REGISTRATION
      RIGHTS AGREEMENT

     

    This
      Registration Rights Agreement (this "Agreement") is made and entered into as
      of
      July 19, 2006, by and between FRIENDLYWAY CORPORATION, a Nevada corporation
      (the
      "Company"), SLOAN SECURITIES CORP. (“Placement Agent”) and certain accredited
      investors purchasing the securities offered in private placement by the Company.
      Such investors are each referred to herein as a “Purchaser” and collectively as
      the "Purchasers".

     

    WHEREAS,
      this Agreement is made pursuant to the Securities Purchase Agreement, dated
      as
      of the date hereof, by and between the Purchasers and the Company (as amended,
      modified or supplemented from time to time, the "Securities Purchase
      Agreement"), and pursuant to the Notes and the Warrants referred to
      therein.

     

    WHEREAS,
      to induce the Purchasers to execute and deliver the Securities Purchase
      Agreement, the Company has agreed to provide certain registration rights with
      respect to the shares of Common Stock issuable upon conversion of the Notes
      and
      exercise of the Warrants and the Company has also agreed to provide certain
      registration rights with respect to the shares of Common Stock issuable upon
      exercise of the warrants (“Placement Agent Warrants”), issued to the Placement
      Agent and its permitted transferees (the “Placement Agent Warrant Shares”), both
      on the terms and conditions provided herein. 

     

    NOW,
      THEREFORE, for good and valuable consideration, the parties hereby agree as
      follows:

     

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

     

    "Commission"
      means the Securities and Exchange Commission.

     

    "Common
      Stock" means shares of the Company's common stock, par value $0.001 per
      share.

     

    "Effectiveness
      Date" means (i) with respect to the initial Registration Statement required
      to
      be filed hereunder, a date no later than one-hundred-eighty (180) days following
      the last closing held pursuant to the Securities Purchase Agreement and (ii)
      with respect to each additional Registration Statement required to be filed
      hereunder, a date no later than forty (40) days following the applicable Filing
      Date.

     

    "Effectiveness
      Period" shall have the meaning set forth in Section 2(a).

     

    "Exchange
      Act" means the Securities Exchange Act of 1934, as amended, and any successor
      statute.

     

    
      
        
        

      

      
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    "Filing
      Date" means, (i) with respect to the initial Registration Statement required
      to
      be filed hereunder, a date no later than sixty (60) days following the date
      of
      the last closing held pursuant to the Securities Purchase Agreement, and (ii)
      with respect to shares of Common Stock issuable to the Holders as a result
      of
      adjustments to the Fixed Conversion Price set forth in any Notes or the Warrant
      Price set forth in any Warrants, thirty (30) days after the occurrence of such
      event or the date of the adjustment of the Conversion Price.

     

    "Holder"
      or "Holders" means a Purchaser or the Purchasers, as the case may be or any
      of
      their affiliates or transferees to the extent any of them hold Registrable
      Securities.

     

    "Indemnified
      Party" shall have the meaning set forth in Section 5(c).

     

    "Indemnifying
      Party" shall have the meaning set forth in Section 5(c).

     

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

     

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

     

    "Registrable
      Securities" means the shares of Common Stock issued upon (i) the conversion
      of
      the Notes or payable thereunder in lieu of a cash payment of principal or
      accrued interest,
      (ii) the
      exercise of the Warrants, (iii) the exercise of the Placement Agent Warrants
      and
      (iv) the issuance of Penalty Shares under the Securities Purchase Agreement,
      if
      any.

     

    "Registration
      Statement" means each registration statement required to be filed hereunder,
      including the Prospectus, amendments and supplements to such registration
      statement or Prospectus, including pre- and post-effective amendments, all
      exhibits thereto, and all material incorporated by reference or deemed to be
      incorporated by reference in such registration statement.

     

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

     

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

     

    
      
        
        

      

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

     

    "Securities
      Act" means the Securities Act of 1933, as amended, and any successor
      statute.

     

    "Securities
      Purchase Agreement" shall have the meaning provided above.

     

    "Trading
      Market" means any of the OTCBB, NASDAQ SmallCap Market, the Nasdaq National
      Market, the American Stock Exchange or the New York Stock Exchange.

     

    "Warrants"
      means, collectively, the Common Stock purchase warrants issued pursuant to
      the
      Securities Purchase Agreement.

     

    2.
       Registration.

     

    (a)
       On
      or
      prior to the applicable Filing Date the Company shall prepare and file with
      the
      Commission a Registration Statement covering the Registrable Securities for
      an
      offering to be made on a continuous basis pursuant to Rule 415. The Registration
      Statement shall be on Form SB-2 (except if the Company is not then eligible
      to
      register for resale the Registrable Securities on Form SB-2, in which case
      such
      registration shall be on another appropriate form in accordance herewith).
      The
      Company shall cause the Registration Statement to become effective and remain
      effective as provided herein. The Company shall use its reasonable commercial
      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 no later than the Effectiveness Date. The Company shall use its reasonable
      commercial efforts to keep the Registration Statement continuously effective
      under the Securities Act until the date which is the earlier date of when (i)
      all Registrable Securities have been sold or (ii) all Registrable Securities
      may
      be sold immediately without registration under the Securities Act and without
      volume restrictions pursuant to Rule 144(k), as determined by the counsel to
      the
      Company pursuant to a written opinion letter to such effect, addressed and
      acceptable to the Company's transfer agent and the affected Holders (the
      "Effectiveness Period").

     

    (b) 
      If: (i)
      the Registration Statement is not filed on or prior to the Filing Date; (ii)
      the
      Company fails to respond in writing to comments received from the Commission
      in
      connection with the Registration Statement within 15 business days of receipt
      thereof, (iii) the Registration Statement is not declared effective by the
      Commission by the Effectiveness Date; (iv) after the Registration Statement
      is
      filed with and declared effective by the Commission, the Registration Statement
      ceases to be effective (by suspension or otherwise) as to any Registrable
      Securities to which it is required to relate at any time prior to the expiration
      of the Effectiveness Period (without being succeeded immediately by an
      additional registration statement filed and declared effective) for a period
      of
      time which shall exceed 30 days in the aggregate per year or more than 20
      consecutive calendar days (defined as a period of 365 days commencing on the
      date the Registration Statement is declared effective); or (v) the Common Stock
      is not listed or quoted, or is suspended from trading on any Trading Market
      for
      a period of three (3) consecutive Trading Days (provided the Company shall
      not
      have been able to cure such trading suspension within 30 days of the notice
      thereof or list the Common Stock on another Trading Market); (any such failure
      or breach being referred to as an "Event," and for purposes of clause (i) or
      (ii) the date on which such Event occurs, or for purposes of clause (iv) the
      date on which such 30 day or 20 consecutive day period (as the case may be)
      is
      exceeded, or for purposes of clause (v) the date on which such three (3) Trading
      Day period is exceeded, being referred to as "Event Date"), then until the
      applicable Event is cured, the Company shall pay to each Holder an amount in
      cash, as liquidated damages and not as a penalty, equal to 2.0% for each thirty
      (30) day period (prorated for partial periods) on a daily basis of the sum
      of
      the original principal amount of the Note held by such Holder. While such Event
      continues, such liquidated damages shall be paid not less often than each thirty
      (30) days. Any unpaid liquidated damages as of the date when an Event has been
      cured by the Company shall be paid within three (3) days following the date
      on
      which such Event has been cured by the Company.

     

    
      
        
        

      

      
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    (c)
       Within
      three business days of the Effectiveness Date, the Company shall cause its
      counsel to issue a blanket opinion in the form attached hereto as Exhibit A,
      to
      the transfer agent stating that the shares are subject to an effective
      registration statement and can be reissued free of restrictive legend upon
      notice of a sale by any of the Purchasers and confirmation by such Purchaser
      that it has complied with the prospectus delivery requirements, provided that
      the Company has not advised the transfer agent orally or in writing that the
      opinion has been withdrawn. Copies of the blanket opinion required by this
      Section 2(c) shall be delivered to the Purchasers within the time frame set
      forth above.

     

    3.
       Registration
      Procedures.
      If and
      whenever the Company is required by the provisions hereof to effect the
      registration of any Registrable Securities under the Securities Act, the Company
      will, as expeditiously as possible:

     

    (a)
       prepare
      and file with the Commission the Registration Statement with respect to such
      Registrable Securities, respond as promptly as possible to any comments received
      from the Commission, and use its best efforts to cause the Registration
      Statement to become and remain effective for the Effectiveness Period with
      respect thereto, and promptly provide to the Purchasers copies of all filings
      and Commission letters of comment relating thereto;

     

    (b)
       prepare
      and file with the Commission such amendments and supplements to the Registration
      Statement and the Prospectus used in connection therewith as may be necessary
      to
      comply with the provisions of the Securities Act with respect to the disposition
      of all Registrable Securities covered by the Registration Statement and to
      keep
      such Registration Statement effective until the expiration of the Effectiveness
      Period;

     

    
      
        
        

      

      
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    (c) 
      furnish
      to the Purchasers such number of copies of the Registration Statement and the
      Prospectus included therein (including each preliminary Prospectus) as the
      Purchasers reasonably may request to facilitate the public sale or disposition
      of the Registrable Securities covered by the Registration
      Statement;

     

    (d)
       use
      its
      commercially reasonable efforts to register or qualify the Purchasers'
      Registrable Securities covered by the Registration Statement under the
      securities or "blue sky" laws of such jurisdictions within the United States
      as
      the Purchasers may reasonably request, provided, however, that the Company
      shall
      not for any such purpose be required to qualify generally to transact business
      as a foreign corporation in any jurisdiction where it is not so qualified or
      to
      consent to general service of process in any such jurisdiction;

     

    (e)
       list
      the
      Registrable Securities covered by the Registration Statement with any securities
      exchange on which the Common Stock of the Company is then listed;

     

    (f)
       immediately
      notify the Purchasers at any time when a Prospectus relating thereto is required
      to be delivered under the Securities Act, of the happening of any event of
      which
      the Company has knowledge as a result of which the Prospectus contained in
      such
      Registration Statement, as then in effect, includes an untrue statement of
      a
      material fact or omits to state a material fact required to be stated therein
      or
      necessary to make the statements therein not misleading in light of the
      circumstances then existing; and

     

    (g)
       make
      available for inspection by the Purchasers and any attorney, accountant or
      other
      agent retained by the Purchasers, all publicly available, non-confidential
      financial and other records, pertinent corporate documents and properties of
      the
      Company, and cause the Company's officers, directors and employees to supply
      all
      publicly available, non-confidential information reasonably requested by the
      attorney, accountant or agent of the Purchasers.

     

    (h) promptly
      notify each seller of Registrable Securities of the issuance by the Commission
      of any stop order suspending the effectiveness of the Registration Statement
      or
      the initiation of any proceedings for that purpose and make every reasonable
      effort to prevent the issuance of any stop order and, if any stop order is
      issued, to obtain the lifting thereof at the earliest possible time;


     

    (i) if
      the
      offering is an underwritten offering, enter into a written agreement with the
      managing underwriter selected in the manner herein provided in such form and
      containing such provisions as are usual and customary in the securities business
      for such an arrangement between such underwriter and companies of the Company’s
      size and investment stature, including, without limitation, customary
      indemnification and contribution provisions; 

     

    (j) if
      the
      offering is an underwritten offering, at the request of any seller of
      Registrable Securities, use its best efforts to furnish to such seller on the
      date that Registrable Securities are delivered to the underwriters for sale
      pursuant to such registration: (i) a copy of an opinion dated such date of
      counsel representing the Company for the purposes of such registration,
      addressed to the underwriters, stating that such Registration Statement has
      become effective under the Securities Act and that (A) to the best knowledge
      of
      such counsel, no stop order suspending the effectiveness thereof has been issued
      and no proceedings for that purpose have been instituted or are pending or
      contemplated under the Securities Act, (B) the Registration Statement, the
      related prospectus and each amendment or supplement thereof comply as to form
      in
      all material respects with the requirements of the Securities Act (except that
      such counsel need not express any opinion as to financial statements or other
      financial or statistical information contained therein) and (C) to such other
      effects as reasonably may be requested by counsel for the underwriters; and
      (ii)
      a copy of a letter dated such date from the independent public accountants
      retained by the Company, addressed to the underwriters, stating that they are
      independent public accountants within the meaning of the Securities Act and
      that, in the opinion of such accountants, the financial statements of the
      Company included in the Registration Statement or the prospectus, or any
      amendment or supplement thereof, comply as to form in all material respects
      with
      the applicable accounting requirements of the Securities Act, and such letter
      shall additionally cover such other financial matters (including information
      as
      to the period ending no more than five business days prior to the date of such
      letter) with respect to such registration as such underwriters reasonably may
      request; 

     

    
      
        
        

      

      
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    (k) take
      all
      actions reasonably necessary to facilitate the timely preparation and delivery
      of certificates (not bearing any legend restricting the sale or transfer of
      such
      securities) representing the Registrable Securities to be sold pursuant to
      the
      Registration Statement and to enable such certificates to be in such
      denominations and registered in such names as the Investors or any underwriters
      may reasonably request; and 

     

    (l) take
      all
      other reasonable actions necessary to expedite and facilitate the registration
      of the Registrable Securities pursuant to the Registration
      Statement.

     

    4.
       Registration
      Expenses.
      All
      expenses relating to the Company's compliance with Sections 2 and 3 hereof,
      including, without limitation, all registration and filing fees, printing
      expenses, fees and disbursements of counsel and independent public accountants
      for the Company, fees and expenses (including counsel fees) incurred in
      connection with complying with state securities or "blue sky" laws, fees of
      the
      NASD, transfer taxes, fees of transfer agents and registrars, fees of, and
      disbursements incurred by, one counsel for the Holders, are called "Registration
      Expenses". All selling commissions applicable to the sale of Registrable
      Securities, including any fees and disbursements of any special counsel to
      the
      Holders beyond those included in Registration Expenses, are called "Selling
      Expenses." The Company shall only be responsible for all Registration
      Expenses.

     

    5.
       Indemnification.

     

    (a)
       In
      the
      event of a registration of any Registrable Securities under the Securities
      Act
      pursuant to this Agreement, the Company will indemnify and hold harmless each
      of
      the Purchasers, and their respective officers, directors and each other person,
      if any, who controls any of the Purchasers within the meaning of the Securities
      Act, against any losses, claims, damages or liabilities, joint or several,
      to
      which any of the Purchasers, or such persons may become subject under the
      Securities Act or otherwise, insofar as such losses, claims, damages or
      liabilities (or actions in respect thereof) arise out of or are based upon
      any
      untrue statement or alleged untrue statement of any material fact contained
      in
      any Registration Statement under which such Registrable Securities were
      registered under the Securities Act pursuant to this Agreement, any preliminary
      Prospectus or final Prospectus contained therein, or any amendment or supplement
      thereof, or arise out of or are based upon the omission or alleged omission
      to
      state therein a material fact required to be stated therein or necessary to
      make
      the statements therein not misleading, and will reimburse the Purchasers, and
      each such person for any reasonable legal or other expenses incurred by them
      in
      connection with investigating or defending any such loss, claim, damage,
      liability or action; provided, however, that the Company will not be liable
      in
      any such case if and to the extent that any such loss, claim, damage or
      liability arises out of or is based upon an untrue statement or alleged untrue
      statement or omission or alleged omission so made in conformity with information
      furnished by or on behalf of any of the Purchasers or any such person in writing
      specifically for use in any such document.

     

    
      
        
        

      

      
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    (b)
       In
      the
      event of a registration of the Registrable Securities under the Securities
      Act
      pursuant to this Agreement, each of the Purchasers will indemnify and hold
      harmless the Company, and its officers, directors and each other person, if
      any,
      who controls the Company within the meaning of the Securities Act, against
      all
      losses, claims, damages or liabilities, joint or several, to which the Company
      or such persons may become subject under the Securities Act or otherwise,
      insofar as such losses, claims, damages or liabilities (or actions in respect
      thereof) arise out of or are based upon any untrue statement or alleged untrue
      statement of any material fact which was furnished in writing by such Purchaser
      to the Company expressly for use in (and such information is contained in)
      the
      Registration Statement under which such Registrable Securities were registered
      under the Securities Act pursuant to this Agreement, any preliminary Prospectus
      or final Prospectus contained therein, or any amendment or supplement thereof,
      or arise out of or are based upon the omission or alleged omission to state
      therein a material fact required to be stated therein or necessary to make
      the
      statements therein not misleading, and will reimburse the Company and each
      such
      person for any reasonable legal or other expenses incurred by them in connection
      with investigating or defending any such loss, claim, damage, liability or
      action, provided, however, that such Purchaser will be liable in any such case
      if and only to the extent that any such loss, claim, damage or liability arises
      out of or is based upon an untrue statement or alleged untrue statement or
      omission or alleged omission so made in conformity with information furnished
      in
      writing to the Company by or on behalf of such Purchaser specifically for use
      in
      any such document. Notwithstanding the provisions of this paragraph, no
      Purchaser shall be required to indemnify any person or entity in excess of
      the
      amount of the aggregate net proceeds received by such Purchaser in respect
      of
      Registrable Securities in connection with any such registration under the
      Securities Act.

     

    (c)
       Promptly
      after receipt by a party entitled to claim indemnification hereunder (an
      "Indemnified Party") of notice of the commencement of any action, such
      Indemnified Party shall, if a claim for indemnification in respect thereof
      is to
      be made against a party hereto obligated to indemnify such Indemnified Party
      (an
      "Indemnifying Party"), notify the Indemnifying Party in writing thereof, but
      the
      omission so to notify the Indemnifying Party shall not relieve it from any
      liability which it may have to such Indemnified Party other than under this
      Section 5(c) and shall only relieve it from any liability which it may have
      to
      such Indemnified Party under this Section 5(c) if and to the extent the
      Indemnifying Party is prejudiced by such omission. In case any such action
      shall
      be brought against any Indemnified Party and it shall notify the Indemnifying
      Party of the commencement thereof, the Indemnifying Party shall be entitled
      to
      participate in and, to the extent it shall wish, to assume and undertake the
      defense thereof with counsel satisfactory to such Indemnified Party, and, after
      notice from the Indemnifying Party to such Indemnified Party of its election
      so
      to assume and undertake the defense thereof, the Indemnifying Party shall not
      be
      liable to such Indemnified Party under this Section 5(c) for any legal expenses
      subsequently incurred by such Indemnified Party in connection with the defense
      thereof; if the Indemnified Party retains its own counsel, then the Indemnified
      Party shall pay all fees, costs and expenses of such counsel, provided, however,
      that, if the defendants in any such action include both the Indemnified Party
      and the Indemnifying Party and the Indemnified Party shall have reasonably
      concluded that there may be reasonable defenses available to it which are
      different from or additional to those available to the Indemnifying Party or
      if
      the interests of the Indemnified Party reasonably may be deemed to conflict
      with
      the interests of the Indemnifying Party, the Indemnified Party shall have the
      right to select one separate counsel and to assume such legal defenses and
      otherwise to participate in the defense of such action, with the reasonable
      expenses and fees of such separate counsel and other expenses related to such
      participation to be reimbursed by the Indemnifying Party as
      incurred.

     

    
      
        
        

      

      
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    (d)
       In
      order
      to provide for just and equitable contribution in the event of joint liability
      under the Securities Act in any case in which either (i) the Purchasers, or
      any
      officer, director or controlling person of the Purchasers, makes a claim for
      indemnification pursuant to this Section 5 but it is judicially determined
      (by
      the entry of a final judgment or decree by a court of competent jurisdiction
      and
      the expiration of time to appeal or the denial of the last right of appeal)
      that
      such indemnification may not be enforced in such case notwithstanding the fact
      that this Section 5 provides for indemnification in such case, or (ii)
      contribution under the Securities Act may be required on the part of the
      Purchasers or such officer, director or controlling person of the Purchasers
      in
      circumstances for which indemnification is provided under this Section 5; then,
      and in each such case, the Company and the Purchasers will contribute to the
      aggregate losses, claims, damages or liabilities to which they may be subject
      (after contribution from others) in such proportion so that each Purchaser
      is
      responsible only for the portion represented by the percentage that the public
      offering price of its securities offered by the Registration Statement bears
      to
      the public offering price of all securities offered by such Registration
      Statement, provided, however, that, in any such case, (A) no Purchaser will
      be
      required to contribute any amount in excess of the public offering price of
      all
      such securities offered by it pursuant to such Registration Statement; and
      (B)
      no person or entity guilty of fraudulent misrepresentation (within the meaning
      of Section 10(f) of the Act) will be entitled to contribution from any person
      or
      entity who was not guilty of such fraudulent misrepresentation.

    


    
      
        
        

      

      
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    6. Changes
      in Capital Stock.  If,
      and
      as often as, there is any change in the capital stock of the Company by way
      of a
      stock split, stock dividend, combination or reclassification, or through a
      merger, consolidation, reorganization or recapitalization, or by any other
      means, appropriate adjustment shall be made in the provisions hereof so that
      the
      rights and privileges granted hereby shall continue as so changed.

    


    7.
       Representations
      and Warranties. The
      Company represents and warrants to the Purchasers as follows: 

    


    (a) The
      execution, delivery and performance of this Agreement by the Company have been
      duly authorized by all requisite corporate action and will not violate any
      provision of law, any order of any court or other agency of government, the
      Charter or By-laws of the Company or any provision of any indenture, agreement
      or other instrument to which it or any or its properties or assets is bound,
      conflict with, result in a breach of or constitute (with due notice or lapse
      of
      time or both) a default under any such indenture, agreement or other instrument
      or result in the creation or imposition of any lien, charge or encumbrance
      of
      any nature whatsoever upon any of the properties or assets of the Company or
      its
      subsidiaries. 

     

    (b) This
      Agreement has been duly executed and delivered by the Company and constitutes
      the legal, valid and binding obligation of the Company, enforceable in
      accordance with its terms, subject to any applicable bankruptcy, insolvency
      or
      other laws affecting the rights of creditors generally and to general equitable
      principles and the availability of specific performance. 

     

    (c)
       The
      Common Stock of the Company is registered pursuant to Section 12(b) or 12(g)
      of
      the Exchange Act and, except with respect to certain matters which the Company
      has disclosed to the Purchasers on Schedule 4.21 to the Securities Purchase
      Agreement, the Company has timely filed all proxy statements, reports,
      schedules, forms, statements and other documents required to be filed by it
      under the Exchange Act. The Company has filed (i) its Annual Report on Form
      10-KSB for its fiscal year ended October 31, 2005, (ii) its Quarterly Report
      on
      Form 10-QSB for the fiscal quarter ended January 31, 2006 and a Current Report
      on Form 8-K, filed with the Commission on May 3, 2006 (collectively, the "SEC
      Reports"). Each SEC Report was, at the time of its filing, in substantial
      compliance with the requirements of its respective form and none of the SEC
      Reports, nor the financial statements (and the notes thereto) included in the
      SEC Reports, as of their respective filing dates, contained any untrue statement
      of a material fact or omitted to state a material fact required to be stated
      therein or necessary to make the statements therein, in light of the
      circumstances under which they were made, not misleading. The financial
      statements of the Company included in the SEC Reports comply as to form in
      all
      material respects with applicable accounting requirements and the published
      rules and regulations of the Commission or other applicable rules and
      regulations with respect thereto. Such financial statements have been prepared
      in accordance with generally accepted accounting principles ("GAAP") applied
      on
      a consistent basis during the periods involved (except (i) as may be otherwise
      indicated in such financial statements or the notes thereto or (ii) in the
      case
      of unaudited interim statements, to the extent they may not include footnotes
      or
      may be condensed) and fairly present in all material respects the financial
      condition, the results of operations and the cash flows of the Company and
      its
      subsidiaries, on a consolidated basis, as of, and for, the periods presented
      in
      each such SEC Report.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    (d)
       The
      Common Stock is listed for trading on the OTCBB and satisfies all requirements
      for the continuation of such listing. The Company has not received any notice
      that its Common Stock will be delisted from the OTCBB (except for prior notices
      which have been fully remedied) or that the Common Stock does not meet all
      requirements for the continuation of such listing.

     

    (e)
       Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offering of the Securities pursuant to the Securities Purchase Agreement
      to
      be integrated with prior offerings by the Company for purposes of the Securities
      Act which would prevent the Company from selling the Common Stock pursuant
      to
      Rule 506 under the Securities Act, or any applicable exchange-related
      stockholder approval provisions, nor will the Company or any of its affiliates
      or subsidiaries take any action or steps that would cause the offering of such
      Securities to be integrated with other offerings.

     

    (f)
       The
      Warrants, the Notes and the shares of Common Stock which the Purchasers may
      acquire pursuant to the Warrants and the Notes are all restricted securities
      under the Securities Act as of the date of this Agreement. The Company will
      not
      issue any stop transfer order or other order impeding the sale and delivery
      of
      any of the Registrable Securities at such time as such Registrable Securities
      are registered for public sale or an exemption from registration is available,
      except as required by federal or state securities laws.

     

    (g)
       The
      Company understands the nature of the Registrable Securities issuable upon
      the
      conversion of the Notes and the exercise of the Warrants and recognizes that
      the
      issuance of such Registrable Securities may have a potential dilutive effect.
      The Company specifically acknowledges that its obligation to issue the
      Registrable Securities is binding upon the Company and enforceable regardless
      of
      the dilution such issuance may have on the ownership interests of other
      shareholders of the Company.

     

    (h)
       Except
      for agreements made in the ordinary course of business, there is no agreement
      that has not been filed with the Commission as an exhibit to a registration
      statement or to a form required to be filed by the Company under the Exchange
      Act, the breach of which could reasonably be expected to have a material and
      adverse effect on the Company and its subsidiaries, or would prohibit or
      otherwise interfere with the ability of the Company to enter into and perform
      any of its obligations under this Agreement in any material
      respect.

     

    (i)
       The
      Company will at all times have authorized and reserved a sufficient number
      of
      shares of Common Stock for the full conversion of the Notes and the exercise
      of
      the Warrants.

     

    8.
       Miscellaneous.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    (a)
       Remedies.
      In the
      event of a breach by the Company or by a Holder, of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, will be entitled to
      specific performance of its rights under this Agreement.

     

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

     

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

     

    (d)
       Discontinued
      Disposition.
      Each
      Holder agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from the Company of the occurrence of a Discontinuation
      Event (as defined below), such Holder will forthwith discontinue disposition
      of
      such Registrable Securities under the applicable Registration Statement until
      such Holder's receipt of the copies of the supplemented Prospectus and/or
      amended Registration Statement or until it is advised in writing (the "Advice")
      by the Company that the use of the applicable Prospectus may be resumed, and,
      in
      either case, has received copies of any additional or supplemental filings
      that
      are incorporated or deemed to be incorporated by reference in such Prospectus
      or
      Registration Statement. The Company may provide appropriate stop orders to
      enforce the provisions of this paragraph. For purposes of this Section 8(d),
      a
      "Discontinuation Event" shall mean (i) when the Commission notifies the Company
      whether there will be a "review" of such Registration Statement and whenever
      the
      Commission comments in writing on such Registration Statement (the Company
      shall
      provide true and complete copies thereof and all written responses thereto
      to
      each of the Holders); (ii) any request by the Commission or any other Federal
      or
      state governmental authority for amendments or supplements to such Registration
      Statement or Prospectus or for additional information; (iii) the issuance by
      the
      Commission of any stop order suspending the effectiveness of such Registration
      Statement covering any or all of the Registrable Securities or the initiation
      of
      any Proceedings for that purpose; (iv) the receipt by the Company of any
      notification with respect to the suspension of the qualification or exemption
      from qualification of any of the Registrable Securities for sale in any
      jurisdiction, or the initiation or threatening of any Proceeding for such
      purpose; and/or (v) the occurrence of any event or passage of time that makes
      the financial statements included in such Registration Statement ineligible
      for
      inclusion therein or any statement made in such Registration Statement or
      Prospectus or any document incorporated or deemed to be incorporated therein
      by
      reference untrue in any material respect or that requires any revisions to
      such
      Registration Statement, Prospectus or other documents so that, in the case
      of
      such Registration Statement or Prospectus, as the case may be, it will not
      contain any untrue statement of a material fact or omit to state any material
      fact required to be stated therein or necessary to make the statements therein,
      in light of the circumstances under which they were made, not
      misleading.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    (e)
       Piggy-Back
      Registrations.
      If at
      any time during the Effectiveness Period there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the Commission a registration statement
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other than on Form S-4 or Form
      S-8 (each as promulgated under the Securities Act) or their then equivalents
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with stock option or other employee benefit plans, then the Company
      shall send to each Holder written notice of such determination and, if within
      fifteen days after receipt of such notice, any such Holder shall so request
      in
      writing, the Company shall include in such registration statement all or any
      part of such Registrable Securities such holder requests to be registered to
      the
      extent the Company may do so without violating registration rights of others
      which exist as of the date of this Agreement, subject to customary underwriter
      cutbacks applicable to all holders of registration rights and subject to
      obtaining any required consent of any selling stockholder(s) to such inclusion
      under such registration statement.

     

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

     

    (g)
       Notices.
      Any
      notice or request hereunder may be given to the Company or the Purchasers at
      the
      respective addresses set forth below or as may hereafter be specified in a
      notice designated as a change of address under this Section 8(g). Any notice
      or
      request hereunder shall be given by registered or certified mail, return receipt
      requested, hand delivery, overnight mail, Federal Express or other national
      overnight next day carrier (collectively, "Courier") or telecopy (confirmed
      by
      mail). Notices and requests shall be, in the case of those by hand delivery,
      deemed to have been given when delivered to any party to whom it is addressed,
      in the case of those by mail or overnight mail, deemed to have been given three
      (3) business days after the date when deposited in the mail or with the
      overnight mail carrier, in the case of a Courier, the next business day
      following timely delivery of the package with the Courier, and, in the case
      of a
      telecopy, when confirmed. The address for such notices and communications shall
      be as follows:

    


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    If
      to the
      Company:

    


    Friendlyway
      Corporation

    1255
      Battery Street, Suite 200

    San
      Francisco, CA 94111

    Attention:
      Ken
      Upcraft, Chief
      Executive Officer and President

    Fax:
      631-254-2136

    


    With
      a
      copy to:

    


    Christopher
      K. Brenner, P.C. 

    130
      E.
      Kiowa Street, Suite 600

    Colorado
      Springs, CO  80903

    Attention:
      Christopher K. Brenner, Esq.

    Fax
      No.:
      (719)
      785-7170 

     

    If
      to the
      Holders, at their respective addresses as set forth on the Financing Signature
      Page to the Securities Purchase Agreement.

    


    If
      to
      Sloan:

    


    Sloan
      Securities Corp.

    444
      Madison Avenue

    New
      York,
      New York 10022

    Attention:
      James
      C. Ackerman, President
      & Chief Executive Officer

    Fax:
      (212) 202-4022

    


    With
      a
      copy to:

    


    Littman
      Krooks LLP

    655
      Third
      Avenue, 20th
      Floor

    New
      York,
      NY 10017

    Attention:
      Steven
      Uslaner, Esq.

    Fax:
      (212) 490-2990

    


    or
      such
      other address as may be designated in writing hereafter in accordance with
      this
      Section 8(g) by such Person.

     

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

     

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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

    

    (j)
       Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, without regard to the
      principles of conflicts of law thereof. Each party agrees that all Proceedings
      concerning the interpretation, enforcement and defense of the transactions
      contemplated by this Agreement shall be commenced exclusively in the state
      and
      federal courts sitting in the City of New York, Borough of Manhattan. Each
      party
      hereto hereby irrevocably submits to the exclusive jurisdiction of the state
      and
      federal courts sitting in the City of New York, Borough of Manhattan for the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein, and hereby irrevocably
      waives, and agrees not to assert in any Proceeding, any claim that it is not
      personally subject to the jurisdiction of any such court or that such Proceeding
      is improper. Each party hereto hereby irrevocably waives personal service of
      process and consents to process being served in any such Proceeding by mailing
      a
      copy thereof via registered or certified mail or overnight delivery (with
      evidence of delivery) to such party at the address in effect for notices to
      it
      under this Agreement and agrees that such service shall constitute good and
      sufficient service of process and notice thereof. Nothing contained herein
      shall
      be deemed to limit in any way any right to serve process in any manner permitted
      by law. Each party hereto hereby irrevocably waives, to the fullest extent
      permitted by applicable law, any and all right to trial by jury in any legal
      proceeding arising out of or relating to this Agreement or the transactions
      contemplated hereby. If either party shall commence a Proceeding to enforce
      any
      provisions of this Agreement, the Securities Purchase Agreement, or any Related
      Agreement, then the prevailing party in such Proceeding shall be reimbursed
      by
      the other party for its reasonable attorney’s fees and other costs and expenses
      incurred with the investigation, preparation and prosecution of such
      Proceeding.

     

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

     

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

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

    

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

     

    [BALANCE
      OF PAGE INTENTIONALLY LEFT BLANK;

    SIGNATURE
      PAGE FOLLOWS]


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


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

    
      	 	 	 
	 	FRIENDLYWAY
              CORPORATION
	 
 	 
 	 
 
	 	By:  	/S/
              KEN
              UPCRAFT 
	 	
              

              Kenneth
                J. Upcraft

              President
                and Chief Executive Officer

            
	 	 


    

    
      	 	 	 
	 	SLOAN
              SECURITIES CORP., 
	 
 	 
 	 
 
	 	By:  	/S/
              JAMES C. ACKERMAN
	 	
              
James
              C. Ackerman
              President
                and Chief Executive Officer

            


    

     

    
      	 	 	 
	 	
              PURCHASER

               

               

              
                [to
                  sign Omnibus Signature Page 

                annexed
                  to Securities Purchase Agreement]

              

            
	 
 	 
 	 
 


    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    [Month
      __, 2006]

     

    [Transfer
      Agent]

     

    Re:
      friendlyway Corporation Registration Statement on Form ____

     

    Ladies
      and Gentlemen:

     

    As
      counsel to friendlyway Corporation, a Nevada corporation (the "Company"), we
      have been requested to render our opinion to you in connection with the resale
      by the individuals or entitles listed on Schedule A attached hereto (the
      "Selling Stockholders"), of an aggregate of [amount] shares (the "Shares")
      of
      the Company's Common Stock.

     

    A
      Registration Statement on Form _____ under the Securities Act of 1933, as
      amended (the "Act"), with respect to the resale of the Shares was declared
      effective by the Securities and Exchange Commission on [date]. Enclosed is
      the
      Prospectus dated [date]. We understand that the Shares are to be offered and
      sold in the manner described in the Prospectus.

     

    Based
      upon the foregoing, upon request by the Selling Stockholders at any time while
      such registration statement remains effective, it is our opinion that the Shares
      have been registered for resale under the Act and new certificates evidencing
      the Shares upon their transfer or re-registration by the Selling Stockholders
      may be issued without restrictive legend. We will advise you if such
      registration statement is not available or effective at any point in the
      future.

     

    Very
      truly yours,

     

    [Company
      counsel]


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    Schedule
      A to Opinion to Transfer Agent

     

    Selling
      Stockholder Shares Being Offered

    


    
      
        
        

      

      
        18