Document:

ex4_3.htm

    
      

    

    Exhibit
4.3

     

    

      [FORM
OF 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.

       

      

      AROTECH
CORPORATION

      

      Warrant
To Purchase Common Stock

      

      Warrant
No.:    _________                                                                                                                                      

      Number of
Shares of Common Stock:
[496,652][33,482][27,902]

      Date of
Issuance: August 14, 2008 ("Issuance Date")

      

      AROTECH
CORPORATION, a Delaware corporation (the "Company"), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, [HIGHBRIDGE INTERNATIONAL LLC] [CRANSHIRE CAPITAL L.P.]
[IROQUOIS MASTER FUND LTD.], the registered holder hereof or its permitted
assigns (the "Holder"),
is entitled, subject to the terms set forth below, to purchase from the Company,
at the Exercise Price (as defined below) then in effect, at any time or times on
or after the date hereof (the "Initial Exercise Date"), but
not after 11:59 p.m., New York time, on the Expiration Date (as defined below),
[FOUR HUNDRED NINETY SIX THOUSAND SIX HUNDRED FIFTY TWO (496,652)] [THIRTY THREE
THOUSAND FOUR HUNDRED EIGHTY TWO (33,652)][TWENTY SEVEN THOUSAND NINE HUNDRED
AND TWO (27,902)] fully paid nonassessable shares of 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
17.  This Warrant (including all Warrants issued in exchange, transfer
or replacement hereof, the "Warrants") is one of the
Warrants to purchase Common Stock (the "SPA Warrants") issued pursuant
to Section 1 of that certain Securities Purchase Agreement, dated as of August
14, 2008 (the "Subscription
Date"), by and among the Company and the investors (the "Buyers") referred to therein
(the "Securities Purchase
Agreement").

       

      
        
           

        

        
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      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(g)), this
Warrant may be exercised by the Holder on any day on or 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 the
Holder's election to exercise this Warrant to the Company 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 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 (1st)
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 (3rd)
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 Warrant Shares 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 Company's share register in the name of
the Holder or its designee, for the number of shares of Common Stock to which
the Holder is entitled pursuant to such exercise which certificates shall not
bear any restrictive legends if this Warrant is exercised pursuant to a Cashless
Exercise or if a registration statement covering the resale of the Warrant
Shares is effective.  Upon delivery of the Exercise Delivery
Documents, 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 such Warrant Shares are credited to
the Holder's DTC account or the date of delivery of the certificates evidencing
such Warrant Shares as the case may be.  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 Common Stock are to be issued upon
the exercise of this Warrant, but rather the number of shares of Common Stock to
be issued shall be rounded up to the nearest whole number.  The
Company shall pay any and all taxes which may be payable with respect to the
issuance and delivery of Warrant Shares upon exercise of this
Warrant.

       

      
        
           

        

        
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      (b)  Exercise
Price.  For purposes of this Warrant, "Exercise Price" means $2.25,
subject to adjustment as provided herein.

       

      (c)  Company's Failure to Timely
Deliver Shares.  Subject to Section 1(g), if the Company shall
fail for any reason or for no reason within three Business Days of the of
receipt of the Exercise Delivery Documents, a certificate for the number of
shares of Common Stock to which the Holder is entitled and register such shares
of Common Stock on the Company's share register or to credit the Holder's
balance account with DTC for such number of shares of Common Stock to which the
Holder is entitled upon the Holder's exercise of this Warrant, and if after such
third (3rd) Business Day the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares that the Holder anticipated receiving from the
Company (a "Buy-In"),
then the Company shall, within three (3) Business Days after the Holder’s
request and in the Holder’s discretion, either (i) pay cash to the Holder in an
amount equal to the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point
the Company's obligation to deliver such certificate (and to issue such shares
of Common Stock) or credit such Holder's balance account with DTC shall
terminate, or (ii) promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such shares of Common Stock or credit
such Holder's balance account with DTC and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (A) such
number of shares of Common Stock, times (B) the Closing Sale Price on the date
of the event giving rise to the Company’s obligation to deliver such
certificate.  Subject to Section 1(g), if the Company shall fail for
any reason or for no reason within three (3) Business Days of the of receipt of
the Exercise Delivery Documents, a certificate for the number of shares of
Common Stock to which the Holder is entitled and register such shares of Common
Stock on the Company's share register or to credit the Holder's balance account
with DTC for such number of shares of Common Stock to which the Holder is
entitled upon the Holder's exercise of this Warrant, then the Holder will have
the right to rescind such exercise.

       

      (d)  Cashless Exercise.
 Notwithstanding
anything contained herein to the contrary, if at any time following the earlier
of the (i) Initial Effectiveness Deadline and (ii) the Initial Effectiveness
Date (each as defined in the Registration Rights Agreement) the 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 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:

       

      
        
           

        

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

       

      B= the
average of the Closing Sale Prices of the shares of Common Stock (as reported by
Bloomberg) for the five (5) consecutive Trading Days ending 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.

      

      

      (e)  Absolute and Unconditional
Obligation.  The Company’s obligations to issue and deliver
Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any other Person
of any obligation to the Company or any violation or alleged violation of law by
the Holder or any other Person.  Nothing herein shall limit the
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity, including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver
certificates representing Warrant Shares upon exercise of the Warrant as
required pursuant to the terms hereof.

       

      (f)   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.

       

      (g)  Limitations on
Exercises

       

      (i)           Beneficial
Ownership.  The Company shall not effect the exercise of this
Warrant, and the Holder shall not 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 4.99% (the "Maximum Percentage") of the
shares of Common Stock outstanding immediately after giving effect to such
exercise.  For purposes of the foregoing sentence, the aggregate
number of shares of Common Stock beneficially owned by such Person and its
affiliates shall include the number of shares of 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 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 convertible notes, convertible debentures, 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 Common Stock, the Holder may rely on the
number of outstanding shares of Common Stock as reflected in (1) the Company's
most recent Form 10-K, Form 10-Q, Current Report on Form 8-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 the Transfer Agent setting forth the number of shares of Common Stock
outstanding.  For any reason at any time, upon the written or oral
request of the Holder, the Company shall within one Business Day confirm orally
and in writing to the Holder the number of shares of Common Stock then
outstanding.  In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including the SPA Securities and the SPA Warrants, by
the Holder and its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported.  By written notice to
the Company, the Holder may increase or decrease the Maximum Percentage to any
other percentage not in excess of 9.99% specified in such notice; provided that
(x) any such increase will not be effective until the sixty-first (61st) day
after such notice is delivered to the Company, and (y) any such increase or
decrease will apply only to the Holder and not to any other holder of SPA
Warrants.  The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of
this Section 1(g)(i) to correct this paragraph (or any portion hereof) which may
be defective or inconsistent with the intended beneficial ownership limitation
herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation.

       

      
        
           

        

        
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      (ii)           Principal Market
Regulation.  The Company shall not be obligated to issue any
shares of Common Stock upon exercise of this Warrant if the issuance of such
shares of Common Stock would exceed that number of shares of Common Stock which
the Company may issue upon exercise of this Warrant (including, as applicable,
any shares of Common Stock issued upon conversion of 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 obtains the approval of its stockholders as required by the applicable
rules of the Principal Market for issuances of shares of Common Stock in excess
of such amount.  Until such approval is obtained, no Buyer shall be
issued, upon exercise or conversion, as applicable, of any SPA Warrants or SPA
Securities, shares of 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 Common Stock underlying the SPA Warrants issued to such
Buyer pursuant to the Securities Purchase Agreement on the Subscription Date and
the denominator of which is the aggregate number of shares of Common Stock
underlying all the Warrants issued to the Buyers pursuant to the Securities
Purchase Agreement on the Subscription 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 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 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 Common Stock
underlying the SPA Warrants then held by each such holder.

      
        
           

        

        
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      (h)  Insufficient Authorized
Shares.  If at any time while any of the Warrants remain
outstanding the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon exercise of the Warrants at least a number of shares of Common
Stock equal to 130% of the number of shares of Common Stock as shall from time
to time be necessary to effect the exercise of all of the Warrants then
outstanding  (the "Required Reserve Amount") (an
"Authorized Share
Failure"), then the Company shall immediately take all action necessary
to increase the Company's authorized shares of Common Stock to an amount
sufficient to allow the Company to reserve the Required Reserve Amount for the
Warrants then outstanding.  Without limiting the generality of the
foregoing sentence, as soon as practicable after the date of the occurrence of
an Authorized Share Failure, but in no event later than ninety (90) days after
the occurrence of such Authorized Share Failure, the Company shall hold a
meeting of its stockholders for the approval of an increase in the number of
authorized shares of Common Stock.  In connection with such meeting,
the Company shall provide each stockholder with a proxy statement and shall use
its best efforts to solicit its stockholders' approval of such increase in
authorized shares of Common Stock and to cause its board of directors to
recommend to the stockholders that they approve such proposal.

       

       

      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
Shares of Common Stock.  If and whenever on or after the
Subscription Date and on or prior to the two (2) year anniversary of the Initial
Effective Date (as defined in the Registration Rights Agreement), the Company
issues or sells, or in accordance with this Section 2(a) is deemed to have
issued or sold, any shares of Common Stock (including the issuance or sale of
shares of Common Stock owned or held by or for the account of the Company, but
excluding shares of Common Stock issued or sold or deemed to have been issued or
sold by the Company in connection with any Excluded Security) for a
consideration per share (the "Applicable Price") less than a
price equal to the Exercise Price in effect immediately prior to such issue or
sale (the foregoing a "Dilutive
Issuance"), then immediately after such Dilutive Issuance the Exercise
Price then in effect shall be reduced to the Applicable Price with respect to a
portion of the total number of Warrant Shares underlying this Warrant, with the
portion of the total number of Warrant Shares underlying this Warrant that is
subject to the adjusted Exercise Price to be determined by multiplying (i) the
total number of Warrant Shares underlying this Warrant whose Exercise Price is
greater than the Applicable Price by (ii) the Adjustment Fraction (as defined in
the SPA Securities) as determined under the SPA Securities.  The
adjustment of the Exercise Price under this Section 2(a) allows for multiple
Exercise Prices to be applicable under this Warrant.  Further
adjustments shall be made successively for successive Dilutive Issuances with
adjustments to the Exercise Price affecting portions of the Warrant with the
highest Exercise Price first and then successively to the portions of the
Warrant with the lowest Exercise Price.  For purposes of determining
the adjusted Exercise Price under this Section 2(a), the following shall be
applicable:

       

      
        
           

        

        
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      (i)           Issuance of
Options.  If the Company in any manner grants any Options and
the lowest price per share for which one share of 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 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 Common Stock is issuable upon exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of such Option" 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 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 shares of Common Stock or of such Convertible Securities upon
the exercise of such Options or upon the actual issuance of such shares of
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
Common Stock is issuable upon the conversion, exercise or exchange thereof is
less than the Applicable Price, then such share of 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 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 Common Stock is issuable upon the conversion,
exercise or exchange thereof" 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 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 shares of 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 shares of 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 shares of 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.

       

      
        
           

        

        
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      (iv)           Calculation of Consideration
Received.  In case any Option is issued in connection with the
issue or sale of other securities of the Company, together comprising one
integrated transaction, (x) the Options will be deemed to have been issued for a
value determined by use of the Black Scholes Option Pricing Model (the "Option Value") and (y) the
other securities issued or sold in such integrated transaction shall be deemed
to have been issued for the difference of (I) the aggregate consideration
received by the Company, less (II) the Option Value.  If any 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 gross amount received by the Company therefor.  If any
Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other than cash
received by the Company will be the fair value of such consideration, except
where such consideration consists of securities, in which case the amount of
consideration received by the Company will be the Closing Sale Price of such
securities on the date of receipt.  If any 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 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 Company and the Required
Holders.  If such parties are unable to reach agreement within ten
(10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair
value of such consideration will be determined within five (5) Business Days
after the tenth (10th) day
following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Required Holders.  The determination
of such appraiser shall be deemed 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 shares
of Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in shares of Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase shares of 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 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.

       

      
        
           

        

        
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      (b)           Adjustment upon Subdivision
or Combination of Common Stock.  If the Company at any time on
or after the Subscription Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the 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 on or after the Subscription Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the 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(a) shall become effective at the close of
business on the date the subdivision or combination becomes
effective.

       

      (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 share appreciation rights,
phantom share 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; 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.

       

      (d)           Voluntary Adjustment By
Company. The Company may at any time during the term of this Warrant
reduce the then current Exercise Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the Company. 

       

      3.      RIGHTS UPON DISTRIBUTION OF
ASSETS.  If the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of
shares of 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 shares of 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 shares of 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 Common
Stock, and (ii) the denominator shall be the Closing Bid Price of the shares of
Common Stock on the trading day immediately preceding such record date;
and

       

      
        
           

        

        
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      (b)           the
number of Warrant Shares shall be increased to a number of shares equal to the
number of shares of Common Stock obtainable immediately prior to the close of
business on the record date fixed for the determination of holders of shares of
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 shares of Common Stock (or common
stock) ("Other Shares of Common
Stock") of a company whose common shares are traded on a national
securities exchange or a national automated quotation system, then the Holder
may elect to receive a warrant to purchase Other Shares of 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 Shares of Common Stock that would
have been payable to the Holder 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).

       

      4.      PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS.

       

      (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 shares of Common
Stock (the "Purchase
Rights"), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of 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
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.

       

      (b)  Fundamental
Transactions.

       

      (1)           The
Company shall not enter into or be party to a Fundamental Transaction unless
(i)  the Successor Entity assumes in writing all of the obligations of the
Company under this Warrant and the other Transaction Documents in accordance
with the provisions of this Section (4)(b) pursuant to written agreements in
form and substance reasonably satisfactory to the Required Holders and approved
by the Required Holders prior to such Fundamental Transaction, including
agreements to deliver to each holder of Warrants in exchange for such Warrants a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant, including, without limitation, an
adjusted exercise price equal to the value for the shares of Common Stock
reflected by the terms of such Fundamental Transaction, and exercisable for a
corresponding number of shares of capital stock equivalent to the shares of
Common Stock acquirable and receivable upon exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and satisfactory to the Required Holders and
(ii) the Successor Entity (including its Parent Entity) is a publicly
traded corporation whose common stock is quoted on or listed for trading on an
Eligible Market.  Upon the occurrence of any Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of this Warrant
referring to the "Company" shall refer instead to the Successor Entity), and may
exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant with the same effect as if such
Successor Entity had been named as the Company herein.  Upon
consummation of the Fundamental Transaction, the Successor Entity shall deliver
to the Holder confirmation that there shall be issued upon exercise of this
Warrant at any time after the consummation of the Fundamental Transaction, in
lieu of the shares of the Common Stock (or other securities, cash, assets or
other property) purchasable upon the exercise of the Warrant prior to such
Fundamental Transaction, such shares of the publicly traded common stock (or its
equivalent) of the Successor Entity (including its Parent Entity) which the
Holder would have been entitled to receive upon the happening of such
Fundamental Transaction had this Warrant been converted immediately prior to
such Fundamental Transaction, as adjusted in accordance with the provisions of
this Warrant.  In addition to and not in substitution for any other
rights hereunder, prior to the consummation of any Fundamental Transaction
pursuant to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common
Stock (a "Corporate
Event"), the Company shall make appropriate provision to insure that the
Holder will thereafter have the right to receive upon an exercise of this
Warrant at any time after the consummation of the Fundamental Transaction but
prior to the Expiration Date, in lieu of the shares of the Common Stock (or
other securities, cash, assets or other property) purchasable upon the exercise
of the Warrant prior to such Fundamental Transaction, such shares of stock,
securities, cash, assets or any other property whatsoever (including warrants or
other purchase or subscription rights) which the Holder would have been entitled
to receive upon the happening of such Fundamental Transaction had the Warrant
been exercised immediately prior to such Fundamental
Transaction.  Provision made pursuant to the preceding sentence shall
be in a form and substance reasonably satisfactory to the Required
Holders.  The provisions of this Section shall apply similarly and
equally to successive Fundamental Transactions and Corporate Events and shall be
applied without regard to any limitations on the exercise of this
Warrant.

       

      
        
           

        

        
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      (2)           Notwithstanding
the provisions of Section 4(b)(1), the Company shall have the right to require
that the Holder waive the requirements of Section 4(b)(1) (the "Waiver") in exchange for a
payment of cash in an amount equal to the Black Scholes Value of the remaining
unexercised portion of this Warrant on the date of such Fundamental Transaction,
with the Waiver becoming effective, and this Warrant cancelled, concurrently
with such payment of such cash amount (the "Fundamental Transaction
Amount") to the Holder on the Fundamental Transaction Closing
Date.  Notwithstanding anything to the contrary in this Section 4(b),
but subject to Section 1(f), until such time that the Holder receives the
Fundamental Transaction Amount (at which point this Warrant shall be cancelled),
this Warrant may be exercised, in whole or in part, by the Holder (x) prior to
the Fundamental Transaction Closing Date, into Common Stock pursuant to Section
1, or (y) upon (which may be expressly conditioned upon the closing of the
Fundamental Transaction) or after the Fundamental Transaction Closing Date, into
any such shares of stock, securities, cash, assets or any other property
whatsoever (including warrants or other purchase or subscription rights, if
applicable) which the Holder would have been entitled to receive upon the
happening of such Fundamental Transaction had the Warrant been exercised
immediately prior to such Fundamental Transaction Closing Date.

       

      
        
           

        

        
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      5.      NONCIRCUMVENTION.  The
Company hereby covenants and agrees that the Company will not, by amendment of
its Certificate of Incorporation, Bylaws or through any reorganization, transfer
of assets, consolidation, merger, scheme of arrangement, 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.  Without limiting the generality of the foregoing, the Company
(i) shall not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect, (ii) shall 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 Common Stock upon the exercise of this Warrant, and
(iii) shall, 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
shares of Common Stock, solely for the purpose of effecting the exercise of the
SPA Warrants, 130% of the number of shares of 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,
the Holder, solely in such Person's capacity as a holder of this Warrant, shall
not be entitled to vote or receive dividends or be deemed the holder of share
capital of the Company for any purpose, nor shall anything contained in this
Warrant be construed to confer upon the Holder, solely in such Person's capacity
as the Holder of this Warrant, any of the rights of a stockholder 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 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 the 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
shall provide the Holder 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 a new Warrant (in
accordance with Section 7(d)), registered as the Holder 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
with Section 7(d)) to the Holder representing the right to purchase the number
of Warrant Shares not being transferred.

       

      
        
           

        

        
          - 12
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      (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 to the Company in customary form and,
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)  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 at the time of such surrender;
provided, however, that no Warrants for fractional shares of 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 which, when added
to the number of shares of 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
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 (i) immediately upon any
adjustment of the Exercise Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) promptly after the date
on which the Company establishes a record date (A) with respect to any dividend
or distribution upon the shares of Common Stock, (B) with respect to any grants,
issuances or sales of any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property to holders of shares of Common
Stock or (C) for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided in each case that such
information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder.

       

      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 Required Holders;
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.  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.

       

      
        
           

        

        
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      10.    GOVERNING
LAW.  This Warrant shall be governed by and 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 (2) Business Days of receipt of the Exercise Notice giving
rise to such dispute, as the case may be, to the Holder.  If the
Holder and the Company are unable to agree upon such determination or
calculation of the Exercise Price or the Warrant Shares within three (3)
Business Days of such disputed determination or arithmetic calculation being
submitted to the Holder, then the Company shall, within two (2) 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  or (b) the disputed arithmetic calculation of the Warrant
Shares to the Company's independent, outside accountant.  The Company
shall cause at its expense 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 and the other Transaction Documents, at law or in equity
(including a decree of specific performance and/or other injunctive relief), and
nothing herein shall limit the right of the Holder 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 and that the
remedy at law for any such breach may be inadequate.  The Company
therefore agrees that, in the event of any such breach or threatened breach, the
holder 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.

       

      
        
           

        

        
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      (a)  This
Warrant may be offered for sale, sold, transferred or assigned in compliance
with the Federal and state securities laws without the consent of the
Company.

       

      (b)  Except
as provided in Section 2(h) of the Securities Purchase Agreement, the Company
may cause the legend set forth on the first page of this Warrant to be set forth
on each Warrant, and a similar legend on any security issued or issuable upon
exercise of this Warrant, unless counsel for the Company is of the opinion as to
any such security that such legend is unnecessary.

       

      15.   
PAYMENT OF
TAXES.  The Company will pay any documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the Holder in respect of which such shares are issued,
and in such case, the Company shall not be required to issue or deliver any
certificate for Warrant Shares or any Warrant until the person requesting the
same has paid to the Company the amount of such tax or has established to the
Company’s reasonable satisfaction that such tax has been paid.  The
Holder shall be responsible for income taxes due under federal, state or other
law, if any such tax is due.

       

      16.    FORCED
EXERCISE.

       

      (a)  At
any time after the eighteen (18) month anniversary of the Issuance Date (the
"Eligibility Date"), the
Company may, no later than ten (10) Trading Days after the applicable Forced
Exercise Measuring Period (as defined below), deliver a notice to the Holder (a
"Forced Exercise Notice"
and the date such notice is received by the Holder, the "Forced Exercise Notice Date"),
of its irrevocable election to require the exercise of all, or any portion, of
this Warrant (such required exercise amount, the "Forced Exercise
Number").  The date of such forced exercise shall be the tenth
(10th) Trading Day following the Forced Exercise Notice Date (the "Forced Exercise
Date").  The Company may only deliver a Forced Exercise Notice,
and the forced exercise thereunder may only occur on the Forced Exercise Date,
if each of the following shall be true: (i) there is currently no Equity
Conditions Failure (unless the Holder has waived such Equity Conditions Failure)
and (ii) prior to the Forced Exercise Notice Date (A) the arithmetic average of
the Weighted Average Price shall equal or exceed $3.38 (subject to adjustment
for any stock dividend, stock split, stock combination or other similar
transaction which occur after the Issuance Date) for twenty (20) Trading Days in
any thirty (30) consecutive Trading Day period occurring after the Eligibility
Date (the "Forced Exercise
Measuring Period") and (B) the volume in number of shares traded on
fifteen (15) trading days out of such twenty (20) trading period referred to in
clause (A) is greater than 100,000.  If any of the foregoing
conditions shall cease to be satisfied at any time during the required period,
then the Forced Exercise Notice shall be null and void, ab
initio.  Notwithstanding the foregoing, nothing in this subsection
shall prevent the Holder from exercising this Warrant, in whole or part, prior
to the Forced Exercise Date.  The Company covenants and agrees that it
will honor all Exercise Notices tendered from the time of delivery of the Forced
Exercise Notice through the Forced Exercise Date.

       

      
        
           

        

        
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      (b)  Pro Rata
Requirement.  If the Company elects to cause a forced exercise
of all or any portion of this Warrant pursuant to Section 16(a), then it must
simultaneously take the similar action, pro rata, with respect to all other SPA
Warrants and the Forced Exercise Number for each holder of SPA Warrants must be
equal to such holder's Forced Exercise Allocation Percentage multiplied by the
aggregate of all Forced Exercise Numbers which the Company elects pursuant to
Section 16(a) of all SPA Warrants.  The "Forced Exercise Allocation
Percentage" for any holder of SPA Warrants shall mean a fraction, the
numerator of which is the number of Warrant shares initially issued to such
holder on the Issuance Date and the denominator of which is the sum of the
aggregate number of Warrant Shares issuable upon exercise of all the SPA
Warrants.  In the event that the initial holder of any such SPA
Warrants shall sell or otherwise transfer any of such holder's SPA Warrants, the
transferee shall be allocated a pro rata portion of such holder's Forced
Exercise Allocation Percentage.  The Forced Exercise Notice shall
state (I)  the aggregate Forced Exercise Numbers of all SPA Warrants
which the Company has elected to forced to be exercised from all of the holders
of SPA Warrants pursuant to Section 16(a) and (II) each holder's Forced Exercise
Number that the Company has elected to force to be exercised pursuant to Section
16(a).

       

      

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

       

      (a)  "Black Scholes Value" means the value of this
Warrant obtained from the "OV" function on Bloomberg using (i) a price per share
of Common Stock equal to the greater of (A) the arithmetic average of the
Weighted Average Price of the Common Stock for the five Trading Days immediately
preceding the date of consummation of the applicable Fundamental Transaction and
(B) the Weighted Average Price of the Common Stock for the Trading Day
immediately preceding the date of consummation of the applicable Fundamental
Transaction, (ii) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of the date of
consummation of the Fundamental Transaction and (iii) an expected volatility
equal to the greater of 60% and the 100 day volatility obtained from the HVT
function on Bloomberg determined as of the Trading Day immediately following the
public announcement of the applicable Fundamental Transaction.

       

      (b) "Bloomberg" means Bloomberg
Financial Markets.

       

      (c)  "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.

       

      (d) 
"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 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.

       

      
        
           

        

        
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      (e)  "Common Stock" means
(i) the Company's shares of Common Stock, $0.01 par value per share, and
(ii) any share capital into which such Common Stock shall have been changed
or any share capital resulting from a reclassification of such Common
Stock.

       

      (f)   "Convertible Securities" means
any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for shares of Common Stock.

       

      (g) "Eligible Market" means the
Principal Market, the American Stock Exchange, The New York Stock Exchange,
Inc., The NASDAQ Capital Market, The NASDAQ Global Select Market or the OTC
Bulletin Board.

       

      (h)  "Equity Conditions"
means:  (i) on each day during the period beginning twenty (20)
Trading Days prior to the applicable date of determination and ending on and
including the applicable date of determination (each, an "Equity Conditions Measuring
Period"), either (x) the Registration Statement filed pursuant to the
Registration Rights Agreement shall be effective and available for the resale of
all Registrable Securities required to be covered thereby in accordance with the
terms of the Registration Rights Agreement and no Event (as defined in the
Registration Rights Agreement) shall have occurred and be continuing or (y) all
shares of Common Stock issuable upon conversion of the SPA Securities, and upon
cashless exercise of the SPA Warrants shall be eligible for sale pursuant to
Rule 144 without restriction or limitation including without the requirement to
be subject to Rule 144(c)(1) and without the need for registration under any
applicable federal or state securities laws; (ii) on each day during the Equity
Conditions Measuring Period, the Common Stock is designated for quotation on an
Eligible Market and shall not have been suspended from trading on such exchange
or market (other than suspensions of not more than two (2) days and occurring
prior to the applicable date of determination due to business announcements by
the Company) nor shall delisting or suspension by such exchange or market been
threatened or pending either (A) in writing by such exchange or market (other
than a notice from the Principal Market to the effect that the common stock does
not satisfy Nasdaq Marketplace Rule 4310(c)(4) (the "Minimum Bid Price Rule"), and
that in accordance with the rules of the Principal Market, the Company will be
provided 180 calendar days to regain compliance with the Minimum Bid Price Rule
or be delisted from the Principal Market) or (B) by falling below the minimum
listing maintenance requirements of all such Eligible Markets; (iii) during the
one (1) year period ending on and including the date immediately preceding the
applicable date of determination, the Company shall have delivered Conversion
Shares upon conversion of the SPA Securities to the holders on a timely basis as
set forth in Section 3(c)(ii) of the SPA Securities and upon exercise of the SPA
Warrants to the Holders on a timely basis as set forth in Section 1(a) hereof;
(iv) any applicable shares of Common Stock to be issued in connection with the
event requiring determination may be issued in full without violating Section
1(g) hereof and the rules or regulations of the Principal Market; (v) during the
Equity Conditions Measuring Period, the Company shall not have failed to timely
make any payments within five (5) Business Days of when such payment is due
pursuant to any Transaction Document; (vi) during the Equity Conditions
Measuring Period, there shall not have occurred either (A) the public
announcement of a pending, proposed or intended Fundamental Transaction which
has not been abandoned, terminated or consummated or (B) an Event of Default (as
defined in the SPA Securities) or an event that with the passage of time or
giving of notice would constitute an Event of Default; (vii) the Company shall
have no knowledge of any fact that would cause (x) the Registration Statements
required pursuant to the Registration Rights Agreement not to be effective and
available for the resale of all remaining Registrable Securities in accordance
with the terms of the Registration Rights Agreement or (y) any shares of Common
Stock issuable upon conversion of the SPA Securities and upon cashless exercise
of the Warrants not to be eligible for sale pursuant to Rule 144 without
restriction or limitation including without the requirement to be subject to
Rule 144(c)(1) and without the need for registration under any applicable
federal or state securities laws; (viii) the Stockholder Approval (as defined in
the Securities Purchase Agreement) shall have been obtained; and (ix) the
Company otherwise shall have been in material compliance with and shall not have
materially breached any provision, covenant, representation or warranty of any
Transaction Document.

       

      
        
           

        

        
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      (i)  
"Equity Conditions
Failure" means that during the period commencing on the first (1st)
Trading Day of the Forced Exercise Measuring Period through the Forced Exercise
Date, the Equity Conditions have not been satisfied (or waived in writing by the
Holder).

       

      (j)   "Expiration Date" means the
date that is thirty-six (36) months after the Issuance Date 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.

       

      (k)  "Fundamental Transaction" means
that the Company shall, directly or indirectly, in one or more related
transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Person or Persons, or (ii) sell, assign,
transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company to another Person, or (iii) allow another
Person to make a purchase, tender or exchange offer that is accepted by the
holders of more than 50% of the outstanding shares of Common Stock (not
including any shares of Common Stock held by the Person or Persons making or
party to, or associated or affiliated with the Persons making or party to, such
purchase, tender or exchange offer), or (iv) consummate a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than the 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase
agreement or other business combination), (v) reorganize, recapitalize or
reclassify its Common Stock or (vi) any "person" or "group" (as these terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall
become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50% of the aggregate Common Stock of the
Company.

       

      
        
           

        

        
          - 18
-

          
            

          

        

        
           

        

      

      (l)   "Options" means any rights,
warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities.

       

      (m)  "Parent Entity" of a Person
means an entity that, directly or indirectly, controls the applicable Person and
whose common stock or equivalent equity security is quoted or listed on an
Eligible Market, or, if there is more than one such Person or Parent Entity, the
Person or Parent Entity with the largest public market capitalization as of the
date of consummation of the Fundamental Transaction.

       

      (n)  "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.

       

      (o)  "Principal Market" means The
NASDAQ Global Market.

       

      (p)  "Registration Rights Agreement"
means that certain registration rights agreement by and among the Company and
the Buyers.

       

      (q)  "Required Holders" means the
holders of the SPA Warrants representing at least a majority of shares of Common
Stock underlying the SPA Warrants then outstanding.

       

      (r)   "SPA Securities" means the
Notes issued pursuant to the Securities Purchase Agreement.

       

      (s)  "Successor Entity" means the
Person, which may be the Company, (or, if so elected by the Required Holders,
the Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Required Holders, the Parent
Entity) with which such Fundamental Transaction shall have been entered
into.

       

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

       

      
        
           

        

        
          - 19
-

          
            

          

        

        
           

        

      

      (u)  "Weighted Average Price" means,
for any security as of any date, the dollar volume-weighted average price for
such security on the Principal Market during the period beginning at 9:30:01
a.m., New York time (or such other time as the Principal Market publicly
announces is the official open of trading), and ending at 4:00:00 p.m., New York
time (or such other time as the Principal Market publicly announces is the
official close of trading) as reported by Bloomberg through its "Volume at
Price" functions, or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market on
the electronic bulletin board for such security during the period beginning at
9:30:01 a.m., New York Time (or such other time as such market publicly
announces is the official open of trading), and ending at 4:00:00 p.m., New York
time (or such other time as such market publicly announces is the official close
of trading) as reported by Bloomberg, or, if no dollar volume-weighted average
price is reported for such security by Bloomberg for such hours, the average of
the highest closing bid price and the lowest closing ask price of any of the
market makers for such security as reported in the "pink sheets" by Pink Sheets
LLC (formerly the National Quotation Bureau, Inc.).  If the Weighted
Average Price cannot be calculated for a security on a particular date on any of
the foregoing bases, the Weighted Average Price of such security on such date
shall be the fair market value as mutually determined by the Company and the
Holder.  If the Company and the Holder are unable to agree upon the
fair market value of such security, then such dispute shall be resolved pursuant
to Section 12.  All such determinations to be appropriately adjusted
for any stock dividend, stock split, stock combination, reclassification or
other similar transaction during the applicable calculation period.

      

       

      [Signature
Page Follows]

      
        
           

        

        
          - 20
-

          
            

          

        

        
           

        

      

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

      

      

      
        	 
      	
                AROTECH
      CORPORATION

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	
                Name:

              
	 
      	
                Title:

              

      

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      EXHIBIT
I

      

      EXERCISE
NOTICE

       

      TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

      WARRANT
TO PURCHASE COMMON STOCK

       

      AROTECH
CORPORATION

       

      The
undersigned holder hereby exercises the right to purchase _________________ of
the shares of Common Stock ("Warrant Shares") of Arotech
Corporation, a Delaware corporation (the "Company"), evidenced by the
attached Warrant to Purchase 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.

              

      

      

      2.           Payment
of Exercise Price.  In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the
Warrant.

      

       

      3.           Delivery
of Warrant Shares.  Please issue the Warrant Shares in the following
name and to the following address:

      

      
        	
                Issue
      to:

              	 
      

      

       

      
        	
                Facsimile
      Number:

              	 
      

      

       

      
        	
                Authorization:

              	 
      

      

       

      
        	
                Account
      Number:

              	 
      
	
                (if
      electronic book entry transfer)

              

      

       

      
        	
                Transaction
      Code Number:

              	 
      
	
                (if
      electronic book entry transfer)

              

      

      

       

      To the
extent the foregoing exercise is for less than the full number of Warrant Shares
issuable pursuant to the Warrant, a replacement Warrant representing the
remainder of the Warrant Shares issuable (and otherwise of like form, tenor and
effect) shall be delivered to holder.

       

      The
undersigned confirms the continuing validity of, and reaffirms as of the date
hereof, the representations and warranties set forth in [Section 2(b) through
(j)] of the Securities Purchase Agreement, dated as of August 14, 2008, by and
among the Company and the Buyers named therein.

       

      The
undersigned agrees to comply with the prospectus delivery requirements (to the
extent applicable) under the applicable securities laws in connection with any
transfer of the aforesaid Warrant Shares.

       

      Date:
_______________ __, ______

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      
        	 
      	 
      
	
                Name
      of Registered Holder

              	 
      
	 
      	 
      	 
      
	
                By:

              	 
      	 
      
	
                Name:

              	 
      	 
      
	
                Title:

              	 
      	 
      

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      ACKNOWLEDGMENT

       

      The
Company hereby acknowledges this Exercise Notice and hereby directs American
Stock Transfer & Trust Co. to issue the above indicated number of shares of
Common Stock in accordance with the Transfer Agent Instructions dated August 14,
2008 from the Company and acknowledged and agreed to by American Stock Transfer
& Trust Co.

      

      
        	 
      	
                AROTECH
      CORPORATION

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      FORM OF
ASSIGNMENT

      

       

      [To be
completed and signed only upon transfer of Warrant]

      

       

      FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the within Warrant to
purchase  ____________ shares of Common Stock of Arotech Corporation
to which the within Warrant relates and appoints ________________ attorney to
transfer said right on the books of Arotech Corporation with full power of
substitution in the premises.

       

      
        	
                Dated: __ ,
      _____

              	
                _______________________________________

              
	 
      	 
      
	 
      	
                (Signature
      must conform in all respects to name of Holder as specified on the face of
      the Warrant)

              
	 	 
	 
      	

                _______________________________________

              
	 	 
	 
      	
                Address
      of Transferee

              
	 
      	 
      
	 
      	

                _______________________________________

              
	 
      	 
      
	 
      	

                _______________________________________

              
	 	 
	
                In
      the presence of:

              	 
      
	
                ______________ex4_4.htm

    
      

    

    Exhibit 4.4

     

    
      REGISTRATION
RIGHTS AGREEMENT

      

      This
Registration Rights Agreement (this "Agreement") is made and
entered into as of August 14, 2008, by and among Arotech Corporation, a Delaware
corporation (the "Company"), and the investors
signatory hereto (each a "Purchaser" and collectively,
the "Purchasers").

      

      This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the
date hereof among the Company and the Purchasers (the "Purchase
Agreement").

      

      The
Company and the Purchasers hereby agree as follows:

      

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

      

      "Additional Effective Date"
means the date the Additional Registration Statement is declared effective by
the SEC.

      

      "Additional Effectiveness
Deadline" means the date which is sixty (60) calendar days after the
earlier of the Additional Filing Date and the Additional Filing Deadline or in
the event that the Registration Statement is subject to any review by the SEC,
ninety (90) calendar days after the earlier of the Additional Filing Date and
the Additional Filing Deadline.

      

      "Additional Filing Date" means
the date on which the Additional Registration Statement is filed with the
SEC.

      

      "Additional Filing Deadline"
means if Cutback Shares are required to be included in any Additional
Registration Statement, the later of (i) the date sixty (60) days after the date
substantially all of the Registrable Securities registered under the immediately
preceding Registration Statement are sold and (ii) the date six (6) months from
the Initial Effective Date or the last Additional Effective Date, as
applicable.

      

      "Additional Registrable
Securities" means, (i) any Cutback Shares not previously included on a
Registration Statement and (ii) any capital stock of the Company issued or
issuable with respect to the Notes, the Conversion Shares, the Warrants, the
Warrant Shares or Cutback Shares, as applicable, as a result of any stock split,
stock dividend, recapitalization, exchange or similar event or otherwise,
without regard to any limitations on conversions and/or redemptions of the Notes
or exercises of the Warrants.

      

      "Additional Registration
Statement" means a registration statement or registration statements of
the Company filed under the 1933 Act covering any Additional Registrable
Securities.

      

      "Additional Required Registration
Amount" means (I) any Cutback Shares not previously included on a
Registration Statement, without regard to any limitations on conversion and/or
redemption of the Notes or exercises of the Warrants, or (II) such other amount
as may be required by the staff of the SEC pursuant to Rule
415.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      "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.

      

      "Closing Date" shall have the
meaning set forth in the Securities Purchase Agreement.

      

      "Cutback Shares" means any of
the Total Required Registration Amount, Initial Required Registration Amount or
the Additional Required Registration Amount (without regard to clause (II) in
the definition thereof) of Registrable Securities not included in all
Registration Statements previously declared effective hereunder as a result of a
limitation on the maximum number of shares of Common Stock of the Company
permitted to be registered by the staff of the SEC pursuant to Rule
415.  The number of Cutback Shares shall be allocated pro rata among
the Holders.  For the purpose of determining the Cutback Securities,
in order to determine any applicable Required Registration Amount, unless a
Holder gives written notice to the Company to the contrary with respect to the
allocation of its Cutback Shares, first the Conversion Shares shall be excluded
on a pro rata basis until all of the Conversion Shares have been excluded and
second, the Warrant Shares shall be excluded on a pro rata basis until all of
the Warrant Shares have been excluded.

      

      "Effective Date" means the
Initial Effective Date and the Additional Effective Date, as
applicable.

      

      "Effectiveness Deadline" means
the Initial Effectiveness Deadline and the Additional Effectiveness Deadline, as
applicable.

      

      "Effectiveness Period" shall
have the meaning set forth in Section 3(a).

      

      "Exchange Act" means the
Securities Exchange Act of 1934, as amended.

      

      "Filing Deadline" means the
Initial Filing Deadline and the Additional Filing Deadline, as
applicable.

      

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

      

      "Initial Effective Date" means
the date that the Initial Registration Statement has been declared effective by
the SEC.

      

      "Initial Effectiveness
Deadline" for the Initial Registration Statement means the earlier of (i)
in the event that the Initial Registration Statement is not subject to a full
review by the SEC, ninety (90) calendar days after the Closing Date, (ii) in the
event that the Initial Registration Statement is subject to a full review by the
SEC, one hundred twenty (120) calendar days after the Closing Date and (iii) the
fifth (5th)
Business Day following the date on which the Company is notified by the SEC that
such Registration Statement will not be reviewed or is no longer subject to
further review and comments.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      "Initial Filing Deadline" means
the date which is thirty (30) calendar days after the Closing Date.

      

      "Initial Registrable
Securities" means (i) the Conversion Shares issued or issuable upon
conversion of the Notes (including the shares of Common Stock issued and
issuable as a Make-Whole Premium (as defined in the Notes)), (ii) the Warrant
Shares issued or issuable upon exercise of the Warrants and (iii) any capital
stock of the Company issued or issuable, with respect to the Conversion Shares,
the Notes, 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 and/or redemptions of the Notes
or exercises of the Warrants.

      

      "Initial Registration
Statement" means a registration statement or registration statements of
the Company filed under the 1933 Act covering the Initial Registrable
Securities.

      

      "Initial Required Registration
Amount" (I) the Maximum Allowable Amount of the Total Required
Registration Amount or (II) such maximum lesser amount as may be required by the
staff of the SEC pursuant to Rule 415 with any cutback applied pro rata to all
Holders.

      

      "Indemnified Party" shall have
the meaning set forth in Section 6(c).

      

      "Indemnifying Party" shall have
the meaning set forth in Section 6(c).

      

      "Losses" shall have the meaning
set forth in Section 6(a).

      

      "Maximum Allowable Amount"
means a number of shares of Common Stock equal to one-third (1/3) (or the
greatest such other percentage as is permitted by the SEC) of the issued and
outstanding Common Stock of the Company that is not beneficially owned by an
affiliate of the Company.

      

      "Proceeding" means an action,
claim, suit, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced or
threatened.

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      "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, and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.

      

      "Registrable Securities" means
the Initial Registrable Securities and the Additional Registrable
Securities.

      

      "Registration Statement" means
the Initial Registration Statement and the Additional Registration Statement, as
applicable.

      

      "Required Holders" means the
holders of at least a majority of the Registrable Securities.

      

      "Required Registration Amount"
means either the Initial Required Registration Amount or the Additional Required
Registration Amount, as applicable.

      

      "Rule 144" means Rule 144
promulgated by the SEC pursuant to the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC having substantially the same effect as such Rule.

      

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

      

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

      

      "SEC" means the United States
Securities and Exchange Commission.

      

      "Securities Act" means the
Securities Act of 1933, as amended.

      

      "Special Counsel" means Schulte
Roth & Zabel LLP.

      

      "Total Required Registration
Amount" means 130% of the sum of (i) the number of Conversion Shares
issued and issuable pursuant to the Notes (including the shares of Common Stock
issued and issuable as a Make Whole Premium (as defined in the Notes)) as of the
Trading Day immediately preceding the applicable date of determination and (ii)
the number of Warrant Shares issued and issuable pursuant to the Warrants as of
the Trading Day immediately preceding the applicable date of determination,
without regard to any limitations on conversions and/or redemptions of the Notes
or exercises of the Warrants.

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      2.       
     Registration.

      

      (a)           On
or prior to the Initial Filing Deadline, the Company shall prepare and file with
the SEC the Initial Registration Statement covering the resale of the Initial
Required Registration Amount of the Initial Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415.  The
Initial Registration Statement shall be on Form S-3 (except if the Company is
not then eligible to register for resale the Initial Registrable Securities on
Form S-3, in which case such registration shall be on another appropriate form
in accordance herewith) and shall contain (except if otherwise directed by the
Holders) the "Selling Shareholders" and "Plan of Distribution" substantially in
the form attached hereto as Annex
A.  The Company shall use its reasonable best efforts to cause
the Initial Registration Statement to be declared effective under the Securities
Act but in no event later than the Initial Effectiveness Deadline.  By
9:30 a.m. New York time on the Business Day following the Initial Effective
Date, the Company shall file with the SEC in accordance with Rule 424 under the
1933 Act the final prospectus to be used in connection with sales pursuant to
such Initial Registration Statement.

      

      (b)           On
or prior to the Additional Filing Deadline, the Company shall prepare and file
with the SEC an Additional Registration Statement covering the resale of the
Additional Required Registration Amount of the Additional Registrable Securities
not previously registered on a Registration Statement hereunder for an offering
to be made on a continuous basis pursuant to Rule 415.  To the extent
the staff of the SEC does not permit the Additional Required Registration Amount
to be registered on an Additional Registration Statement, the Company shall file
Additional Registration Statements successively trying to register on each such
Additional Registration Statement the maximum number of remaining Additional
Registrable Securities until the Additional Required Registration Amount has
been registered with the SEC.  Each Additional Registration Statement
prepared pursuant hereto shall register for resale at least that number of
shares of Common Stock equal to the Additional Required Registration Amount
determined as of the date such Additional Registration Statement is initially
filed with the SEC.  Each Additional Registration Statement shall be
on Form S-3 (except if the Company is not then eligible to register for resale
the Additional Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form in accordance herewith) and
shall contain (except if otherwise directed by the Holders) the "Selling
Shareholders" and "Plan of Distribution" substantially in the form attached
hereto as Annex
A.  The Company shall use its reasonable best efforts to cause
the Additional Registration Statement to be declared effective under the
Securities Act but in no event later than the Additional Effectiveness
Deadline.  By 9:30 a.m. New York time on the Business Day following
the Additional Effective Date, the Company shall file with the SEC in accordance
with Rule 424 under the 1933 Act the final prospectus to be used in connection
with sales pursuant to such Additional Registration Statement.

      

      (c)           The
initial number of Registrable Securities included in any Registration Statement
and any increase or decrease in the number of Registrable Securities included
therein shall be allocated pro rata among the Holders based on the number of
Registrable Securities held by each Holder at the time the Registration
Statement covering such initial number of Registrable Securities or increase or
decrease thereof is declared effective by the SEC. In the event that an Holder
sells or otherwise transfers any of such Holder’s Registrable Securities in a
transfer involving the transfer of all or a part of the Holder’s rights
hereunder, 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 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 Holders, pro rata based on the number of Registrable
Securities then held by such Holders which are covered by such Registration
Statement.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (d)           If:
(i) a Registration Statement is not filed on or prior to its respective Filing
Deadline (if the Company files such Registration Statement without affording the
Holder the opportunity to review and comment on the same as required by Section
3(b) hereof, the Company shall not be deemed to have satisfied this clause (i)),
or (ii) the Company fails to file with the SEC a request for acceleration in
accordance with Rule 461 promulgated under the Securities Act, within five (5)
Business Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the SEC that a Registration Statement will not be
"reviewed," or not subject to further review, or (iii) after its respective
Effective Date, such Registration Statement ceases to be effective and available
to the Holders thereunder as to all Registrable Securities required to be
included in such Registration Statement (whether upon the delivery of an Advice
pursuant to Section 7(d) or otherwise) at any time prior to the expiration of
its Effectiveness Period for a period exceeding thirty (30) consecutive days at
any one time, forty five (45) days in the aggregate in any three-month period or
ninety (90) days in the aggregate during any twelve-month period; or (iv) the
Common Stock is not listed or quoted, or is suspended from trading on The NASDAQ
Global Market or another Trading Market (as defined in the Purchase Agreement)
for a period of three (3) Business Days (which need not be consecutive Business
Days), or (v) the conversion rights or the exercise rights of the Holders
pursuant to the Notes and Warrants, respectively, are suspended for any reason,
or (vi) any Registration Statement shall not be declared effective or by the SEC
or is not otherwise available to the Holders on or prior to its respective
Effectiveness Deadline (any such failure or breach being referred to as an
"Event," and for
purposes of clause (i), (v) or (vi) the date on which such Event occurs, or for
purposes of clause (ii) the date on which such five (5) Business Day period is
exceeded, or for purposes of clauses (iii) the date on which such 30, 45 or 90
day period, as applicable, is exceeded, or for purposes of clause (iv) the date
on which such three (3) Business Day period is exceeded, being referred to as
"Event Date"), then, in
addition to any other rights available to the Holders: (x) on each such Event
Date the Company shall pay to each Holder an amount in cash, as liquidated
damages and not as a penalty, equal to 1.5% of the aggregate principal amount of
the Notes, then held by such Holder and (y) on each monthly anniversary
thereafter of each such Event Date thereof (if the applicable Event shall not
have been cured by such date) until the applicable Event is cured, the Company
shall pay to each Holder an amount in cash, as liquidated damages and not as a
penalty, equal to 1.5% of the aggregate principal amount of the Notes, then held
by such Holder (the "Registration Delay Payments");
provided, however, that (i) the maximum aggregate Registration Delay Payments
payable to an Holder under this Agreement shall be ten percent (10%) of the
aggregate Purchase Price paid by such Holder pursuant to the Securities Purchase
Agreement, (ii) the Company shall not be liable for Registration Delay Payments
to any Holder under this Agreement with respect to any Cutback Shares that the
SEC requires the Company to exclude from a Registration Statement pursuant to
Rule 415 and (iii) the Company shall not be liable for any Registration Delay
Payments to any Holder under this Agreement with respect to any Registrable
Securities covered by a Registration Statement that may be sold without
restriction or limitation pursuant to Rule 144 and without the requirement to be
in compliance with Rule 144(c)(1).  If the Company fails to pay any
liquidated damages pursuant to this Section in full within seven days after the
date payable, the Company will pay interest thereon at a rate of 18% per annum
(or such lesser maximum amount that is permitted to be paid by applicable law)
to the Holder, accruing daily from the date such liquidated damages are due
until such amounts, plus all such interest thereon, are paid in
full.  The liquidated damages pursuant to the terms hereof shall apply
on a pro rata basis for any portion of a month prior to the cure of an
Event.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (c)           Notwithstanding
anything herein to the contrary, the Company shall prepare and file a supplement
to the appropriate Registration Statement (if permitted for such purpose under
the Securities Act) within 5 Business Days following the issuance of a new
Warrant or a new Note upon transfer of all or part of such Warrant or Note in
accordance with the terms of such Warrant or Note, as applicable, or (if such
supplement is not permitted for such purposes under the Securities Act), a new
Registration Statement within 15 Business Days following the issuance of such a
new Warrant.

      

      (d)           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 Required Holders 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.

      

      3.         
   Registration
Procedures

      

      In
connection with the Company's registration obligations hereunder, the Company
agrees, with respect to clauses (a) through (l), and each Purchaser agrees, with
respect to clause (m), that it shall:

      

      (a)           The
Company shall use its reasonable best efforts to keep the Registration Statement
continuously effective under the Securities Act until the date when all the
Registrable Securities covered by such Registration Statement have been sold or
may be sold without restriction pursuant to Rule 144 and without the requirement
to be in compliance with Rule 144(c)(1) as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company's transfer agent and the affected Holders (the "Effectiveness
Period").

      

      (b)           Not
less than two (2) Business Days prior to the filing of a Registration Statement
or any related Prospectus or any amendment or supplement thereto, the Company
shall, (i) furnish to the Holders and their Special Counsel copies of all such
documents proposed to be filed (including documents incorporated or deemed
incorporated by reference, to the extent that such documents are not available
on EDGAR) which documents will be subject to the review of such Holders and
their Special Counsel, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to conduct a
reasonable investigation within the meaning of the Securities
Act.  The Company shall not file the Registration Statement or any
such Prospectus or any amendments or supplements thereto to which the Required
Holders and their Special Counsel shall reasonably object in good
faith.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (c)           (i)         
  Prepare and file with the SEC such amendments, including
post-effective amendments, to the Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period and prepare and file with the SEC such additional
Registration Statements in order to register for resale under the Securities Act
all of the Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) respond as
promptly as reasonably possible after the receipt of such comments, to any
comments received from the SEC with respect to the Registration Statement or any
amendment thereto and, as promptly as reasonably possible provide the Holders
true and complete copies of all correspondence from and to the SEC relating to
the Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.

      

      (d)           Notify
the Holders of Registrable Securities to be sold and their Special Counsel as
promptly as reasonably possible (and, in the case of (i)(A) below, not less than
two (2) Business Days prior to such filing) and (if requested by any such
Person) confirm such notice in writing no later than one (1) Business Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed;
(B) when the SEC notifies the Company whether there will be a "review" of such
Registration Statement and whenever the SEC comments in writing on such
Registration Statement (the Company shall provide true and complete copies
thereof and all written responses thereto to each of the Holders); and (C) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the SEC or any other Federal
or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

      

      (f)           Furnish
to each Holder and their Special Counsel, without charge, at least one (1)
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the
SEC.

      

      (g)           Promptly
deliver to each Holder and their Special Counsel, without charge, as many copies
of the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably
request.  The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

      

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

      

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

      

      (j)           Upon
the occurrence of any event contemplated by Section 3(d)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (k)           Comply
with all applicable rules and regulations of the SEC.

      

      (l)           Neither
the Company nor any Subsidiary (as defined in the Purchase Agreement) or
affiliate thereof shall identify any Holder as an underwriter in any public
disclosure or filing with the SEC or any Principal Market (as defined in the
Notes) or Eligible Market (as defined in the Notes) and any Holder being deemed
an underwriter by the SEC shall not relieve the Company of any obligations it
has under this Agreement or any other Transaction Document (as defined in the
Purchase Agreement); provided, however, that the
foregoing shall not prohibit the Company from including the disclosure found in
the "Plan of Distribution" section attached hereto as Annex A in the
Registration Statement.

      

      (m)           Obligations
of the Holders.

      

      (i)         
   Each Holder shall furnish in writing 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 registration of such Registrable
Securities.  At least five (5) Business Days prior to the first
anticipated filing date of any Registration Statement, the Company shall notify
each Holder of the information the Company requires from such Holder if such
Holder elects to have any of the Registrable Securities included in the
Registration Statement.  A Holder shall provide such information to
the Company at least two (2) Business Days prior to the first anticipated filing
date of such Registration Statement if such Holder elects to have any of the
Registrable Securities included in the Registration Statement.

      

      (ii)        
   Each Holder, by its 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 a Registration Statement
hereunder, unless such Holder has notified the Company in writing of its
election to exclude all of its Registrable Securities from such Registration
Statement.

      

      (iii)          
Each Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(d), such Holder will
immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until such
Holder’s receipt of copies of the supplemented or amended prospectus as
contemplated by Section 3(d) or receipt of notice that no supplement or
amendment is required.

      

      (iv)  
        Each Holder covenants and agrees that
it will comply with the prospectus delivery requirements of the 1933 Act as
applicable to it or an exemption therefrom in connection with sales of
Registrable Securities pursuant to the Registration Statement.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      4.          
  Reports
Under the 1934 Act.

      

      With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Securities Act or any other similar rule or regulation of the SEC that
may at any time permit the Holders 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 Securities Act and the Exchange Act so long as the Company
remains subject to such requirements and the filing of such reports and other
documents is required for the applicable provisions of Rule 144;
and

      

      (c)           furnish
to each Holder so long as such Holder 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 Securities Act and the Exchange
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 Holders to sell
such securities pursuant to Rule 144 without registration.

      

      5.         
   Registration
Expenses.  All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to the Registration
Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with The NASDAQ Global Market or any other Trading Market,
and (B) in compliance with applicable state securities or Blue Sky laws), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the holders of a majority of
the Registrable Securities included in the Registration Statement), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company and $5,000 for the fees and disbursements of Special
Counsel (which amount shall be paid to the Special Counsel concurrent with the
initial delivery of the Registration Statement to the Holders and their Special
Counsel pursuant to Section 3(b) hereof), (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement.  In addition, the
Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder.  Expenses of any Registration Statement abandoned prior to
the effectiveness thereof due to the request of the Holders shall be borne by
the Holders.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      6.         
   Indemnification

      

      (a)           Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, agents, brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to perform under
a margin call of Common Stock), investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable costs of
preparation and reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising
out of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for use therein, or
to the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the Holders have
approved Annex A hereto for this purpose).  The Company shall notify
the Holders promptly of the institution, threat or assertion of any Proceeding
of which the Company is aware in connection with the transactions contemplated
by this Agreement.

      

      (b)           Indemnification by
Holders.  Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses, as incurred, arising
solely out of or based solely upon: (x) such Holder's failure to comply with the
prospectus delivery requirements of the Securities Act or (y) any untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing by
such Holder to the Company specifically for inclusion in such Registration
Statement or such Prospectus or to the extent that (1) such untrue statements or
omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement (it being understood that the Holders have approved Annex A hereto for
this purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (2) in the case of an occurrence of an event of the type
specified in Section 3(d)(ii)-(v), the use by such Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or  defective and prior to the receipt by
such Holder of the Advice contemplated in Section 7(d).  In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of the net proceeds received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification
obligation.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

      

      An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying
Party).  The Indemnifying Party shall not be liable for any settlement
of any such Proceeding effected without its written consent, which consent shall
not be unreasonably withheld.  No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such
Proceeding.

      

      All fees
and expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten Business Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (d)           Contribution.  If
a claim for indemnification under Section 6(a) or 6(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations.  The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission.  The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in Section 6(c), any reasonable attorneys' or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

      

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

      

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

      

      7.        
    Miscellaneous

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (b)           No Piggyback on
Registrations.  Neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security
holders.  Except as and to the extent specified in Schedule 6(b) hereto,
the Company has not previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person which
have not been fully satisfied.

      

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

      

      (d)           Discontinued
Disposition.  Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(d), such Holder will
forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the "Advice") by the Company that
the use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus or Registration
Statement.  The Company may provide appropriate stop orders to enforce
the provisions of this paragraph.

      

      (e)           Piggy-Back
Registrations.  If at any time during the Effectiveness
Period  there is not an effective Registration Statement covering all
of the Registrable Securities and the Company shall determine to prepare and
file with the SEC a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen (15) days after receipt of such notice, any
such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights.

      

      (f)           Amendments and
Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and the Holders of all of the
then outstanding Registrable Securities.  Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of certain Holders and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates, provided, that the provisions of this sentence may
not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (g)           Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 6:30 p.m. (New York City time) on a Business
Day, (ii) the Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Agreement later than 6:30 p.m. (New York City time) on any
date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.  The address for such notices and
communications shall be as follows:

      

      If to the
Company:

      

      Arotech
Corporation

      1229 Oak
Valley Drive

      Ann
Arbor, Michigan 48108

      Facsimile
No.:  (734) 761-5836

      Telephone
No.:  (734) 761-5368

      Attention:
Tom Paup

      

      With a
copy to:

      

      Electric
Fuel (E.F.L.) Ltd.

      One
HaSolela Street, POB 641

      Western
Industrial Park

      Beit
Shemesh 99000, Israel

      Facsimile
No.:   011-972-2-990-6688

      Telephone
No.:  011-972-2-990-6623

      Attention:
General Counsel

      

      With a
copy (for informational purposes only) to:

      

      Lowenstein
Sandler PC

      65
Livingston Avenue

      Roseland,
New Jersey 07068

      Facsimile
No.:   (973) 597-2477

      Telephone
No.:  (973) 597-2500

      Attention:
Steven Skolnick, Esq.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
              	
                If
      to a Purchaser:

              	
                 To
      the address set forth under such Purchaser's name on the signature pages
      hereto.

              

      

      

      
        	
              	
                With
      a copy to: 

              	
                Schulte
      Roth & Zabel LLP

              

      

      919 Third
Avenue

      New York,
NY  10022

      Facsimile
No.:  (212) 593-5955

      Telephone
No.:  (212) 756-2376

      Attn:  Eleazer
Klein, Esq.

      

      
        	
                 
      

              	
                If
      to any other Person who is then the registered
  Holder:

              

      

      

      To the
address of such Holder as it appears in the stock transfer books of the
Company

      

      or such
other address as may be designated in writing hereafter, in the same manner, by
such Person.

      

      (h)           Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder.  The Company may not assign
its rights or obligations hereunder without the prior written consent of each
Holder.  Each Holder may assign their respective rights hereunder in
the manner and to the Persons as permitted under the Purchase
Agreement.

      

      (i)     
      Execution and
Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same
Agreement.  In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

      

      (j)         
  Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflict of laws
thereof.  Each party agrees that all legal Proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced in the state and federal courts sitting in the City of New York,
Borough of Manhattan.  Each party hereto hereby irrevocably submits to
the 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 (including with respect to the enforcement of this Agreement),
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 has been commenced in an
improper or inconvenient forum. Each party hereto (including its affiliates,
agents, officers, directors and employees) hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal Proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action or
Proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or Proceeding shall be reimbursed by the other party for
its attorney's fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or
Proceeding.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

      

      (l)        
   Severability.  If
any provision of this Agreement is prohibited by law or otherwise determined to
be invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties.  The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable provision(s).

      

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

      

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

      

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

      SIGNATURE
PAGES FOLLOW]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

      

      
        	 
      	
                AROTECH
      CORPORATION

              	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	
                By:

              	 	 
	 
      	 
      	 
      	 
	 
      	
                Name:
      Robert S. Ehrlich

              	 
	 
      	
                Title:   Chief
      Executive Officer

              	 

      

      

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

      SIGNATURE
PAGES OF PURCHASERS FOLLOW]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

      

      
        	 
      	
                HIGHBRIDGE
      INTERNATIONAL LLC

              	 
	 
      	 
      	 
      	 
	 
      	
                By:
      Highbridge Capital Management, LLC,

              	 
	 
      	
                Its
      Trading Manager

              	 
	 
      	 
      	 
      	 
	 
      	
                By:

              	 	 
	 
      	
                Name:
      Adam J. Chill

              	 
	 
      	
                Title:   Managing
      Director

              	 
	 
      	 
      	 
      	 
	 
      	
                Address
      for Notice:

              	 
	 
      	 
      	 
      	 
	 
      	
                c/o
      Highbridge Capital Management, LLC

              	 
	 
      	
                9
      West 57th Street, 27th Floor

              	 
	 
      	
                New
      York, New York  10019

              	 
	 
      	
                Attention:  Ari
      J. Storch / Adam J. Chill

              	 
	 
      	
                Facsimile
      No.:  (212) 751-0755

              	 
	 
      	
                Telephone
      No.:  (212) 287-4720

              	 
	 
      	
                Email:ari.storch@highbridge.com
      /

              	 
	 
      	
                adam.chill@highbridge.com

              	 
	 
      	 
      	 
      	 
	 
      	
                With
      a copy to:

              	 
	 
      	 
      	 
      	 
	 
      	
                Schulte
      Roth & Zabel LLP

              	 
	 
      	
                919
      Third Avenue

              	 
	 
      	
                New
      York, New York  10022

              	 
	 
      	
                Facsimile
      No.:  (212) 593-5955

              	 
	 
      	
                Telephone
      No.:  (212) 756-2376

              	 
	 
      	
                Attention:  Eleazer
      Klein, Esq.

              	 
	 
      	
                Email:
      eleazer.klein@srz.com

              	 

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

      

      
        	 
      	
                CRANSHIRE
      CAPITAL L.P.

              	 
	 
      	 
      	 
      	 
	 
      	
                By:

              	 
      	 
	 
      	
                Name:

              	 
	 
      	
                Title:

              	 
	 
      	 
      	 
      	 
	 
      	
                Address
      for Notice:

              	 
	 
      	 
      	 
      	 
	 
      	
                c/o
      Downsview Capital, Inc.

              	 
	 
      	
                The
      General Partner

              	 
	 
      	
                3100
      Dundee Road,

              	 
	 
      	
                Suite
      703

              	 
	 
      	
                Northbrook,
      IL  60062

              	 
	 
      	
                Attention:  Mitchell
      P. Kopin

              	 
	 
      	
                Facsimile:  (847)
      562-9031

              	 
	 
      	
                Telephone:  (847)
      562-9030

              	 
	 
      	
                Residence:
      Illinois

              	 
	 
      	
                Email:
      mkopin@cranshirecapital.com

              	 

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

      

      
        	 
      	
                IROQUOIS
      MASTER FUND LTD.

              	 
	 
      	 
      	 
      	 
	 
      	
                By:

              	 
      	 
	 
      	
                Name:

              	 
	 
      	
                Title:

              	 
	 
      	 
      	 
      	 
	 
      	
                Address
      for Notice:

              	 
	 
      	 
      	 
      	 
	 
      	
                Iroquois
      Master Fund Ltd.

              	 
	 
      	
                641
      Lexington Ave.

              	 
	 
      	
                26th
      Floor

              	 
	 
      	
                New
      York, New York  10022

              	 
	 
      	
                Facsimile:  (646)
      274-1728

              	 
	 
      	
                Telephone:   (212)
      974-3070

              	 
	 
      	
                Attention:  Joshua
      Silverman

              	 
	 
      	
                Email:
      JSilverman@icfund.com

              	 

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Annex
A

      

      

      

      SELLING
SHAREHOLDERS

      

      The
shares of Common Stock being offered by the selling shareholders are issuable
upon conversion of the convertible notes and upon exercise of the
warrants.  For additional information regarding the issuance of those
convertible notes and warrants, see "Private Placement of Convertible Notes and
Warrants" above.  We are registering the shares of Common Stock in
order to permit the selling shareholders to offer the shares for resale from
time to time.  Except  for the ownership of the convertible
notes and the warrants issued pursuant to the Securities Purchase Agreement, the
selling shareholders have not had any material relationship with us within the
past three years.

      

      The table
below lists the selling shareholders and other information regarding the
beneficial ownership of the shares of Common Stock by each of the selling
shareholders.  The second column lists the number of shares of Common
Stock beneficially owned by each selling shareholder, based on its ownership of
the convertible notes and warrants, as of ________, 200_, assuming conversion of
all convertible notes and exercise of all warrants held by the selling
shareholders on that date.

      

      The third
column lists the shares of Common Stock being offered by this prospectus by the
selling shareholders.

      

      In
accordance with the terms of registration rights agreements with the selling
shareholders, this prospectus generally covers the resale of at least 130% of
the sum of (i) the maximum number of shares of Common Stock issuable upon
conversion of the convertible notes as of the trading day immediately preceding
the date the registration statement is initially filed with the SEC and (ii) the
maximum number of shares of common stock issued and issuable upon exercise of
the warrants, as of the Trading Day immediately preceding the date this
registration statement is initially filed with the SEC. Because the conversion
price of the convertible notes and the exercise price of the warrants may be
adjusted, the number of shares that will actually be issued may be more or less
than the number of shares being offered by this prospectus.  The
fourth column assumes the sale of all of the shares offered by the selling
shareholders pursuant to this prospectus.

      

      Under the
terms of the convertible notes and the warrants, a selling shareholder may not
convert the convertible notes or exercise the warrants to the extent such
conversion or exercise would cause such selling shareholder, together with its
affiliates, to beneficially own a number of shares of Common Stock which would
exceed 4.99% of our then outstanding shares of Common Stock following such
conversion or exercise, excluding for purposes of such determination shares of
Common Stock issuable upon conversion of the convertible notes which have not
been converted or upon exercise of the warrants which have not been
exercised.  The number of shares in the second column reflects this
limitation.  The selling shareholders may sell all, some or none of
their shares in this offering.  See "Plan of
Distribution."

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	
                Name of Selling
      Shareholder

              	
                Number of Shares Owned
      Prior to Offering

              	
                Maximum Number of
      Shares to be Sold Pursuant to this Prospectus

              	
                Number of Shares Owned
      After Offering

              
	 
      	 
      	 
      	 
      
	
                Highbridge
      International LLC (1)

              	
                [      ]

              	 
      	
                0

              
	 
      	 
      	 
      	 
      
	
                Cranshire
      Capital L.P.

              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                Iroquois
      Master Fund Ltd.

              	 
      	 
      	 
      

      

      

      

      (1)           Highbridge
Capital Management, LLC is the trading manager of Highbridge International LLC
and has voting control and investment discretion over securities held by
Highbridge International LLC.  Glenn Dubin and Henry Swieca
control Highbridge Capital Management, LLC and have voting control and
investment discretion over the securities held by Highbridge International
LLC.  Each of Highbridge Capital Management, LLC, Glenn Dubin and
Henry Swieca disclaim beneficial ownership of the securities held by
Highbridge International LLC.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      PLAN
OF DISTRIBUTION

      

      We are
registering the shares of Common Stock issuable upon conversion of the
convertible notes and the shares of Common Stock issuable upon exercise of the
warrants to permit the resale of these shares of Common Stock by the holders of
the convertible notes and warrants from time to time after the date of this
prospectus.  We will not receive any of the proceeds from the sale by
the selling shareholders of the shares of Common Stock.  We will bear
all fees and expenses incident to our obligation to register the shares of
Common Stock.

      

      The
selling shareholders may sell all or a portion of the shares of Common Stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents.  If the
shares of Common Stock are sold through underwriters or broker-dealers, the
selling shareholders will be responsible for underwriting discounts or
commissions or agent's commissions.  The shares of Common Stock may be
sold in one or more transactions at fixed prices, at prevailing market prices at
the time of the sale, at varying prices determined at the time of sale, or at
negotiated prices.  These sales may be effected in transactions, which
may involve crosses or block transactions,

      

      
        	
              	
                ●

              	
                on
      any national securities exchange or quotation service on which the
      securities may be listed or quoted at the time of
  sale;

              

      

      

      
        	
              	
                

                  

                    ●

                  

                

              	
                in
      the over-the-counter market;

              

      

      

      
        	
              	
                

                  

                    ●

                  

                

              	
                in
      transactions otherwise than on these exchanges or systems or in the
      over-the-counter market;

              

      

      

      
        	
              	
                

                  

                    ●

                  

                

              	
                through
      the writing of options, whether such options are listed on an options
      exchange or otherwise;

              

      

      

      
        	
              	
                

                  

                    ●

                  

                

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

              

      

      

      
        	
              	
                

                  

                    ●

                  

                

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

              

      

      

      
        	
              	
                

                  

                    ●

                  

                

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

              

      

       

      
        	
              	
                

                  

                    ●

                  

                

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

              

      

      

      
        	
              	
                

                  

                    ●

                  

                

              	
                privately
      negotiated transactions;

              

      

      

      
        	
              	
                

                  

                    ●

                  

                

              	
                short
      sales;

              

      

      

      
        	
              	
                

                  

                    ●

                  

                

              	
                sales
      pursuant to Rule 144;

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
              	
                

                  

                    ●

                  

                

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

              

      

      

      
        	
              	
                

                  

                    ●

                  

                

              	
                a
      combination of any such methods of sale;
and

              

      

      

      
        	
              	
                

                  

                    ●

                  

                

              	
                any
      other method permitted pursuant to applicable
  law.

              

      

      

      If the
selling shareholders effect such transactions by selling shares of Common Stock
to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling shareholders or commissions from
purchasers of the shares of Common Stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved).  In connection with
sales of the shares of Common Stock or otherwise, the selling shareholders may
enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the shares of Common
Stock in the course of hedging in positions they assume.  The selling
shareholders may also sell shares of Common Stock short and deliver shares of
Common Stock covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales.  The
selling shareholders may also loan or pledge shares of Common Stock to
broker-dealers that in turn may sell such shares.

      

      The
selling shareholders may, from time to time, pledge or grant a security interest
in some or all of the convertible notes, warrants or shares of Common Stock
owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell the shares of
Common Stock from time to time pursuant to this prospectus or any amendment to
this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act of 1933, as amended, amending, if necessary, the list of selling
shareholders to include the pledgee, transferee or other successors in interest
as selling shareholders under this prospectus.  The selling
shareholders also may transfer and donate the shares of Common Stock in other
circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus. The selling shareholders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).

      

      The
selling shareholders and any broker-dealer participating in the distribution of
the shares of Common Stock may be deemed to be "underwriters" within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act.  At the time a particular
offering of the shares of Common Stock is made, a prospectus supplement, if
required, will be distributed which will set forth the aggregate amount of
shares of Common Stock being offered and the terms of the offering, including
the name or names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling shareholders and any
discounts, commissions or concessions allowed or reallowed or paid to
broker-dealers.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Under the
securities laws of some states, the shares of Common Stock may be sold in such
states only through registered or licensed brokers or dealers.  In
addition, in some states the shares of Common Stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied
with.

      

      There can
be no assurance that any selling shareholder will sell any or all of the shares
of Common Stock registered pursuant to the shelf registration statement, of
which this prospectus forms a part.

      

      The
selling shareholders and any other person participating in such distribution may
be subject to applicable provisions of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares of Common Stock by the selling
shareholders and any other participating person.  Regulation M may
also restrict the ability of any person engaged in the distribution of the
shares of Common Stock to engage in market-making activities with respect to the
shares of Common Stock.  All of the foregoing may affect the
marketability of the shares of Common Stock and the ability of any person or
entity to engage in market-making activities with respect to the shares of
Common Stock.

      

      We will
pay all expenses of the registration of the shares of Common Stock pursuant to
the registration rights agreement, estimated to be
$[     ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or "blue sky" laws; provided, however, that a selling
shareholder will pay all underwriting discounts and selling commissions, if
any.  We will indemnify the selling shareholders against liabilities,
including some liabilities under the Securities Act, in accordance with the
registration rights agreements, or the selling shareholders will be entitled to
contribution.  We may be indemnified by the selling shareholders
against civil liabilities, including liabilities under the Securities Act, that
may arise from any written information furnished to us by the selling
shareholder specifically for use in this prospectus, in accordance with the
related registration rights agreements, or we may be entitled to
contribution.

      

      Once sold
under the shelf registration statement, of which this prospectus forms a part,
the shares of Common Stock will be freely tradable in the hands of persons other
than our affiliates.

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