Document:

exv4w22

 

Exhibit 4.22

REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement (this “AGREEMENT”) is made and entered into as of January
___, 2008, by and among Cytocore, Inc., a Delaware corporation (the “COMPANY”), and the investors
signatory hereto (each a “INVESTOR” and collectively, the “INVESTORS”).

     This Agreement is made pursuant to Purchase Agreements between the Company and each Investor
(the “PURCHASE AGREEMENT”) and the Finder’s Agreement between the Company and Bathgate Capital
Partners LLC.

     The Company and the Investors hereby agree as follows:

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

“ADDITIONAL WARRANTS” has the meaning set forth in Section 2(c).

“ADVICE” has the meaning set forth in Section 6(d).

“COMMON STOCK” means the Company’s $.001 par value common stock.

“EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended.

“FILING DATE” means (a) with respect to the initial Registration Statement required to be filed
under Section 2(a), 120 days from the Final Close of the Offering.

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

“INDEMNIFIED
PARTY” has the meaning set forth in Section 5(c). 

“INDEMNIFYING
PARTY” has the meaning set forth in Section 5(c). “LOSSES” has the meaning
set forth in Section 5(a).

“OFFERING” means that private offering of Units made pursuant to the Purchase Agreements.

“FINDER’S AGREEMENT” means that agreement dated January 24, 2008, between the Company and Bathgate
Capital Partners LLC relating to the Offering.

 

 

“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
a Registration Statement, and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed to be incorporated
by reference in such Prospectus.

“REGISTRABLE SECURITIES” means: (i) the Warrant Shares and (ii) any securities issued or issuable
upon any stock split, dividend or other distribution, recapitalization or similar event, or any
conversion price adjustment with respect to the Warrant Shares.

“REGISTRATION STATEMENT” means the initial registration statement required to be filed in
accordance with Section 2(a) and any additional registration statement(s) required to be filed
under Section 2(b) and 2(c), including (in each case) the Prospectus, amendments and supplements to
such registration statements or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be incorporated by
reference therein.

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

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

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

“SECURITIES ACT” means the Securities Act of 1933, as amended.

“UNITS” means the units comprising shares of Common Stock and Warrants issued in the
Offering.

“WARRANTS” means the Common Stock purchase warrants issued or issuable to the Investors as part
of the Units and the Finder’s Warrants issued pursuant to the Finder’s Agreement.

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“WARRANT SHARES” means the shares of Common Stock issued or issuable upon exercise of the
Warrants and the Additional Warrants.

“ILLINOIS COURTS” means the state and federal courts sitting in the City of Chicago, Illinois.

     2. Registration.

     (a) As soon as possible after the Final Closing of the Offering, but not later than each
Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all Registrable Securities not already covered by an
existing and effective Registration Statement, for an offering to be made on a continuous basis
pursuant to Rule 415, on Form SB-2 (or on such other form appropriate for such purpose). Such
Registration Statement shall contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration Statement) the “Plan of
Distribution” attached hereto as Annex A. The Company shall cause such Registration Statement to be
declared effective under the Securities Act as soon as possible after it is filed, and shall use
its reasonable best efforts to keep the Registration Statement continuously effective under the
Securities Act until the date which is the earlier of (i) four years after its Effective Date, (ii)
such time as all of the Registrable Securities covered by such Registration Statement have been
publicly sold by the Holders, or (iii) such time as all of the Registrable Securities covered by
such Registration Statement may be sold by the Holders pursuant to Rule 144(k) as determined by the
counsel to the Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company’s transfer agent and the affected Holders (the “EFFECTIVENESS PERIOD”).

     (b) Promptly following any date on which the Company becomes eligible to use a registration
statement on Form S-3 to register the Registrable Securities for resale, the Company shall file a
registration statement on Form S-3 covering the Registrable Securities (or a post-effective
amendment on Form S-3 to the then effective Registration Statement) and shall cause such
Registration Statement to be declared effective as soon as possible thereafter. Such Registration
Statement shall contain (except if otherwise required pursuant to written comments received from
the Commission upon a review of such Registration Statement) the “Plan of Distribution” attached
hereto as Annex A. The Company shall cause such Registration Statement to be declared effective
under the Securities Act as soon as possible and shall use its reasonable best efforts to keep
such Registration Statement continuously effective under the Securities Act during the entire
Effectiveness Period.

     (c) If a Registration Statement is not filed on or prior to its Filing Date (if the Company
files a Registration Statement without affording the Holders the opportunity to review and comment
on the same as required by Section 3(a) hereof, the Company shall not be deemed to have satisfied
this clause (i)(such failure or breach being referred to as an “EVENT” and the date on which such
Event occurs, being referred to as the “EVENT DATE”), and/or if the Company fails to use its
reasonable best efforts to cause the

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Registration Statement to be declared effective as soon as possible after it is filed, then in
addition to any other rights the Holders may have hereunder or under applicable law, the Company
shall issue to the holders of the Registrable Securities, as liquidated damages and not as a
penalty, warrants (“ADDITIONAL WARRANTS”). The number of Additional Warrants that shall be issued
to a Holder is equivalent to two Additional Warrants for every four Warrants owned by such Holder.
The Additional Warrants will have a per share exercise price equal to the lower of $2.00 per
share. The Additional Warrants will be exercisable for three years, and will be in the same form
as the warrants issued as part of the Units in the Offering.

     (d) Each Holder agrees to furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex B (a “SELLING HOLDER QUESTIONNAIRE”). The Company shall not be required to include the Registrable Securities of a
Holder in a Registration Statement and shall not be required to issue any Additional Warrants or
other damages under Section 2(d) to any Holder who fails to furnish to the Company a fully
completed Selling Holder Questionnaire at least two Trading Days prior to the Filing Date
(subject to the requirements set forth in Section 3(a)).

     3. Registration
Procedures. In connection with the Company’s registration obligations
hereunder, the Company shall:

     (a) Not less than four Trading Days prior to the filing of the Registration Statement or any
related Prospectus or any amendment or supplement thereto, the Company shall furnish to each Holder
copies of the “Selling Stockholders” section of such document, the “Plan of Distribution” and any
risk factor contained in such document that addresses specifically this transaction or the Selling
Stockholders, as proposed to be filed which documents will be subject to the review of such Holder.
The Company shall not file a Registration Statement, any Prospectus or any amendments or
supplements thereto in which the “Selling Stockholder” section thereof differs from the disclosure
received from a Holder in its Selling Holder Questionnaire (as amended or supplemented).

     (b) Prepare and file with the Commission such amendments, including post-effective amendments,
to each Registration Statement and the Prospectus used in connection therewith as may be necessary
to keep such Registration Statement continuously effective as to the applicable Registrable
Securities for its Effectiveness Period and prepare and file with the Commission such additional
Registration Statements in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received from the Commission with
respect to each 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
Commission relating to such Registration Statement that would not result in the disclosure to the
Holders of material and non-public information

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concerning the Company; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to
the Registration Statements and the disposition of all Registrable Securities covered by each
Registration Statement.

     (c) Notify the Holders as promptly as reasonably possible (and, in the case of (i)(A) below,
not less than three Trading Days prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one Trading Day following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is
proposed to be filed; (B) when the Commission notifies the Company whether there will be a “review”
of such Registration Statement and whenever the Commission 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 that pertain to the Holders as a Selling Stockholder or to the Plan of Distribution,
but not information which the Company believes would constitute material and non-public
information); and (C) with respect to each Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or any other Federal or
state governmental authority for amendments or supplements to a Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation
or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event or
passage of time that makes the financial statements included in a Registration Statement ineligible
for inclusion therein or any statement made in such 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 such Registration Statement, Prospectus or other
documents so that, in the case of such 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.

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

     (e) Furnish to each Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto and all exhibits to the extent requested by such Person
(including those previously furnished) promptly after the filing of such documents with the
Commission.

     (f) Promptly deliver to each Holder, without charge, as many copies of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or

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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.

     (g) Prior to any public offering of Registrable Securities, to register or qualify or
cooperate with the selling Holders 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 all jurisdictions within the United States, 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 the Registration Statements.

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

     (i) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to
the affected Registration Statements 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, no Registration Statement nor any 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.

     4. Registration
Expenses. All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company whether or not any Registrable
Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings required to be made
with any Trading Market on which the Common Stock is then listed for trading, 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, (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.

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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.

     5. Indemnification.

     (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers, directors, agents, investment
advisors, partners, members 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 any Registration Statement, any Prospectus or any form of prospectus or
in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (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 (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, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto (it being
understood that the Holder has approved Annex A hereto for this purpose) or (2) in the case of an
occurrence of an event of the type specified in Section 3(c)(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 an Advice or an
amended or supplemented Prospectus, but only if and to the extent that following the receipt of the
Advice or the amended or supplemented Prospectus the misstatement or omission giving rise to such
Loss would have been corrected. 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,

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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, (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 Holder has 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(c)(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 an Advice or an amended or
supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or
the amended or supplemented Prospectus the misstatement or omission giving rise to such Loss would
have been corrected. 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

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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 (which consent shall not be unreasonably withheld), 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 Trading 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 5(a) or 5(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 5(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

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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.

     6. 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 a Registration Statement other than the Registrable Securities.

     (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(c), 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 Commission a registration

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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 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
Section 6(f), 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 no less than a majority in interest 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.

     (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 (a) the date of transmission, if such notice or communication is delivered via
facsimile (provided the sender receives a machine-generated confirmation of successful
transmission) at the facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number specified in this Section on
a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day,
(c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) 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:

Cytocore, Inc.

414 North Orleans Street, Suite 502

Chicago, Illinois 60610

Attention: Robert F. McCullough Jr., CEO, CFO

Fax: 312-222-9580

If to an Investor: To the address set forth under such Investor’s name on the
signature pages hereto.

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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 Subscription 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 Illinois, without regard to the principles of conflicts of law
thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement (whether brought against a party hereto
or its respective Affiliates, employees or agents) will be commenced in the Illinois Courts. Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the Illinois Courts for
the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any claim that it is not personally subject to the jurisdiction of any Illinois
Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to process being served
in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any Proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby. If either party shall
commence a Proceeding to enforce any provisions of this Agreement, then the prevailing party in
such Proceeding shall be reimbursed by the other party for its

-12-

 

attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

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

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

     (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 Investors’ Obligations and Rights. The obligations of each Investor
under this Agreement are several and not joint with the obligations of each other Investor, and no
Investor shall be responsible in any way for the performance of the obligations of any other
Investor under this Agreement. Nothing contained herein or in any Transaction Document, and no
action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Investors are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by this Agreement or any other Transaction Document. Each Investor
acknowledges that no other Investor will be acting as agent of such Investor in enforcing its
rights under this Agreement. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this Agreement, and it shall not
be necessary for any other Investor to be joined as an additional party in any Proceeding for such
purpose. The Company acknowledges that each of the Investors has been provided with the same
Registration Rights Agreement for the purpose of closing a transaction with multiple Investors and
not because it was required or requested to do so by any Investor.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES TO FOLLOW]

-13-

 

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

	 	 	 	 	 
	 	CYTOCORE, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	Robert F. McCullough Jr.  	 
	 	 	Title:  	CEO & CFO 	 
	 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES OF INVESTORS TO FOLLOW]

-14-

 

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

	 	 	 	 	 
	If Investor is an Individual:

 	 	 
	 
	          (Print Name)
 	 	 
	 
	 
	          (Signature)
 	 	 
	 
	 
	If Investor is an Entity:

 	 	 
	 
	          (Name of Entity)
 	 	 
	 
	By:  	 	 	 
	 	     (Signature)
 	 	 
	 
	 
	 	(Print name of signer) 	 	 
	 
	 	Title:
		 
	 	 	 	 

	 	 	 	 
	ADDRESS FOR NOTICE
	 	 	 
	 
	 	 	 
	c/o:

	 	 	 
	 
	 	 	 
	Street:

	 	 	 
	 
	 	 	 
	City/State/Zip:

	 	 	 
	 
	 	 	 
	Attention:

	 	 	 
	 
	 	 	 
	Tel:

	 	 	 
	 
	 	 	 
	Fax:

	 	 	 
	 
	 	 	 
	Email: 

	 	 	 

-15-

 

Annex A

Plan of Distribution

The Selling Stockholders and any of their pledgees, donees, transferees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on
any stock exchange, market or trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use
any one or more of the following methods when selling shares:

	 	•	 	ordinary brokerage transactions and transactions in which the broker-dealer solicits
Investors;
	 
	 	•	 	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;
	 
	 	•	 	to cover short sales made after the date that this Registration
Statement is declared effective by the Commission;
	 
	 	•	 	broker-dealers may agree with the Selling
Stockholders 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.

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if
available, rather than under this prospectus.

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions involved.

The Selling Stockholders may from time to time pledge or grant a security interest in some or all
of the Shares owned by them and, if they default in the performance of their secured obligations,
the pledgees or secured parties may offer and sell shares of Common Stock from time to time under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act of 1933 amending the list of selling stockholders to include the
pledgee, transferee or other successors in interest as selling stockholders under this prospectus.
upon the Company being notified in writing by a Selling Stockholder that any material arrangement
has been entered into with a broker-dealer for the sale of Common Stock through a block trade,
special offering, exchange distribution or secondary distribution or a purchase by a

 

 broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under
the Securities Act, disclosing (i) the name of each such Selling Stockholder and of the
participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such
the shares of Common Stock were sold, (iv)the commissions paid or discounts or concessions allowed
to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set
out or incorporated by reference in this prospectus, and (vi) other facts material to the
transaction. In addition, upon the Company being notified in writing by a Selling Stockholder that
a donee or pledgee intends to sell more than 500 shares of Common Stock, a supplement to this
prospectus will be filed if then required in accordance with applicable securities law.

The Selling Stockholders also may transfer the shares of Common Stock in other circumstances, in
which case the transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.

The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares
may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such
sales. In such event, any commissions received by such broker-dealers or agents and any profit on
the resale of the shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, that can be attributed to the sale of Securities will be paid by the Selling
Stockholder and/or the purchasers. Each Selling Stockholder has represented and warranted to the
Company that it acquired the securities subject to this registration statement in the ordinary
course of such Selling Stockholder’s business and, at the time of its purchase of such securities
such Selling Stockholder had no agreements or understandings, directly or indirectly, with any
person to distribute any such securities.

The Company has advised each Selling Stockholder that it may not use shares registered on this
Registration Statement to cover short sales of Common Stock made prior to the date on which this
Registration Statement shall have been declared effective by the Commission. If a Selling
Stockholder uses this prospectus for any sale of the Common Stock, it will be subject to the
prospectus delivery requirements of the Securities Act. The Selling Stockholders will be
responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and
the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as
applicable to such Selling Stockholders in connection with resales of their respective shares under
this Registration Statement.

The Company is required to pay all fees and expenses incident to the registration of the shares,
but the Company will not receive any proceeds from the sale of the Common Stock. The Company has
agreed to indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

A-2

 

Annex B

CYTOCORE, INC.

SELLING SECURITYHOLDER QUESTIONNAIRE

The undersigned beneficial owner of common stock (the “COMMON STOCK”) of Cytocore, Inc. (the
“COMPANY”) understands that the Company has filed or intends to file with the Securities and
Exchange Commission (the “COMMISSION”) a Registration Statement for the registration and resale of
the Registrable Securities, in accordance with
the terms of the Registration Rights Agreement, dated as of ___, 2008 (the “REGISTRATION RIGHTS
AGREEMENT”), among the Company and the Investors named therein. A copy of the Registration Rights
Agreement is available from the Company upon request at the address set forth below. All
capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto
in the Registration Rights Agreement.

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

QUESTIONNAIRE

	1.	 	NAME.

	 	(a)	 	Full Legal Name of Selling Securityholder

	 
	 	 	 

	 	(b)	 	Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities Listed in Item 3 below are held:

	 
	 	 	 

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

	 
	 	 	 

	2.	 	ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:

	 
	 	 	 

	 
	 	 	 

	 
	 	 	 

 

Telephone:  

Fax:  

Contact Person:  

	 
	3.	 	BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:

Type and Principal Amount of Registrable Securities beneficially owned:

	 
	 	 	 

	 
	 	 	 

	 
	 	 	 

	 
	4.	 	BROKER-DEALER STATUS:
	 
		 	(a) Are you a broker-dealer?
	 
	 	 	Yes o No o

Note: If yes, the Commission’s staff has indicated that you should be identified as an
underwriter in the Registration Statement.

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

     Yes o No o

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

     Yes o No o

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

     5. BENEFICIAL OWNERSHIP OF OTHER SECURITIES OF THE COMPANY OWNED BY THE SELLING SECURITYHOLDER.

Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner
of any securities of the Company other than the Registrable Securities listed above in Item 3.

B-2

 

Type and Amount of Other Securities beneficially owned by the Selling Securityholder:

 

 

 

6. RELATIONSHIPS WITH THE COMPANY:

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

State any exceptions here:

 

 

 

The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the
information provided herein that may occur subsequent to the date hereof and prior to the Effective
Date for the Registration Statement.

By signing below, the undersigned consents to the disclosure of the information contained herein in
its answers to Items 1 through 6 and the inclusion of such information in the Registration
Statement and the related prospectus. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of the Registration
Statement and the related prospectus.

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

	 	 	 	 	 
	Dated:                                          	Beneficial Owner:

 	 
	 	 	 
	 	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	 	Signature 	 
	 	 	Title: 	 	 
	 

B-3

 

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

[COMPANY’S ATTORNEY]

B-4exv4w23

 

Exhibit 4.23

THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED OR QUALIFIED FOR
SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAW AND MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE HOLDER HEREOF PROVIDES
THE COMPANY WITH AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT THE PROPOSED SALE OR
TRANSFER IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.

WARRANT TO PURCHASE

SHARES OF

COMMON STOCK

Void after ___, 2011

     THIS IS TO CERTIFY that, as
of this ______ day of ____________, 2008, for value received and subject to
the provisions hereinafter set forth, ___________________________
(the “Purchaser”), is entitled to
purchase from Cytocore, Inc., a Delaware corporation (the “Company”), at any time from the date
hereof to and including ___, 2011 (the “Expiration Date”), at a price initially equal to Two
Dollars ($2.00) per share (the “Warrant Calculation
Price”), __________________  (_____) (the “Warrant
Number”) shares of the Common Stock of the Company (the “Stock”).

     The aggregate price for the shares of Stock purchasable hereunder shall be equal to the
initial Warrant Calculation Price multiplied by the number of shares initially purchasable
hereunder. Such aggregate price is not subject to adjustment and is herein sometimes referred to as
the “aggregate Warrant Price.” The Warrant Calculation Price per share is, however, subject to
adjustment as hereinafter provided (such price, or such price as last adjusted, as the case may be,
being herein referred to as the “Per Share Warrant Price”). The Warrant Number is likewise subject
to adjustment as hereinafter provided.

     1. Exercise of Warrant. Subject to the conditions hereinafter set forth, this Warrant may be
exercised in whole at any time, or in part from time to time, by the holder hereof, by the
surrender of this Warrant (with the subscription form at the end hereof duly executed) at the
principal office of the Company in Chicago, Illinois, or at such other office as the Company may
designate by written notice to the holder hereof within the above-mentioned period and, at the
election of the holder, by paying to the Company the Aggregate Warrant Price (or the proportionate
part thereof if exercised in part) for the shares so purchased in current funds, which payment
shall be made in cash or by certified or official bank check.

     If this Warrant is exercised in respect of fewer than all of the shares of Stock at the time
purchasable hereunder, the holder hereof shall be entitled to receive a new Warrant covering the
number of shares in respect of which this Warrant shall not have
been exercised and setting forth the Aggregate Warrant Price applicable to such shares.
Notwithstanding anything to the contrary set forth herein, this Warrant or any new Warrant issued
as the result of a partial exercise hereof and all rights and options hereunder or thereunder shall
expire and shall be wholly null and void

 

 

to the extent this Warrant or such new warrant is not
exercised before it expires at the close of business on the Expiration Date.

     2. Reservation of Stock. The Company covenants and agrees that during the period within which
the rights represented by this Warrant may be exercised, the Company will at all times have
authorized, and in reserve, a sufficient number of shares of its Stock to provide for the exercise
of the rights represented by this Warrant.

     3. Protection Against Dilution. Subject and pursuant to the provisions of this Section 3, the
Warrant Price and the Warrant Calculation Number shall be subject to adjustment from time to time
as set forth hereinafter.

          (a) If the Company shall, at any time or from time to time while this Warrant is outstanding,
pay a dividend or make a distribution on its Common Stock in shares of Common Stock, subdivide its
outstanding shares of Common Stock into a greater number of shares or combine its outstanding
shares of Common Stock into a smaller number of shares or issue by reclassification of its
outstanding shares of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the Company is the
continuing corporation), then the Warrant Calculation Number and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective, shall be adjusted by
the Company so that the Warrantholder thereafter exercising the Warrant shall be entitled to
receive the number of shares of Common Stock or other capital stock which the Warrantholder would
have received if the Warrant had been exercised immediately prior to such event upon payment of a
Warrant Price that has been adjusted to reflect a fair allocation of the economics of such event to
the Warrantholder. Such adjustments shall be made successively whenever any event listed above
shall occur.

          (b) If any capital reorganization, reclassification of the capital stock of the Company,
consolidation or merger of the Company with another corporation in which the Company is not the
survivor, or sale, transfer or other disposition of all or substantially all of the Company’s
assets to another corporation shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate
provision shall be made whereby each Warrantholder shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock,
securities or assets as would have been issuable or payable with respect to or in exchange for a
number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable
upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case appropriate provision
shall be made with respect to the rights and interests of each Warrantholder to the end that the
provisions hereof (including, without
limitation, provision for adjustment of the Warrant Price) shall thereafter be applicable, as
nearly equivalent as may be practicable in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. The Company shall not effect any such
consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with
the consummation thereof the successor corporation (if other than the Company) resulting from such
consolidation or merger, or the corporation

2

 

purchasing or otherwise acquiring such assets or other
appropriate corporation or entity shall assume the obligation to deliver to the Warrantholder, at
the last address of the Warrantholder appearing on the books of the Company, such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the Warrantholder may be
entitled to purchase, and the other obligations under this Warrant. The provisions of this
paragraph (b) shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, transfers or other dispositions.

          (c) In case the Company shall fix a payment date for the making of a distribution to all
holders of Common Stock (including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) of evidences of indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends or distributions referred to in Section 8(a)), or subscription rights or
warrants, the Warrant Price to be in effect after such payment date shall be determined by
multiplying the Warrant Price in effect immediately prior to such payment date by a fraction, the
numerator of which shall be the total number of shares of Common Stock outstanding multiplied by
the Market Price (as defined below) per share of Common Stock immediately prior to such payment
date, less the fair market value (as determined by the Company’s Board of Directors in good faith)
of said assets or evidences of indebtedness so distributed, or of such subscription rights or
warrants, and the denominator of which shall be the total number of shares of Common Stock
outstanding multiplied by such Market Price per share of Common Stock immediately prior to such
payment date. “Market Price” as of a particular date (the “Valuation Date”) shall mean the
following: (a) if the Common Stock is then listed on a national stock exchange, the closing sale
price of one share of Common Stock on such exchange on the last trading day prior to the Valuation
Date; (b) if the Common Stock is then quoted on The Nasdaq Stock Market, Inc. (“Nasdaq”), the
National Association of Securities Dealers, Inc. OTC Bulletin Board (the “Bulletin Board”) or such
similar exchange or association, the closing sale price of one share of Common Stock on Nasdaq, the
Bulletin Board or such other exchange or association on the last trading day prior to the Valuation
Date or, if no such closing sale price is available, the average of the high bid and the low asked
price quoted thereon on the last trading day prior to the Valuation Date; or (c) if the Common
Stock is not then listed on a national stock exchange or quoted on Nasdaq, the Bulletin Board or
such other exchange or association, the fair market value of one share of Common Stock as of the
Valuation Date, shall be determined in good faith by the Board of Directors of the Company and the
Warrantholder. If the Common Stock is not then listed on a national securities exchange, the
Bulletin Board or such other exchange or association, the Board of Directors of the Company shall
respond promptly, in writing, to an inquiry by the Warrantholder prior to the exercise hereunder as
to the fair market value of a share of Common Stock as determined by the Board of Directors of the
Company. In the event
that the Board of Directors of the Company and the Warrantholder are unable to agree upon the
fair market value in respect of subpart (c) hereof, the Company and the Warrantholder shall jointly
select an appraiser, who is experienced in such matters. The decision of such appraiser shall be
final and conclusive, and the cost of such appraiser shall be borne equally by the Company and the
Warrantholder. Such adjustment shall be made successively whenever such a payment date is fixed.

3

 

          (d) An adjustment to the Warrant Price shall become effective immediately after the payment
date in the case of each dividend or distribution and immediately after the effective date of each
other event which requires an adjustment.

          (e) In the event that, as a result of an adjustment made pursuant to this Section 3, the
Warrantholder shall become entitled to receive any shares of capital stock of the Company other
than shares of Common Stock, the number of such other shares so receivable upon exercise of this
Warrant shall be subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in
this Warrant.

     4. Ownership Cap and Certain Exercise
Restrictions. (a) Notwithstanding anything to the
contrary set forth in this Warrant, at no time may a Holder of this Warrant exercise this Warrant
if the number of shares of Common Stock to be issued pursuant to such exercise would exceed, when
aggregated with all other shares of Common Stock owned by such Holder at such time, the number of
shares of Common Stock which would result in such Holder owning more than 4.999% of all of the
Common Stock outstanding at such time; provided, however, that upon a holder of this Warrant
providing the Company with sixty-one (61) days notice (pursuant to Section 16 hereof) (the “Waiver
Notice”) that such Holder would like to waive this Section 4 with regard to any or all shares of
Common Stock issuable upon exercise of this Warrant (and upon consent of the Company, which will
not be unreasonably withheld), this Section 4 will be of no force or effect with regard to all or a
portion of the Warrant referenced in the Waiver Notice; provided, further, that this provision
shall be of no further force or effect during the sixty-one (61) days immediately preceding the
expiration of the term of this Warrant.

     (b) The Holder may not exercise the Warrant hereunder to the extent such exercise would result
in the Holder beneficially owning (as determined in accordance with Section 13(d) of the Exchange
Act and the rules thereunder) in excess of 9.999% of the then issued and outstanding shares of
Common Stock, including shares issuable upon exercise of the Warrant held by the Holder after
application of this Section; provided, however, that upon a holder of this Warrant providing the
Issuer with a Waiver Notice that such holder would like to waive this Section 4.13 with regard to
any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 4.13 shall
be of no force or effect with regard to those shares of Warrant Stock referenced in the Waiver
Notice; provided, further, that this provision shall be of no further force or effect during the
sixty-one (61) days immediately preceding the expiration of the term of this Warrant.

     5. Fractional Shares. Fractional shares shall not be issued upon the exercise of this Warrant
but in any case where the holder hereof would, except for the provisions
of this paragraph, be entitled under the terms hereof to receive a fractional share upon the
complete exercise of this Warrant, the Company shall, upon the exercise of this Warrant for the
largest number of whole shares then called for, pay a sum in cash equal to the excess of the Fair
Market Value of such fractional share over the proportional part of the Per Share Warrant Price
represented by such fractional share.

4

 

     6. Fully Paid Stock;
Taxes. The Company covenants and agrees that the shares of stock
represented by each and every certificate for its Stock to be delivered on any exercise of this
Warrant shall, at the time of such delivery, be duly authorized, validly issued and outstanding and
be fully paid and nonassessable. The Company further covenants and agrees that it will pay when due
and payable any and all federal and state taxes, other than taxes on income, which may be payable
in respect of this Warrant or any Stock or certificates therefor upon the exercise of the rights
herein provided for pursuant to the provisions hereof. The Company shall not, however, be required
to pay any tax which may be payable in respect of any transfer involved in the transfer and
delivery of stock certificates in the name other than that of the holder of the Warrant converted,
and any such tax shall be paid by such holder at the time of presentation.

     7. Closing
of Transfer Books. The holder of this Warrant shall continue to have the right to
exercise this Warrant even during a period when the stock transfer books of the Company for its
Stock are closed. The Company shall not be required, however, to deliver certificates of its Stock
upon such exercise while such books are duly closed for any purpose, but the Company may postpone
the delivery of the certificates for such Stock until the opening of such books, and they shall, in
such case, be delivered forthwith upon the opening thereof, or as soon as practicable thereafter.

     8. Redemption

     8.1 Right to Redeem. The Company may, at its option, redeem the Warrants in whole or in part
on a pro rata basis for a redemption price of $.05 per Warrant (the “Redemption Price”) on 15 days
prior written notice to the Warrant Holders. The right to redeem the Warrants may be exercised by
the Company only in the event (i) the average of the closing sale prices of the Company’s common
stock is at or above $4.00 per share for twenty (20) consecutive trading days preceding the date
the Warrants are called, (ii) the Warrant Securities can be resold pursuant to an effective
registration statement under the Act, (iii) the expiration of the 15 days notice period is within
the Exercise Period. In the event the Company exercises its right to redeem the Warrants, the
Expiration Date will be deemed to be, and the Warrants will be exercisable until the close of
business on, the date fixed for redemption in such notice (the “Redemption Date”). If any Warrant
called for redemption is not exercised by such time, it will cease to be exercisable and the
Warrant Holder thereof will be entitled only to the Redemption Price.

     8.2 Termination of Rights. From and after the Redemption Date, all rights of the holders of
record of redeemed Warrants (except the right to receive the Redemption Price) shall terminate.

     8.3 Payment of Redemption Price. The Company shall pay to the holders of
record of redeemed Warrants all amounts to which the holders of record of such redeemed
Warrants who shall have surrendered their Warrants are entitled.

     9. Restrictions on Transferability of Warrants and Shares; Compliance with Securities Act;
Exchange, Assignment or Loss of Warrant. This Warrant and the Stock

5

 

issued upon the exercise hereof, and any security into which such Stock may be convertible
(“Underlying Stock”) shall not be transferable except upon the conditions hereinafter specified,
which conditions are intended to insure compliance with the provisions of the Securities Act of
1933, as amended, or any similar Federal statute at the time in effect (the “Securities Act”) in
respect of the transfer of any Warrant or any such Stock or any security into which such Stock may
be convertible.

          9.1 Assignments Generally. Except as may otherwise be expressly provided herein, this Warrant
is exchangeable, without expense, at the option of the holder, upon compliance with the express
provisions of this Section 9 and presentation and surrender of the Warrant to the Company, for
other Warrants of different denominations entitling the holder thereof to purchase in the aggregate
the same number of shares of Stock purchasable hereunder. Any assignment shall be made by surrender
of this Warrant to the Company with the Form of Assignment annexed hereto duly executed and funds
sufficient to pay any transfer tax. Upon compliance with the express provisions of this Section 9,
the Company shall, without charge, cause to be executed and delivered a new Warrant in the name of
the assignee named in such instrument of assignment and this Warrant shall promptly be canceled.
This Warrant may be divided or combined with other warrants that carry the same rights upon
presentation hereof to the Company together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the holder hereof.

          9.2 Notice of Proposed Transfer; Opinion. The holder of each Warrant or any Underlying Stock
that is not the subject of a registration statement effective under the Securities Act (“Restricted
Stock”), by acceptance thereof, agrees to give prior written notice to the Company of such holder’s
intention to transfer such Warrant or the Restricted Stock (as hereinafter defined) relating
thereto or such Restricted Stock (or any portion thereof), describing briefly the manner and
circumstances of the proposed transfer, including the identity of the proposed transferee and the
consideration to be paid thereby. Promptly after receiving such written notice, the Company shall
present copies thereof to Company counsel and, if required by the Company, to counsel designated by
such holder. If in the opinion of each such counsel the proposed transfer may be effected without
registration or qualification under any Federal or State law of such Warrant or the Underlying
Shares or such Restricted Stock, the Company, as promptly as practicable, shall notify such holder
of such opinion and of the terms and conditions, if any, to be observed, whereupon such holder
shall be entitled to transfer such Warrant or such Restricted Stock, all in accordance with the
terms of the notice delivered to such holder by the Company.

          If in the opinion of either of such counsel (such opinion to state the basis
of the legal conclusions reached therein) the proposed transfer described in the written
notice given pursuant to this subparagraph may not be effected without such registration or
qualification or without compliance with the conditions of an exemptive regulation of the
Commission, the Company shall promptly notify such holder and thereafter such holder shall not be
entitled to effect such transfer until receipt of a subsequent notice from the Company pursuant to
the immediately preceding sentence or until such registration or qualification or filing has become
effective. All fees and expenses of the Company’s counsel shall be borne by the Company and

6

 

the
fees of the counsel, if any, designated by any holder of this Warrant or Restricted Stock shall be
borne by such holder.

          Notwithstanding anything to the contrary set forth herein, no opinion of counsel shall be
required in the case of transfers to affiliates of the holder of this Warrant or of the Underlying
Stock.

          9.3. Certain Assignments Following Registration. Notwithstanding anything to the contrary
contained herein, if the Company has registered the Underlying Stock pursuant to a Registration
Statement which has been declared effective by the Securities and Exchange Commission (“SEC”) and,
thereafter, the holder purports to assigns all or a portion of the Underlying Stock to any other
person, the assignee shall have the right to cause the Registration Statement to be amended or the
prospectus related thereto to be supplemented, in either case to name such assignee as a selling
stockholder, provided that (i) the use of a post-effective amendment or a supplement to the
prospectus is permitted by applicable law for such purpose, and (ii) all costs and expenses to the
Company, including without limitation legal and accounting expenses, incurred to so amend such
Registration Statement or supplement the Prospectus shall be paid by the assignee requesting such
amendment (or shared on a pro rata basis to the extent more than one assignee requests such
amendment).

          9.4. Restrictive Legends. Each Warrant shall bear on the face thereof a legend substantially
in the form of the notice endorsed on the first page of this Warrant.

          Each certificate for shares of Underlying Stock initially issued upon the exercise of any
Warrant and each certificate for shares of Underlying Stock issued to a subsequent transferee of
such certificate shall, unless otherwise permitted by the provisions of this Section 9 bear on the
face thereof a legend reading substantially as follows:

THE TRANSFER, SALE, ASSIGNMENT, PLEDGE AND ENCUMBRANCE OF OTHER DISPOSITION OF THE SHARES
OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS SET
FORTH IN THE WARRANT UNDER WHICH THESE SHARES WERE ISSUED AND WHICH TERMS CONTINUE IN
EFFECT FOLLOWING THE EXERCISE THEREOF. A COPY OF THE WARRANT IS ON FILE IN THE OFFICE OF
THE SECRETARY OF THE COMPANY. NO SALE
OR OTHER TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE EFFECTED EXCEPT
PURSUANT TO THE TERMS OF THE WARRANT.

          9.5 Removal of Legend. In the event that the Company shall receive an opinion of its counsel
or counsel of the holder, which opinion is reasonably acceptable to it, that, in the opinion of
such counsel, such legend is not, or is no longer, necessary or required (including, without
limitation, because of the availability of the exemption afforded by Rule 144 of the General Rules
and Regulations of the Securities and Exchange Commission), the Company shall, or shall instruct
its transfer agents and registrars to, remove such legend from the

7

 

certificates evidencing the
Restricted Stock or issue new certificates without such legend in lieu thereof.

     10. Partial
Exercise and Partial Assignment. If this Warrant be exercised in part only, the
holder hereof shall be entitled to receive a new Warrant covering the number of shares in respect
of which this Warrant shall not have been exercised as provided in paragraph 1 hereof. If this
Warrant is partially assigned, this Warrant shall be surrendered at the principal office of the
Company (with the partial assignment form at the end hereof duly executed), and thereupon a new
Warrant shall be issued to the holder hereof covering the number of shares not assigned and setting
forth the proportionate Aggregate Warrant Price applicable to such shares not assigned. The
assignee of such partial assignment of this Warrant shall also be entitled to receive a new Warrant
covering the number of shares so assigned and setting forth the proportionate Aggregate Warrant
Price applicable to such assigned shares.

     11. Registration Rights

          11.1 Definitions. As used in this Section 11, the following terms shall have the meanings set
forth below:

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

          (b) The term “Registrable Securities” shall mean together in the aggregate: (A) the Underlying
Stock issued or issuable upon exercise of this Warrant and (B) the Stock held by or issuable upon
exercise of any warrant or conversion of convertible security to any other persons with similar
registration rights as provided in this Warrant.

          (c) The term “Holder” means any person owning of record Registrable Securities.

          11.2 Piggy-back Registration Rights. If (but without any obligation to do so) at any time
prior to the date one (1) year after the Purchaser has fully exercised this Warrant, the Company
proposes to register any of its securities under the Act in
connection with the public offering of such securities solely for cash (other than a
registration on Form S-4, Form S-8 or any form which does not include substantially the same
information as would be required to be included in a registration statement covering the sale of
the Registrable Securities and a registration statement relating to a PIPE (private investment
public equity) or similar transaction), the Company shall, each such time, promptly give the Holder
written notice of such registration. Upon the written request of the Holder given within twenty
(20) days after receipt of such written notice from the Company, the Company shall, subject to the
provisions of Section 11, cause to be registered under the Act all of the Registrable Securities
that the Holder has requested to be registered; provided, however, that if the managing underwriter
of any underwritten offering by the Company expresses reasonable written objection to the
registration of all of the Registrable Securities, then the Registrable Securities which shall be
registered in

8

 

such offering on behalf of holders of Registrable Securities shall be reduced in the
proportion equal to the average proportion of reduction as that of all such holders seeking
registration in connection with such offering, subject to any rights granted to other holders of
securities of the Company that are expressly by the terms of their agreements with the Company
entitled to have priority registration rights. The inclusion of any of the Purchaser’s Registrable
Securities in a registration statement filed by the Company and declared effective by the SEC shall
be deemed to be the exercise by such Purchaser of the piggy-back registration rights granted herein
to such Purchaser except as to such Registrable Securities as were not registered as a result of
the immediately preceding sentence.

     11.3 Obligations of the Company. Whenever required hereunder to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably possible:

          (a) Prepare and file with the SEC a registration statement with respect to such Registrable
Securities and act diligently to cause such registration statement to become effective as promptly
as practicable and maintain the effectiveness of the registration statement (i) in the case of firm
commitment underwritten public offering, until each underwriter has completed the distribution of
all of the securities purchased by it, and (ii) in the case of any other offering, 180 days after
the effective date thereof, except that in the case of registrations on Form S-3 or its equivalent,
those registration statements shall in any event be kept effective until at least one (1) year
after the Purchaser has fully exercised this Warrant.

          (b) Prepare and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.

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

          (d) Use its best efforts to register and qualify the securities covered by such registration
statement under the securities laws of such jurisdictions as shall be reasonably requested by the
Purchasers for the distribution of the securities covered by the registration statement, provided
that the Company shall not be required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in any such jurisdiction.

          (e) In the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement with terms generally satisfactory to the managing underwriter of
such offering.

9

 

          (f) Notify the Purchasers, promptly after the Company shall have received notice thereof, of
the time when the registration statement becomes effective or any supplement to any prospectus
forming a part of the registration statement has been filed.

          (g) Notify the Purchasers of any stop order suspending the effectiveness of the registration
statement and use its reasonable best efforts to remove such stop order.

          11.4 Furnish Information. It shall be a condition precedent to the obligations of the Company
to take any action pursuant hereto that the Purchaser, having chosen to have its Registrable
Securities included for registration, shall furnish to the Company such information regarding the
Purchaser, its Registrable Securities and the intended method of disposition of such securities as
shall be required to effect the registration thereof. The Purchaser shall be required to represent
to the Company that all such information that is given is complete and accurate in all material
respects. The Purchaser shall deliver to the Company a statement in writing from the beneficial
owners of such securities that such beneficial owners bona fide intend to sell, transfer or
otherwise dispose of such securities.

          11.5 Expenses.

          (a) Registration
Expenses. All expenses incurred by the Company in complying with the terms of
Sections 11.2 and 11.3 hereof, including without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, “Blue Sky” fees and expenses,
and the expense of any special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company which shall be paid in any event by
the Company) shall be borne by the Company.

          (b) Selling Expenses. All underwriting discounts, underwriters’ expense allowance, and selling
commissions applicable to the sale of Registrable Securities by the Purchasers and all fees and
disbursements of any special counsel (other than the Company’s regular counsel) shall be borne by
the Purchasers of the Registrable Securities so registered pro rata on the basis of the number of
Registrable Securities so
registered.

          11.6 Underwriting Requirements; Lock-up Provisions. All Purchasers proposing to distribute
their Registrable Securities through an underwriting in which the Company has proposed or is
proposing to participate, shall (together with the Company and any other Purchasers distributing
their securities through such underwriting) enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for underwriting by the Company. If any Purchaser
disapproves of the terms of any such underwriting, such Purchaser may elect to withdraw therefrom
by written notice to the Company and the managing underwriter; such notice to be given by the
Purchaser not later than two (2) business days following receipt of the Company’s notice (which
shall include the terms of the underwriting agreement) to Purchaser that the Company will file a
registration statement (not later than five (5) business days after such Company’s notice) which
will include a preliminary prospectus which sets forth the number of shares of Common Stock to be
offered for sale by

10

 

selling stockholders. Any Registrable Securities excluded or withdrawn from
such underwriting shall not be withdrawn from such registration except at the election of the
Purchaser.

     Notwithstanding the foregoing, the Purchaser acknowledges that if the Company elects to
distribute its shares in an underwritten public offering (whether or not any Registrable Securities
held by Purchaser are included as a part of such offering), the underwriter may require as a
condition of the offering that the Purchaser agree to a lock-up of the Registrable Securities for a
period commencing 10 days prior to the anticipated commencement of the offering and continuing for
up to 180 days after completion of the offering (the “Lock-up Provision”). The Purchaser agrees
that, if requested by any such underwriter and not waived by the Company, such Purchaser will be
bound by such Lock-up Provisions if required by such underwriter.

          11.7 Indemnification. In the event that any Registrable Securities are included in a
registration statement pursuant hereto:

          (a) To the extent permitted by law, the Company will indemnify and hold harmless each
Purchaser, the officers, directors, employees, agents, attorneys and partners of each Purchaser,
any underwriter (as defined in the Act) for such Purchaser and each person, if any, who controls
such Purchaser or underwriter within the meaning of the Act or the Exchange Act, against any
losses, claims, damages or liabilities (joint or several) to which they may become subject under
the Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a “Violation”): (A) any untrue statement or
alleged untrue statement of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments or supplements
thereto; (B) the omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading; or (C) any violation or
alleged violation by the Company of the Act, the Exchange Act, any applicable state securities law
or any rule or regulation promulgated under the Act, the Exchange Act or any applicable state
securities law; and the Company will reimburse
the Purchaser for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Subsection 11.9(a) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably withheld), nor shall
the Company be liable in any such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection with such
registration by any such Purchaser, underwriter or controlling person; provided, however, that the
Company will not be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in said registration statement, said preliminary prospectus, said
final prospectus or said amendment or supplement in reliance upon and in conformity with written
information furnished by such Purchaser or any other Purchaser, for use in the preparation thereof;
and further provided, however, that the foregoing indemnity agreement is subject to the condition
that, insofar as it relates to any untrue statement, alleged

11

 

untrue statement, omission or alleged
omission made in any preliminary prospectus but eliminated or remedied in the prospectus, such
indemnity agreement shall not inure to the benefit of any underwriter or broker, if a copy of the
final prospectus was not sent or given to such person with or prior to the confirmation of the sale
of such securities to such person.

          (b) To the extent permitted by law, each selling Purchaser will indemnify and hold harmless
the Company, its directors, its officers, its employees, its agents, its attorneys, any person who
controls the Company within the meaning of the Act or the Exchange Act, any underwriter (within the
meaning of the Act) for the Company and any person who controls such underwriter against any
losses, claims, damages or liabilities joint or several) to which the Company or any such director,
officer, employee, agent, attorney, controlling person, or underwriter or controlling person may
become subject, under the Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished by the Purchaser expressly
for use in connection with such registration; and the Purchaser will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer, controlling person,
underwriter or controlling person thereof, in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained
in this Subsection 11.7b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent of the Purchaser,
which consent shall not be unreasonably withheld, and further provided that Purchaser’s obligations
under this subsection shall not exceed the amount invested by Purchaser in the securities that are
included in the registration to which the violation relates.

          (c) Promptly after receipt by an indemnified party under this Section
11.7 of notice of the commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 11.7 notify the indemnifying party in writing of the commencement thereof, and
the indemnifying party shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly notified, to assume the
defense thereof with counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees and expenses to be
paid by the indemnifying party, if representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by such counsel in such proceeding.
The failure to notify an indemnifying party within a reasonable time of the commencement of any
such action, to the extent prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section 11.7 but the
omission so to notify the indemnifying party will not relieve it of any liability that it may have
to any indemnified party otherwise than under this Section.

12

 

          11.8 Reports under Exchange Act. The Company agrees to:

          (a) use its best efforts to make and keep public information available, as those terms are
understood and defined in Rule 144, at all times; and

          (b) use its best efforts to file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the Exchange Act.

          11.9 Purchaser’s Acceptance of Obligations. Acceptance of this Warrant by its Purchaser(s)
shall be deemed to constitute the unqualified acceptance by the Purchaser of all of the terms and
conditions set forth herein.

          11.10 Registration Rights Agreement. The provisions of this Section 11 are in addition to the
rights provided the Holder described in the Registration Rights Agreement entered into between the
Purchaser and the Company concurrently with the issuance of this Warrant.

     12. Lost, Stolen Warrants, etc. In case any Warrant shall be mutilated, stolen or destroyed,
the Company may issue a new Warrant of like date, tenor and denomination and deliver the same in
exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or in
lieu of any Warrant lost, stolen or destroyed, upon receipt of evidence satisfactory to the Company
of the loss, theft or destruction of such Warrant, and upon receipt of indemnity satisfactory to
the Company.

     13. Warrant Holder Not Shareholder. This Warrant does not confer upon the holder hereof any
right to vote or to consent or to receive notice as a shareholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a shareholder, prior to
the exercise hereof as hereinbefore provided.

     14. Severability. Should any part of this Warrant for any reason be declared invalid, such
decision shall not affect the validity of any remaining portion, which remaining portion shall
remain in force and effect as if this Warrant had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties hereto that they would have
executed and accepted the remaining portion of this Warrant without including therein any such
part, parts or portion which may, for any reason, be hereafter declared invalid.

     15. Notice. All notices and other communications required or permitted to be given under any
Agreement shall be deemed given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, overnight delivery or confirmed facsimile transmission to the parties
at the following address or fax number:

13

 

          To the Company at:

          Cytocore, Inc.

          414 North Orleans Street, Suite 502

          Chicago, Illinois 60610

          Attention: Chief Financial Officer

          Facsimile No.: 312-222-9580

To the Purchaser at: The address set forth in the Subscription Agreement under
which the Purchaser acquired, among other things, this Warrant.

or, as to either party or any subsequent holder of this Warrant, to such other address and/or
facsimile number as such party designates by written notice to the other party or parties.

     16. Miscellaneous.

          (a) This Warrant shall be governed by, construed and enforced in accordance with the law of
the State of Illinois, without regard to its conflict of laws principles.

          (b) The agreements which are contained herein shall survive the exercise of this Warrant to
the extent applicable thereafter.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly
authorized officers as of the day and year first set forth above.

	 	 	 	 	 
	 	CYTOCORE, INC.

 	 
	 	By  	 	 
	 	 	Robert McCullough, CEO, CFO 	 
	 	 	 	 

14

 

	 	 	 	 	 

ASSIGNMENT

(Form of
Assignment to be Executed if the Warrant Holder

Desires to Transfer Warrants Evidenced Hereby)

     FOR VALUE RECEIVED,                                                                 
                                                                             hereby sells, assigns and
transfers to              
                                                                      
              
                     
                     
                            
                            
.

(Please print name and address including zip code)

	 	 	 	 	 
	 

	 	Please insert social security, federal

tax ID number or other identifying number:
	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

                                                                   
                                                                                  
                                Warrants represented
by this Warrant Certificate and does hereby irrevocably constitute and
appoint                                             
                                                                               , Attorney, to
transfer said Warrants on the books of the Company with full power of substitution.

	 	 	 	 	 	 	 	 	 
	Dated: 
	 	 	 	 	 	 	 	 
	 

	 

	 	 	 	 

	 	 
	 

	 	 	 	 	 	             Signature

(Signature must conform in all
respects
 to name of holder as
specified on the 
face of this
Warrant Certificate.)	 	 

SIGNATURE GUARANTEED:

 

			
	Note:	 	Any transfer or assignment of this Warrant Certificate is subject to compliance with the
restrictions on transfer imposed under the Warrant Terms.

15

 

EXERCISE

(Form of Exercise to be Executed if the Warrant
Holder
 Desires to Exercise Warrants Evidenced
Hereby)

TO THE COMPANY:

     The
undersigned hereby irrevocably elects to exercise
                            Warrants represented by this Warrant
Certificate and to purchase thereunder the full number of shares of Common Stock issuable upon
exercise of said Warrants and enclose $          as the purchase price therefor, and requests that
certificates for such shares shall be issued in the name of, and cash for any fractional shares
shall be paid to,

	 	 	 	 	 
	 

	 	Please insert Social Security
Number or other

identifying number:	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

 

(Please print name and address, including zip code)

and, if said number of Warrants shall not be all the Warrants evidenced by this Warrant
Certificate, that a new Warrant Certificate for the unexercised number of Warrants may be assigned
under the form of Assignment appearing hereon.

	 	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	Signature:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 
	 

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

SIGNATURE GUARANTEED:

 

IMPORTANT: Signature guarantee must be made by a participant of STAMP or another signature
guarantee program acceptable to the Securities and Exchange Commission, the Securities Transfer
Association and the Transfer Agent of the Company or the Company.

16

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