chxd_8k-ex10x2.htm


    Exhibit 10.2

    
 

    


     

    REGISTRATION
RIGHTS AGREEMENT

     

     

    REGISTRATION RIGHTS AGREEMENT
(this "Agreement"),
dated as of November 27, 2009, by and among China XD Plastics Company Limited, a
Nevada corporation, with headquarters located at No. 9 Qinling Road, Yingbin
Road Centralized Industrial Park, Harbin Development Zone, Heilongjiang 150078,
China (the "Company"),
and the investors listed on the Schedule of Buyers attached hereto (each, a
"Buyer" and
collectively, the "Buyers").

     

    WHEREAS:

     

    A.           In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the "Securities Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to each Buyer
(i) shares of the Company's Series C Convertible Preferred Stock, par value
$0.0001 per share (the "Preferred Shares"), which
will, among other things, be convertible into a certain number of shares of the
Company's common stock, $0.0001 par value per share (the "Common Stock", as converted,
the "Conversion Shares")
in accordance with the terms of the Certificate of Designations, Preferences and
Rights of Series C Convertible Preferred Stock (the "Certificate of Designations")
and (ii) two (2) series of warrants (the "Warrants") which will be
exercisable to purchase shares of Common Stock (as exercised, the "Warrant Shares") in accordance
with the terms of the Warrants.

     

    B.           In
accordance with the terms of the Securities 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 "1933 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 Buyers hereby agree as
follows:

     

    1.           Definitions.

     

    Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:

     

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

     

    (b)           "Additional Effectiveness
Deadline" means the date which is thirty (30) calendar days after the
earlier of the Additional Filing Date and the Additional Filing Deadline or in
the event that the Registration Statement is subject to a full review by the
SEC, sixty (60) calendar days after the earlier of the Additional Filing Date
and the Additional Filing Deadline.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

    (g)           "Additional Required Registration
Amount" means any Cutback Shares not previously included on a
Registration Statement, all subject to adjustment as provided in Section 2(f),
without regard to any limitations on conversion and/or redemption of the
Preferred Shares or exercise of the Warrants.

     

    (h)           "Business Day" means any day
other than Saturday, Sunday or any other day on which commercial banks in The
City of New York are authorized or required by law to remain
closed.

     

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

     

     

    (j)           "Cutback Shares" means any of
the Initial Required Registration Amount or the Additional Required Registration
Amount of Registrable Securities not included in all Registration Statements
previously declared effective hereunder as a result of a limitation on the
maximum number of shares of Common Stock of the Company permitted to be
registered by the staff of the SEC pursuant to Rule 415.  The number
of Cutback Shares shall be allocated pro rata among the Investors with each
Investor entitled to elect the portion of its Conversion Shares and/or Warrant
Shares that are to be considered Cutback Shares.

     

     

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

     

     

     

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

     

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

     

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

     

    (o)           "Initial Effectiveness
Deadline" means the date which is (i) in the event that the Initial
Registration Statement is not subject to a full review by the SEC, sixty (60)
calendar days after the Closing Date or (ii) in the event that the Initial
Registration Statement is subject to a full review by the SEC, ninety (90)
calendar days after the Closing Date.

     

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

     

    (q)           "Initial Registrable
Securities" means (i) the Conversion Shares issued or issuable upon
conversion of the Preferred Shares, (ii) the Warrant Shares issued or issuable
upon exercise of the Warrants and (iii) any capital stock of the Company issued
or issuable, with respect to the Conversion Shares, the Preferred Shares, the
Warrant Shares or the Warrants as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to any
limitations on conversion and/or redemption of the Preferred Shares or exercise
of the Warrants.

     

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

     

    (s)           "Initial Required Registration
Amount" means (I) 130% of the sum of (i) the number of Conversion Shares
issued and issuable pursuant to the Preferred Shares as of the Trading Day (as
defined in the Certificate of Designations) immediately preceding the applicable
date of determination and (ii) the number of Warrant Shares issued and issuable
pursuant to the Warrants as of the Trading Day immediately preceding the
applicable date of determination, each subject to adjustment as provided in
Section 2(f), without regard to any limitations on conversions and/or
redemptions of the Preferred Shares or exercises of the Warrants or (II) such
other amount as may be required by the staff of the SEC pursuant to Rule
415.

     

     

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    (t)           "Investor" means a Buyer, any
transferee or assignee thereof to whom a Buyer assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 and any transferee or assignee thereof to whom a
transferee or assignee assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section
9.

     

    (u)           "Person" means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.

     

    (v)           "register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415, and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.

     

    (w)           "Registrable Securities" means
the Initial Registrable Securities and the Additional Registrable
Securities.

     

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

     

     

    (y)           "Required Holders" means the
initial holders of at least two-thirds of the Registrable
Securities.

     

     

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

     

     

    (aa)           "Rule 415" means Rule 415
promulgated under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis.

     

     

    (bb)           "SEC" means the United States
Securities and Exchange Commission.

     

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

     

     

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    2.           Registration.

     

    (a)           Initial Mandatory
Registration.  The Company shall prepare, and, as soon as
practicable but in no event later than the Initial Filing Deadline, file with
the SEC the Initial Registration Statement on Form S-3 covering the resale of
all of the Initial Registrable Securities.  In the event that Form S-3
is unavailable for such a registration, the Company shall use such other
appropriate form as is available for such a registration and is reasonably
acceptable to the Required Holders, subject to the provisions of Section
2(e).  The Initial Registration Statement prepared pursuant hereto
shall register for resale at least the number of shares of Common Stock equal to
the Initial Required Registration Amount determined as of the date the Initial
Registration Statement is initially filed with the SEC, subject to adjustment as
provided in Section 2(f).  The Initial Registration Statement shall
contain (except if otherwise directed by the Required Holders) the "Selling Shareholders"
and "Plan of
Distribution" sections in substantially the form attached hereto as Exhibit B. The
Company shall use its best efforts to have the Initial Registration Statement
declared effective by the SEC as soon as practicable, but in no event later than
the Initial Effectiveness Deadline.  By 9:30 a.m. New York time on the
Business Day following the Initial Effective Date, the Company shall file with
the SEC in accordance with Rule 424 under the 1933 Act the final prospectus to
be used in connection with sales pursuant to such Initial Registration
Statement.

     

    (b)           Additional Mandatory
Registrations.  The Company shall prepare, and, as soon as
practicable but in no event later than the Additional Filing Deadline, file with
the SEC an Additional Registration Statement on Form S-3 covering the resale of
all of the Additional Registrable Securities not previously registered on an
Additional Registration Statement hereunder.  To the extent the staff
of the SEC does not permit the Additional Required Registration Amount to be
registered on an Additional Registration Statement, the Company shall file
Additional Registration Statements successively trying to register on each such
Additional Registration Statement the maximum number of remaining Additional
Registrable Securities until the Additional Required Registration Amount has
been registered with the SEC.  In the event that Form S-3 is
unavailable for such a registration, the Company shall use such other
appropriate form as is available for such a registration and is reasonably
acceptable to the Required Holders, subject to the provisions of Section
2(e).  Each Additional Registration Statement prepared pursuant hereto
shall register for resale at least that number of shares of Common Stock equal
to the Additional Required Registration Amount determined as of the date such
Additional Registration Statement is initially filed with the
SEC.  Each Additional Registration Statement shall contain (except if
otherwise directed by the Required Holders) the "Selling Shareholders" and "Plan
of Distribution" sections in substantially the form attached hereto as Exhibit
B.  The Company shall use its best efforts to have each
Additional Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the Additional Effectiveness
Deadline.  By 9:30 a.m. New York time on the Business Day following
the Additional Effective Date, the Company shall file with the SEC in accordance
with Rule 424 under the 1933 Act the final prospectus to be used in connection
with sales pursuant to such Additional Registration Statement.

     

    (c)           Allocation of Registrable
Securities.  The initial number of Registrable Securities
included in any Registration Statement and any increase or decrease in the
number of Registrable Securities included therein shall be allocated pro rata
among the Investors based on the number of Registrable Securities held by each
Investor at the time the Registration Statement covering such initial number of
Registrable Securities or increase or decrease thereof is filed with the
SEC.  In the event that an Investor sells or otherwise transfers any
of such Investor's Registrable Securities, each transferee shall be allocated a
pro rata portion of the then remaining number of Registrable Securities included
in such Registration Statement for such transferor.  Any shares of
Common Stock included in a Registration Statement and which remain allocated to
any Person which ceases to hold any Registrable Securities covered by such
Registration Statement shall be allocated to the remaining Investors, pro rata
based on the number of Registrable Securities then held by such Investors which
are covered by such Registration Statement.  In no event shall the
Company include any securities other than Registrable Securities on any
Registration Statement without the prior written consent of the Required
Holders.

     

     

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    (d)           Legal
Counsel.  Subject to Section 5 hereof, the Required Holders
shall have the right to select one legal counsel to review and oversee any
registration pursuant to this Section 2 ("Legal Counsel"), which shall
be Schulte Roth & Zabel LLP or such other counsel as thereafter designated
by the Required Holders.  The Company and Legal Counsel shall
reasonably cooperate with each other in performing the Company's obligations
under this Agreement.

     

    (e)           Ineligibility for Form
S-3.  In the event that Form S-3 is not available for the
registration of the resale of Registrable Securities hereunder, the Company
shall (i) register the resale of the Registrable Securities on another
appropriate form reasonably acceptable to the Required Holders and (ii)
undertake to register the Registrable Securities on Form S-3 as soon as such
form is available, provided that the Company shall maintain the effectiveness of
the Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.

     

    (f)           Sufficient Number of Shares
Registered.  In the event the number of shares available under
a Registration Statement filed pursuant to Section 2(a) or Section 2(b) is
insufficient to cover all of the Registrable Securities required to be covered
by such Registration Statement or an Investor's allocated portion of the
Registrable Securities pursuant to Section 2(c), the Company shall amend the
applicable Registration Statement, or file a new Registration Statement (on the
short form available therefor, if applicable), or both, so as to cover at least
the Required Registration Amount as of the Trading Day immediately preceding the
date of the filing of such amendment or new Registration Statement, in each
case, as soon as practicable, but in any event not later than fifteen (15) days
after the necessity therefor arises.  The Company shall use its best
efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof.  For
purposes of the foregoing provision, the number of shares available under a
Registration Statement shall be deemed "insufficient to cover all of the
Registrable Securities" if at any time the number of shares of Common Stock
available for resale under the Registration Statement is less than the product
determined by multiplying (i) the Required Registration Amount as of such time
by (ii) 0.80.  The calculation set forth in the foregoing sentence
shall be made without regard to any limitations and/or redemption on the
conversion of the Preferred Shares or exercise of the Warrants and such
calculation shall assume that the Preferred Shares are then convertible into
shares of Common Stock at the then prevailing Conversion Rate (as defined in the
Certificate of Designations and the Warrants are then exercisable for shares of
Common Stock at the then prevailing Exercise Price (as defined in the
Warrants).

     

     

     

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    (g)           Effect of Failure to File
and Obtain and Maintain Effectiveness of Registration
Statement.  If (i) a Registration Statement covering all of the
Registrable Securities required to be covered thereby and required to be filed
by the Company pursuant to this Agreement is (A) not filed with the SEC on or
before the respective Filing Deadline (a "Filing Failure") or (B) not
declared effective by the SEC on or before the respective Effectiveness
Deadline, (an "Effectiveness
Failure") or
(ii) on any day after the respective Effective Date sales of all of the
Registrable Securities required to be included on such Registration Statement
cannot be made (other than during an Allowable Grace Period (as defined in
Section 3(r)) pursuant to such Registration Statement or otherwise (including,
without limitation, because of the suspension of trading or any other limitation
imposed by an Eligible Market, a failure to keep such Registration Statement
effective, a failure to disclose such information as is necessary for sales to
be made pursuant to such Registration Statement or a failure to register a
sufficient number of shares of Common Stock or to maintain the listing of the
Common Stock) (a "Maintenance
Failure") then, as partial relief for the damages to any holder by reason
of any such delay in or reduction of its ability to sell the underlying shares
of Common Stock (which remedy shall not be exclusive of any other remedies
available at law or in equity, including, without limitation, specific
performance), the Company shall pay to each holder of Registrable Securities
relating to such Registration Statement an amount in cash equal to two percent
(2.0%) of the aggregate Purchase Price (as such term is defined in the
Securities Purchase Agreement) of such Investor's Registrable Securities
included in such Registration Statement on each of the following dates: (i) the
day of a Filing Failure; (ii) the day of an Effectiveness Failure; and (iii) the
initial day of a Maintenance Failure; (iv) on the thirtieth day after the date
of a Filing Failure and every thirtieth day thereafter (pro rated for periods
totaling less than thirty days) until such Filing Failure is cured; (v) on the
thirtieth day after the date of an Effectiveness Failure and every thirtieth day
thereafter (pro rated for periods totaling less than thirty days) until such
Effectiveness Failure is cured; and (vi) on the thirtieth day after the date of
a Maintenance Failure and every thirtieth day thereafter (pro rated for periods
totaling less than thirty days) until such Maintenance Failure is
cured.  The payments to which a holder shall be entitled pursuant to
this Section 2(g) are referred to herein as "Registration Delay
Payments."  Registration Delay Payments shall be paid on the
earlier of (I) the dates set forth above and (II) the third Business Day after
the event or failure giving rise to the Registration Delay Payments is
cured.  In the event the Company fails to make Registration Delay
Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of one and one-half percent (1.5%) per month (prorated for
partial months) until paid in full.  Notwithstanding the foregoing, no
Registration Delay Payments shall be due pursuant to this Section 2(g) as a
result of and solely to the extent of an Effectiveness Failure (i) caused solely
by the application of a limitation on the maximum number of shares of Common
Stock of the Company permitted to be registered by the staff of the SEC pursuant
to Rule 415 or (ii) with respect to any Investor, caused solely by such
Investor's exercise of its rights pursuant to Section 3(h).

     

    3.           Related
Obligations.

     

    At such
time as the Company is obligated to file a Registration Statement with the SEC
pursuant to Section 2(a), 2(b), 2(e) or 2(f), the Company will use its best
efforts to effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof and, pursuant thereto, the
Company shall have the following obligations:

     

     

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    (a)           The
Company shall promptly prepare and file with the SEC a Registration Statement
with respect to the Registrable Securities and use its reasonable best efforts
to cause such Registration Statement relating to the Registrable Securities to
become effective as soon as practicable after such filing (but in no event later
than the Effectiveness Deadline).  The Company shall keep each
Registration Statement effective pursuant to Rule 415 at all times until the
earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction or limitation pursuant to Rule 144 and without the requirement to be
in compliance with Rule 144(c)(1) (or any successor thereto) promulgated under
the 1933 Act or (ii) the date on which the Investors shall have sold all of the
Registrable Securities covered by such Registration Statement (the "Registration
Period").  The Company shall 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.  The term "best
efforts" shall mean, among other things, that the Company shall submit to the
SEC, within two (2) Business Days after the later of the date that (i) the
Company learns that no review of a particular Registration Statement will be
made by the staff of the SEC or that the staff has no further comments on a
particular Registration Statement, as the case may be, and (ii) the approval of
Legal Counsel pursuant to Section 3(c) (which approval is immediately sought), a
request for acceleration of effectiveness of such Registration Statement to a
time and date, subject to acceptance by the SEC, not later than two (2) Business
Days after the submission of such request.  The Company shall respond
in writing to comments made by the SEC in respect of a Registration Statement as
soon as practicable, but in no event later than fifteen (15) days after the
receipt of comments by or notice from the SEC that an amendment is required in
order for a Registration Statement to be declared effective.

     

    (b)           The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement.  In the case of amendments and
supplements to a Registration Statement which are required to be filed pursuant
to this Agreement (including pursuant to this Section 3(b)) by reason of the
Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous
report under the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Company shall
have incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the SEC no later
than three (3) Trading Days after the date on which the 1934 Act report is filed
which created the requirement for the Company to amend or supplement such
Registration Statement.

     

     

     

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    (c)           The
Company shall (A) permit Legal Counsel to review and comment upon (i) a
Registration Statement at least five (5) Business Days prior to its filing with
the SEC and (ii) all amendments and supplements to all Registration Statements
(except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and any similar or successor reports) within a reasonable
number of days prior to their filing with the SEC, and (B) not file any
Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel reasonably objects.  The Company shall not submit a
request for acceleration of the effectiveness of a Registration Statement or any
amendment or supplement thereto without the prior approval of Legal Counsel,
which consent shall not be unreasonably withheld.  The Company shall
furnish to Legal Counsel, without charge, (i) copies of any correspondence from
the SEC or the staff of the SEC to the Company or its representatives relating
to any Registration Statement, (ii) promptly after the same is prepared and
filed with the SEC, one copy of any Registration Statement and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference, if requested by an Investor, and all exhibits
and (iii) upon the effectiveness of any Registration Statement, one copy of the
prospectus included in such Registration Statement and all amendments and
supplements thereto.  The Company shall reasonably cooperate with
Legal Counsel in performing the Company's obligations pursuant to this Section
3.

     

    (d)           The
Company shall furnish to each Investor whose Registrable Securities are included
in any Registration Statement, without charge,  (i) promptly after the
same is prepared and filed with the SEC, at least one copy of such Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by an
Investor, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including copies of any preliminary or final
prospectus, as such Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities owned by such
Investor.

     

    (e)           The
Company shall use its best efforts, unless an exemption from registration and
qualification applies, to (i) register and qualify the resale by Investors of
the Registrable Securities covered by a Registration Statement under such other
securities or "blue sky" laws of all applicable jurisdictions in the United
States, (ii) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such
jurisdiction.  The Company shall promptly notify Legal Counsel and
each Investor who holds Registrable Securities of the receipt by the Company of
any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or "blue sky" laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.

     

     

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    (f)           The
Company shall notify Legal Counsel and each Investor 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, subject to Section 3(r), promptly prepare
a supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and each Investor (or such other number of copies as
Legal Counsel or such Investor may reasonably request).  The Company
shall also promptly notify Legal Counsel and each Investor in writing (i) 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 (notification of such effectiveness shall be delivered to Legal
Counsel and each Investor by facsimile on the same day of such effectiveness and
by overnight mail), (ii) of any request by the SEC for amendments or supplements
to a Registration Statement or related prospectus or related information, and
(iii) of the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.  By 9:30 a.m. New
York City time on the date following the date any post-effective amendment has
become effective, the Company shall file with the SEC in accordance with Rule
424 under the 1933 Act the final prospectus to be used in connection with sales
pursuant to such Registration Statement.

     

    (g)           The
Company shall use its 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 Legal Counsel and each Investor who holds Registrable Securities being
sold 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.

     

    (h)           If
any Investor is required under applicable securities laws to be described in the
Registration Statement as an underwriter or an Investor believes that it could
reasonably be deemed to be an underwriter of Registrable Securities, at the
reasonable request of such Investor, the Company shall furnish to such Investor,
at such Investor's expense, on the date of the effectiveness of the Registration
Statement and thereafter from time to time on such dates as an Investor 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 Investors, 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 as is customarily given in an
underwritten public offering, addressed to the Investors.

     

     

    10

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)           If
any Investor is required under applicable securities laws to be described in the
Registration Statement as an underwriter or an Investor believes that it could
reasonably be deemed to be an underwriter of Registrable Securities, the Company
shall make available for inspection by (i) such Investor, (ii) Legal Counsel and
(iii) one firm of accountants or other agents retained by the Investors
(collectively, the "Inspectors"), all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be
reasonably deemed necessary by each Inspector, and cause the Company's officers,
directors and employees to supply all information which any Inspector may
reasonably request; provided, however, that each Inspector shall agree to hold
in strict confidence and shall not make any disclosure (except to an Investor)
or use of any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
Agreement.  Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential.  Nothing herein (or in any other confidentiality
agreement between the Company and any Investor) shall be deemed to limit the
Investors' ability to sell Registrable Securities in a manner which is otherwise
consistent with applicable laws and regulations.

     

    (j)           The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor 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 Investor is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor, at the
Investor's expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.

     

    (k)           The
Company shall use its best efforts either to (i) cause all of the Registrable
Securities covered by a Registration Statement to be listed on each Eligible
Market 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 or (ii) if, despite the Company's
best efforts, the Company is unsuccessful in satisfying the preceding clause
(i), to secure the inclusion for quotation on an Eligible Market for such
Registrable Securities and, without limiting the generality of the foregoing, to
use its best efforts to arrange for at least two market makers to register with
the Financial Industry Regulatory Authority, Inc. ("FINRA") as such with respect
to such Registrable Securities.  The Company shall pay all fees and
expenses in connection with satisfying its obligation under this Section
3(k).

     

     

     

    11

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (l)           The
Company shall cooperate with the Investors who hold Registrable Securities being
offered and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) 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 Investors may reasonably request and registered in such names as the
Investors may request.

     

    (m)           If
requested by an Investor, the Company shall as soon as practicable (i)
incorporate in a prospectus supplement or post-effective amendment such
information as an Investor 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 an Investor
holding any Registrable Securities.

     

    (n)           The
Company shall use its 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.

     

    (o)           The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 1933 Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the applicable Effective Date of a Registration
Statement.

     

    (p)           The
Company shall otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC in connection with any registration
hereunder.

     

    (q)           Within
two (2) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
A.

     

     

    12

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (r)           Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company and its counsel, in the best
interest of the Company and, in the opinion of counsel to the Company, otherwise
required (a "Grace
Period"); provided, that the Company shall promptly (i) notify the
Investors in writing of the existence of material, non-public information giving
rise to a Grace Period (provided that in each notice the Company will not
disclose the content of such material, non-public information to the Investors)
and the date on which the Grace Period will begin, and (ii) notify the Investors
in writing of the date on which the Grace Period ends; and, provided further,
that no Grace Period shall exceed five (5) consecutive days and during any three
hundred sixty five (365) day period such Grace Periods shall not exceed an
aggregate of twenty (20) days and the first day of any Grace Period must be at
least five (5) Trading Days after the last day of any prior Grace Period (each,
an "Allowable Grace
Period") and that no Allowable Grace Period shall occur during the thirty
(30) calendar days immediately following the Effective Date.  For
purposes of determining the length of a Grace Period above, the Grace Period
shall begin on and include the date the Investors receive the notice referred to
in clause (i) and shall end on and include the later of the date the Investors
receive the notice referred to in clause (ii) and the date referred to in such
notice.  The provisions of Section 3(g) hereof shall not be applicable
during the period of any Allowable Grace Period.  Upon expiration of
the Grace Period, the Company shall again be bound by the first sentence of
Section 3(f) with respect to the information giving rise thereto unless such
material, non-public information is no longer
applicable.  Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of an Investor in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale, prior to the
Investor's receipt of the notice of a Grace Period and for which the Investor
has not yet settled.

     

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

     

    4.           Obligations of the
Investors.

     

    (a)           At
least five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each Investor in writing of the
information the Company requires from each such Investor if such Investor elects
to have any of such Investor's Registrable Securities included in such
Registration Statement.  It shall be a condition precedent to the
obligations of the Company to complete any registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably
required to effect and maintain the effectiveness of the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.

     

     

    13

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)           Each
Investor, by such Investor's acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor's election to
exclude all of such Investor's Registrable Securities from such Registration
Statement.

     

    (c)           Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of 3(f), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor's receipt of copies of the
supplemented or amended prospectus as contemplated by Section 3(g) or the first
sentence of 3(f) or receipt of notice that no supplement or amendment is
required.  Notwithstanding anything to the contrary, the Company shall
cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of an Investor in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale prior to the
Investor's receipt of a notice from the Company of the happening of any event of
the kind described in Section 3(g) or the first sentence of 3(f) and for which
the Investor has not yet settled.

     

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

     

    5.           Expenses of
Registration.

     

    All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company.  The Company
shall also reimburse the Investors for the fees and disbursements of Legal
Counsel in connection with registration, filing or qualification pursuant to
Sections 2 and 3 of this Agreement which amount shall be limited to $10,000 for
each such registration, filing or qualification.

     

    6.           Indemnification.

     

    In the
event any Registrable Securities are included in a Registration Statement under
this Agreement:

     

     

    14

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a)           To
the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend each Investor, the directors, officers,
partners, members, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the 1933 Act or the 1934
Act (each, an "Indemnified
Person"), against any losses, claims, damages, liabilities, judgments,
fines, penalties, charges, costs, reasonable attorneys' fees, amounts paid in
settlement or expenses, joint or several (collectively, "Claims"), incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto ("Indemnified Damages"), to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon:  (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other "blue sky" laws of any jurisdiction
in which Registrable Securities are offered ("Blue Sky Filing"), or the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any violation of this
Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "Violations").  Subject
to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly
as such expenses are incurred and are due and payable, for any legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim.  Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section
6(a):  (i) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person expressly for use
in connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(d); and (ii) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed.  Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9.

     

     

    15

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)           In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified Party"), against
any Claim or Indemnified Damages to which any of them may become subject, under
the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are based upon any Violation, in each case to the
extent, and only to the extent, that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and, subject
to Section 6(c), such Investor shall reimburse the Indemnified Party any legal
or other expenses reasonably incurred by an Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld or
delayed; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by the Investors pursuant to Section 9.

     

    (c)           Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of not
more than one counsel for all such Indemnified Person or Indemnified Party to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the Indemnified Person or Indemnified Party, as the case may be, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding.  In the
case of an Indemnified Person, legal counsel referred to in the immediately
preceding sentence shall be selected by the Investors holding at least
two-thirds in interest of the Registrable Securities included in the
Registration Statement to which the Claim relates.  The Indemnified
Party or Indemnified Person shall reasonably cooperate with the indemnifying
party in connection with any negotiation or defense of any such action or Claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party or Indemnified Person
which relates to such action or Claim.  The indemnifying party shall
keep the Indemnified Party or Indemnified Person fully apprised at all times as
to the status of the defense or any settlement negotiations with respect
thereto.  No indemnifying party shall be liable for any settlement of
any action, claim or proceeding effected without its prior written consent;
provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent.  No indemnifying party shall, without the prior written
consent of the Indemnified Party or Indemnified Person, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim or litigation and such settlement shall not include any
admission as to fault on the part of the Indemnified Party.  Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made.  The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any liability to
the Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

     

     

    16

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)           The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.

     

    (e)           The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.

     

    7.           Contribution.

     

    To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that:  (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 1933
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) contribution by any seller of Registrable
Securities shall be limited in amount to the amount of net proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.

     

    8.           Reports Under the 1934
Act.

     

    With a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that may
at any time permit the Investors to sell securities of the Company to the public
without registration ("Rule
144"), the Company agrees to:

     

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

     

    (b)           file
with the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 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

     

     

    17

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)           furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company, if true, that it has
complied with the reporting requirements of Rule 144, the 1933 Act and the 1934
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the Investors to sell
such securities pursuant to Rule 144 without registration.

     

    9.           Assignment of Registration
Rights.

     

    The
rights under this Agreement shall be automatically assignable by the Investors
to any 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 a reasonable time after such assignment; (ii) the Company is,
within a reasonable time 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 1933 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 Securities Purchase Agreement.

     

    10.           Amendment of Registration
Rights.

     

    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 10 shall be binding upon each Investor and the Company.

     

    11.           Miscellaneous.

     

    (a)           A
Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities.  If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from such record
owner of such Registrable Securities.

     

    (b)           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:  (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same.  The addresses and facsimile numbers for such
communications shall be:

     

     

     

    18

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      If to the
Company:

       

      
        	 	
                China
      XD Plastics Company Limited

                11
      Broadway STE 1004

                New
      York, NY 10004

                Telephone:   212-747-1118

                Facsimile:    212-747-1088

                Attention:   Taylor
      Zhang, Chief Financial Officer

                Email:   cxdc@chinaxd.net

              


      

       

       

      With a
copy (for informational purposes only) to:

       

      
        	 	
                Loeb
      & Loeb LLP

                345
      Park Avenue

                New
      York, New York 10154

                Telephone:  212-407-4159

                Facsimile:   212-407-4990

                Attention:    Mitchell
      S. Nussbaum, Esq.

              


      

      


       

      If to the
Transfer Agent:

      
      

       

      
        	 	
                Interwest
      Transfer Company, Inc

                1981
      Murray Holladay Road, Suite 100

                Salt
      Lake City, UT  84117

                Telephone:   801-272-9294

                Facsimile:   801-277-3147

                Attention: 
      Melinda Orth

              


      

      


      If to a
Buyer, to its address, facsimile number and email address set forth on the
Schedule of Buyers, with copies to such Buyer's representatives as set forth on
the Schedule of Buyers,

       

      with a
copy (for informational purposes only) to:

       

      
        	 	
                Schulte
      Roth & Zabel LLP

                919
      Third Avenue

                New
      York, New York  10022
Telephone:   (212)
      756-2000

                Facsimile:   (212)
      593-5955

                Attention:    Eleazer
      N. Klein, Esq.

                Email:   eleazer.klein@srz.com

              


      

       

       

      If to a
Buyer, to its address, facsimile number or email address set forth on the
Schedule of Buyers attached hereto, with copies to such Buyer's representatives
as set forth on the Schedule of Buyers, or to such other address, facsimile
number and/or email address to the attention of such other Person as the
recipient party has specified by written notice given to each other party five
(5) days prior to the effectiveness of such change.  Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

    

     

     

    19

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)           Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

     

    (d)           All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
New York.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  The
Company hereby appoints Loeb & Loeb LLP with offices at 345 Park Avenue, New
York, New York 10154 as its agent for service of process in the United States.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

     

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

     

     

    20

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    
      
      
(f)           This
Agreement, the other Transaction Documents (as defined in the Securities
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.

     

    (g)           Subject
to the requirements of Section 9, this Agreement shall inure to the benefit of
and be binding upon the permitted successors and assigns of each of the parties
hereto.

     

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

     

    (i)           This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement.  This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

     

    (j)           Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.

     

    (k)           All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders, determined as if all of the Preferred Shares and
Warrants held by Investors then outstanding have been exercised for Registrable
Securities without regard to any limitations on conversions and/or redemptions
of the Preferred Shares or exercises of the Warrants.

     

    (l)           The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will
be applied against any party.

     

    (m)           This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

     

    (n)           The
obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this Agreement is
intended to confer any obligations on any Investor vis-à-vis any other
Investor.  Nothing contained herein, and no action taken by any
Investor pursuant hereto, shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated
herein.

     

     

    21

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (o)           Unless
otherwise indicated, all dollar amounts referred to in this Agreement are in
United States Dollars.  All amounts owing under this Agreement shall
be paid in US dollars.  All amounts denominated in other currencies
shall be converted in the US dollar equivalent amount in accordance with the
Exchange Rate on the date of calculation.  "Exchange Rate" means, in
relation to any amount of currency to be converted into US dollars pursuant to
this Agreement, the US dollar exchange rate as published in The Wall Street
Journal on the relevant date of calculation.

     

    (p)           Judgment
Currency.

     

    i. If for
the purpose of obtaining or enforcing judgment against the Company in any court
in any jurisdiction it becomes necessary to convert into any other currency
(such other currency being hereinafter in this Section 11(p) referred to as the
"Judgment Currency") an amount due in US Dollars under this Agreement, the
conversion shall be made at the Exchange Rate prevailing on the Business Day
immediately preceding:

     

    (a)      the
date of actual payment of the amount due, in the case of any proceeding in the
courts of New York or in the courts of any other jurisdiction that will give
effect to such conversion being made on such date: or

     

    (b)      the
date on which the foreign court determines, in the case of any proceeding in the
courts of any other jurisdiction (the date as of which such conversion is made
pursuant to this Section being hereinafter referred to as the "Judgment Conversion
Date").

     

    ii. If in the
case of any proceeding in the court of any jurisdiction referred to in Section
11(p)(i)(b) above, there is a change in the Exchange Rate prevailing between the
Judgment Conversion Date and the date of actual payment of the amount due, the
applicable party shall pay such adjusted amount as may be necessary to ensure
that the amount paid in the Judgment Currency, when converted at the Exchange
Rate prevailing on the date of payment, will produce the amount of US Dollars
which could have been purchased with the amount of Judgment Currency stipulated
in the judgment or judicial order at the Exchange Rate prevailing on the
Judgment Conversion Date.

     

    iii. Any
amount due from the Company under this provision shall be due as a separate debt
and shall not be affected by judgment being obtained for any other amounts due
under or in respect of this Agreement.

     

     

    * * * * *
*

     

    


     

    [Signature
Page Follows]

     

     

    22

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    



    


     

    IN WITNESS WHEREOF, each Buyer
and the Company have caused its respective signature page to this Registration
Rights Agreement to be duly executed as of the date first written
above.

     

    
      
        	 	
                COMPANY:

                 

                CHINA XD PLASTICS COMPANY
      LIMITED

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Jie
      Han	 
	 	 	Name:
      Jie Han	 
	 	 	Title:
      Chief Executive Officer	 
	 	 	 	 


      

    

     

     

     

     

     

     

     

     

     

    21


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, each Buyer
and the Company have caused its respective signature page to this Registration
Rights Agreement to be duly executed as of the date first written
above.

     

     

     

    
       

      
        
          	 	
                  BUYERS:

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 	 
	 	 	Name:
      	 
	 	 	Title:	 
	 	 	 	 


        

      

       

       

       

       

       

       

      22

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

     

     

     

    
 

    


     

    SCHEDULE
OF BUYERS

    


    
      	
               

              Buyer

            	
              Buyer
      Address

              and Facsimile Number

            	
              Buyer's
      Representative's Address

              and Facsimile Number

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      


    

     

     

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
A

     

    FORM
OF NOTICE OF EFFECTIVENESS

    OF
REGISTRATION STATEMENT

     

    


    Interwest
Transfer Company, Inc.

    1981
Murray Holladay Road, Suite 100

    Salt Lake
City, UT  84117

     

    Re:           China XD Plastics Company
Limited

     

    Ladies
and Gentlemen:

     

    [We
are][I am] counsel to China XD Plastics Company Limited, a Nevada corporation
(the "Company"), and
have represented the Company in connection with that certain Securities Purchase
Agreement, dated as of November 27, 2009 (the "Securities Purchase Agreement"), entered
into by and among the Company and the buyers named therein (collectively, the
"Holders") pursuant to
which the Company issued to the Holders Series C Convertible Preferred Shares
(the "Preferred Shares")
convertible into the Company's common stock, $0.0001 par value per share
(the "Common
Stock") and two (2) series of warrants exercisable for shares of Common
Stock (the "Warrants").  Pursuant
to the Securities Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Holders (the "Registration Rights
Agreement") pursuant to which the Company agreed, among other things, to
register the resale of the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Preferred Shares and the shares of Common Stock issuable
upon exercise of the Warrants under the Securities Act of 1933, as amended (the
"1933
Act").  In connection with the Company's obligations under the
Registration Rights Agreement, on ____________ ___, 2009, the Company filed a
Registration Statement on Form S-3 (File No. 333-_____________) (the "Registration Statement") with
the Securities and Exchange Commission (the "SEC") relating to the
Registrable Securities which names each of the Holders as a selling shareholder
thereunder.

     

    In connection with the foregoing,
[we][I] advise you that a member of the SEC's staff has advised [us][me] by
telephone that the SEC has entered an order declaring the Registration
Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF
EFFECTIVENESS] and [we]
[I] have no knowledge, after telephonic inquiry of a member of the SEC's staff,
that any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC and
the Registrable Securities are available for resale under the 1933 Act pursuant
to the Registration Statement.

     

    This
letter shall serve as our standing instruction to you that the shares of Common
Stock are freely transferable by the Holders pursuant to the Registration
Statement.  You need not require further letters from us to effect any
future legend-free issuance or reissuance of shares of Common Stock to the
Holders as contemplated by the Company's Irrevocable Transfer Agent Instructions
dated November [__], 2009.

     

    Very
truly yours,

     

    [ISSUER'S COUNSEL]

     

    By:_____________________

     

    CC:           [LIST NAMES OF HOLDERS]

    
 

     

     

    
Annex A-1

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

      


       

      
        	
                Name of Selling shareholder

              	
                Number of Shares of Common Stock Owned Prior to
      Offering

              	
                Maximum Number of Shares of Common Stock to be
      Sold Pursuant to this Prospectus

              	
                Number of Shares of Common Stock Owned After
      Offering

              


      

       

       

       

       

       

       

       

       

       

       

       

       

      
Annex A-2

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    EXHIBIT
B

    SELLING
SHAREHOLDERS

     

    The
shares of common stock being offered by the selling shareholders are those
issuable upon conversion of the convertible preferred shares and upon exercise
of the warrants.  For additional information regarding the issuances
of the convertible preferred shares and the warrants, see "Private Placement of
the Convertible Preferred Shares and Warrants" above.  We are
registering the shares of common stock in order to permit the selling
shareholders to offer the shares for resale from time to time.  Except
for the ownership of the convertible preferred shares and the warrants, the
selling shareholders have not had any material relationship with us within the
past three years.

     

    The table
below lists the selling shareholders and other information regarding the
beneficial ownership of the shares of common stock by each of the selling
shareholders.  The second column lists the number of shares of common
stock beneficially owned by each selling shareholder, based on its ownership of
the shares of the convertible preferred shares and the warrants, as of ________,
2009, assuming conversion of all convertible preferred shares and exercise of
the warrants held by the selling shareholders on that date, without regard to
any limitations on conversions and/or redemptions of the convertible preferred
shares or exercises of the warrants.

     

    The third
column lists the shares of common stock being offered by this prospectus by the
selling shareholders.

     

    In
accordance with the terms of a registration rights agreement with the holders of
the convertible preferred shares and the warrants, this prospectus generally
covers the resale of at least 130% of the sum of (i) the number of shares of
common stock issued and issuable upon conversion of the convertible preferred
shares as of the trading day immediately preceding the date the registration
statement is initially filed with the SEC and (ii) the number of shares of
common stock issued and issuable upon exercise of the related warrants,
determined as if the outstanding warrants were exercised, as applicable, in
full, as of the Trading Day immediately preceding the date this registration
statement is initially filed with the SEC, without regard to any limitations on
conversions and/or redemptions of the Preferred Shares or exercises of the
Warrants.  The fourth column assumes the sale of all of the shares
offered by the selling shareholders pursuant to this prospectus.

     

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

     

    
 

     

     

    Annex B-1

    
       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    PLAN
OF DISTRIBUTION

     

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

     

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

     

    
      	
              ·  

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

            


    

     

    
      	
              ·  

            	
              in
      the over-the-counter market;

            


    

     

    
      	
              ·  

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

            


    

     

    
      	
              ·  

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

            


    

     

    
      	
              ·  

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

            


    

     

    
      	
              ·  

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

            


    

     

    
      	
              ·  

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

            


    

     

    
      	
              ·  

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

            


    

     

    
      	
              ·  

            	
              privately
      negotiated transactions;

            


    

     

    
      	
              ·  

            	
              short
      sales;

            


    

     

    
      	
              ·  

            	
              sales
      pursuant to Rule 144;

            


    

     

     

     

    Annex
B-1

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              ·  

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

            


    

     

    
      	
              ·  

            	
              a
      combination of any such methods of sale;
and

            


    

     

    
      	
              ·  

            	
              any
      other method permitted pursuant to applicable
  law.

            


    

     

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

     

    The
selling shareholders may pledge or grant a security interest in some or all of
the convertible preferred shares or warrants or shares of common stock owned by
them and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time pursuant to this prospectus or any amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of
1933, as amended, amending, if necessary, the list of selling shareholders to
include the pledgee, transferee or other successors in interest as selling
shareholders under this prospectus.  The selling shareholders also may
transfer and donate the shares of common stock in other circumstances in which
case the transferees, donees, pledgees or other successors in interest will be
the selling beneficial owners for purposes of this prospectus.

     

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

     

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

     

     

    Annex
B-2

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

     

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

    


     

     

     

     

    Annex B-3