeable, upon the surrender hereof by the Holder at
the principal office of the Company, for a new Warrant or Warrants (in
accordance with Section 7(d)) representing in the aggregate the right to
purchase the number of Warrant Shares then underlying this Warrant, and each
such new Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the holder of this Warrant at the time of
such surrender; provided, however, that no Warrants for fractional shares of
Class A Common Stock shall be given.

 

(d)           Issuance
of New Warrants.  Whenever the
Company is required to issue a new Warrant pursuant to the terms of this
Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii)
shall represent, as indicated on the face of such new Warrant, the right to
purchase the Warrant Shares then underlying this Warrant (or in the case of a
new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant
Shares designated by the holder of this Warrant which, when added to the number
of shares of Class A Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) shall have an issuance date, as indicated
on the face of such new Warrant which is the same as the Issuance Date, and
(iv) shall have the same rights and conditions as this Warrant.

 

8.             NOTICES.  Whenever notice is required to be given
under this Warrant, unless otherwise provided herein, such notice shall be
given in accordance with Section 9(f) of the Securities Purchase
Agreement.  The Company shall provide
the holder of this Warrant with prompt written notice of all actions taken
pursuant to this Warrant, including in reasonable detail a description of such
action and the reason therefore. 
Without limiting the generality of the foregoing, the Company will give
written notice to the holder of this Warrant (i) immediately upon any
adjustment of the Exercise Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) at least fifteen days
prior to the date on which the Company closes its books or takes a record (A)
with respect to any dividend or distribution upon the Class A Common Stock, (B)
with respect to any grants, issues or sales of any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
to holders of Class A Common Stock or (C) for determining rights to vote with
respect to any Change of Control (as defined in the SPA Securities),
dissolution or liquidation, provided in each case that such information shall
be made known to the public prior to or in conjunction with such notice being
provided to such holder. 
Notwithstanding the foregoing, Section 4(j) of the Securities Purchase
Agreement shall apply to all notices given pursuant to this Warrant.

 

12

 

9.             AMENDMENT
AND WAIVER.  Except as otherwise provided
herein, the provisions of this Warrant may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holders of SPA Warrants representing at least a majority of the shares of Class
A Common Stock obtainable upon exercise of the SPA Warrants then outstanding;
provided that no such action may increase the exercise price of any SPA Warrant
or decrease the number of shares or class of stock obtainable upon exercise of
any SPA Warrant without the written consent of the holder of this Warrant.  No such amendment shall be effective to the
extent that it applies to less than all of the holders of the SPA Warrants then
outstanding.

 

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

 

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

 

12.           DISPUTE
RESOLUTION.  In the case of a
dispute as to the determination of the Exercise Price or the arithmetic
calculation of the Warrant Shares, the Company shall submit the disputed determinations
or arithmetic calculations via facsimile within two Business Days of receipt of
the Exercise Notice giving rise to such dispute, as the case may be, to the
holder of this Warrant.  If the holder
of this Warrant and the Company are unable to agree upon such determination or
calculation of the Exercise Price or the Warrant Shares within three Business
Days of such disputed determination or arithmetic calculation being submitted
to the Holder, then the Company shall, within two Business Days submit via
facsimile (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and approved by
the holder of this Warrant or (b) the disputed arithmetic calculation of the
Warrant Shares to the Company’s independent, outside accountant.  The Company shall cause the investment bank
or the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the Holder of the results no later than
ten Business Days from the time it receives the disputed determinations or
calculations.  Such investment bank’s or
accountant’s determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

 

13.           REMEDIES,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall
be cumulative and in addition to all other remedies available under this
Warrant, the Securities Purchase Agreement, the SPA Securities and the
Registration Rights Agreement, at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall
limit the right of the holder of this Warrant right to pursue actual damages
for any failure by the Company to comply with the terms of this Warrant. The
Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the holder of this Warrant and that the remedy at law

 

13

 

for any such breach may be inadequate.  The Company therefore agrees that, in the
event of any such breach or threatened breach, the holder of this Warrant shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.

 

14.           TRANSFER.          This Warrant may be offered for sale,
sold, transferred or assigned without the consent of the Company, except as may
otherwise be required by Section 2(f) of the Securities Purchase Agreement.

 

15.           CERTAIN
DEFINITIONS.  For purposes of this
Warrant, the following terms shall have the following meanings:

 

(a)           “Bloomberg” means Bloomberg Financial
Markets.

 

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

 

(c)           “Class A Common Stock” means (i) the
Company’s Class A common stock, par value $0.0001 per share, and (ii) any
capital stock into which such Class A Common Stock shall have been changed or
any capital stock resulting from a reclassification of such Class A Common
Stock.

 

(d)           “Class A Common Stock Deemed Outstanding”
means, at any given time, the number of shares of Class A Common Stock actually
outstanding at such time, plus the number of shares of Class A Common Stock
deemed to be outstanding pursuant to Sections 2(a)(i) and 2(a)(ii) hereof
regardless of whether the Options or Convertible Securities are actually exercisable
or convertible at such time, but excluding any shares of Class A Common Stock
owned or held by or for the account of the Company or issuable upon conversion
of the SPA Securities or exercise of the SPA Warrants.

 

(e)           “Closing Bid Price” and “Closing Sale Price” means, for any
security as of any date, the last closing bid price and last closing trade
price, respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by
Bloomberg, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the last closing bid price or last trade
price, respectively, of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or,
if no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the Closing Bid Price or the Closing Sale
Price cannot be calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price or the Closing 

 

14

 

Sale Price, as the case may be,
of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. 
If the Company and the Holder are unable to agree upon the fair market
value of such security, then such dispute shall be resolved pursuant to Section
12.  All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination
or other similar transaction during the applicable calculation period.

 

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

 

(g)           “Expiration Date” means the date five years
after the Closing Date (as defined in the Securities Purchase Agreement) or, if
such date falls on a day other than a Business Day or on which trading does not
take place on the Principal Market (a “Holiday”),
the next date that is not a Holiday.

 

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

 

(i)            “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and a government or any
department or agency thereof.

 

(j)            “Principal Market” means The Nasdaq SmallCap
Market or in the event that the Company is no longer listed with The Nasdaq
SmallCap Market, the market or exchange on which the Class A Common Stock is
then listed and traded, which only may be either The New York Stock Exchange,
Inc., the American Stock Exchange or the Nasdaq National Market.

 

(k)           “Registration Rights Agreement” means that
certain registration rights agreement dated as of March 16, 2004 between the
Company and the Buyers.

 

(l)            “SPA Securities” means the convertible notes
in the aggregate principal amount of $7,500,000 issued on the Issuance Date
pursuant to the Securities Purchase Agreement.

 

[Signature Page Follows]

 

15

 

IN WITNESS WHEREOF,
the Company has caused this Warrant to Purchase Class A Class A Common Stock to
be duly executed as of the Issuance Date set out above.

 

	
   

  	
  VASO ACTIVE PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ John J. Masiz

  
	
   

  	
   

  	
  Name:

  	
  John J. Masiz

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS

WARRANT TO PURCHASE CLASS A COMMON STOCK

 

VASO ACTIVE PHARMACEUTICALS, INC.

 

The undersigned holder
hereby exercises the right to purchase
                                 
of the shares of Class A Common Stock (“Warrant
Shares”) of Vaso Active Pharmaceuticals, Inc., a Delaware
corporation (the “Company”),
evidenced by the attached Warrant to Purchase Class A Common Stock (the “Warrant”). 
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.

 

1.  Form of Exercise Price. 
The Holder intends that payment of the Exercise Price shall be made as:

 

                         
a “Cash Exercise” with respect to
                         
Warrant Shares; and/or

 

                         
a “Cashless Exercise” with respect to
                         
Warrant Shares.

 

[Insert this paragraph (2) in the event that the holder has
not elected a Cashless Exercise in accordance with the terms of the Warrant as
to all of the Warrant Shares to be issued pursuant hereto] 
2.  Payment of Exercise
Price.  The holder is hereby delivering
to the Company payment in the amount of
$                  
representing the Aggregate Exercise Price for such Warrant Shares not subject
to a Cashless Exercise in accordance with the terms of the Warrant.

 

3.  Delivery of Warrant Shares. 
The Company shall deliver to the holder
                    
Warrant Shares in accordance with the terms of the Warrant.

 

	
  Date:
  

  	
   

  	
   , 200     

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name
  of Registered Holder

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

 

ACKNOWLEDGMENT

 

The Company
hereby acknowledges this Exercise Notice and hereby directs EquiServe, Trust
Company N.A. to issue the above indicated number of shares of Class A Common
Stock in accordance with the Transfer Agent Instructions dated March 16, 2004
from the Company and acknowledged and agreed to by EquiServe Trust Company,
N.A.

 

 

 

	
   

  	
  VASO ACTIVE PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:Exhibit
4.3

 

REGISTRATION
RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as of March 16, 2004, by and
among Vaso Active Pharmaceuticals, Inc., a Delaware corporation, with
headquarters located at 99 Rosewood Drive, Suite 260, Danvers, Massachusetts
01923 (the “Company”), and the investors listed on the Schedule of Buyers
attached hereto (each, a “Buyer” and collectively, the “Buyers”).

 

WHEREAS:

 

A.            In connection with the Securities Purchase Agreement by
and among the parties hereto dated as of as of the date hereof (the “Securities
Purchase Agreement”),
the Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell on the date hereof to each
Buyer (i) convertible notes of the Company (the “Notes”) which shall be convertible into shares of the
Company’s Class A common stock, par value $.0001 per share (the “Class A Common Stock”) (as converted, the “Conversion Shares”) in accordance with the
terms of the Notes, and (ii) warrants (the “Warrants”) which will be exercisable to
purchase shares of Class A Common Stock (as exercised collectively, the “Warrant
Shares”);

 

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

 

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

 

1.             Definitions.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

2.             Registration.

 

a.             Mandatory Registration.  The Company shall prepare, and, as soon as practicable but in no
event later than 30 days after the date hereof (the “Filing Deadline”), file with
the SEC a Registration Statement on Form SB-2 covering the resale of all of the
Registrable Securities.  In the event
that Form SB-2 is unavailable for such a registration, the Company shall use
such other form as is available for such a registration, subject to the
provisions of Section 2(d).  The
Registration Statement prepared pursuant hereto shall register for resale at
least 1,300,000 shares of Class A Common Stock, subject to adjustment as
provided in Section 2(e).  The Company
shall use its best efforts to have the Registration Statement declared
effective by the SEC as soon as practicable, but in no event later than the
date which is (i) in the event that the Registration Statement is not subject
to a full review by the SEC, 60 days after the date hereof or (ii) in the event
that the Registration Statement is subject to a full review by the SEC, 90 days
after the date hereof (the “Effectiveness Deadline”).

 

b.             Allocation of Registrable Securities.  The initial number of Registrable Securities
included in any Registration Statement and each increase in the number of
Registrable Securities included therein pursuant to Section 2(e) shall be
allocated pro rata among

 

2

 

the Investors based on the number of Registrable Securities held by
each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC.  In the event that an Investor
sells or otherwise transfers any of such Investor’s Registrable Securities,
each transferee shall be allocated a pro rata portion of the then remaining
number of Registrable Securities included in such Registration Statement for
such transferor.  Any shares of Class A
Common Stock included in a Registration Statement and which remain allocated to
any Person which ceases to hold any Registrable Securities covered by such
Registration Statement shall be allocated to the remaining Investors, pro rata
based on the number of Registrable Securities then held by such Investors which
are covered by such Registration Statement. 
In no event shall the Company include any securities other than
Registrable Securities on any Registration Statement without the prior written
consent of Buyers holding at least a majority of the Registrable Securities.

 

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

 

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

 

e.             Sufficient Number of Shares Registered.  In the event the number of shares available
under a Registration Statement filed pursuant to Section 2(a) is insufficient
to cover all of the Registrable Securities required to be covered by such
Registration Statement or an Investor’s allocated portion of the Registrable
Securities pursuant to Section 2(b), the Company shall amend the applicable
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover at least 130% of
the number of such Registrable Securities as of the trading day immediately
preceding the date of the filing of such amendment or new Registration Statement,
in each case, as soon as practicable, but in any event not later than fifteen
(15) days after the Company becomes aware of the necessity therefor
arises.  The Company shall use its best
efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof.  For purposes of the foregoing provision, the
number of shares available under a Registration Statement shall be deemed
“insufficient to cover all of the Registrable Securities” if at any time the
number of shares of Class A Common Stock available for resale under such
Registration Statement is less than 115% of the number of Registrable
Securities issued and issuable upon exercise of the Warrants.  The calculation set forth in the foregoing
sentence shall

 

3

 

be made without regard to any limitations on the conversion of the
Notes or the exercise of the Warrants and such calculation shall assume that
the Notes and the Warrants are convertible or exercisable into shares of Class
A Common Stock and the maximum number of Interest Shares under the Notes,
assuming the initial outstanding principal amount of the Notes remains
outstanding through the scheduled maturity date and assuming no conversions or
redemptions of the Notes prior to the scheduled maturity date, are issuable at
the then prevailing Interest Conversion Price ( as defined in the Notes), the
Conversion Rate (as defined in the Notes ) or Warrant Exercise Price (as
defined in the Warrants), as applicable.

 

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

 

3.             Related Obligations.

 

At such time as the
Company is obligated to file a Registration Statement with the SEC pursuant to
Section 2(a), 2(d) or 2(e), the Company will use its best efforts to effect the

 

4

 

registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:

 

a.             The
Company shall submit to the SEC, within two Business Days after the Company
learns that no review of a particular Registration Statement will be made by
the staff of the SEC or that the staff of the SEC has no further comments on a
particular Registration Statement, as the case may be, a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than 48 hours after the submission of such request.  The Company shall keep each
Registration Statement effective pursuant to Rule 415 at all times until the
earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or successor thereto) promulgated under
the 1933 Act or (ii) the date on which the Investors shall have sold all the
Registrable Securities covered by such Registration Statement (the “Registration Period”).  The
Company shall ensure that each Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein (in
the case of prospectuses, in the light of the circumstances in which they were
made) not misleading.

 

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

 

c.             The Company shall (A) permit Legal Counsel to review and
comment upon (i) a Registration Statement at least five (5) Business Days prior
to its filing with the SEC and (ii) all amendments and supplements to all
Registration Statements (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K and any similar or
successor reports) within a reasonable number of days prior to their filing
with the SEC, and (B) not file any Registration Statement or amendment or
supplement thereto in a form to which Legal Counsel reasonably objects.  The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or

 

5

 

supplement thereto without the prior approval of Legal Counsel, which
consent shall not be unreasonably withheld. 
The Company shall furnish to Legal Counsel, without charge, (i) copies
of any correspondence from the SEC or the staff of the SEC to the Company or
its representatives relating to any Registration Statement, (ii) promptly after
the same is prepared and filed with the SEC, one copy of any Registration
Statement and any amendment(s) thereto, including financial statements and schedules,
all documents, including exhibits if reasonably requested by the Investor,
incorporated therein by reference, if requested by an Investor and not
otherwise available on the EDGAR system, and all other exhibits and (iii) upon
the effectiveness of any Registration Statement, one copy of the prospectus
included in such Registration Statement and all amendments and supplements
thereto.  The Company shall reasonably
cooperate with Legal Counsel in performing the Company’s obligations pursuant
to this Section 3.

 

d.             The Company shall furnish to each Investor whose
Registrable Securities are included in any Registration Statement, without
charge,  (i) promptly after the same is
prepared and filed with the SEC, at least one copy of such Registration Statement
and any amendment(s) thereto, including financial statements and schedules, all
documents, including exhibits, incorporated therein by reference, if requested
by an Investor and not otherwise available on the EDGAR system, all other
exhibits if reasonably requested by the Investor and each preliminary
prospectus, (ii) upon the effectiveness of any Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of copies as such
Investor may reasonably request) and (iii) such other documents, including
copies of any preliminary or final prospectus, as such Investor may reasonably
request from time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.

 

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

 

6

 

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

 

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

 

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

 

i.              Upon the written request of one Investor (as may be
designated by the holders of at least a majority of the Registrable Securities)
in connection with any Investor’s due diligence requirements, if any, the
Company shall make available for inspection by (i) any Investor, (ii) Legal
Counsel and (iii) one firm of accountants or other agents retained by the
Investors (collectively, the “Inspectors”),
all pertinent financial and other records, and pertinent corporate documents
and properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by each
Inspector, and cause the Company’s officers, directors and

 

7

 

employees to supply all information which any Inspector may reasonably
request; provided, however, that each Inspector shall agree in writing (in a
form reasonably acceptable to the Company) to hold in strict confidence and
shall not make any disclosure (except to an Investor) or use of any Record or
other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required
under the 1933 Act, (b) the release of such Records is ordered pursuant to a
final, non-appealable subpoena or order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement of which the Inspector has knowledge.  Each Investor agrees that it shall, upon learning that disclosure
of such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential.  Nothing herein (or in any
other confidentiality agreement between the Company and any Investor) shall be
deemed to limit the Investors’ ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and regulations.

 

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

 

k.             The Company shall use its best efforts either to (i)
cause all the Registrable Securities covered by a Registration Statement to be
listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities covered
by a Registration Statement on The Nasdaq SmallCap Market.  The Company shall pay all fees and expenses
in connection with satisfying its obligation under this Section 3(k).

 

l.              The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, facilitate
the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in

 

8

 

such denominations or amounts, as the case may be, as the Investors may
reasonably request and registered in such names as the Investors may request.

 

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

 

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

 

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

 

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

 

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

 

r.              Notwithstanding anything to the contrary herein, at any
time after the Registration Statement has been declared effective by the SEC,
the Company may delay the disclosure of material non-public information
concerning the Company the disclosure of which at the time is not, in the good
faith opinion of the Board of Directors of the Company and its counsel, in the
best interest of the Company and, in the opinion of counsel to the Company,
otherwise required (a “Grace Period”); provided, that the Company
shall promptly (i) notify the Investors in writing of the existence of material
non-public information giving rise to a Grace Period (provided that in each
notice the Company will not disclose the content of such material

 

9

 

 

non-public information to
the Investors) and the date on which the Grace Period will begin, and (ii)
notify the Investors in writing of the date on which the Grace Period ends;
and, provided further, that no Grace Period shall exceed ten (10) consecutive
days and during any three hundred sixty five (365) day period such Grace
Periods shall not exceed an aggregate of twenty (20) days and the first day of
any Grace Period must be at least two (2) trading days after the last day of
any prior Grace Period (each, an “Allowable Grace Period”).  For purposes of determining the length of a
Grace Period above, the Grace Period shall begin on and include the date the
Investors receive the notice referred to in clause (i) and shall end on and
include the later of the date the Investors receive the notice referred to in
clause (ii) and the date referred to in such notice.  The provisions of Section 3(f) hereof shall not be applicable
during the period of any Allowable Grace Period.  Upon expiration of the Grace Period, the Company shall again be
bound by the first sentence of Section 3(f) with respect to the information
giving rise thereto unless such material non-public information is no longer
applicable.  Notwithstanding anything to
the contrary, the Company shall cause its transfer agent to deliver unlegended
shares of Class A Common Stock to a transferee of an Investor in accordance
with the terms of the Securities Purchase Agreement in connection with any sale
of Registrable Securities with respect to which an Investor has entered into a
contract for sale, and delivered a copy of the prospectus included as part of
the applicable Registration Statement, prior to the Investor’s receipt of the
notice of a Grace Period and for which the Investor has not yet settled.

 

4.             Obligations Of The Investors.

 

a.             At least seven (7) Business Days prior to the first
anticipated filing date of a Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor’s Registrable
Securities included in such Registration Statement.  It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish, in a manner consistent with the last sentence of this Section 4(a), to
the Company such information regarding itself, the Registrable Securities held
by it and the intended method of disposition of the Registrable Securities held
by it as shall be reasonably required to effect the effectiveness of the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.  All such information provided to the Company
by an Investor pursuant to the prior sentence shall be in writing, and such
writing shall expressly acknowledge that the information is being provided for
use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto.

 

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

 

c.             Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
3(g) or the first

 

10

 

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

 

5.             Expenses of Registration.

 

All reasonable expenses,
other than underwriting discounts and commissions (which shall be borne by the
Investors), incurred in connection with the performance of the Company’s
obligations hereunder and under the transactions contemplated hereby, including
registrations, filings or qualifications pursuant to Sections 2 and 3, including,
without limitation, all registration, listing and qualifications fees, printers
and accounting fees, and fees and disbursements of counsel for the Company
shall be paid by the Company.  The
Company shall also reimburse the Investors for the fees and disbursements of
Legal Counsel in connection with registration, filing or qualification pursuant
to Sections 2 and 3 of this Agreement which amount shall be limited to $5,000
for each Registration Statement.

 

6.             Indemnification.

 

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

 

a.             To the fullest extent permitted by law, the Company
will, and hereby does, indemnify, hold harmless and defend each Investor, the
directors, officers, partners, employees, agents, representatives of, and each
Person, if any, who controls any Investor within the meaning of the 1933 Act or
the 1934 Act (each, an “Indemnified Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”),
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: 
(i) any untrue statement or alleged untrue statement of a material fact
in a Registration Statement or any post-effective amendment thereto or in any
filing made in connection with the qualification of the offering under the
securities or other “blue sky” laws of any jurisdiction in which Registrable
Securities are offered (“Blue Sky Filing”),
or the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)

 

11

 

any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus if used prior to the effective date of
such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in the light of
the circumstances under which the statements therein were made, not misleading,
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
Registrable Securities pursuant to a Registration Statement or (iv) any
material violation of this Agreement (the matters in the foregoing clauses (i)
through (iv) being, collectively, “Violations”).  Subject to Section 6(c), the Company shall
reimburse the Indemnified Persons, promptly as such expenses are incurred and are
due and payable, for any legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.  Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section
6(a):  (w) shall not apply to a Claim by
an Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person for such Indemnified Person expressly for
use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was timely
made available by the Company pursuant to Section 3(d); (x) with respect to any
preliminary prospectus, shall not inure to the benefit of any such Indemnified
Person from whom the Person asserting any such Claim purchased the Registrable
Securities that are the subject thereof (or to the benefit of any Person
controlling such Person) if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected in the prospectus, as
then amended or supplemented, and if such prospectus was timely made available
by the Company pursuant to Section 3(d), and the Indemnified Person was
promptly advised in writing not to use the incorrect prospectus prior to the
use giving rise to a violation and such Indemnified Person, notwithstanding
such advice, used it or failed to deliver the correct prospectus as required by
the 1933 Act and such correct prospectus was timely made available pursuant to
Section 3(d); (y) shall not be available to the extent such Claim is based on a
failure of the Investor to deliver or to cause to be delivered the prospectus
made available by the Company, including a corrected prospectus, if such
prospectus or corrected prospectus was timely made available by the Company
pursuant to Section 3(d); and (z) shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior written consent
of the Company, which consent shall not be unreasonably withheld or
delayed.  Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.

 

b.             In connection with any Registration Statement in which
an Investor is participating, each such Investor agrees to severally and not
jointly indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement and each Person, if
any, who controls the Company within the meaning of the 1933 Act or the 1934
Act (each, an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of

 

12

 

them may become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement or any post-effective amendment thereof or any
prospectus contained therein; and, subject to Section 6(c), such Investor will
reimburse any legal or other expenses reasonably incurred by an Indemnified
Party in connection with investigating or defending any such Claim as promptly
as such expenses are incurred and are due and payable; provided, however, that
the indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld or delayed; provided, further, however, that an Investor shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a result of the
sale of Registrable Securities pursuant to such Registration Statement.  Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9. 
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.

 

c.             Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action or proceeding (including any governmental action or proceeding)
involving a Claim, such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under
this Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that an Indemnified Person or Indemnified Party shall have the
right to retain its own counsel with the fees and expenses of not more than one
counsel for such Indemnified Person or Indemnified Party to be paid by the
indemnifying party, if, in the reasonable opinion of the Indemnified Person or
the Indemnified Party, as the case may be, the representation by such counsel
of the Indemnified Person or Indemnified Party and the indemnifying party would
be inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding.  In the case
of an Indemnified Person, legal counsel referred to in the immediately
preceding sentence shall be selected by the Investors holding at least a
majority in interest of the Registrable Securities included in the Registration
Statement to which the Claim relates. 
The Indemnified Party or Indemnified Person shall cooperate fully with
the indemnifying party in connection with any negotiation or defense of any
such action or Claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the Indemnified
Party

 

13

 

or Indemnified Person which relates to such action or Claim.  The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto.  No indemnifying party shall be liable for
any settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
prior written consent of the Indemnified Party or Indemnified Person, consent
to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability in respect to such Claim or litigation.  Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party
or Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made.  The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

 

d.             The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.

 

e.             The indemnity agreements contained herein shall be in
addition to  (i) any cause of action or
similar right of the Indemnified Party or Indemnified Person against the
indemnifying party or others, and (ii) any liabilities the indemnifying party
may be subject to pursuant to the law.

 

7.             Contribution.

 

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

 

8.             Reports Under The 1934 Act.

 

With a view to making
available to the Investors the benefits of Rule 144 promulgated under the 1933
Act or any other similar rule or regulation of the SEC that may at

 

14

 

any time permit the Investors to sell securities of the Company to the
public without registration (“Rule 144”),
the Company agrees to:

 

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

 

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

 

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

 

9.             Assignment of Registration Rights.

 

The rights under this
Agreement shall be automatically assignable by the Investors to any transferee
of all or any portion of such Investor’s Registrable Securities if:  (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment; (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws;
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; and (v)
such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement.

 

10.           Amendment of Registration Rights.

 

Provisions of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
then hold at least a majority of the Registrable Securities.  Any amendment or waiver effected in accordance
with this Section 10 shall be binding upon each Investor and the Company.  No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Registrable
Securities.  No consideration shall be
offered or paid to any Person to amend or consent to a waiver or

 

15

 

modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.

 

11.           Miscellaneous.

 

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

 

b.             Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt,
when sent by facsimile (provided confirmation of transmission is mechanically
or electronically generated and kept on file by the sending party); or (iii)
one Business Day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such
communications shall be:

 

	
   

  	
  If to the
  Company:

  
	
   

  	
   

  
	
   

  	
  Vaso Active
  Pharmaceuticals, Inc.

  
	
   

  	
  99 Rosewood Drive,
  Suite 260

  
	
   

  	
  Danvers, Massachusetts
  01923

  
	
   

  	
  Telephone:

  	
  (978) 750-0090

  
	
   

  	
  Facsimile:

  	
  (978) 750-0085

  
	
   

  	
  Attention:

  	
  John J. Masiz

  
	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Robinson & Cole LLP

  
	
   

  	
  One Boston Place

  
	
   

  	
  Boston, Massachusetts
  02108

  
	
   

  	
  Telephone:

  	
  (617) 557-5955

  
	
   

  	
  Facsimile:

  	
  (617) 557-5999

  
	
   

  	
  Attention:

  	
  David A. Garbus, Esq.

  
				

 

16

 

	
   

  	
  If to Legal Counsel:

  
	
   

  	
   

  
	
   

  	
  Schulte Roth &
  Zabel LLP

  
	
   

  	
  919 Third Avenue

  
	
   

  	
  New York, New York  10022

  
	
   

  	
  Telephone:

  	
  (212) 756-2000

  
	
   

  	
  Facsimile:

  	
  (212) 593-5955

  
	
   

  	
  Attention:

  	
  Eleazer Klein, Esq.

  

 

If to a Buyer, to its
address and facsimile number set forth on the Schedule of Buyers attached
hereto, with copies to such Buyer’s representatives as set forth on the
Schedule of Buyers, or to such other address and/or facsimile number and/or to
the attention of such other Person as the recipient party has specified by
written notice given to each other party five days prior to the effectiveness
of such change.  Written confirmation of
receipt (A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the sender’s
facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission or (C) provided by a courier or
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.

 

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

 

d.             All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.  If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.  EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE

 

17

 

ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

[Remainder
of Page Intentionally Left Blank.]

 

18

 

IN WITNESS WHEREOF, each Buyer and the Company have
caused their respective signature page to this Registration Rights Agreement to
be duly executed as of day and year first above written.

 

 

	
   

  	
  COMPANY:

  	 

	
   

  	
   

  	 

	
   

  	
  VASO ACTIVE PHARMACEUTICALS, INC.

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/
  John J. Masiz 

  	
   

  
	
   

  	
   

  	
  Name:  John J. Masiz 

  	 

	
   

  	
   

  	
  Title:   President

  	 

					

 

 

[Signature Page to
Registration Rights Agreement]

 

 

IN WITNESS WHEREOF, each Buyer and the Company have
caused their respective signature page to this Registration Rights Agreement to
be duly executed as of day and year first above written.

 

 

	
   

  	
  BUYERS:

  	 

	
   

  	
   

  	 

	
   

  	
  THE RIVERVIEW GROUP LLC

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/
  Terry Feeney

  	
   

  
	
   

  	
   

  	
  Name:  Terry Feeney

  	 

	
   

  	
   

  	
  Title:   Chief
  Operating Officer

  	 

					

 

 

[Signature Page to
Registration Rights Agreement]

 

SCHEDULE OF BUYERS

 

 

	
  Investor

  	
   

  	
  Investor Address

  and Facsimile Number

  	
   

  	
  Investor’s Representative’s Address

  and Facsimile Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Riverview Group LLC

  	
   

  	
  666
  Fifth Avenue, 8th Floor

  New York, New York  10103

  Attention:  Daniel Cardella

  Facsimile:(212) 977-1667

  Telephone: (212) 841-4100

  	
   

  	
  Schulte Roth &
  Zabel LLP

  919 Third Avenue

  New York, New York 10022

  Attention:  Eleazer Klein, Esq.

  Facsimile:  (212) 593-5955

  Telephone:  (212) 756-2000

  

 

 

EXHIBIT A

 

FORM OF NOTICE OF
EFFECTIVENESS OF REGISTRATION STATEMENT

 

EquiServe Trust Company,
N.A.

150 Royall Street

Mail Stop 45-02-62

Canton, MA 02021

Attn: Deb Spearin

 

Re:          Vaso Active Pharmaceuticals, Inc.

 

Ladies and Gentlemen:

 

We are counsel to Vaso
Active Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and have
represented the Company in connection with that certain Securities Purchase
Agreement, dated as of March 16, 2004 (the “Purchase Agreement”), entered into
by and among the Company and the buyers named therein (collectively, the
“Holders”) pursuant to which the Company issued to the Holders its convertible
notes (the “Notes”) convertible into shares of the Company’s Class A Common
Stock, par value $.0001 per share (the “Class A Common Stock”) and warrants
exercisable for shares of its Class A Common Stock (the “Warrants”).  Pursuant to the Purchase Agreement, the
Company also has entered into a Registration Rights Agreement with the Holders
(the “Registration Rights Agreement”) pursuant to which the Company agreed,
among other things, to register the resale of the Registrable Securities (as
defined in the Registration Rights Agreement), including the Common Shares and
the shares of its Class A Common Stock issuable upon conversion of the Notes
and exercise of the Warrants under the Securities Act of 1933, as amended (the
“1933 Act”).  In connection with the
Company’s obligations under the Registration Rights Agreement, on
                     
     , 2004, the Company filed a Registration
Statement on Form SB-2 (File No.
333-                       )
(the “Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the Registrable Securities which names each of the Holders
as a selling stockholder thereunder.

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [ISSUER’S
  COUNSEL]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

 

CC:          [LIST
NAMES OF HOLDERS]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}]]