Yayi International Inc.  - Exhibit 10.3 - Filed by newsfilecorp.com






Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

          This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and
entered into as of September 27, 2010, by and among Yayi International Inc., a
Delaware corporation (the “Company”), the investors identified on
Schedule A hereto (each, including their respective successors and
assigns, an “Investor” and collectively, the “Investors”) and,
with respect to certain sections hereof, Euro Pacific Capital, Inc. (the
“Investor Representative”). 

          WHEREAS,
in connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the “Purchase Agreement”), the Company has
agreed, upon the terms and subject to the conditions set forth in the Purchase
Agreement, to issue and sell to each Investor units comprised of (i) one 9%
convertible promissory note in the aggregate principal amount of $10,000 and
(ii) one Series F Warrant to purchase 1,250 shares of the Company’s common
stock, $0.001 par value per share (the “Common Stock”) at an exercise
price of $2.50 per share; and 

          WHEREAS,
in accordance with the terms of the Purchase Agreement, the Company has agreed
to provide certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “Securities Act”), and applicable state
securities laws. 

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

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

                    “Advice”
has the meaning set forth in Section 8(e).

                    “Commission
Comments” means written comments pertaining solely to Rule 415 which
are received by the Company from the Commission to a filed Registration
Statement, which either (i) requires the Company to limit the number of
Registrable Securities which may be included therein to a number which is less
than the number sought to be included thereon as filed with the Commission or
(ii) requires the Company to either exclude Registrable Securities held by
specified Holders or deem such Holders to be underwriters with respect to
Registrable Securities they seek to include in such Registration Statement.


                    “Cut
Back Shares” has the meaning set forth in Section 2(b).

                    “Effective
Date” means, as to a Registration Statement, the date on which such
Registration Statement is first declared effective by the Commission. 




                    “Effectiveness
Date” means (a) with respect to the initial Registration Statement required
to be filed pursuant to Section 2(a), the earlier of: (i) the 180th
day following the Final Closing Date and (ii) the fifth Trading Day following the date
on which the Company is notified by the Commission that the initial Registration
Statement will not be reviewed or is no longer subject to further review and
comments; (b) with respect to any additional Registration Statements required to
be filed pursuant to Section 2(a), the earlier of: (i) the 180th day
following the applicable Filing Date for such additional Registration
Statement(s) and (ii) the fifth Trading Day following the date on which the
Company is notified by the Commission that such additional Registration
Statement(s) will not be reviewed or is no longer subject to further review; (c)
with respect to any additional Registration Statements required to be filed
solely due to SEC Restrictions, the earlier of: (i) the 180th day
following the applicable Restriction Termination Date and (ii) the fifth Trading
Day following the date on which the Company is notified by the Commission that
such Registration Statement will not be reviewed or is no longer subject to
further review and comments; (d) with respect to a Registration Statement
required to be filed under Section 2(c), the earlier of: (i) the
180th day following the date on which the Company becomes eligible to
utilize Form S-3 to register the resale of Common Stock; provided, that,
if the Commission reviews and has written comments to such filed Registration
Statement that would require the filing of a pre-effective amendment thereto
with the Commission, then the Effectiveness Date under this clause (d)(i) shall
be the 180th day following the date on which the Company becomes
eligible to utilize Form S-3 to register the resale of Common Stock, and (ii)
the fifth Trading Day following the date on which the Company is notified by the
Commission that the Registration Statement will not be reviewed or is no longer
subject to further review and comments; (e) with respect to a Registration
Statement required to be filed under Section 2(d), the earlier of: (i) the
180th day following the Make Good Shares Delivery Date;
provided, that, if the Commission reviews and has written comments to
such filed Registration Statement that would require the filing of a
pre-effective amendment thereto with the Commission, then the Effectiveness Date
under this clause (e)(i) shall be the 180th day following the Make
Good Shares Delivery Date, and (ii) the fifth Trading Day following the date on
which the Company is notified by the Commission that the Registration Statement
will not be reviewed or is no longer subject to further review and comments. 

                    “Effectiveness
Period” means, as to any Registration Statement required to be filed
pursuant to this Agreement, the period commencing on the Effective Date of such
Registration Statement and ending on (a) the date that all of the Registrable
Securities covered by such Registration Statement have been publicly sold by the
Holders of the Registrable Securities included therein, or (b) such time as all
of the Registrable Securities covered by such Registration Statement may be sold
by the Holders without volume restrictions pursuant to Rule 144 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. 

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

                    “Filing
Date” means (a) with respect to the initial Registration Statement required
to be filed pursuant to Section 2(a), the 30th day following the
Final Closing Date; (b) with respect to any additional Registration Statements
required to be filed pursuant to Section 2(a), the 30th day following
the Effective Date for the last Registration Statement filed pursuant to this
Agreement under Section 2(a); (c) with respect to any additional Registration
Statements required to be filed due to SEC Restrictions, the 30th day
following the applicable Restriction Termination Date; (d) with respect to a
Registration Statement required to be filed under Section 2(c), the 30th day following the date on which the
  Company becomes eligible to utilize Form S-3 to register the resale of Common
  Stock; (e) with respect to the Registration Statement required to be filed under
  Section 2(d), the 30th day following the Make Good Shares Delivery
  Date 

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                    “FINRA”
means the Financial Industry Regulatory Authority, Inc.

                    “Holder”
or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities and, if other than an Investor, a Person to
whom the rights hereunder have been properly assigned pursuant to Section 7
hereof. 

                    “Indemnified
Party” has the meaning set forth in Section 5(c). 

                    “Indemnifying
Party” has the meaning set forth in Section 5(c).

                    “Investment
Amount” means, with respect to each Investor, the Investment Amount
indicated on such Investor’s signature page to this Agreement, which is also
reflected on the Schedule of Investors attached hereto as Schedule A.


                    “Losses”
has the meaning set forth in Section 5(a).

                    “Make
Good Shares Delivery Date” means the date on which the Make Good Shares are
required to be delivered to the Investors pursuant to the Make Good Escrow
Agreement. 

                    “New
York Courts” means the state and federal courts sitting in the City of New
York, Borough of Manhattan. 

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

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

                    “Registrable
Securities” means: (i) any shares of Common Stock issuable upon the
conversion of the Notes issued to Investors pursuant to the Purchase Agreement,
(ii) the Make Good Shares, as applicable, (iii) any shares of Common Stock
issuable upon the exercise of Series F Warrants issued to the Investors pursuant
to the Purchase Agreement, (iv) any shares of Common Stock issuable upon the
exercise of warrants issued to any placement agent as compensation in connection
with the financing that is the subject of the Purchase Agreement (“Placement
Agent Warrant Shares”) and (v) any securities issued or issuable upon any
stock split, dividend or other distribution, recapitalization or similar event,
or any price adjustment as a result of such stock splits, reverse stock splits or similar
events with respect to any of the securities referenced in (i) – (iv) above.
Notwithstanding the foregoing, a security shall cease to be a Registrable
Security for purposes of this Agreement from and after such time as the Holder
of such security may resell such security without volume restrictions under Rule
144, 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.

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

                    “Required
Holders” means the Holders of at least a majority of the Registrable
Securities or the Investor Representative acting in accordance with the
authority granted under Section 2.8 of the Purchase Agreement. 

                    “Restriction
Termination Date” has the meaning set forth in Section 2(b).

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

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

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

                    “SEC
Restrictions” has the meaning set forth in Section 2(b).

                    “Selling
Holder Questionnaire” means the selling security holder notice and
questionnaire attached as Annex B hereto. 

                    “Trading
Market” means any of the New York Stock Exchange, the NYSE AMEX, the NASDAQ
Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, the
OTCBB or any other market on which the Common Stock is listed or quoted for
trading on the date in question. 

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          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 resale of all Registrable
Securities (other than in the case of the initial Registration Statement to be
filed under this Section 2(a), the Make Good Shares) not already covered by an
existing and effective Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415. Each Registration Statement required to
be filed under this Agreement shall be filed on Form S-1 (or on such other form
appropriate for such purpose) and contain (except if otherwise required pursuant
to written comments received from the Commission upon a review of such
Registration Statement, other than as to the characterization of any Holder as
an underwriter, which shall not occur unless such characterization is consistent
with written information provided by the Holder in the Selling Holder
Questionnaire) the “Plan of Distribution” attached hereto as Annex A. The
Company shall cause each Registration Statement required to be filed under this
Agreement to be declared effective under the Securities Act as soon as possible
but, in any event, no later than its Effectiveness Date, and shall use its
commercially reasonable best efforts to keep each such Registration Statement
continuously effective during its entire Effectiveness Period. By 5:00 p.m. (New
York City time) on the Business Day immediately following the Effective Date of
each Registration Statement, the Company shall file with the Commission in
accordance with Rule 424 under the Securities Act the final prospectus to be
used in connection with sales pursuant to such Registration Statement (whether
or not such filing is technically required under such Rule). If for any reason
other than due solely to SEC Restrictions, a Registration Statement is effective
but not all outstanding Registrable Securities are registered for resale
pursuant thereto, then the Company shall prepare and file by the applicable
Filing Date an additional Registration Statement to register the resale of all
such unregistered Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. 

                    (b)      Notwithstanding
anything to the contrary contained in this Section 2, if the Company receives
Commission Comments, and following discussions with and responses to the
Commission in which the Company uses its commercially reasonable best efforts
and time to cause as many Registrable Securities (other than the Make Good
Shares, unless the Make Good Shares Delivery Date shall have occurred) for as
many Holders as possible to be included in the Registration Statement filed
pursuant to Section 2(a) without characterizing any Holder as an underwriter
unless such characterization is consistent with written information provided by
the Holder in the Selling Holder Questionnaire (and in such regard uses its
commercially reasonable best efforts to cause the Commission to permit the
Investor Representative or its counsel to participate in Commission
conversations on such issue together with the Company’s counsel, and timely
conveys relevant information concerning such issue with the Investor
Representative or its counsel) (the day that such discussions and responses are
concluded shall be referred to as the “Tolling Date”), the Company is
unable to cause the inclusion of all Registrable Securities, then the Company
may, following not less than three (3) Trading Days prior written notice to the
Investor Representative (i) remove from the Registration Statement such
Registrable Securities (the “Cut Back Shares”) and/or (ii) agree to such
restrictions and limitations on the registration and resale of the Registrable
Securities, in each case as the Commission may require in order for the
Commission to allow such Registration Statement to become effective;
provided, that in no event may the Company characterize any Holder as an
underwriter unless such characterization is consistent with written information
provided by the Holder in the Selling Holder Questionnaire (collectively, the
“SEC Restrictions”). Unless the SEC Restrictions otherwise require, any
cut-back imposed pursuant to this Section 2(b) shall be allocated: (i) first,
upon the holders of any other securities of the Company who have the right to
have such securities included in the Registration Statement, (ii) second, upon
the Placement Agent Warrant Shares, and (iii) lastly, among the remaining
Registrable Securities of the Holders on a pro rata basis. No liquidated damages
under Section 2(e) shall accrue on or as to any Cut Back Shares, and the required Effectiveness Date for such Registration Statement
will be tolled until such time as the Company is able to effect the registration
of the Cut Back Shares in accordance with any SEC Restrictions if such
Registrable Securities cannot at such time be resold by the Holders thereof
without volume limitations pursuant to Rule 144 (such date, the “Restriction
Termination Date”). From and after the Restriction Termination Date, all
provisions of this Section 2 shall again be applicable to the Cut Back Shares
(which, for avoidance of doubt, retain their character as “Registrable
Securities”) if such Registrable Securities cannot at such time be resold by the
Holders thereof without volume limitations pursuant to Rule 144 so that the
Company will be required to file with and cause to be declared effective by the
Commission such additional Registration Statements in the time frames set forth
herein as necessary to ultimately cause to be covered by effective Registration
Statements all Registrable Securities. For the avoidance of doubt, the time
period starting from the Tolling Date and ending with the Restriction
Termination Date shall be excluded in calculating the applicable Effectiveness
Date.

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                    (c)     
Promptly following any date on which the Company becomes eligible to use a
registration statement on Form S-3 to register Registrable Securities for
resale, the Company shall file a Registration Statement on Form S-3 covering all
Registrable Securities (or a post-effective amendment on Form S-3 to the then
effective Registration Statement) and shall cause such Registration Statement to
be filed by the Filing Date for such Registration Statement and declared
effective under the Securities Act as soon as possible thereafter, but in any
event prior to the Effectiveness Date therefor. Such Registration Statement
shall contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration Statement, other
than as to the characterization of any Holder as an underwriter, which shall not
occur unless such characterization is consistent with written information
provided by the Holder in the Selling Holder Questionnaire) the “Plan of
Distribution” attached hereto as Annex A. The Company shall use its
commercially reasonable best efforts to keep such Registration Statement
continuously effective under the Securities Act during the entire Effectiveness
Period. By 5:00 p.m. (New York City time) on the Business Day immediately
following the Effective Date of such Registration Statement, the Company shall
file with the Commission in accordance with Rule 424 under the Securities Act
the final prospectus to be used in connection with sales pursuant to such
Registration Statement (whether or not such filing is technically required under
such Rule). 

                    (d)     
On or prior to its Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of the Make Good Shares
on Form S-3 if the Company is then eligible to utilize such Form (or if the
Company is not then eligible to utilize such form of registration, it shall
utilize such other available form appropriate for such purpose) and shall cause
such Registration Statement to be filed by the Filing Date for such Registration
Statement and declared effective under the Securities Act as soon as possible
thereafter, but in any event prior to the Effectiveness Date therefore. Such
Registration Statement shall contain (except if otherwise required pursuant to
written comments received from the Commission upon a review of such Registration
Statement, other than as to the characterization of any Holder as an
underwriter, which shall not occur without such Holder’s consent) the “Plan of
Distribution” attached hereto as Annex A. The Company shall use its
commercially reasonable best efforts to keep such Registration Statement
continuously effective under the Securities Act during the entire Effectiveness
Period which is applicable to it. By 5:00 p.m. (New York City time) on the
Business Day immediately following the Effective Date of such Registration Statement, the Company shall file with the
Commission in accordance with Rule 424 under the Securities Act the final
prospectus to be used in connection with sales pursuant to such Registration
Statement (whether or not such filing is technically required under such Rule). 

6




                    (e)     
If: (i) a Registration Statement is not filed on or prior to its Filing Date
covering the Registrable Securities required under this Agreement to be included
therein), or (ii) a Registration Statement is not declared effective by the
Commission on or prior to its required Effectiveness Date or if by the Business
Day immediately following the Effective Date the Company shall not have filed a
“final” prospectus for the Registration Statement with the Commission under Rule
424(b) (whether or not such a prospectus is technically required by such Rule),
or (iii) after its Effective Date, without regard for the reason thereunder or
efforts therefore, such Registration Statement ceases for any reason to be
effective and available to the Investors as to the Registrable Securities to
which it is required to cover at any time prior to the expiration of its
Effectiveness Period for more than an aggregate of 30 Trading Days (which need
not be consecutive) (any such failure or breach being referred to as an
“Event,” and for purposes of clauses (i) or (ii) the date on which such
Event occurs, or for purposes of clause (iii) the date which such 30 Trading
Day-period is exceeded, being referred to as “Event Date”), then in
addition to any other rights the Investors may have hereunder or under
applicable law, on each such Event Date and on each monthly anniversary of each
such Event Date (if the applicable Event shall not have been cured by such date)
until the applicable Event is cured, the Company shall pay to each Investor an
amount in cash, as partial liquidated damages and not as a penalty, equal to
1.0% of the aggregate Investment Amount paid by such Investor pursuant to the
Purchase Agreement. The parties agree that (1) the Company will not be liable
for liquidated damages under this Agreement with respect to any (i) warrants
issued to any placement agent as compensation in connection with the financing
that is the subject of the Purchase Agreement or (ii) Placement Agent Warrant
Shares and (2) in no event will the Company be liable for liquidated damages
under this Agreement in excess of 1.0% of the aggregate Investment Amount of the
Investors in any single month and the maximum aggregate liquidated damages
payable to a Investor under this Agreement shall be eight percent (8%) of the
aggregate Investment Amount paid by such Investor pursuant to the Purchase
Agreement. The partial liquidated damages pursuant to the terms hereof shall
apply on a daily pro-rata basis for any portion of a month prior to the cure of
an Event (except in the case of the first Event Date), and shall cease to accrue
(unless earlier cured) upon the expiration of the Effectiveness Period. 

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

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

                    (a)      The
Company shall not file a Registration Statement, any Prospectus or any
amendments or supplements thereto in which the “Selling Stockholder” section
thereof differs from the disclosure received from a Holder in its Selling Holder
Questionnaire (as amended or supplemented). The Company shall not file a
Registration Statement, any Prospectus or any amendments or supplements thereto
in which it (i) characterizes any Holder as an underwriter, unless such
characterization is consistent with written information provided by the Holder
in the Selling Holder Questionnaire, (ii) excludes a particular Holder due to
such Holder refusing to be named as an underwriter, or (iii) reduces the number
of Registrable Securities being registered on behalf of a Holder except pursuant
to, in the case of subsection (iii), the Commission Comments, without, in each
case, such Holder’s express written authorization, unless such reduction is made
pursuant to Section 2(b) hereof. The Company shall also ensure that each
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein (in the case of prospectuses, in the
light of the circumstances in which they were made) not misleading.

                    (b)      The
Company shall (i) prepare and file with the Commission such amendments,
including post-effective amendments, to each Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep such
Registration Statement continuously effective as to the applicable Registrable
Securities for its Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible to any comments received from the
Commission with respect to each Registration Statement or any amendment thereto
and, as promptly as reasonably possible provide the Investor Representative true
and complete copies of all correspondence from and to the Commission relating to
such Registration Statement that would not result in the disclosure to the
Investor Representative of material and non-public information concerning the
Company; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the Registration
Statement(s) and the disposition of all Registrable Securities covered by each
Registration Statement. 

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

8




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

                    (e)      The
Company shall furnish to the Investor Representative, without charge and at the
option of the Company in electronic format, at least one conformed copy of each
Registration Statement and each amendment thereto and all exhibits to the extent
requested by the Investor Representative (including those previously furnished)
promptly after the filing of such documents with the Commission. 

                    (f)      The
Company shall promptly deliver to the Investor Representative, without charge,
as many copies of each Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as the Investor
Representative may reasonably request. The Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto. 

                    (g)      Prior
to any public offering of Registrable Securities, the Company shall register or
qualify such Registrable Securities for offer and sale under the securities or
Blue Sky laws of all jurisdictions within the United States as any Holder may
request, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statements; provided,

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however, in connection with any such registration or
qualification, the Company shall not be required to (i) qualify to do business
in any jurisdiction where the Company would not otherwise be required to
qualify, (ii) subject itself to general taxation in any such jurisdiction, (iii)
file a general consent to service of process in any jurisdiction, or (iv) make
any change to the Company’s certificate of incorporation or bylaws. 

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

                    (i)      Upon
the occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, the Company shall prepare a supplement or amendment,
including a post-effective amendment, to the affected Registration Statements or
a supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. 

                    (j)     
The Company shall notify the Investor Representative in writing of the
happening of any event, as promptly as practicable after becoming aware of such
event, as a result of which the prospectus included in a Registration Statement,
as then in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and promptly prepare a supplement or amendment
to such Registration Statement to correct such untrue statement or omission. The
Company shall also promptly notify the Investor Representative in writing when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment has
become effective. 

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

10




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

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

                    (n)     
The Company shall cooperate with the Holders who hold Registrable Securities
being offered and, to the extent applicable, facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legend to the extent
permitted by the Purchase Agreement) representing the Registrable Securities to
be offered pursuant to a Registration Statement and enable such certificates to
be in such denominations or amounts, as the case may be, as the Holders may
reasonably request and registered in such names as the Holders may request. 

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

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

11




          4.      
Registration Expenses. All fees and expenses incident to the performance
of or compliance with this Agreement by the Company shall be borne by the
Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with any Trading Market on which
the Common Stock is then listed for trading, (B) with respect to filings with
FINRA by the Investor Representative’s counsel for compensation review pursuant
to FINRA Rule 5110, but in no event shall the sum of such fees and expenses and
other transaction costs and legal fees incurred by the Investor Representative
to be reimbursed by the Company in connection with such FINRA filing be more
than $15,000, and (C) in compliance with applicable state securities or Blue Sky
laws), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is reasonably requested by the Investor
Representative), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder. In no
event shall the Company be responsible for any broker or similar commissions
incurred by any Holder or, except to the extent provided for in the Transaction
Documents, any legal fees or other cost of the Holders in connection with this
Agreement. 

          5.      
Indemnification. 

                    (a)     
Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents, investment advisors, partners, members and
employees of each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable costs of preparation and reasonable attorneys' fees) and
expenses (collectively, “Losses”), as incurred, arising out of or
relating to any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, any Prospectus or any form of prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in light
of the circumstances under which they were made) not misleading, except to the
extent, but only to the extent, that (1) such untrue statements or omissions are
based solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
(it being understood that the Holder has approved Annex A hereto for this
purpose) or (2) in the case of an occurrence of an event of the type specified
in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified the Investor Representative in writing
that the Prospectus is outdated or defective and prior to the
receipt by such Holder of an Advice or an amended or supplemented Prospectus,
but only if and to the extent that following the receipt of the Advice or the
amended or supplemented Prospectus the misstatement or omission giving rise to
such Loss would have been corrected. The Company shall notify the Investor
Representative promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement. 

12




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

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

13




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

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

                    (d)      Contribution.
If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if
the indemnification provided for in this Section was available to such party in
accordance with its terms. 

14




                    The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), (i) no Person involved in
the sale of Registrable Securities which Person is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) in
connection with such sale shall be entitled to contribution from any Person
involved in such sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) no Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the proceeds actually
received by such Holder from the sale of the Registrable Securities subject to
the Proceeding exceeds the amount of any damages that such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 

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

          6.      
Reports Under the Exchange Act. With a view to making available to the
Holders the benefits of Rule 144 or any other similar rule or regulation of the
SEC that may at any time permit the Holders to sell Registrable Securities of
the Company to the public without registration, the Company agrees, for so long
as Registrable Securities are outstanding and held by the Holders, to: 

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

                    (b)     
file with the SEC in a timely manner all reports and other documents required of
the Company under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and 

                    (c)      furnish
to each Holder so long as such Holder owns Registrable Securities, promptly upon
request, such information as may be reasonably and customarily requested to
permit the Holders to sell such securities pursuant to Rule 144 without
registration. 

          7.       Assignment
of Registration Rights. The rights under this Agreement shall be
automatically assignable by the Investors to any permitted transferee of all or
any portion of such Investor’s Registrable Securities if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within five (5) Business Days
after such assignment; (ii) the Company is, within five (5) Business Days after
such transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act or applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein; and (v) such transfer shall have been made
in accordance with the applicable requirements of the Purchase Agreement. 

15




          8.      
Miscellaneous. 

                    (a)      Third
Party Beneficiary. The Investor Representative is intended third party
beneficiary of this Agreement and have all of the rights of an “Investor” under
this Agreement and the shares of Common Stock issuable upon the exercise of the
warrants issued to the Placement Agent (and any capital stock of the Company
issued or issuable, with respect to the warrants issued to the Placement Agent
as a result of any stock split, stock dividend, recapitalization, exchange,
anti-dilution adjustment or similar event or otherwise, without regard to any
limitations on exercises of the warrants, if any) constitute Registrable
Securities for all purposes of this Agreement.

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

                    (c)     
No Piggyback on Registrations. Except as and to the extent specified in
Schedule 8(c) to the Purchase Agreement, neither the Company nor any of
its security holders (other than the Holders in such capacity pursuant hereto)
may include securities of the Company in a Registration Statement other than the
Registrable Securities, and the Company shall not during the Effectiveness
Period enter into any agreement providing any such right to any of its security
holders.

                    (d)     
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. 

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

16




                    (f)     
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 calendar days after receipt of such notice,
any such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights. 

                    (g)      Amendments
and Waivers. Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Required Holders. Any amendment or waiver effected in accordance with
this Section 8(g) shall be binding upon each Investor and the Company. No such
amendment shall be effective to the extent that it applies to less than all of
the Holders. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of this Agreement unless
the same consideration also is offered to all of the parties to this Agreement.
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. 

                    (h)     
Notices. Any notices, consents, waivers or other communications required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered if delivered in accordance with
Section 6.3 of the Purchase Agreement. 

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

                    (j)      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 or email 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 or email signature were the original thereof. 

17




                    (k)      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 interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective Affiliates, employees or agents) will be commenced in
the New York Courts. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any New York Court, or that such Proceeding has been commenced
in an improper or inconvenient forum. Each party hereto hereby irrevocably
waives personal service of process and consents to process being served in any
such Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any Proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding to
enforce any provisions of this Agreement, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its attorney’s fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding. 

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

                    (m)     
Entire Agreement. This Agreement, the other Transaction Documents (as
defined in the Purchase Agreement) and the instruments referenced herein and
therein constitute the entire agreement among the parties hereto with respect to
the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the other Transaction Documents and the instruments
referenced herein and therein supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.


                    (n)     
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. 

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

18




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

[Signature Page Follows]

19




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

COMPANY: 

YAYI INTERNATIONAL INC.


By:
_______________________________________
Name: Li Liu 
Title: Chief
Executive Officer and President

 

INVESTOR REPRESENTATIVE:

EURO PACIFIC CAPITAL,
INC.


By:
_______________________________________
Name: Gordon McBean 
Title: Head
of Capital Markets

INVESTORS: 

The Investors executing the Signature
Page in the form attached hereto as Annex C and delivering the same to
the Company or its agents shall be deemed to have executed this Agreement and
agreed to the terms hereof. 

Yayi Registration Rights Agreement




Annex A

Plan of Distribution

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

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

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

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

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

  
	
  privately negotiated transactions; 

  
	
  through the writing of options on the shares; 

  
	
  to cover short sales made after the date that this Registration Statement
  is declared effective by the Commission; 

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

  
	
  a combination of any such methods of sale. 



          The
selling stockholders may also sell shares under Rule 144 of the Securities Act
of 1933, as amended (the “Securities Act”), if available, rather than under this
prospectus. The selling stockholders shall have the sole and absolute discretion
not to accept any purchase offer or make any sale of shares if it deems the
purchase price to be unsatisfactory at any particular time. 

          The
selling stockholders or their respective pledgees, donees, transferees or other
successors in interest, may also sell the shares directly to market makers
acting as principals and/or broker-dealers acting as agents for themselves or
their customers. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and
block purchasers purchasing the shares will do so for their own account and at
their own risk. It is possible that a selling stockholder will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then existing market
price. We cannot assure that all or any of the shares offered in this
prospectus will be issued to, or sold by, the selling stockholders. The selling
stockholders and any brokers, dealers or agents, upon effecting the sale of any
of the shares offered in this prospectus, may be deemed to be “underwriters” as
that term is defined under the Securities Act, the Exchange Act and the rules
and regulations of such acts. In such event, any commissions received by such
broker-dealers or agents and any profit on the resale of the shares purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act. 




          We
are required to pay all fees and expenses incident to the registration of the
shares, including fees and disbursements of counsel to the selling stockholders,
but excluding brokerage commissions or underwriter discounts. 

          The
selling stockholders, alternatively, may sell all or any part of the shares
offered in this prospectus through an underwriter. The selling stockholders have
not entered into any agreement with a prospective underwriter and there is no
assurance that any such agreement will be entered into. 

          The
selling stockholders may pledge their shares to their brokers under the margin
provisions of customer agreements. If a selling stockholder defaults on a margin
loan, the broker may, from time to time, offer and sell the pledged shares. The
selling stockholders and any other persons participating in the sale or
distribution of the shares will be subject to applicable provisions of the
Exchange Act, and the rules and regulations under such act, including, without
limitation, Regulation M. These provisions may restrict certain activities of,
and limit the timing of purchases and sales of any of the shares by, the selling
stockholders or any other such person. In the event that any of the selling
stockholders are deemed an affiliated purchaser or distribution participant
within the meaning of Regulation M, then the selling stockholders will not be
permitted to engage in short sales of common stock. Furthermore, under
Regulation M, persons engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and certain other activities with
respect to such securities for a specified period of time prior to the
commencement of such distributions, subject to specified exceptions or
exemptions. In addition, if a short sale is deemed to be a stabilizing activity,
then the selling stockholders will not be permitted to engage in a short sale of
our common stock. All of these limitations may affect the marketability of the
shares. 

          If
a selling stockholder notifies us that it has a material arrangement with a
broker-dealer for the resale of the common stock, then we would be required to
amend the registration statement of which this prospectus is a part, and file a
prospectus supplement to describe the agreements between the selling stockholder
and the broker-dealer.




Annex B


YAYI INTERNATIONAL INC.

Selling Securityholder Notice and Questionnaire

The undersigned beneficial owner of common stock (the
“Common Stock”), of Yayi International Inc., a Delaware corporation (the
“Company”), understands that the Company has filed or intends to file
with the Securities and Exchange Commission (the “Commission”) a
Registration Statement for the registration and resale of the Registrable
Securities, in accordance with the terms of the Registration Rights Agreement,
dated as of _______________, 2010 (the “Registration Rights Agreement”),
among the Company and the Investors named therein. A copy of the Registration
Rights Agreement is available from the Company upon request at the address set
forth below. All capitalized terms used and not otherwise defined herein shall
have the meanings ascribed thereto in the Registration Rights Agreement. 

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

QUESTIONNAIRE

	1. 	
      Name.

	 	 	 
		(a) 	
      Full Legal Name of Selling Securityholder

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

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

	 	 	 
	 	 	 
	 	 	 
	2. 	
      Address for Notices to Selling
    Securityholder:

	 	 
	 	 
	 	 
	 	 


Telephone:
____________________________________________________________________________
Fax:
_________________________________________________________________________________
Contact
Person:_________________________________________________________________________








	3. 	
      Beneficial Ownership of Registrable
    Securities:




	 	Type and Principal Amount of
      Registrable Securities beneficially owned: 
	 	 
	 	 
	 	 
	 	 



	4. 	
      Broker-Dealer Status:




	 	(a) 	
      Are you a broker-dealer?



Yes       No 

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




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



Yes       No 

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



Yes       No 

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




	5. 	
      Beneficial Ownership of Other Securities of the
      Company Owned by the Selling Securityholder.



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

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







	6. 	
      Relationships with the
Company:




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


7.      The Company has advised
each Selling Stockholder that it is the view of the Commission that it may not
use shares registered on the Registration Statement to cover short sales of
Common Stock made prior to the date on which the Registration Statement is
declared effective by the Commission, in accordance with 1997 Securities and
Exchange Commission Manual of Publicly Available Telephone Interpretations
Section A.65. If a Selling Stockholder uses the prospectus for any sale of the
Common Stock, it will be subject to the prospectus delivery requirements of the
Securities Act. The Selling Stockholders will be responsible to comply with the
applicable provisions of the Securities Act and Exchange Act, and the rules and
regulations thereunder promulgated, including, without limitation, Regulation M,
as applicable to such Selling Stockholders in connection with resales of their
respective shares under the Registration Statement. 

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

Certain legal consequences arise from being named as a Selling
Securityholder in the Registration Statement and related prospectus.
Accordingly, the undersigned is advised to consult their own securities law
counsel regarding the consequence of being named or not being named as a Selling
Securityholder in the Registration Statement and the related prospectus. 

By signing below, the undersigned consents to the disclosure of
the information contained herein in its answers to Items 1 through 6 and the
inclusion of such information in the Registration Statement and the related
prospectus. The undersigned understands that such information will be relied
upon by the Company in connection with the preparation or amendment of the
Registration Statement and the related prospectus. The undersigned hereby elects
to include the Registrable Securities owned by it and listed above in Item 3
(unless otherwise specified in Item 3) in the Registration Statement. 




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

	Dated: ____________________________	Beneficial Owner:
  ___________________________
	  	  
	  	By:
______________________________________
	  	         Name: 
	  	         Title:
  


PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND


  QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO: 

Pillsbury Winthrop Shaw Pittman LLP 
2300 N Street NW

Washington, D.C. 20037 
Facsimile: 202.663.8007 

  Attn.: Qixiang Sun 




Annex C 

Registration Rights Agreement 

  Investor Counterpart Signature Page 

          The
undersigned, desiring to: (i) enter into this Registration Rights Agreement,
dated as of _________________, 2010 (the “Agreement”), between the
undersigned, Yayi International Inc., a Delaware corporation (the
“Company”), and the other parties thereto, in or substantially in the
form furnished to the undersigned and (ii) purchase the securities of the
Company appearing below, hereby agrees to purchase such securities from the
Company as of the Closing and further agrees to join the Agreement as a party
thereto, with all the rights and privileges appertaining thereto, and to be
bound in all respects by the terms and conditions thereof. 

          IN
WITNESS WHEREOF, the undersigned has executed the Agreement as of
_____________________, 2010. 

	 	Name and Address, Fax No. and Social
      Security No./EIN of Investor: 
	 	  
	 	  
	 	  
	 	 
	 	 
	 	
	 	 
	 	Fax No.:
  ___________________________________
	 	 
	 	Soc. Sec. No./EIN:
    ___________________________
	 	 
	 	If a partnership, corporation, trust or
      other business entity: 
	 	 
	 	By:  
      ______________________________________
	 	         Name: 
	 	         Title: 
	 	If an individual: 
	 	 
	 	 
	 	  
	 	Signature 
	 	 
	 	Investment Amount:
      ________________________
	 	 
	 	Amount of Units to be 
	 	Purchased:______________________
  






ADDRESS FOR NOTICE

 

c/o:_____________________________________________

Street:___________________________________________

City/State/Zip:_____________________________________

Attention:_________________________________________

Tel:______________________________________________

DELIVERY INSTRUCTIONS
(if
different from above) 

 

c/o:_____________________________________________

Street:___________________________________________

City/State/Zip:_____________________________________

Attention:_________________________________________

Tel:______________________________________________




Schedule A 

SCHEDULE OF INVESTORS 


  	

        

Name 	

        
Investment 
Amount
    	

        Principal 
Amount of
      
Notes 	Number of 

        Shares Subject
      
to Series F 
Warrants 
	AMY J STEFANIK TTEE AMY J STEFANIK REVOCABLE TRUST U/A
      2/6/01 	$100,000 	$100,000 	12,500 
	ANDREW P COOK SUSAN R COOK 	$50,000 	$50,000 	6,250 
	ARNOLD WILLIAM GOLDSCHLAGER NORA GOLDSCHLAGER TTEE THE
      GOLDSCHLAGER FAMILY TRUST U/A 6/24/04 	$50,000 	$50,000 	6,250 
	ART KLEPPEN KIMBERLY KLEPPEN 	$100,000 	$100,000 	12,500 
	BARBARA HEARST 	$100,000 	$100,000 	12,500 
	BARBARA J PETERSON TTEE REV TR OF BARBARA J PETERSON U/A
      2/4/00 	$70,000 	$70,000 	8,750 
	BARBARA S MEISTER TTEE THE MEISTER NON-EXEMPT MARITAL TR
      U/A 11/17/83 	$100,000 	$100,000 	12,500 
	BARBARA SEIDEL TTEE BARBARA GALLUN SEIDEL RESIDUAL TRUST
      U/A 2/9/60 	$50,000 	$50,000 	6,250 
	BARBARA SUE WILSON DAVID D WILSON TTEE THE BARBARA SUE
      WILSON U/A 8/23/94 	$50,000 	$50,000 	6,250 
	BERT HUNTSINGER 	$50,000 	$50,000 	6,250 
	BRENT PAULGER SHARISSA PAULGER 	$50,000 	$50,000 	6,250 
	BRIAN S BEHAN 	$50,000 	$50,000 	6,250 
	BRUCE WALKER RAVENEL III 	$300,000 	$300,000 	37,500 
	BUCKTHORN LLC 	$50,000 	$50,000 	6,250 
	CARLOS A MERINO TTEE CARLOS ALFONSO MERINO REV LIVING
      TRUST, U/A 12/04/96 	$50,000 	$50,000 	6,250 
	CAROLYN R LONG 	$60,000 	$60,000 	7,500 
	CHARLOTTE J BELASCO 	$50,000 	$50,000 	6,250 
	CHRISTIANNA SEIDEL TTEE PROPERTY TRUST U/A 11/5/99 FBO
      CHRISTIANNA SEIDEL 	$50,000 	$50,000 	6,250 
	CINDY J LEWIS TTEE CINDY J LEWIS DECL OF TRUST U/A 3/11/93
    	$50,000 	$50,000 	6,250 
	COREY SHANNON MCNAMEE 	$50,000 	$50,000 	6,250 
	CYNTHIA KESSLER & JAMES KESSLER 	$50,000 	$50,000 	6,250 
	DAVID ALAN SCULLY 	$100,000 	$100,000 	12,500 
	DAVID ARITA TOD 	$50,000 	$50,000 	6,250 
	DAVID BRISBIN TTEE INNES/BRISBIN LIVING TRUST DATED 6/8/04
    	$100,000 	$100,000 	12,500 
	DAVID W LARSON JENNIFER L LARSON 	$100,000 	$100,000 	12,500 
	DEBORAH FOREMAN TTEE DEBORAH D FOREMAN TRUST U/A 9/29/94
	$50,000 	$50,000 	6,250 
	DOUGLAS W JOHNSON TTEE DOUGLAS WILLIAM JOHNSON REV TRST U/A
      6/25/10 	$50,000 	$50,000 	6,250 
	DR UZZI REISS MRS YAEL REISS TTEE THE REISS FAMILY TRUST
      U/A 12/29/88 	$50,000 	$50,000 	6,250 
	EVA MARIE SALAS TTEE EVA M SALAS TRUST 	$50,000 	$50,000 	6,250 
	GAYLE M & DEBORAH SANDERS TTEE THE GAYLE M SANDERS FAM
      TR REV TR, U/A 8/15/02 	$100,000 	$100,000 	12,500 
	GEORGE FELDMAN 	$250,000 	$250,000 	31,250 
	GILBERT DOMINGUEZ TTEE DOMINGUEZ TRUST U/A 3/3/05 	$350,000 	$350,000 	43,750 
	HCR INVESTMENTS INC. 	$100,000 	$100,000 	12,500 
	HEIDI W KIENE KEVIN KIENE 	$100,000 	$100,000 	12,500 
	HEMANT KATHURIA P/ADM H KATHURIA INVESTMENTS II P PLAN 	$50,000 	$50,000 	6,250 









  	

        

Name 	

        
Investment 
Amount
    	

        Principal 
Amount of
      
Notes 	Number of 

        Shares Subject
      
to Series F 
Warrants 
	JACK ABRAMS MARGO ABRAMS TTEE JACK ABRAMS PENSION PLAN 1
	$50,000 	$50,000 	6,250 
	JANET D RUSSELL TTEE JANET DICKINSON RUSSELL LIVING TR U/A
      1/20/10 	$50,000 	$50,000 	6,250 
	JEAN A DAVIDS-OSTERHAUS TTEE JEAN A DAVIDS-OSTERHAUS REV
      U/A 10/03/07 	$50,000 	$50,000 	6,250 
	JEFF ARCHIBALD 	$100,000 	$100,000 	12,500 
	JERRY F MCWILLIAMS 	$50,000 	$50,000 	6,250 
	JIM GRIFFIN CUST DANIEL J GRIFFIN UTMA OH 	$60,000 	$60,000 	7,500 
	JIM GRIFFIN CUST MICHELLE E GRIFFIN UTMA OH 	$60,000 	$60,000 	7,500 
	JIM ROBERT PUGH 	$50,000 	$50,000 	6,250 
	JIMMIE C WEST CAROLYN E WEST 	$50,000 	$50,000 	6,250 
	JOHN A RUPP TTEE JOHN A RUPP TRUST U/A 3/9/07 	$50,000 	$50,000 	6,250 
	JOHN D SMEAD 	$50,000 	$50,000 	6,250 
	JOSEPH MCCARTHY MIKI MCCARTHY TOD 	$50,000 	$50,000 	6,250 
	JULIA L GRIFFIN 	$60,000 	$60,000 	7,500 
	KENNETH H NASS & MAUREEN K NASS TTEE KENNETH H NASS
      & MAUREEN K NASS CHARITRUST U/A 6/7/05 	$100,000 	$100,000 	12,500 
	KEVIN MOORE 	$50,000 	$50,000 	6,250 
	KK SWOGGER ASSET MANAGEMENT, LP 	$80,000 	$80,000 	10,000 
	LARRY GUAGLIARDO TOD 	$70,000 	$70,000 	8,750 
	LAURA SMITH FORREST SMITH TTEE CONNELLY JOHNSON SMITH FAM
      TR U/A 4/2/09 	$50,000 	$50,000 	6,250 
	MARC A PIERRE, P BARRAGAN P/ADM CENTER FOR PHYS HLTH 401K
      PSP MARC PIERRE 	$50,000 	$50,000 	6,250 
	MARC BIENSTOCK JENNY I BIENSTOCK 	$50,000 	$50,000 	6,250 
	MARC W LEVIN SUSAN G LEVIN 	$50,000 	$50,000 	6,250 
	MARK A OSTERHAUS TTEE THE MARK A OSTERHAUS REV TR U/A
      10/31/07 	$50,000 	$50,000 	6,250 
	MARK DUGGER P/ADM THE ALLSTATES DRYWALL INC EE ST 	$50,000 	$50,000 	6,250 
	MARK EDWARD SMEAD TTEE MARK E SMEAD REVOC LIVING TRUST U/A
      11/17/95 	$100,000 	$100,000 	12,500 
	MARK STERIN 	$70,000 	$70,000 	8,750 
	MAUREEN K NASS KENNETH H NASS TTEE MAUREEN K NASS LIVING
      TRUST U/A 5/16/05 	$50,000 	$50,000 	6,250 
	MICHAEL J HANRATTY LYNSAY F HANRATTY 	$100,000 	$100,000 	12,500 
	MICHAEL SCULLY 	$100,000 	$100,000 	12,500 
	MITCHELL MARTIN DEBORAH MARTIN 	$50,000 	$50,000 	6,250 
	NANCY L BENSON TTEE THE NANCY L BENSON LIVING TRUST U/A
      11/11/02 	$50,000 	$50,000 	6,250 
	N E APPERSON, P MCEACHERN TTEE NORMAN E APPERSON AND PAMELA
      MCEACHERN TR, U/A 7/22/96 	$100,000 	$100,000 	12,500 
	NFS/FMTC IRA FBO DIANE D SPOLUM 	$200,000 	$200,000 	25,000 
	NFS/FMTC IRA FBO HOWARD W WAHL 	$100,000 	$100,000 	12,500 
	NFS/FMTC IRA FBO LEONARD SIEGEL 	$50,000 	$50,000 	6,250 
	NFS/FMTC IRA FBO LYNN HAVLIK 	$50,000 	$50,000 	6,250 
	NFS/FMTC IRA FBO ROYCE V JACKSON 	$100,000 	$100,000 	12,500 
	NFS/FMTC IRA FBO ROBERT STEPHEN ADAMS 	$100,000 	$100,000 	12,500 
	NFS/FMTC ROLLOVER IRA FBO ANDRES KEICHIAN 	$50,000 	$50,000 	6,250 
	NFS/FMTC ROLLOVER IRA FBO BERTRAND BROOKS CARDER 	$50,000 	$50,000 	6,250 
	NFS/FMTC ROLLOVER IRA FBO DONALD T GLASER JR 	$50,000 	$50,000 	6,250 









  	

        

Name 	

        
Investment 
Amount
    	

        Principal 
Amount of
      
Notes 	Number of 

        Shares Subject
      
to Series F 
Warrants 
	NFS/FMTC ROLLOVER IRA FBO EDWIN BRUNO KAEHLER 	$50,000 	$50,000 	6,250 
	NFS/FMTC ROLLOVER IRA FBO JAMES A TAMBORELLO 	$100,000 	$100,000 	12,500 
	NFS/FMTC ROLLOVER IRA FBO JERRY R SPEAKS 	$50,000 	$50,000 	6,250 
	NFS/FMTC ROLLOVER IRA FBO LYNN ROLLINS STULL 	$50,000 	$50,000 	6,250 
	NFS/FMTC ROLLOVER IRA FBO RALPH DALE EDSON 	$100,000 	$100,000 	12,500 
	NFS/FMTC ROLLOVER IRA FBO RICHARD DAVIS MOORE 	$40,000 	$40,000 	5,000 
	NFS/FMTC ROLLOVER IRA FBO ROBERT M WEISSBERG 	$50,000 	$50,000 	6,250 
	NFS/FMTC ROLLOVER IRA FBO RONALD ALLEN MCCANN 	$50,000 	$50,000 	6,250 
	NFS/FMTC ROLLOVER IRA FBO TODD HOWARD OVERGARD 	$50,000 	$50,000 	6,250 
	NFS/FMTC ROTH IRA FBO HELEN ERSKINE 	$50,000 	$50,000 	6,250 
	NFS/FMTC ROTH IRA FBO VIRGINIA C ADAMS 	$50,000 	$50,000 	6,250 
	NFS/FMTC SEP IRA FBO CARTER LAREN 	$100,000 	$100,000 	12,500 
	NFS/FMTC SEP IRA FBO GERALD E MANWILL 	$50,000 	$50,000 	6,250 
	NFS/FMTC SEP IRA FBO GERALD MONA 	$50,000 	$50,000 	6,250 
	NORMAN S KRAMER & LINDA L KRAMER 	$50,000 	$50,000 	6,250 
	OLEKSANDR TUMKO OKSANA TUMKO 	$50,000 	$50,000 	6,250 
	PETER D SCHIFF 	$200,000 	$200,000 	25,000 
	POINT AUX CHENES, LLC 	$50,000 	$50,000 	6,250 
	POM INVESTMENTS LLC 	$100,000 	$100,000 	12,500 
	PRASAD REALTY CORP 	$50,000 	$50,000 	6,250 
	QUINCY MURPHY INC 	$50,000 	$50,000 	6,250 
	R STEVEN SMITH 	$100,000 	$100,000 	12,500 
	RICHARD GRIFF JACKIE GRIFF 	$150,000 	$150,000 	18,750 
	RICHARD P ANTHONY III & KIMBERLY J ANTHONY 	$50,000 	$50,000 	6,250 
	RICHARD POTAPCHUK 	$300,000 	$300,000 	37,500 
	ROBERT L BISHOP TOD FRANCINE BISHOP 	$50,000 	$50,000 	6,250 
	ROBERT T FOSS MARGARET FOSS TTEE ROBERT T & MARGARET
      FOSS REV TR U/A 3/31/04 	$60,000 	$60,000 	7,500 
	SCOTT & MISTY DAVIES TTEE THE SCOTT & MISTY DAVIES
      LIVING TR, U/A 6/28/07 	$80,000 	$80,000 	10,000 
	SCOTT R GRIFFIN 	$60,000 	$60,000 	7,500 
	SHELBY JORDAN, BECKY JORDAN 	$50,000 	$50,000 	6,250 
	SKEE GOEDHART TTEE THE PARACELSUS REVOCABLE TRUST U/A
      7/25/97 	$50,000 	$50,000 	6,250 
	STEPHEN RASKIN P/ADM DREW & RASKIN P/S PLAN FBO STEPHEN
      RASKIN 	$100,000 	$100,000 	12,500 
	STEVE & COLLEEN HOKE TTEE HOKE LIVING TRUST U/A 4/19/02
    	$50,000 	$50,000 	6,250 
	STEVEN JAY EPSTEIN 	$50,000 	$50,000 	6,250 
	SUSAN C CULLEN 	$50,000 	$50,000 	6,250 
	THOMAS L INGRAM CARISSA INGRAM TTEE INGRAM LIVING TRUST U/A
      11/2/05 	$50,000 	$50,000 	6,250 
	TIMOTHY CRANE TTEE TIMOTHY R CRANE TRUST U/A 12/6/04 	$100,000 	$100,000 	12,500 
	TRISHA L FRERES THEODORE KYLE FRERES TTEE TRISHA L FRERES
      LIVING TRUST U/A 12/20/04 	$50,000 	$50,000 	6,250 
	WALTER FRIESEN 	$80,000 	$80,000 	10,000 
	WILLIAM A KARGES JR TTEE KARGES REVOC INTERVIVOS TRUST U/A
      4/29/85 	$50,000 	$50,000 	6,250 
	WILLIAM BRADLEY P/ADM BRADLEY ANESTHESIOLOGY PSP 	$50,000 	$50,000 	6,250 
	WILLIAM J CYR 	$70,000 	$70,000 	8,750 
	WILLIAM TEN BRINK TTEE TEN BRINK TRUST U/A 10/2/86 	$90,000 	$90,000 	11,250 









  	

        

Name 	

        
Investment 
Amount
    	

        Principal 
Amount of
      
Notes 	Number of 

        Shares Subject
      
to Series F 
Warrants 
	WILLIAM WILEY MARIANNE WILEY TTEE WILEY FAMILY LIVING TRUST
      U/A 7/19/95 	$60,000 	$60,000 	7,500 
	TOTALS 	$8,920,000 	 $8,920,000 	1,115,000