Common use of Required Registration Clause in Contracts

Required Registration. (a) Not later than August 15, 2004 (unless a majority in interest of the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period), the Company will prepare and file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Registrable Securities, and use its best efforts to obtain the effectiveness of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this Agreement. (b) At any time after the earlier of (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, or (ii) November 15, 2007, the Holders of a majority of the Warrant Registrable Securities may, by notice to the Company, require that the Company file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holders, and that the Company use its best efforts to obtain the effectiveness of such registration statement as soon as practicable as would permit or facilitate the subsequent resale and distribution of all of such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of any of the Registrable Securities is in effect at the time the notice is given to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(b) by maintaining the effectiveness of the registration statement already in effect for an additional nine months.

Required Registration. (a) Not As promptly as possible, but in any event no --------------------- later than August 15, 2004 (unless a majority in interest of the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period)Filing Date, the Company will shall prepare and file with the Commission a registration statement Registration Statement covering all Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Company shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event prior to the Effectiveness Date (currently expected to be on except where the Company's audited financial statements are stale, in which case by the earlier of 90 days after the Effectiveness Date or the date that current audited financial statements have been filed by the Company as part of a Form S-2 or S-3) covering all of the Registrable Securities10-KSB), and use its best efforts to obtain the effectiveness of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15and, 2004 (subject to an extension of Section 2(c) below, to keep such Registration Statement continuously effective under the Securities Act until such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this Agreement. (b) At any time after is the earlier of (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported when all Registrable Securities covered by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, Registration Statement have been sold or (ii) November 15, 2007, two (2) years after the Holders date of a majority the issuance of the Warrant Registrable Securities may, by notice to the Company, require that the Company file with the Commission a registration statement under the Securities Act Purchase Agreement (currently expected to be on Form S-2 or S-3the "Effectiveness Period"). If at any time during the Effectiveness Period (i) covering all the maximum number of Warrant Shares exceeds (A) the number of shares of Common Stock initially registered in respect of the Warrant Registrable Securities Shares minus (B) the number of Warrant Shares, if any, already sold pursuant to the Registration Statement and (ii) such excess exists for a period of more than ten (10) Business Days in any Note Registrable Securities then held thirty (30) day period, the Company shall be required to file an amendment to the Registration Statement or an additional Registration Statement with respect to such excess shares within ten (10) Business Days after such conditions have been met (except where the Company's audited financial statements are stale, in which case within 100 calendar days after such conditions have been met), and the Company shall thereafter use its commercially reasonable efforts to cause such amendment or additional Registration Statement to be declared effective by the Holders, and that the Company use its best efforts to obtain the effectiveness of such registration statement Commission as soon as practicable as would permit or facilitate the subsequent resale and distribution of all of such Registrable Securities. Notwithstanding the forgoingpossible, if a registration statement covering the resale and distribution of any of the Registrable Securities is but in effect at the time the notice is given to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(bno event later than ninety (90) by maintaining the effectiveness of the registration statement already in effect for an additional nine monthsdays after filing.

Required Registration. (a) Not As promptly as practicable after the Closing, but in no event later than August 15, 2004 ninety (unless a majority in interest 90) days after the date of the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period)Closing, the Company will prepare and Issuer agrees to file with the Commission SEC a registration statement Registration Statement to register the resale of all the Shares and Warrant Shares (which shall not include an underwritten offering) (a “Required Registration”). Such Registration Statement shall include a plan of distribution substantially in the form attached hereto as Exhibit D. Not less than three (3) Business Days prior to the filing of such Registration Statement, the Issuer shall provide each of the Investors (or, if an Investor shall have so instructed the Issuer, the legal counsel or investment adviser of such Investor) with a copy of the Registration Statement proposed to be filed and shall consider all (but shall not be obligated to give effect to any) appropriate comments that are timely provided by such Investors to the Issuer with respect to the Registration Statement. The Issuer shall use its commercially reasonable efforts to cause the SEC to declare the Registration Statement effective no later than the one hundred twentieth (120th) day following the date the Registration Statement is filed with the SEC (including filing with the SEC a request for acceleration of effectiveness in accordance with Rule 461 promulgated under the Securities Act within five (currently expected 5) Business Days of the date that the Issuer is notified (orally or in writing, whichever is earlier) by the SEC that a Registration Statement will not be “reviewed,” or not be subject to be further review). In the event that the Registration Statement has not been filed on Form S-2 or S-3prior to the ninetieth (90th) covering all day after the Closing (the “Filing Deadline”) or declared effective by the SEC on or prior to the one hundred twentieth (120th) day after the date of the filing of the Registration Statement (the “Registration Deadline”), then in addition to any other rights the Holders may have hereunder or under applicable law, within five (5) Business Days of each monthly anniversary of such Filing Deadline and/or Registration Deadline until the date on which the Registration Statement is first filed with the SEC or declared effective by the SEC, as applicable, the Issuer shall pay to each Holder at each Holder’s discretion, as evidenced in writing to the Issuer, either (1) an amount in cash, as liquidated damages and not as a penalty, equal to 1.0% of the aggregate Purchase Price originally paid to the Issuer in connection with the acquisition pursuant to the terms of this Agreement of the Registrable SecuritiesSecurities then held by such Holder or (2) an additional warrant to acquire that number of shares of Common Stock equal to two percent (2%) of the Shares purchased by such Holder pursuant to this Agreement, and use its best efforts which warrant shall be substantially in the form of the Holder’s Warrant issued pursuant to obtain this Agreement. Once the Registration Statement has been declared effective, the Issuer shall thereafter maintain the effectiveness of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this Agreement. (b) At any time after Registration Statement until the earlier of of: (i) the date upon on which all the high closing bid prices of Shares and Warrant Shares have been sold pursuant to the Company’s Common Stock on the NASDAQ System (Registration Statement or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, Rule 144; or (ii) November 15such time as the Issuer reasonably determines, 2007based on the advice of counsel, the Holders that each Holder, acting independently of a majority of the Warrant Registrable Securities may, by notice to the Company, require that the Company file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the other Holders, will be eligible to sell under Rule 144 all the Shares and that Warrant Shares then owned by such Holder within the Company use its best efforts to obtain volume limitations imposed by paragraph (e) of Rule 144 in the effectiveness three (3)-month period immediately following the termination of such registration statement as soon as practicable as would permit or facilitate the subsequent resale and distribution of all of such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of any of the Registrable Securities is in effect at the time the notice is given to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(b) by maintaining the effectiveness of the registration statement already in effect for an additional nine monthsRegistration Statement.

Required Registration. (a) Not If, at any time after the expiration of the Lock-Up Term but no later than August 15, 2004 the tenth (unless a majority in interest 10th) anniversary of such expiration (the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period“Registration Rights Term”), the Company will prepare and receives from any Holder or Holders a written request or requests (each, a “Demand Request”) that the Company file with the Commission a registration statement Registration Statement under the Securities Act to effect the registration (currently expected to be on Form S-2 or S-3a “Required Registration”) covering all of the Registrable Securities, and the Company shall use its best all reasonable efforts to obtain the effectiveness of file a Registration Statement covering such registration Holders’ Registrable Securities as soon as practicable (and by the applicable Filing Date) and shall use all reasonable efforts to, as would soon as practicable thereafter, effect the registration of the Registrable Securities to permit or facilitate the original issuance or subsequent resale sale and distribution in an Underwritten Offering of all or such portion of such Holder’s or Holders’ Registrable Securities. The Securities as are specified in such Demand Request, subject however, to the conditions and limitations set forth herein; provided, however, that the Company shall not be obligated to effect any registration of Registrable Securities upon receipt of a Demand Request pursuant to this Section 2.1 if: (i) the Company has already completed three (3) Required Registrations; ACTIVE/100319021.2 (ii) (A) in the event that the market value of all Registrable Securities outstanding is equal to or greater than fifty million dollars ($50,000,000), the market value of the Registrable Securities proposed to be included in the registration, based on the average closing price during the ten (10) consecutive trading days period prior to the making of the Demand Request, is less than fifty million dollars ($50,000,000) or (B) in the event that the market value of all Registrable Securities outstanding is less than fifty million dollars ($50,000,000), the market value of the Registrable Securities proposed to be included in the registration, based on the average closing price during the ten (10) consecutive trading days period prior to the making of the Demand Request, is less than the lesser of (x) twenty-five million dollars ($25,000,000) or (y) the total market value of Registrable Securities outstanding. (iii) the Company furnishes to the Holders a certificate signed by an authorized officer of the Company stating that (A) within sixty (60) days after receipt of the Demand Request under this Section 2.1, the Company will file a registration statement for the public offering of securities for the account of the Company (other than a registration of securities (x) issuable pursuant to an employee stock option, stock purchase or similar plan, (y) issuable pursuant to a merger, exchange offer or a transaction of the type specified in Rule 145(a) under the Securities Act or (z) in which the only securities being registered are securities issuable upon conversion of debt securities which are also being registered), provided, that the Company is actively employing good faith efforts to cause such registration statement to become effective or (B) the Company is engaged in a material transaction or has an undisclosed material corporate development, in either case, which would be required to be disclosed in the Registration Statement, and in the good faith judgment of the Company’s failure Board of Directors, such disclosure would be detrimental to obtain effectiveness the Company and its stockholders at such time (in which case, the Company shall disclose the matter as promptly as reasonably practicable and thereafter file the Registration Statement, and each Holder agrees not to disclose any information about such material transaction to Third Parties until such disclosure has occurred or such information has entered the public domain other than through breach of this registration statement provision by November 15such Holder), 2004 provided, however, that the Company shall have the right to only defer the filing of the Registration Statement pursuant to this subsection once in any twelve (subject 12) month period and, such deferral may not exceed a period of more than ninety (90) days after receipt of a Demand Request; (iv) the Company has, within the twelve (12) month period preceding the date of the Demand Request, already effected one (1) Required Registration for any Holder pursuant to an extension this Section 2.1; or (v) at any time during the period between the Company’s receipt of such date the Demand Request and the completion of the Required Registration, any Holder is in breach of or has failed to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure cause its Controlled Affiliates to comply with the provisions obligations and restrictions of Sections 3, 4 or 5 of this Agreement, and such breach or failure is ongoing and has not been remedied; it being understood that (A) a one-time, inadvertent and de minimis breach of Section 5(b) below) will commence the running 4 shall not be deemed to be a breach of the first “Failure Term” as defined in obligations and restrictions under Section 4 for purposes of the Note this Section 2.1(v) and will also constitute an event (B) a de minimis breach of default under this Agreement. (bSection 3.1(a) At any time after the earlier of (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇hereof, or if this service an inadvertent breach of Section 3.1(g) hereof arising ACTIVE/100319021.2 from informal discussions covering general corporate or other business matters the purpose of which is discontinued, such other reporting service acceptable not intended to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, effectuate or (ii) November 15, 2007, the Holders of a majority of the Warrant Registrable Securities may, by notice lead to the Company, require that the Company file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holders, and that the Company use its best efforts to obtain the effectiveness of such registration statement as soon as practicable as would permit or facilitate the subsequent resale and distribution of all of such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of any of the Registrable Securities is actions referred to in effect at the time the notice is given paragraphs (a) through (e) of Section 3.1, shall not be deemed to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file be a registration statement under this Subsection 2.1(b) by maintaining the effectiveness breach of the registration statement already in effect obligations and restrictions under Section 3.1 for an additional nine monthspurposes of this Section 2.1(v).

Required Registration. (a) Not later than August 15, 2004 (unless a majority in interest Subject to the existing registration rights of the Holders request a delay holders of Series D Preferred Stock and Series F Preferred Stock within ninety (90) to one hundred twenty (120) days after the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period)Closing Date, the Company will shall prepare and file with the Commission a registration statement under the Securities Act (currently expected Act, on a form selected by the Company, covering the Restricted Stock and shall use its commercially reasonable efforts to be on Form S-2 or S-3) covering all cause such registration statement to become effective as expeditiously as possible and to remain effective until the earlier to occur of the Registrable Securitiesdate (i) the Restricted Stock covered thereby have been sold, and or (ii) by which all Restricted Stock covered thereby may be sold under Rule 144, without volume limitations. (b) Following the effectiveness of a registration statement filed pursuant to this section, the Company may, at any time, suspend the effectiveness of such registration for up to 45 days, as appropriate (a "Suspension Period"), by giving notice to the Holders of Restricted Stock, if ------------------ the Company shall have determined that the Company may be required to disclose any material corporate development which disclosure may have a Material Adverse Effect on the Company. Notwithstanding the foregoing, no more than two Suspension Periods (i.e., 90 days) may occur in immediate succession. The Company shall use its best efforts to obtain limit the effectiveness duration and number of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securitiesany Suspension Periods. The Company’s failure to obtain effectiveness Holders of this registration statement by November 15Restricted Stock agree that, 2004 (subject to an extension upon receipt of such date to correspond to any notice from the Company of a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this Agreement. (b) At any time after the earlier of (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, or (ii) November 15, 2007Suspension Period, the Holders of a majority Restricted Stock shall forthwith discontinue disposition of the Warrant Registrable Securities may, Restricted Stock covered by notice to the Company, require that the Company file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holders, and that the Company use its best efforts to obtain the effectiveness of such registration statement as soon as practicable as would permit or facilitate prospectus until the subsequent resale and distribution Holders of all Restricted Stock (i) are advised in writing by the Company that the use of such Registrable Securities. Notwithstanding the forgoingapplicable prospectus may be resumed, (ii) have received copies of a supplemental or amended prospectus, if a registration statement covering the resale applicable, and distribution (iii) have received copies of any of the Registrable Securities is in effect at the time the notice is given additional or supplemental filings which are incorporated or deemed to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(b) be incorporated by maintaining the effectiveness of the registration statement already in effect for an additional nine monthsreference into such prospectus.

Required Registration. (a) Not 9.7.1. As soon as practicable after the Closing Date, and in no event later than August 1530 calendar days after the Closing Date, 2004 (unless a majority in interest of the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period), the Company will OSI shall prepare and file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) a form selected by OSI, covering all of the Registrable Securities, and use its best efforts to obtain the effectiveness of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 Stock (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 the Registration Rights Agreement), and shall use reasonable commercial efforts to cause such registration statement to become effective as expeditiously as possible and to remain effective until the earlier to occur of the Note and will also constitute an event of default date (a) the Registrable Stock covered thereby has been sold, or (b) by which all Registrable Stock covered thereby may be sold under this Rule 144(k), all in accordance with the Registration Rights Agreement. (b) At 9.7.2. If any time after the earlier of (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if Contingent Payment Shares are issued, and such Contingent Payment Shares are not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported covered by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, or (ii) November 15, 2007, the Holders of a majority of the Warrant Registrable Securities may, by notice any registration statement pursuant to the CompanySecurities Act, require that the Company OSI shall prepare and file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) a form selected by OSI, covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holderssuch Contingent Payment Shares, and that such Contingent Payment Shares shall be included in the Company use its best efforts definition of Registrable Stock, no later than the earliest to obtain occur of: (a) the effectiveness first registration statement filed by OSI subsequent to the issuance of such registration statement as soon as practicable as would permit or facilitate Contingent Payment Shares; (b) 180 days after the subsequent resale and distribution of all issuance of such Registrable SecuritiesContingent Payment Shares; or (c) 30 days after the accumulation of Contingent Payment Shares representing a Contingent Payment amount of $1,500,000 or more. Notwithstanding the forgoingIn any event, if a registration statement covering the resale Contingent Payment Shares are issued prior to April 30, 2003, OSI shall prepare and distribution of any of the Registrable Securities is in effect at the time the notice is given to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement as described above no later than June 30, 2003. OSI shall use reasonable commercial efforts to cause the registration statements provided for in this Section 9.7.2 to become effective as expeditiously as possible and to remain effective until the earlier to occur of the date (a) the Contingent Payment Shares covered thereby has been sold, or (b) by which all Contingent Payment Shares covered thereby may be sold under Rule 144(k), all in accordance with the Registration Rights Agreements. Notwithstanding any other provision hereof: (x) OSI shall have no obligation with regard to registration of Contingent Payment Shares if, at the time such obligation would have become applicable hereunder, OSI is not a reporting company under the Securities Exchange Act of 1934, as then amended; and (y) if the OSI Board of Directors determines in good faith that the filing of a registration statement at the time provided under this Subsection 2.1(b) by maintaining Section 9.7.2 would be significantly adverse to OSI’s legitimate interests, OSI may delay the effectiveness filing of the any registration statement already in effect required by this Section 9.7.2 for an additional nine monthsa period of up to 60 days; provided, however, that OSI may not invoke such permitted delay on more than one occasion per any 12-month period.

Required Registration. (a) Not later than August 15, 2004 (unless a majority in interest of Within 45 days from the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration date of this requested delaying periodAgreement (the “Filing Date”), the Company will prepare and shall file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 S-1 or S-3) covering all such other form as may be appropriate in order to permit the Investors to publicly sell the Shares. The date of this Agreement shall be the date of the Registrable Securities, and use its best efforts final closing through which the Investors entered into the Stock Purchase Agreement with respect to obtain the effectiveness of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this Agreementcurrent offering. (b) At any time after the earlier of If: (i) the date upon which registration statement is not filed on or prior to the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, Filing Date; or (ii) November 15the Company fails to cause the registration statement to be declared effective by the Effective Date (any 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”), 2007then, until the applicable Event is cured, the Holders Company shall pay to each Investor in cash or in shares of Common Stock at Fair Market Value at the Company’s option as liquidated damages and not as a majority penalty, an amount equal to 1.0% of the Warrant Registrable Securities maytotal amount invested by such Investor under each Stock Purchase Agreement for each 30 day period (prorated for partial periods) during which such Event continues uncured. While such Event continues, such liquidated damages shall be paid not less often than every 30 days. Any unpaid liquidated damages as of the date when an Event has been cured by notice the Company shall be paid within seven business days following the date on which such Event has been cured by the Company. Notwithstanding anything herein to the Companycontrary, require to the extent that the Company file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holders, and that the Company use its best efforts to obtain the effectiveness of such registration statement as soon as practicable as would permit or facilitate the subsequent resale and distribution of all of such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of any or all of the Registrable Securities by the Company on a registration statement is in effect prohibited (the “Non-Registered Shares”) as a result of rules, regulations, positions or releases issued or actions taken by the Commission (including its Division of Corporation Finance or any other part of its staff) pursuant to its authority with respect to Rule 415 (or successor rule) and the Company has registered at the such time the notice is given to maximum number of Registrable Securities permissible upon consultation with the Company as provided in this subsection 2.1(bCommission (including its Division of Corporation Finance or any other part of its staff), then the Company liquidated damages described in this Section 2(b) shall not be applicable to such Non-Registered Shares. Notwithstanding the preceding, the foregoing liquidated damages shall not accrue or be otherwise charged during any period in which the Investor may satisfy its obligation to file a registration statement sell all Shares on any given day under this Subsection 2.1(b) by maintaining the effectiveness of the registration statement already in effect for an additional nine monthsRule 144.

Required Registration. (a) Not later than August 15, 2004 (unless a majority in interest of On or prior to the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period)Filing Date, the Company will shall prepare and file with the Commission a registration statement Registration Statement covering all Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Company shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event prior to the Effectiveness Date (currently expected to be on except where the Company's audited financial statements are stale, in which case by the earlier of 90 days after the Effectiveness Date or the date that current audited financial statements have been filed by the Company as part of a Form S-2 or S-3) covering all of the Registrable Securities10-KSB), and use its best efforts to obtain the effectiveness of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15and, 2004 (subject to an extension of Section 2(c) below, to keep such Registration Statement continuously effective under the Securities Act until such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this Agreement. (b) At any time after is the earlier of (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported when all Registrable Securities covered by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, Registration Statement have been sold or (ii) November 15, 2007, the Holders two-year anniversary of a majority the last issuance of Warrants under the Securities Purchase Agreement (the "Effectiveness Period"). If at any time during the Effectiveness Period (i) the maximum number of Warrant Shares exceeds (A) the number of shares of Common Stock initially registered in respect of the Warrant Registrable Securities mayShares minus (B) the number of Warrant Shares, by notice if any, already sold pursuant to the CompanyRegistration Statement and (ii) such excess exists for a period of more than ten (10) Business Days in any thirty (30) day period, require that the Company shall be required to file an amendment to the Registration Statement or an additional Registration Statement with respect to such excess shares within ten (10) Business Days after such conditions have been met (except where the Company's audited financial statements are stale, in which case within 100 calendar days after such conditions have been met), and the Company shall thereafter use its commercially reasonable efforts to cause such amendment or additional Registration Statement to be declared effective by the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holders, and that the Company use its best efforts to obtain the effectiveness of such registration statement as soon as practicable as would permit or facilitate the subsequent resale and distribution of all of such Registrable Securities. Notwithstanding the forgoingpossible, if a registration statement covering the resale and distribution of any of the Registrable Securities is but in effect at the time the notice is given to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(bno event later than ninety (90) by maintaining the effectiveness of the registration statement already in effect for an additional nine monthsdays after filing.

Required Registration. (a) Not The Company shall, no later than August 15, 2004 sixty (unless a majority 60) days after the Last Closing (as defined in interest of the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying periodSubscription Agreements), the Company will prepare and file with the Commission a registration statement under (the "Registration Statement") on Form S-l (or other suitable form, at the Company's discretion but subject to the reasonable approval of Subscribers) with the Securities Act and Exchange Commission (currently expected to be on Form S-2 or S-3the "SEC"). The Company shall, within ten (10) covering all days of the Registrable Securitiesfiling of the Registration Statement, send a copy of the Registration Statement to Subscribers. Such Registration Statement shall initially cover the resale of a number of shares of Common Stock issuable upon conversion of the Preferred Stock and exercise of the Warrants equal to at least one million five hundred thousand ( 1,500,000) shares of Common Stock, allocated and reserved pro rata among the Subscribers and Swartz or designees of Swart▇, ▇▇▇ shall cover, to ▇▇▇ ▇xtent allowable by applicable law, such additional indeterminate number of shares of Common Stock as are required to effect the full conversion of the Preferred Stock and the full exercise of the Warrants, due to fluctuations in the price of the Company's Common Stock. The Company shall use its best efforts to obtain have the effectiveness of such registration Registration Statement declared effective as soon as practicable possible. In the event that the Company determines or is notified by a Holder that the Registration Statement does not cover a sufficient number of shares of Common Stock to effect conversion of all Preferred Stock then eligible for conversion, including Preferred Stock issuable upon exercise of warrants to purchase Series A Preferred Stock of the Company, and exercise of the outstanding Warrants, the Company shall, within five (5) business days, amend the Registration Statement or file a new registration statement to add such number of additional shares as would permit be necessary to effect all such conversions of the Preferred Stock and exercises of the Warrants. If the Registration Statement is not declared effective within five (5) calendar months after the Last Closing or facilitate if any new or amended registration statement required to be filed hereunder is not declared effective within two (2) calendar months of the original issuance date it is required to be filed, the Company shall pay Subscribers an amount equal to two percent (2%) per month of the aggregate amount of Preferred Stock sold to Subscriber in the Offering, compounded monthly and accruing daily until the Registration Statement is declared effective (the "Late Registration Payment"), payable, at each Subscriber's option, in either cash or subsequent resale and distribution Common Stock. If Subscriber elects to be paid in cash, such Late Registration Payment shall be paid to such Subscriber within five (5) business days following the end of all the month in which such Late Registration Payment was accrued. If Subscriber elects to be paid in Common Stock, such number of such shares shall be determined as follows: Upon conversion of each share of Preferred Stock, the Company shall issue to Subscriber the number of shares of Common Stock determined as set forth in Section 5(a) of the Certificate of Designation plus an additional number of shares of Common Stock (the "Additional Shares") determined as set forth below: Additional Shares = Late Registration Payment ------------------------- Conversion Price where, "Conversion Price" has the definition ascribed to it in the Certificate of Designation. Such Additional Shares shall also be deemed "Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” " as defined in Section 4 of the Note and will also constitute an event of default under this Agreementherein. (b) At any time after the earlier of (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ SystemThe Registration Statement shall be prepared as a "shelf" registration statement under Rule 415, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, or (ii) November 15, 2007, and shall be maintained effective until the Holders of a majority of the Warrant Registrable Securities may, by notice have completed a distribution of such Securities. (c) The Company represents that it is presently eligible to effect the Company, require that the Company file with the Commission a registration statement under the Securities Act (currently expected to be contemplated hereby on Form S-2 or S-3) covering all of the Warrant Registrable Securities S- 1 and any Note Registrable Securities then held by the Holders, and that the Company will use its best efforts to obtain the effectiveness of continue to take such registration statement actions as soon as practicable as would permit or facilitate the subsequent resale and distribution of all of are necessary to maintain such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of any of the Registrable Securities is in effect at the time the notice is given to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(b) by maintaining the effectiveness of the registration statement already in effect for an additional nine monthseligibility.

Required Registration. (a) Not later than August 15At any time on or before July 6, 2004 (unless 1998, Peritus shall file a majority in interest of the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period), the Company will prepare and file with the Commission a registration statement under the Securities Act (currently expected to be Registration Statement on Form S-2 S-3 (or S-3any successor form relating to secondary offerings) covering (the "RESALE REGISTRATION STATEMENT") registering all of the Registrable Securities, Shares then held by the Seller (the "REMAINING SHARES") and shall use its best efforts to obtain cause the effectiveness Resale Registration Statement to become effective promptly following the filing thereof and to remain effective until the second anniversary of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securitiesdate hereof. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted If the Resale Registration Statement is not declared effective by the Holders aboveCommission prior to August 1, 1998, Peritus shall pay the Seller the sum of $5,000 for each day that the Resale Registration Statement is not effective, it being understood and agreed that (i) August 1, 1998 shall be deemed to be the first day for which such amount will be assessed, (ii) no such amount will be assessed for the day on which the Resale Registration Statement is declared effective, and subject to delays incurred (iii) Peritus shall be liable for no more than an aggregate of $100,000. Peritus shall pay any amount described in the preceding sentence in one payment by any Holder’s failure to comply with wire transfer of immediately available funds on the provisions fifth business day following the earlier of Section 5(b(x) below) will commence the running effective date of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this AgreementResale Registration Statement or (y) August 21, 1998. (b) At Peritus may not include any time issued and outstanding shares of Common Stock held by others in the Resale Registration Statement without the prior written consent of the Seller, which consent shall not be unreasonably withheld. Prior to January 1, 1999, the Seller agrees to sell (pursuant to the Resale Registration Statement or otherwise) no more than the number of Shares determined by adding (x) the difference, if any, between 500,000 and the number of Shares sold pursuant to Section 3(a) hereof (the "SHARE DIFFERENCE") and (y) one-half of the difference between the Remaining Shares and the Share Difference. (c) If at or after the earlier time of (iany requirement to register Shares pursuant to Section 2(a) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (hereof, Peritus is unable to file or if not then traded on the NASDAQ Systemhave declared effective any such Resale Registration Statement under applicable Commission rules and regulations, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if periods of time under this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, or (ii) November 15, 2007, the Holders of a majority of the Warrant Registrable Securities may, by notice Section shall be extended only to the Companyextent necessary to comply with such Commission rules and regulations; provided that, require this Section 2(c) shall not be applicable in the event that the Company Peritus is unable to file or have declared effective any such Resale Registration Statement under applicable Commission rules and regulations due to its failure to timely file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities reports and any Note Registrable Securities then held by the Holdersmaterial required to be filed pursuant to Sections 13, and that the Company use its best efforts to obtain the effectiveness of such registration statement as soon as practicable as would permit 14 or facilitate the subsequent resale and distribution of all of such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of any 15(d) of the Registrable Securities is in effect at Exchange Act for the 12 calendar months immediately preceding the time the notice is given to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(b) by maintaining the effectiveness of the registration statement already in effect for an additional nine monthsrequirement to register Shares pursuant to Section 2(a) hereof.

Required Registration. (a) Not If, at any time after the expiration of the Lock-Up Term but no later than August 15, 2004 the tenth (unless a majority in interest 10th) anniversary of such expiration (the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period“Registration Rights Term”), the Company will prepare and receives from any Holder or Holders a written request or requests (each, a “Demand Request”) that the Company file with the Commission a registration statement Registration Statement under the Securities Act to effect the registration (currently expected to be on Form S-2 or S-3a “Required Registration”) covering all of the Registrable Securities, and the Company shall use its best all reasonable efforts to obtain the effectiveness of file a Registration Statement covering such registration Holders’ Registrable Securities as soon as practicable (and by the applicable Filing Date) and shall use all reasonable efforts to, as would soon as practicable thereafter, effect the registration of the Registrable Securities to permit or facilitate the original issuance or subsequent resale sale and distribution in an Underwritten Offering of all or such portion of such Holder’s or Holders’ Registrable Securities. The Securities as are specified in such Demand Request, subject however, to the conditions and limitations set forth herein; provided, however, that the Company shall not be obligated to effect any registration of Registrable Securities upon receipt of a Demand Request pursuant to this Section 2.1 if: (i) the Company has already completed three (3) Required Registrations; (ii) (A) in the event that the market value of all Registrable Securities outstanding is equal to or greater than fifty million dollars ($50,000,000), the market value of the Registrable Securities proposed to be included in the registration, based on the average closing price during the ten (10) consecutive trading days period prior to the making of the Demand Request, is less than fifty million dollars ($50,000,000) or (B) in the event that the market value of all Registrable Securities outstanding is less than fifty million dollars ($50,000,000), the market value of the Registrable Securities proposed to be included in the registration, based on the average closing price during the ten (10) consecutive trading days period prior to the making of the Demand Request, is less than the lesser of (x) twenty-five million dollars ($25,000,000) or (y) the total market value of Registrable Securities outstanding. (iii) the Company furnishes to the Holders a certificate signed by an authorized officer of the Company stating that (A) within sixty (60) days after receipt of the Demand Request under this Section 2.1, the Company will file a registration statement for the public offering of securities for the account of the Company (other than a registration of securities (x) issuable pursuant to an employee stock option, stock purchase or similar plan, (y) issuable pursuant to a merger, exchange offer or a transaction of the type specified in Rule 145(a) under the Securities Act or (z) in which the only securities being registered are securities issuable upon conversion of debt securities which are also being registered), provided, that the Company is actively employing good faith efforts to cause such registration statement to become effective or (B) the Company is engaged in a material transaction or has an undisclosed material corporate development, in either case, which would be required to be disclosed in the Registration Statement, and in the good faith judgment of the Company’s failure Board of Directors, such disclosure would be detrimental to obtain effectiveness the Company and its stockholders at such time (in which case, the Company shall disclose the matter as promptly as reasonably practicable and thereafter file the Registration Statement, and each Holder agrees not to disclose any information about such material transaction to Third Parties until such disclosure has occurred or such information has entered the public domain other than through breach of this registration statement provision by November 15such Holder), 2004 provided, however, that the Company shall have the right to only defer the filing of the Registration Statement pursuant to this subsection once in any twelve (subject 12) month period and, such deferral may not exceed a period of more than ninety (90) days after receipt of a Demand Request; (iv) the Company has, within the twelve (12) month period preceding the date of the Demand Request, already effected one (1) Required Registration for any Holder pursuant to an extension this Section 2.1; or (v) at any time during the period between the Company’s receipt of such date the Demand Request and the completion of the Required Registration, any Holder is in breach of or has failed to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure cause its Controlled Affiliates to comply with the provisions obligations and restrictions of Sections 3, 4 or 5 of this Agreement, and such breach or failure is ongoing and has not been remedied; it being understood that (A) a one-time, inadvertent and de minimis breach of Section 5(b) below) will commence the running 4 shall not be deemed to be a breach of the first “Failure Term” as defined in obligations and restrictions under Section 4 for purposes of the Note this Section 2.1(v) and will also constitute an event (B) a de minimis breach of default under this Agreement. (bSection 3.1(a) At any time after the earlier of (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇hereof, or if this service an inadvertent breach of Section 3.1(g) hereof arising from informal discussions covering general corporate or other business matters the purpose of which is discontinued, such other reporting service acceptable not intended to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, effectuate or (ii) November 15, 2007, the Holders of a majority of the Warrant Registrable Securities may, by notice lead to the Company, require that the Company file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holders, and that the Company use its best efforts to obtain the effectiveness of such registration statement as soon as practicable as would permit or facilitate the subsequent resale and distribution of all of such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of any of the Registrable Securities is actions referred to in effect at the time the notice is given paragraphs (a) through (e) of Section 3.1, shall not be deemed to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file be a registration statement under this Subsection 2.1(b) by maintaining the effectiveness breach of the registration statement already in effect obligations and restrictions under Section 3.1 for an additional nine monthspurposes of this Section 2.1(v).

Required Registration. (a) Not later than August 15If, 2004 (unless a majority in interest of during the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period)Registration Rights Term, the Company will prepare and receives from any Holder or Holders a written request or requests (each, a "Demand Request") that the Company file with the Commission a registration statement Registration Statement under the Securities Act to effect the registration (currently expected to be on Form S-2 or S-3a "Required Registration") covering all of the Registrable Securities, and the Company shall use its best all reasonable efforts to obtain the effectiveness of file a Registration Statement covering such registration Holders' Registrable Securities as soon as practicable (and by the applicable Filing Date) and shall use all reasonable efforts to, as would soon as practicable thereafter, effect the registration of the Registrable Securities to permit or facilitate the original issuance or subsequent resale sale and distribution in an Underwritten Offering of all or such portion of such Holder's or Holders' Registrable Securities. The Company’s failure Securities as are specified in such Demand Request, subject however, to obtain effectiveness the conditions and limitations set forth herein; provided, however, that the Company shall not be obligated to effect any registration of Registrable Securities upon receipt of a Demand Request pursuant to this registration statement by November 15, 2004 Section 2.1 if: (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(ba) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this Agreement.[***]; (b) At any time after the earlier of (i) in the date upon event that the market value of all Registrable Securities outstanding is equal to or greater than [***], the market value of the Registrable Securities proposed to be included in the registration, based on the average closing price during the [***] consecutive trading days period prior to the making of the Demand Request, is less than [***] or (ii) in the event that the market value of all Registrable Securities outstanding is less than [***], the market value of the Registrable Securities proposed to be included in the registration, based on the average closing price during the ten (10) consecutive trading days period prior to the making of the Demand Request, is less than the lesser of (x) [***]or (y) the total market value of Registrable Securities outstanding; (c) the Company furnishes to the Holders a certificate signed by an authorized officer of the Company stating that (i) within sixty (60) days of receipt of the Demand Request under this Section 2.1, the Company expects to file a registration statement for the public offering of securities for the account of the Company (other than a registration of securities (x) issuable pursuant to an employee stock option, stock purchase or similar plan, (y) issuable pursuant to a merger, exchange offer or a transaction of the type specified in Rule 145(a) under the Securities Act or (z) in which the high closing bid prices only securities being registered are securities issuable upon conversion of debt securities which are also being registered), provided, that the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service Company is discontinued, actively employing good faith efforts to cause such other reporting service acceptable registration statement to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading daysbecome effective, or (ii) November 15the Company is engaged in a material transaction or has an undisclosed material corporate development, 2007in either case, which would be required to be disclosed in the Registration Statement, and in the good faith judgment of the Company's Board of Directors, such disclosure would be materially detrimental to the Company and its stockholders at such time (in which case, the Holders Company shall disclose the matter as promptly as reasonably practicable and thereafter file the Registration Statement, and each Holder agrees not to disclose any information about such material transaction to Third Parties until such disclosure has occurred or such information has entered the public domain other than through breach of a majority of the Warrant Registrable Securities maythis provision by such Holder), by notice to the Companyprovided, require however, that the Company file shall have the right to only defer the filing of the Registration Statement pursuant to this subsection [***] in any twelve (12) month period and, such deferral may not exceed a period of more than one hundred and twenty (120) days after receipt of a Demand Request; (d) the Company has, within the twelve (12) month period preceding the date of the Demand Request, already effected one (1) Required Registration for any Holder pursuant to this Section 2.1; or (e) at any time during the period between the Company's receipt of the Demand Request and the completion of the Required Registration, any Holder is in breach of or has failed to cause its Affiliates to comply with the Commission obligations and restrictions of Sections 3, 4 or 5 of this Agreement, the Company has provided notice of such breach to a registration statement under the Securities Act Holder and such breach or failure is ongoing and has not been remedied; it being understood that (currently expected i) a one-time, inadvertent and de minimis breach of Section 4 shall not be deemed to be on Form S-2 or S-3) covering all a breach of the Warrant Registrable Securities obligations and any Note Registrable Securities then held by restrictions under Section 4 for purposes of this Section 2.1(e) and (ii) a de minimis breach of Section 3.1(a) hereof, or an inadvertent breach of Section 3.1(g) hereof arising from informal discussions covering general corporate or other business matters the Holders, and that the Company use its best efforts purpose of which is not intended to obtain the effectiveness of such registration statement as soon as practicable as would permit effectuate or facilitate the subsequent resale and distribution of all of such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of lead to any of the Registrable Securities is actions referred to in effect at the time the notice is given paragraphs (a) through (e) of Section 3.1, shall not be deemed to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file be a registration statement under this Subsection 2.1(b) by maintaining the effectiveness breach of the registration statement already in effect obligations and restrictions under Section 3.1 for an additional nine monthspurposes of this Section 2.1(e).

Required Registration. (a) Not The Company shall prepare and, as soon as practicable, but in no event later than August 15the Filing Deadline, 2004 (unless a majority in interest of the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period), the Company will prepare and file with the Commission the Initial Registration Statement; provided that the Initial Registration Statement shall register for resale at the lesser of: (x) the number of share Common Stock equal to 125% of the maximum number of shares of Common Stock issuable upon conversion of the Revolving Note at the initial conversion price thereof, and (y) the maximum number of shares of Common Stock allowable in the event the Commission informs the Company that all of the Registerable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement (the “Initial Required Registration Amount”) as well as the Warrant Shares. The Registration Statement filed hereunder shall be on Form S-1 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-1, in which case such registration shall be on another appropriate form in accordance herewith). Subject to the terms of this Agreement, the Company shall cause each Registration Statement required to be filed under this Agreement to be declared effective under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Registrable Securities, and use its best efforts to obtain the effectiveness of such registration as soon promptly as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this Agreement. (b) At any time possible after the filing thereof and shall keep such Registration Statements continuously effective under the Securities Act until the earlier of of: (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported that all Registrable Securities covered by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading daysRegistration Statement no longer constitute Registrable Securities, or (ii) November 15, 2007, the Holders two year anniversary of the date of this Agreement (the “Effectiveness Period”). The Company shall request effectiveness of a majority Registration Statement as of the Warrant Registrable Securities may, by notice to the Company, require that the Company file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holders, and that the Company use its best efforts to obtain the effectiveness of such registration statement as soon as practicable as would permit or facilitate the subsequent resale and distribution of all of such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of any of the Registrable Securities is in effect at the time the notice is given to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(b) by maintaining the effectiveness of the registration statement already in effect for an additional nine months.5:00 p.m. Eastern

Required Registration. (a) Not later than August 15For purposes of this Section 10.1 only, 2004 (unless a majority the term "Registrable Shares" shall mean the AMNEX Shares acquired pursuant to this Agreement, provided, however, that if such shares of AMNEX Shares owned by the Selling Shareholders may be sold, in interest the opinion of counsel to Buyer, pursuant to an exemption from the registration requirements of the Holders request Securities Act, including, without limitation, pursuant to Rule 144 under the Securities Act, such shares shall not be deemed to be Registrable Shares. Subject to clause (b) below (i) Buyer shall use its reasonable best efforts to cause a delay of Registration Statement covering 115,943 Registrable Shares (the Company for up "First Shares") to an additional 90 days in writing and in such case, upon expiration of this requested delaying period), the Company will prepare and file be filed with the Commission a registration statement under on or prior to March 31, 1997 (the Securities Act (currently expected "First Date") and to be on Form S-2 or S-3) covering all become effective as soon as reasonably practicable and to remain effective until the completion of the distribution of the Registrable SecuritiesShares to be offered or sold, and but in any case not longer than such period as is required for the intended method of distribution, or such shorter period which will terminate when all Registrable Shares covered by such Registration Statement have been sold or withdrawn, (ii) Buyer shall use its reasonable best efforts to obtain cause a Registration Statement covering 217,391 Shares (the effectiveness of such registration "Second Shares") plus, to the extent not already sold or currently registered under a Registration Statement, the First Shares, to be filed with the Commission on or prior to September 30, 1997 (the "Second Date") and to become effective as soon as reasonably practicable as would permit or facilitate and to remain effective until the original issuance or subsequent resale and completion of the distribution of the Registrable Shares to be offered or sold, but in any case not longer than such period as is required for the intended method of distribution, or such shorter period which will terminate when all of AMNEX Shares covered by such Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders aboveRegistration Statement have been sold or withdrawn, and subject (iii) Buyer shall use its reasonable best efforts to delays incurred by any Holder’s failure cause a Registration Statement covering 217,391 Registrable Shares plus, to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default extent not already sold or currently registered under this Agreement. (b) At any time after the earlier of (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, or (ii) November 15, 2007Registration Statement, the Holders of a majority of the Warrant Registrable Securities mayFirst Shares and Second Shares, by notice to the Company, require that the Company file be filed with the Commission a registration statement under the Securities Act (currently expected on or prior to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities September 30, 1998 and any Note Registrable Securities then held by the Holders, and that the Company use its best efforts to obtain the effectiveness of such registration statement become effective as soon as reasonably practicable as would permit or facilitate and to remain effective until the subsequent resale and completion of the distribution of all of such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of any of the Registrable Securities Shares to be offered or sold, but in any case not longer than such period as is in effect at required for the time the notice is given to the Company as provided in this subsection 2.1(b)intended method of distribution, then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(b) or such shorter period which will terminate when all AMNEX Shares covered by maintaining the effectiveness of the registration statement already in effect for an additional nine monthssuch Registration Statement have been sold or withdrawn.

Required Registration. (a) Not later than August 15, 2004 (unless a majority in interest of Within 30 days after the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period)Last Potential Closing Date, the Company will shall use its best efforts to prepare and file with the Commission a registration statement under the Securities Act Act, on a Form S-2 or other appropriate form selected by the Company, covering the Shares and Warrant Stock and shall use its commercially reasonable efforts to cause such registration statement to become effective within 120 days following the Last Potential Closing Date (currently expected the "Effectiveness Deadline Date") and to remain effective until the earlier to occur of the date (i) the Restricted Stock covered thereby have been sold, or (ii) by which all Restricted Stock covered thereby may be sold under Rule 144, without volume limitations. (b) Following the effectiveness of a registration statement filed pursuant to this section, the Company may, at any time, suspend the effectiveness of such registration for up to 60 days, as appropriate (a "Suspension Period"), by giving notice to the Holders of shares of Restricted Stock, if the Company shall have determined that the Company may be required to disclose any material corporate development which disclosure may have a Material Adverse Effect on the Company. The Holders of shares of Restricted Stock acknowledge that the Company is required to file a post-effective amendment to its registration statements on Form S-2 upon the filing of each of its quarterly and annual reports with the Commission and therefore a Suspension Period will occur between the Company's filing of its quarterly or S-3) covering all annual report and the filing of the Registrable Securitiespost-effective amendment to the registration statement on Form S-2. Notwithstanding the foregoing, and no more than two Suspension Periods (i.e., 120 days) may occur in immediate succession. The Company shall use its best efforts to obtain limit the effectiveness duration and number of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securitiesany Suspension Periods. The Company’s failure to obtain effectiveness Holders of this registration statement by November 15shares of Restricted Stock agree that, 2004 (subject to an extension upon receipt of such date to correspond to any notice from the Company of a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this Agreement. (b) At any time after the earlier of (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, or (ii) November 15, 2007Suspension Period, the Holders of a majority shares of the Warrant Registrable Securities may, Restricted Stock shall forthwith discontinue disposition of shares of Restricted Stock covered by notice to the Company, require that the Company file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holders, and that the Company use its best efforts to obtain the effectiveness of such registration statement as soon as practicable as would permit or facilitate prospectus until the subsequent resale and distribution Holders of all shares of such Registrable Securities. Notwithstanding Restricted Stock (i) are advised in writing by the forgoingCompany that the use of the applicable prospectus may be resumed, (ii) have received copies of a supplemental or amended prospectus, if a registration statement covering the resale applicable, and distribution (iii) have received copies of any of the Registrable Securities is in effect at the time the notice is given additional or supplemental filings which are incorporated or deemed to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(b) be incorporated by maintaining the effectiveness of the registration statement already in effect for an additional nine monthsreference into such prospectus.

Required Registration. (a) Not later than August 15, 2004 Within forty five (unless a majority 45)days after the Last Closing (as defined in interest the Subscription Agreement) of the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period)Offering, the Company will prepare and shall file with the Commission a registration statement under the Securities Act (currently expected to be "Registration Statement") on Form S-2 S-3 (or S-3) other suitable form), covering all of the Registrable Securities, and use its best efforts to obtain the effectiveness of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all shares of such Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this AgreementSecurities then outstanding. (b) At any time after The Registration Statement shall be prepared as a "shelf" registration statement under Rule 415, and shall be maintained effective until the earlier of (i) the date upon which that the high closing bid prices of distribution described in the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service Registration Statement is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, completed or (ii) November 15the date that Common Stock covered by the Registration Statement is immediately transferable, 2007without volume limitations, the Holders of a majority of the Warrant Registrable Securities may, by notice pursuant to the Company, require that the Company file with the Commission a registration statement Rule 144 or another available exemption under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holders, and that the Act. The Company shall use its best efforts to obtain have the effectiveness Registration Statement declared effective within one hundred five (105) days of the Last Closing, and shall in any event have the Registration Statement declared effective within one hundred twenty (120) days of the Last Closing. (c) The Holders have the right to convert the Preferred Stock into Common Stock pursuant to the terms of the Subscription Agreement and the Certificate of Designation of Series A Preferred Stock of the Company and sell the Common Stock under Regulation S and applicable exemptions until such registration statement time that the Registration Statement becomes effective. (d) Notwithstanding anything to the contrary contained herein, any Holder (together with any assignee of its rights) (collectively referred to as soon as practicable as would permit "Excluded Holders") shall be entitled, by written notice to the Company delivered at any time prior to the filing of the Registration Statement contemplated by this Section 2, to elect to have the Registrable Securities issued or facilitate issuable to it excluded from the subsequent resale Registration Statement. In the event a Holder elects not to have its Registrable Securities included in the Registration Statement, the Holder shall, nonetheless, and distribution notwithstanding anything herein to the contrary, have the right (i) upon written notice to the Company from Holders of all of such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of any at least twenty-five (25%) of the Registrable Securities is not subject to another registration statement then on file with the Securities and Exchange Commission, at any time following the expiration of the seventy five (75) day period following the Last Closing, to cause the Company to effect a Demand Registration (as defined in effect at Section 3) registering the time the notice is given Registrable Securities held by such Holders on Form S-3 (or other suitable form, subject to the Company as provided in this subsection 2.1(bapproval of such Holders), then and (ii) at any time following the Company may satisfy expiration of the thirty (30) day period following the Due Date, to have its obligation to file shares included in any Piggyback Registration (as defined in Section 4), in each case in accordance with the provisions of Sections 3 and 4 hereof. In connection with a registration statement Demand Registration initiated by the Excluded Holders under this Subsection 2.1(b) by maintaining 2(d), the effectiveness Company shall pay all costs and expenses of Demand Registration in accordance with Section 9. The Excluded Holders' rights to include their Registrable Securities in a Piggyback Registration or a Demand Registration shall be limited to those instances in which their Registrable Securities are not otherwise immediately transferable pursuant to Rule 144 or another available exemption under the registration statement already in effect for an additional nine monthsAct.

Required Registration. (a) Not (i) The Company shall prepare and, as soon as practicable, but in no event later than August 15the applicable Filing Deadline, 2004 (unless a majority in interest of the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period), the Company will prepare and file with the Commission a Registration Statement covering the resale of all of the First Closing Registrable Securities (the “Initial Registration Statement”); provided that the Initial Registration Statement shall register for resale at least the number of shares of Common Stock equal to 100% of the sum of the maximum number of shares of Common Stock issuable upon conversion of the First Notes at the initial conversion price thereof (the “Initial Required Registration Amount”); provided that should any event following the date hereof result in the maximum number of shares of Common Stock issuable upon conversion of the First Notes being increased because of the application of any provisions thereof, the Company shall promptly file an amendment to the Initial Registration Statement providing for registration statement of such additional shares. The Registration Statement filed hereunder shall be on Form S-1 in connection with the First Closing. Subject to the terms of this Agreement, the Company shall cause each Registration Statement required to be filed under this Agreement to be declared effective under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of as promptly as possible after the Registrable Securitiesfiling thereof, but in any event no later than the applicable Effectiveness Deadline, and use its best efforts to obtain shall keep such Registration Statements continuously effective under the effectiveness of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this Agreement. (b) At any time after Securities Act until the earlier of of: (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported that all Registrable Securities covered by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading daysRegistration Statement no longer constitute Registrable Securities, or (ii) November 15, 2007, the Holders two year anniversary of the date of this Agreement (the “First Closing Effectiveness Period” or the “Effectiveness Period”). The Company shall telephonically request effectiveness of a majority Registration Statement as of the Warrant Registrable Securities may, by notice to the Company, require that the Company file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holders, and that the Company use its best efforts to obtain the effectiveness of such registration statement as soon as practicable as would permit or facilitate the subsequent resale and distribution of all of such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of any of the Registrable Securities is in effect at the time the notice is given to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(b) by maintaining the effectiveness of the registration statement already in effect for an additional nine months.5:00 p.m. Eastern

Required Registration. The Company shall file with the Commission and any applicable state securities authorities within thirty (a30) Not days following the Closing Date (the "Filing Date"), and use its reasonable commercial efforts to cause to be declared effective within one hundred twenty (120) days following the Closing Date (the "Effective Date"), a Registration Statement in order to register the Registrable Securities for resale and distribution under the Securities Act. The Registration Statement must be declared effective by the Commission not later than August 15the Effective Date. If the Registration Statement is not filed on or before the Filing Date, 2004 the Company shall issue to the Holders, on a pro rata basis (unless a majority in interest based upon the relative amount of Registrable Securities then held by each such Holder), additional shares of its Common Stock equal to 0.05% of the shares originally issued on the Closing Date for each day after the Filing Date that the Registration Statement is not filed. If the Registration Statement is not declared effective on or before the Effective Date, the Company shall issue to the Holders request on a delay pro rata basis (based upon the relative amount of Registrable Securities then held by each such Holder) additional shares of its Common Stock equal to 0.05% of the shares originally issued on the Closing Date for each day after the Effective Date, that the Registration Statement is not declared effective. The Company shall maintain the effectiveness of the Registration Statement until such time as all remaining Registrable Securities held by the Holders may be sold under Rule 144(k), without restriction under Rule 144(k) (the "Effectiveness Period"). In the event that the Registration Statement ceases to be effective for up to more than forty-five (45) days, whether or not consecutive, in any three hundred sixty-five (365) day period during the Effectiveness Period (an additional 90 days in writing and in such case, upon expiration of this requested delaying period"Effectiveness Default"), the Company will prepare and file with shall issue to the Commission a registration statement under Holders on pro rata basis (based upon the relative amount of Registrable Securities Act then held by such Holder) additional shares of its Common Stock equal to 0.05% of the Shares originally issued on the Closing Date from the forty-sixth (currently expected 46th) day of the applicable three hundred sixty-five (365) day period that such Registration Statement ceases to be on Form S-2 or S-3) covering all of the Registrable Securities, and use its best efforts to obtain the effectiveness of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 of the Note and will also constitute an event of default under this Agreement. (b) At any time after effective until the earlier of (i) the date upon which time the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, Registration Statement again becomes effective or (ii) November 15, 2007, the Holders of a majority time the Effectiveness Period expires. The Company's obligation to issue shares of the Warrant Registrable Securities may, by notice Company's Common Stock pursuant to the Company, require that the Company file with the Commission this Section 3.1 shall accrue and be discharged on a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holders, and that the Company use its best efforts to obtain the effectiveness of such registration statement as soon as practicable as would permit or facilitate the subsequent resale and distribution of all of such Registrable Securitiesmonthly basis. Notwithstanding the forgoingforegoing, if the Company shall not issue, as a registration statement covering the resale and distribution conveyance of any this Section 3.1, more than eighteen percent (18%) of the Registrable Securities is in effect shares of Common Stock issued at the time the notice is given to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(b) by maintaining the effectiveness of the registration statement already in effect for an additional nine monthsClosing.

Required Registration. (a) Not The Company shall, no later than August 15, 2004 sixty (unless a majority 60) days after the Last Closing (as defined in interest of the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying periodSubscription Agreements), the Company will prepare and file with the Commission a registration statement under (the "Registration Statement") on Form S-l (or other suitable form, at the Company's discretion but subject to the reasonable approval of Subscribers) with the Securities Act and Exchange Commission (currently expected to be on Form S-2 or S-3the "SEC"). The Company shall, within ten (10) covering all days of the Registrable Securitiesfiling of the Registration Statement, send a copy of the Registration Statement to Subscribers. Such Registration Statement shall initially cover the resale of a number of shares of Common Stock issuable upon conversion of the Preferred Stock and exercise of the Warrants equal to at least one million five hundred thousand ( 1,500,000) shares of Common Stock, allocated and reserved pro rata among the Subscribers and Swartz or designees of Sw▇▇▇▇, and shall cover, ▇▇ ▇▇e extent allowable by applicable law, such additional indeterminate number of shares of Common Stock as are required to effect the full conversion of the Preferred Stock and the full exercise of the Warrants, due to fluctuations in the price of the Company's Common Stock. The Company shall use its best efforts to obtain have the effectiveness of such registration Registration Statement declared effective as soon as practicable possible. In the event that the Company determines or is notified by a Holder that the Registration Statement does not cover a sufficient number of shares of Common Stock to effect conversion of all Preferred Stock then eligible for conversion, including Preferred Stock issuable upon exercise of warrants to purchase Series A Preferred Stock of the Company, and exercise of the outstanding Warrants, the Company shall, within five (5) business days, amend the Registration Statement or file a new registration statement to add such number of additional shares as would permit be necessary to effect all such conversions of the Preferred Stock and exercises of the Warrants. If the Registration Statement is not declared effective within five (5) calendar months after the Last Closing or facilitate if any new or amended registration statement required to be filed hereunder is not declared effective within two (2) calendar months of the original issuance date it is required to be filed, the Company shall pay Subscribers an amount equal to two percent (2%) per month of the aggregate amount of Preferred Stock sold to Subscriber in the Offering, compounded monthly and accruing daily until the Registration Statement is declared effective (the "Late Registration Payment"), payable, at each Subscriber's option, in either cash or subsequent resale and distribution Common Stock. If Subscriber elects to be paid in cash, such Late Registration Payment shall be paid to such Subscriber within five (5) business days following the end of all the month in which such Late Registration Payment was accrued. If Subscriber elects to be paid in Common Stock, such number of such shares shall be determined as follows: Upon conversion of each share of Preferred Stock, the Company shall issue to Subscriber the number of shares of Common Stock determined as set forth in Section 5(a) of the Certificate of Designation plus an additional number of shares of Common Stock (the "Additional Shares") determined as set forth below: Additional Shares = Late Registration Payment ------------------------- Conversion Price where, "Conversion Price" has the definition ascribed to it in the Certificate of Designation. Such Additional Shares shall also be deemed "Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” " as defined in Section 4 of the Note and will also constitute an event of default under this Agreementherein. (b) At any time after the earlier of (i) the date upon which the high closing bid prices of the Company’s Common Stock on the NASDAQ System (or if not then traded on the NASDAQ SystemThe Registration Statement shall be prepared as a "shelf" registration statement under Rule 415, then on the OTC Bulletin Board as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinued, such other reporting service acceptable to a majority in interest of the Holders) exceeds 150% of the exercise price of the Warrant for 20 consecutive trading days, or (ii) November 15, 2007, and shall be maintained effective until the Holders of a majority of the Warrant Registrable Securities may, by notice have completed a distribution of such Securities. (c) The Company represents that it is presently eligible to effect the Company, require that the Company file with the Commission a registration statement under the Securities Act (currently expected to be contemplated hereby on Form S-2 or S-3) covering all of the Warrant Registrable Securities S- 1 and any Note Registrable Securities then held by the Holders, and that the Company will use its best efforts to obtain the effectiveness of continue to take such registration statement actions as soon as practicable as would permit or facilitate the subsequent resale and distribution of all of are necessary to maintain such Registrable Securities. Notwithstanding the forgoing, if a registration statement covering the resale and distribution of any of the Registrable Securities is in effect at the time the notice is given to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(b) by maintaining the effectiveness of the registration statement already in effect for an additional nine monthseligibility.

Required Registration. (a) Not The Company shall, no later than August 15, 2004 sixty (unless a majority 60) days after the Last Closing (as defined in interest of the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying periodSubscription Agreements), the Company will prepare and file with the Commission a registration statement under (the "Registration Statement") on Form S-l (or other suitable form, at the Company's discretion but subject to the reasonable approval of Subscribers) with the Securities Act and Exchange Commission (currently expected to be on Form S-2 or S-3the "SEC"). The Company shall, within ten (10) covering all days of the Registrable Securities, and use its best efforts to obtain the effectiveness of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securities. The Company’s failure to obtain effectiveness of this registration statement by November 15, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first “Failure Term” as defined in Section 4 Registration Statement, send a copy of the Note and will also constitute an event Registration Statement to Subscribers. Such Registration Statement shall initially cover the resale of default under this Agreement. (b) At any time after the earlier a number of (i) the date shares of Common Stock issuable upon which the high closing bid prices conversion of the Company’s Preferred Stock and exercise of the Warrants equal to at least one million five hundred thousand ( 1,500,000) shares of Common Stock on Stock, allocated and reserved pro rata among the NASDAQ System (Subscribers and ▇▇▇▇▇▇ or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by designees of ▇▇▇▇▇▇▇▇▇.▇▇▇, or if this service is discontinuedand shall cover, to the extent allowable by applicable law, such other reporting service acceptable additional indeterminate number of shares of Common Stock as are required to a majority in interest effect the full conversion of the Holders) exceeds 150% Preferred Stock and the full exercise of the exercise Warrants, due to fluctuations in the price of the Warrant for 20 consecutive trading days, or (ii) November 15, 2007, the Holders of a majority of the Warrant Registrable Securities may, by notice to the Company, require that the 's Common Stock. The Company file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or S-3) covering all of the Warrant Registrable Securities and any Note Registrable Securities then held by the Holders, and that the Company shall use its best efforts to obtain have the effectiveness of such registration statement Registration Statement declared effective as soon as practicable possible. In the event that the Company determines or is notified by a Holder that the Registration Statement does not cover a sufficient number of shares of Common Stock to effect conversion of all Preferred Stock then eligible for conversion, including Preferred Stock issuable upon exercise of warrants to purchase Series A Preferred Stock of the Company, and exercise of the outstanding Warrants, the Company shall, within five (5) business days, amend the Registration Statement or file a new registration statement to add such number of additional shares as would permit be necessary to effect all such conversions of the Preferred Stock and exercises of the Warrants. If the Registration Statement is not declared effective within five (5) calendar months after the Last Closing or facilitate if any new or amended registration statement required to be filed hereunder is not declared effective within two (2) calendar months of the subsequent resale date it is required to be filed, the Company shall pay Subscribers an amount equal to two percent (2%) per month of the aggregate amount of Preferred Stock sold to Subscriber in the Offering, compounded monthly and distribution accruing daily until the Registration Statement is declared effective (the "Late Registration Payment"), payable, at each Subscriber's option, in either cash or Common Stock. If Subscriber elects to be paid in cash, such Late Registration Payment shall be paid to such Subscriber within five (5) business days following the end of all the month in which such Late Registration Payment was accrued. If Subscriber elects to be paid in Common Stock, such number of such shares shall be determined as follows: Upon conversion of each share of Preferred Stock, the Company shall issue to Subscriber the number of shares of Common Stock determined as set forth in Section 5(a) of the Certificate of Designation plus an additional number of shares of Common Stock (the "Additional Shares") determined as set forth below: Additional Shares = Late Registration Payment ------------------------- Conversion Price where, "Conversion Price" has the definition ascribed to it in the Certificate of Designation. Such Additional Shares shall also be deemed "Registrable Securities. Notwithstanding the forgoing, if " as defined herein. (b) The Registration Statement shall be prepared as a "shelf" registration statement covering under Rule 415, and shall be maintained effective until the resale and distribution of any Holders of the Registrable Securities have completed a distribution of such Securities. (c) The Company represents that it is in presently eligible to effect at the time the notice is given to the Company as provided in this subsection 2.1(b), then the Company may satisfy its obligation to file a registration statement under this Subsection 2.1(b) by maintaining the effectiveness of the registration statement already in effect for an additional nine monthscontemplated hereby on Form S- 1 and will use its best efforts to continue to take such actions as are necessary to maintain such eligibility.