Document:

RENTRAK
CORPORATION

    

    AMENDED
AND RESTATED

    2005
STOCK INCENTIVE PLAN

    

    Effective
August 20, 2009

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          	 
      	
                                                                                                  TABLE
      OF CONTENTS

                                                                                                	 
      
	 	 	 
	 
      	 
      	
                                                                                                  Page

                                                                                                
	 	 	 
	
                                                                                                  1.

                                                                                                	
                                                                                                  ESTABLISHMENT
      AND PURPOSE

                                                                                                	
                                                                                                  1

                                                                                                
	 	 	 
	 
      	
                                                                                                  1.1

                                                                                                	
                                                                                                  Establishment

                                                                                                	
                                                                                                  1

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  1.2

                                                                                                	
                                                                                                  Purpose

                                                                                                	
                                                                                                  1

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  1.3

                                                                                                	
                                                                                                  Prior
      Plans

                                                                                                	
                                                                                                  1

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  1.4

                                                                                                	
                                                                                                  Reservation
      of Right to Amend to Comply with Section 409A

                                                                                                	
                                                                                                  1

                                                                                                
	 	 	 	 
	
                                                                                                  2.

                                                                                                	DEFINITIONS	
                                                                                                  1

                                                                                                
	 	 	 
	 
      	
                                                                                                  2.1

                                                                                                	
                                                                                                  Defined
      Terms

                                                                                                	
                                                                                                  1

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  2.2

                                                                                                	
                                                                                                  Gender
      and Number

                                                                                                	
                                                                                                  6

                                                                                                
	 	 	 	 
	
                                                                                                  3.

                                                                                                	ADMINISTRATION	
                                                                                                  6

                                                                                                
	 	 	 
	 
      	
                                                                                                  3.1

                                                                                                	
                                                                                                  General

                                                                                                	
                                                                                                  6

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  3.2

                                                                                                	
                                                                                                  Composition
      of the Committee

                                                                                                	
                                                                                                  6

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  3.3

                                                                                                	
                                                                                                  Authority
      of the Committee

                                                                                                	
                                                                                                  6

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  3.4

                                                                                                	
                                                                                                  Action
      by the Committee

                                                                                                	
                                                                                                  7

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  3.5

                                                                                                	
                                                                                                  Delegation

                                                                                                	
                                                                                                  7

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  3.6

                                                                                                	
                                                                                                  Liability
      of Committee Members

                                                                                                	
                                                                                                  7

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  3.7

                                                                                                	
                                                                                                  Costs
      of Plan

                                                                                                	
                                                                                                  7

                                                                                                
	 	 	 	 
	
                                                                                                  4.

                                                                                                	DURATION
      OF THE PLAN AND SHARES SUBJECT TO THE PLAN	
                                                                                                  7

                                                                                                
	 	 	 
	 
      	
                                                                                                  4.1

                                                                                                	
                                                                                                  Duration
      of the Plan

                                                                                                	
                                                                                                  7

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  4.2

                                                                                                	
                                                                                                  Shares
      Subject to the Plan

                                                                                                	
                                                                                                  7

                                                                                                
	 	 	 	 
	
                                                                                                  5.

                                                                                                	ELIGIBILITY	
                                                                                                  8

                                                                                                
	 	 	 
	
                                                                                                  6.

                                                                                                	AWARDS	
                                                                                                  8

                                                                                                
	 	 	 
	 
      	
                                                                                                  6.1

                                                                                                	
                                                                                                  Types
      of Awards

                                                                                                	
                                                                                                  8

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  6.2

                                                                                                	
                                                                                                  General

                                                                                                	
                                                                                                  8

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  6.3

                                                                                                	
                                                                                                  Nonuniform
      Determinations

                                                                                                	
                                                                                                  8

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  6.4

                                                                                                	
                                                                                                  Award
      Agreements

                                                                                                	
                                                                                                  8

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  6.5

                                                                                                	
                                                                                                  Provisions
      Governing All Awards

                                                                                                	
                                                                                                  9

                                                                                                
	 	 	 	 
	
                                                                                                  7.

                                                                                                	OPTIONS	
                                                                                                  13

                                                                                                
	 	 	 
	 
      	
                                                                                                  7.1

                                                                                                	
                                                                                                  Types
      of Options

                                                                                                	
                                                                                                  13

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  7.2

                                                                                                	
                                                                                                  General

                                                                                                	
                                                                                                  13

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  7.3

                                                                                                	
                                                                                                  Option
      Price

                                                                                                	
                                                                                                  13

                                                                                                
	 	 	 	 
	 
      	
                                                                                                  7.4

                                                                                                	
                                                                                                  Option
      Term

                                                                                                	
                                                                                                  13

                                                                                                

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
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                                                                                              TABLE
      OF CONTENTS

                                                                                              (continued)

                                                                                            	 
      
	 
      	 
      	 
      	
                                                                                              Page

                                                                                            
	 	 	 	 
	 
      	
                                                                                              7.5

                                                                                            	
                                                                                              Time
      of Exercise

                                                                                            	
                                                                                              13

                                                                                            
	 	 	 	 
	 
      	
                                                                                              7.6

                                                                                            	
                                                                                              Special
      Rules for Incentive Stock Options

                                                                                            	
                                                                                              14

                                                                                            
	 	 	 	 
	 
      	
                                                                                              7.7

                                                                                            	
                                                                                              Restricted
      Shares

                                                                                            	
                                                                                              14

                                                                                            
	 	 	 	 
	 
      	
                                                                                              7.8

                                                                                            	
                                                                                              Limitation
      on Number of Shares Subject to Options

                                                                                            	
                                                                                              14

                                                                                            
	 	 	 	 
	
                                                                                              8.

                                                                                            	STOCK
      APPRECIATION RIGHTS	
                                                                                              14

                                                                                            
	 	 	 
	 
      	
                                                                                              8.1

                                                                                            	
                                                                                              General

                                                                                            	
                                                                                              14

                                                                                            
	 	 	 	 
	 
      	
                                                                                              8.2

                                                                                            	
                                                                                              Nature
      of Stock Appreciation Right

                                                                                            	
                                                                                              14

                                                                                            
	 	 	 	 
	 
      	
                                                                                              8.3

                                                                                            	
                                                                                              Exercise

                                                                                            	
                                                                                              15

                                                                                            
	 	 	 	 
	 
      	
                                                                                              8.4

                                                                                            	
                                                                                              Form
      of Payment

                                                                                            	
                                                                                              15

                                                                                            
	 	 	 	 
	 
      	
                                                                                              8.5

                                                                                            	
                                                                                              Limitation
      on Number of Stock Appreciation Rights

                                                                                            	
                                                                                              15

                                                                                            
	 	 	 	 
	
                                                                                              9.

                                                                                            	RESTRICTED
      AWARDS	
                                                                                              15

                                                                                            
	 	 	 
	 
      	
                                                                                              9.1

                                                                                            	
                                                                                              Types
      of Restricted Awards

                                                                                            	
                                                                                              15

                                                                                            
	 	 	 	 
	 
      	
                                                                                              9.2

                                                                                            	
                                                                                              General

                                                                                            	
                                                                                              16

                                                                                            
	 	 	 	 
	 
      	
                                                                                              9.3

                                                                                            	
                                                                                              Restriction
      Period

                                                                                            	
                                                                                              16

                                                                                            
	 	 	 	 
	 
      	
                                                                                              9.4

                                                                                            	
                                                                                              Forfeiture

                                                                                            	
                                                                                              16

                                                                                            
	 	 	 	 
	 
      	
                                                                                              9.5

                                                                                            	
                                                                                              Settlement
      of Restricted Awards

                                                                                            	
                                                                                              16

                                                                                            
	 	 	 	 
	 
      	
                                                                                              9.6

                                                                                            	
                                                                                              Rights
      as a Shareholder

                                                                                            	
                                                                                              17

                                                                                            
	 	 	 	 
	 
      	
                                                                                              9.7

                                                                                            	
                                                                                              Limitation
      in Number of Restricted Awards

                                                                                            	
                                                                                              17

                                                                                            
	 	 	 	 
	
                                                                                              10.

                                                                                            	PERFORMANCE
      AWARDS	
                                                                                              17

                                                                                            
	 	 	 
	 
      	
                                                                                              10.1

                                                                                            	
                                                                                              General

                                                                                            	
                                                                                              17

                                                                                            
	 	 	 	 
	 
      	
                                                                                              10.2

                                                                                            	
                                                                                              Nature
      of Performance Awards

                                                                                            	
                                                                                              17

                                                                                            
	 	 	 	 
	 
      	
                                                                                              10.3

                                                                                            	
                                                                                              Performance
      Cycles

                                                                                            	
                                                                                              17

                                                                                            
	 	 	 	 
	 
      	
                                                                                              10.4

                                                                                            	
                                                                                              Performance
      Goals

                                                                                            	
                                                                                              17

                                                                                            
	 	 	 	 
	 
      	
                                                                                              10.5

                                                                                            	
                                                                                              Performance
      Goals for Executive Officers

                                                                                            	
                                                                                              18

                                                                                            
	 	 	 	 
	 
      	
                                                                                              10.6

                                                                                            	
                                                                                              Determination
      of Awards

                                                                                            	
                                                                                              18

                                                                                            
	 	 	 	 
	 
      	
                                                                                              10.7

                                                                                            	
                                                                                              Timing
      and Form of Payment

                                                                                            	
                                                                                              18

                                                                                            
	 	 	 	 
	 
      	
                                                                                              10.8

                                                                                            	
                                                                                              Limitation
      on Number of Performance Awards

                                                                                            	
                                                                                              18

                                                                                            
	 	 	 	 
	
                                                                                              11.

                                                                                            	OTHER
      STOCK-BASED AND COMBINATION AWARDS	
                                                                                              18

                                                                                            
	 	 	 
	 
      	
                                                                                              11.1

                                                                                            	
                                                                                              Other
      Stock-Based Awards

                                                                                            	
                                                                                              18

                                                                                            
	 	 	 	 
	 
      	
                                                                                              11.2

                                                                                            	
                                                                                              Combination
      Awards

                                                                                            	
                                                                                              19

                                                                                            
	 	 	 	 
	
                                                                                              12.

                                                                                            	DIVIDEND
      EQUIVALENTS	
                                                                                              19

                                                                                            

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          - ii
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                                                          TABLE
      OF CONTENTS

                                                          

                                                            (continued)

                                                          

                                                        	 
      
	 
      	 
      	 
      	
                                                          Page

                                                        
	 	 	 
	
                                                          13.

                                                        	ADJUSTMENTS
      UPON CHANGES IN CAPITALIZATION, ETC.	
                                                          19

                                                        
	 	 	 
	 
      	
                                                          13.1

                                                        	
                                                          Plan
      Does Not Restrict Corporation

                                                        	
                                                          19

                                                        
	 	 	 	 
	 
      	
                                                          13.2

                                                        	
                                                          Adjustments
      to Shares Subject to the Plan and Outstanding Awards

                                                        	
                                                          19

                                                        
	 	 	 	 
	
                                                          14.

                                                        	AMENDMENT
      AND TERMINATION	
                                                          20

                                                        
	 	 	 
	
                                                          15.

                                                        	MISCELLANEOUS	
                                                          20

                                                        
	 	 	 
	 
      	
                                                          15.1

                                                        	
                                                          Tax
      Withholding

                                                        	
                                                          20

                                                        
	 	 	 	 
	 
      	
                                                          15.2

                                                        	
                                                          Unfunded
      Plan

                                                        	
                                                          20

                                                        
	 	 	 	 
	 
      	
                                                          15.3

                                                        	
                                                          Annulment
      of Awards

                                                        	
                                                          20

                                                        
	 	 	 	 
	 
      	
                                                          15.4

                                                        	
                                                          Engaging
      in Competition With Corporation

                                                        	
                                                          21

                                                        
	 	 	 	 
	 
      	
                                                          15.5

                                                        	
                                                          Other
      Corporation Benefit and Compensation Programs

                                                        	
                                                          21

                                                        
	 	 	 	 
	 
      	
                                                          15.6

                                                        	
                                                          Securities
      Law Restrictions

                                                        	
                                                          21

                                                        
	 	 	 	 
	 
      	
                                                          15.7

                                                        	
                                                          Governing
      Law

                                                        	
                                                          21

                                                        
	 	 	 	 
	
                                                          16.

                                                        	SHAREHOLDER
      APPROVAL	
                                                          21

                                                        

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
           

        

        
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    RENTRAK
CORPORATION

    AMENDED
AND RESTATED

    2005
STOCK INCENTIVE PLAN

    

    1.           ESTABLISHMENT
AND PURPOSE

     

    1.1           Establishment.  Rentrak
Corporation, an Oregon corporation ("Corporation"), established the Rentrak
Corporation 2005 Stock Incentive Plan effective as of August 25, 2005 (the
"Effective Date").  The original Plan was approved at Corporation's
2005 annual shareholders' meeting.  The Plan is hereby amended and
restated in the form of this Rentrak Corporation Amended and Restated 2005 Stock
Incentive Plan (the "Plan"), effective as of the time of and subject to
shareholder approval as provided in Section 16.

     

    1.2           Purpose.  The
purpose of the Plan is to promote and advance the interests of Corporation and
its shareholders by enabling Corporation to attract, retain, and reward key
employees, directors, and outside consultants of Corporation and its
subsidiaries.  It is also intended to strengthen the mutuality of
interests between such employees, directors, and consultants and Corporation's
shareholders.  The Plan is designed to serve these purposes by
offering stock options and other equity-based incentive awards in order to
provide participants a proprietary interest in pursuing the long-term growth,
profitability, and financial success of Corporation.

     

    1.3           Prior
Plans.  The Plan is separate from the Rentrak Corporation 1997
Equity Participation Plan and the Rentrak Corporation 1997 Non-Officer Employee
Stock Option Plan (the "Prior Plans").  The adoption of the Plan
neither affects nor is affected by the continued existence of the Prior Plans
except that:

     

    (a)           No
further Awards will be granted under the Prior Plans; and

     

    (b)           The
number of Shares which may be made subject to Awards under the Plan will be
adjusted from time to time pursuant to Section 4.2 to reflect cancellation,
termination, or expiration of stock options previously granted under the Prior
Plans.

     

    1.4           Reservation of Right to
Amend to Comply with Section 409A.  The Board and the Committee
reserve the right to amend the Plan, either retroactively or prospectively, in
whatever respect is required to achieve and maintain compliance with the
requirements of Code Section 409A and the regulations and other guidance issued
by the Department of the Treasury thereunder (collectively, "Section
409A").

     

    2.           DEFINITIONS

     

    2.1           Defined
Terms.  For purposes of the Plan, the following terms have the
meanings set forth below:

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    "Award"
means an award or grant made to a Participant of Options, Stock Appreciation
Rights, Restricted Awards, Performance Awards, or Other Stock-Based Awards
pursuant to the Plan.

     

    "Award
Agreement" means an agreement as described in Section 6.4 of the
Plan.

     

    "Board"
means the Board of Directors of Corporation.

     

    "Change in
Control" has the meaning given by the Committee in each Award Agreement,
or, if the term is not otherwise defined in an Award Agreement, the first
occurrence of any of the following:

     

    (a)           Any
person (including any individual, corporation, limited liability company,
partnership, trust, group, association, or other "person," as such term is used
in Section 13(d)(3) or 14(d) of the Exchange Act) other than a trustee or
other fiduciary holding securities under an employee benefit plan of
Corporation, is or becomes a beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
Corporation representing 25 percent or more of the combined voting power of
Corporation's then outstanding securities;

     

    (b)           A
majority of the directors elected at any annual or special meeting of
shareholders are not individuals nominated by Corporation's then incumbent
Board; or

     

    (c)           The
shareholders of Corporation approve (i) a merger or consolidation of Corporation
with any other corporation, other than a merger or consolidation which would
result in the Voting Securities (defined as all issued and outstanding
securities ordinarily having the right to vote at elections of Corporation's
directors) of Corporation outstanding immediately prior to such transaction
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 75 percent of the
combined voting power of the Voting Securities of Corporation or of such
surviving entity outstanding immediately after such merger or consolidation,
(ii) a plan of complete liquidation of Corporation, or (iii) an agreement for
the sale or disposition by Corporation of all or substantially all of its
assets.

     

    "Code"
means the Internal Revenue Code of 1986, as amended and in effect from time to
time, or any successor statute, together with rules, regulations, and
interpretations promulgated under the Code.  Where the context so
requires, any reference to a particular Code section will be construed to refer
to the successor provision to such Code section.

     

    "Committee"
means the committee appointed by the Board to administer the Plan as provided in
Section 3 of the Plan.

     

    "Common
Stock" means the $.001 par value Common Stock of
Corporation.

     

    "Consultant"
means any consultant or adviser to Corporation or a Subsidiary selected by the
Committee who is not an employee of Corporation or a Subsidiary and who provides
services to Corporation or a Subsidiary other than services of a capital-raising
nature.

     

    
      
        
           

        

        
          - 2
-

          
            

          

        

        
           

        

      

    

    

    "Continuing
Restriction" means a Restriction contained in Sections 6.5(g),
6.5(i), 15.3, 15.4, and 15.6 of the Plan and any other Restriction expressly
designated by the Committee in an Award Agreement as a Continuing
Restriction.

     

    "Corporation"
means Rentrak Corporation, an Oregon corporation, or any successor
corporation.

     

    "Disability"
means the condition of being permanently "disabled" within the meaning of
Section 22(e)(3) of the Code, namely being unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12
months.  However, the Committee may change the foregoing definition of
"Disability" or may adopt a different definition for purposes of specific
Awards.

     

    "Exchange
Act" means the Securities Exchange Act of 1934, as amended and in effect
from time to time, or any successor statute.  Where the context so
requires, any reference to a particular section of the Exchange Act, or to any
rule promulgated under the Exchange Act, will be construed to refer to successor
provisions to such section or rule.

     

    "Fair
Market Value" means, on any given day, the fair market value per share of
the Common Stock determined as follows:

     

    (a)           If
the Common Stock is traded on an established securities exchange, the closing
sale price of Common Stock as reported for such day by the principal exchange on
which Common Stock is traded (as determined by the Committee) or, if Common
Stock was not traded on such day, on the next preceding day on which Common
Stock was traded;

     

    (b)           If
trading activity in Common Stock is reported on The Nasdaq Stock Market, the
closing sale price of Common Stock as reported for such day by Nasdaq or, if
Common Stock trades were not reported on such day, on the next preceding day on
which Common Stock trades were reported by Nasdaq;

     

    (c)           If
trading activity in Common Stock is reported on the OTC Bulletin Board, the
average of the closing representative bid and asked prices for such day as
reported on the OTC Bulletin Board or, if there are no such quotes for Common
Stock for such day, on the next preceding day for which bid and asked price
quotes for Common Stock were reported on the OTC Bulletin Board; or

     

    (d)           If
there is no market for Common Stock or if trading activities for Common Stock
are not reported in one of the manners described above, the fair market value
will be as determined by the Committee.

     

    "Incentive
Stock Option" or "ISO"  means
any Option granted pursuant to the Plan that is intended to be and is
specifically designated in its Award Agreement as an "incentive stock option"
within the meaning of Section 422 of the Code.

     

    
      
        
           

        

        
          - 3
-

          
            

          

        

        
           

        

      

    

    

    "Non-Employee
Board Director" means a member of the Board who is not an employee of
Corporation or any Subsidiary.

     

    "Non-Employee
Subsidiary Director" means a member of the board of directors of a
Subsidiary who is neither an employee of Corporation or a Subsidiary nor a
member of the Board.

     

    "Nonqualified
Option" or "NQO"
means any Option granted pursuant to the Plan that is not an Incentive Stock
Option.

     

    "Option"
means an ISO or an NQO.

     

    "Option
Committee" means a committee of one or more members of the Board (who
need not be members of the Committee) to whom the Committee may delegate
authority to grant Awards to Participants who are not Reporting
Persons.

     

    "Other
Stock-Based Award" means an Award as defined in Section 11.1 of the
Plan.

     

    "Participant"
means an employee of Corporation or a Subsidiary, a Consultant, a Non-Employee
Board Director, or a Non-Employee Subsidiary Director who is granted an Award
under the Plan.

     

    "Performance
Award" means an Award granted pursuant to the provisions of
Section 10 of the Plan, the Vesting of which is contingent on attainment of
Performance Goals.

     

    "Performance
Cycle" means a designated performance period pursuant to the provisions
of Section 10.3 of the Plan.

     

    "Performance
Goal" means a designated performance objective pursuant to the provisions
of Section 10.4 of the Plan.

     

    "Plan"
means this Rentrak Corporation 2005 Amended and Restated Stock Incentive Plan,
as set forth in this document and as it may be amended from time to
time.

     

    "Reporting
Person" means a Participant who is subject to the reporting requirements
of Section 16(a) of the Exchange Act.

     

    "Restricted
Award" means a Restricted Share or a Restricted Stock Unit granted
pursuant to Section 9 of the Plan.

     

    "Restricted
Share" means an Award described in Section 9.1(a) of the
Plan.

     

    "Restricted
Stock Unit" means an Award of units representing Shares described in
Section 9.1(b) of the Plan.

    

    
      
        
           

        

        
          - 4
-

          
            

          

        

        
           

        

      

    

    

    "Restriction"
means a provision in the Plan or in an Award Agreement which limits the
exercisability or transferability, or which governs the forfeiture, of an Award
or the Shares, cash, or other property payable pursuant to an
Award.

     

    "Restriction
Period" means a designated period pursuant to the provisions of Section
9.3 of the Plan.

     

    "Retirement"
has the meaning given by the Committee in each Award Agreement, or, if the term
is not otherwise defined in an Award Agreement, has the following
meaning:

     

    (a)           For
Participants who are employees, retirement from active employment with
Corporation and its Subsidiaries on or after age 65, or such earlier
retirement date as approved by the Committee for purposes of the
Plan;

     

    (b)           For
Participants who are Non-Employee Board Directors or Non-Employee Subsidiary
Directors, retirement from the applicable board of directors after attaining the
age and service period specified in the Corporate Governance Guidelines adopted
by the Board; or

     

    (c)           For
Participants who are Consultants, termination of service as a Consultant after
attaining a retirement age specified by the Committee for purposes of an Award
to such Consultant.

     

    "Settlement
Period" means, with respect to any Restricted Stock Unit Award or
Performance Award, the period following the expiration of the Restriction Period
or the Performance Cycle, respectively, for such Award specified by the
Committee in the Award Agreement for such Award so that the Restricted Stock
Unit Award or Performance Award will either (a) not be treated as a deferred
compensation arrangement for income tax purposes under Section 409A, or (b) if
treated as a deferred compensation arrangement for such purposes, will meet all
requirements under Section 409A.

     

    "Share"
means a share of Common Stock.

     

    "Stock
Appreciation Right" or "SAR"
means an Award to benefit from the appreciation of Common Stock granted pursuant
to the provisions of Section 8 of the Plan.

     

    "Subsidiary"
means (i) a "subsidiary corporation" of Corporation, within the meaning of
Section 424(f) of the Code, namely any corporation in which Corporation
directly or indirectly controls 50 percent or more of the total combined
voting power of all classes of stock having voting power, and (ii) any
partnership, limited liability company, or other business entity of which
Corporation owns or controls 50 percent or more of the voting interests and
which has been designated by the Committee as a subsidiary; provided, however,
that with respect to ISOs, only employees of subsidiary corporations as
described in clause (i) may receive such Awards.

     

    
      
        
           

        

        
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    "Vest,"
"Vesting,"
or "Vested"
means:

     

    (a)           In
the case of an Award that requires exercise, to be or to become immediately and
fully exercisable and free of all Restrictions (other than Continuing
Restrictions);

     

    (b)           In
the case of an Award that is subject to forfeiture, to be or to become
nonforfeitable, freely transferable, and free of all Restrictions (other than
Continuing Restrictions);

     

    (c)           In
the case of an Award that is required to be earned by attaining specified
Performance Goals, to be or to become earned and nonforfeitable, freely
transferable, and free of all Restrictions (other than Continuing Restrictions);
or

     

    (d)           In
the case of any other Award as to which payment is not dependent solely upon the
exercise of a right, election, or option, to be or to become immediately payable
and free of all Restrictions (except Continuing Restrictions).

     

    2.2           Gender and
Number.  Except where otherwise indicated by the context, any
masculine or feminine terminology used in the Plan also includes the opposite
gender; and the definition of any term in Section 2.1 in the singular also
includes the plural, and vice versa.

     

    3.           ADMINISTRATION

     

    3.1           General.  The
Plan will be administered by a Committee composed as described in
Section 3.2.

     

    3.2           Composition of the
Committee.  The Committee will be appointed by the Board and
will consist of not less than a sufficient number of Non-Employee Board
Directors so as to qualify the Committee to administer the Plan as contemplated
by Section 162(m)(4)(C) of the Code, Rule 16b-3 under the Exchange Act
and Rule 5605(d) of the Nasdaq Marketplace Rules.  The Board may from
time to time remove members from, or add members to, the
Committee.  Vacancies on the Committee, however caused, will be filled
by the Board.   In the event that the Committee ceases to satisfy
the requirements of Section 162(m)(4)(C), Rule 16b-3, or Rule 5605(d), the
Board will reconstitute the Committee as necessary to satisfy such
requirements.

     

    3.3           Authority of the
Committee.  The Committee has full power and authority (subject
to such orders or resolutions as may be issued or adopted from time to time by
the Board) to administer the Plan in its sole discretion, including the
authority to:

     

    (a)           Construe
and interpret the Plan and any Award Agreement;

     

    (b)           Promulgate,
amend, and rescind rules and procedures relating to the implementation of the
Plan;

     

    (c)           Select
the employees, Non-Employee Board Directors, Non-Employee Subsidiary Directors,
and Consultants who will be granted Awards;

     

    
      
        
           

        

        
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    (d)           Determine
the number and types of Awards to be granted to each such
Participant;

     

    (e)           Determine
the number of Shares, or Share equivalents, to be subject to each
Award;

     

    (f)         
  Determine the option price, purchase price, base price, or similar
feature for any Award; and

     

    (g)           Determine
all the terms and conditions of all Award Agreements, consistent with the
requirements of the Plan.

     

    Decisions
of the Committee, or any delegate as permitted by the Plan, will be final,
conclusive, and binding on all Participants.

     

    3.4           Action by the
Committee.  A majority of the members of the Committee will
constitute a quorum for the transaction of business.  Action approved
by a majority of the members present at any meeting at which a quorum is
present, or action in writing by all of the members of the Committee, will be
the valid acts of the Committee.

     

    3.5           Delegation.  Notwithstanding
any other provision of this Section 3, the Committee may delegate to the
Option Committee the authority, subject to such conditions or limitations as the
Committee may designate, to determine the recipients, types, amounts, and terms
of Awards granted to Participants who are not Reporting Persons.

     

    3.6           Liability of Committee
Members.  No member of the Committee or the Option Committee
will be liable for any action or determination made in good faith with respect
to the Plan, any Award, or any Participant.

     

    3.7           Costs of
Plan.  The costs and expenses of administering the Plan will be
borne by Corporation.

     

    4.           DURATION
OF THE PLAN AND SHARES SUBJECT TO THE PLAN

     

    4.1           Duration of the
Plan.  The Plan became effective on August 25, 2005, and
subject to approval by Corporation's shareholders as provided in Section 16
is amended and restated as of the date of such approval.  The Plan
will remain in effect until Awards have been granted covering all the available
Shares or the Plan is otherwise terminated by the Board.  Termination
of the Plan will not affect outstanding Awards.

     

    4.2           Shares Subject to the
Plan.  The shares which may be made subject to Awards under the
Plan are Shares of Common Stock, which may be either authorized and unissued
Shares or reacquired Shares.  No fractional Shares may be issued under
the Plan.  Subject to adjustment pursuant to Section 13, the
maximum number of Shares for which Awards may be granted under the Plan is
2,000,000.  If an Award under the Plan (or any option previously
granted under the Prior Plans) is canceled or expires for any reason prior to
having been fully Vested or exercised by a Participant or is settled in cash in
lieu of Shares or is exchanged for other Awards, all Shares covered by such
Awards will be added back into the number of Shares available for future Awards
under the Plan.

     

    
      
        
           

        

        
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    5.           ELIGIBILITY

     

    Officers
and other key employees of Corporation and its Subsidiaries (including employees
who may also be directors of Corporation or a Subsidiary), Consultants,
Non-Employee Board Directors, and Non-Employee Subsidiary Directors who, in the
Committee's judgment, are or will be contributors to the long-term success of
Corporation are eligible to receive Awards under the Plan.

     

    6.           AWARDS

     

    6.1           Types of
Awards.  The types of Awards that may be granted under the Plan
are:

     

    (a)           Options
governed by Section 7 of the Plan;

     

    (b)           Stock
Appreciation Rights governed by Section 8 of the Plan;

     

    (c)           Restricted
Awards governed by Section 9 of the Plan;

     

    (d)           Performance
Awards governed by Section 10 of the Plan; and

     

    (e)           Other
Stock-Based Awards or combination awards governed by Section 11 of the
Plan.

     

    In the
discretion of the Committee, any Award may be granted alone, in addition to, or
in tandem with other Awards under the Plan.

     

    6.2           General.  Subject
to the limitations of the Plan, the Committee may cause Corporation to grant
Awards to such Participants, at such times, of such types, in such amounts, for
such periods, with such option prices, purchase prices, or base prices, and
subject to such terms, conditions, limitations, and restrictions as the
Committee, in its discretion, deems appropriate.  Awards may be
granted as additional compensation to a Participant or in lieu of other
compensation to such Participant.  A Participant may receive more than
one Award and more than one type of Award under the Plan.

     

    6.3           Nonuniform
Determinations.  The Committee's determinations under the Plan
or under one or more Award Agreements, including, without limitation,
(a) the selection of Participants to receive Awards, (b) the type,
form, amount, and timing of Awards, (c) the terms of specific Award
Agreements, and (d) elections and determinations made by the Committee with
respect to exercise or payments of Awards, need not be uniform and may be made
by the Committee selectively among Participants and Awards, whether or not
Participants are similarly situated.

     

    6.4           Award
Agreements.  Each Award will be evidenced by a written Award
Agreement between Corporation and the Participant.  Award Agreements
may, subject to the provisions of the Plan, contain any provision approved by
the Committee.

     

    
      
        
           

        

        
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    6.5           Provisions Governing All
Awards.  All Awards are subject to the following
provisions:

     

    (a)           Alternative
Awards.  If any Awards are designated in their Award Agreements
as alternative to each other, the exercise of all or part of one Award will
automatically cause an immediate equal (or pro rata) corresponding termination
of the other alternative Award or Awards.

     

    (b)           Rights as
Shareholders.  No Participant will have any rights of a
shareholder with respect to Shares subject to an Award until such Shares are
issued in the name of the Participant.

     

    (c)           Employment
Rights.  Neither the adoption of the Plan nor the granting of
any Award confers on any person the right to continued employment with
Corporation or any Subsidiary or the right to remain as a director of or a
Consultant to Corporation or any Subsidiary, as the case may be, nor does it
interfere in any way with the right of Corporation or a Subsidiary to terminate
such person's employment or to remove such person as a Consultant or as a
director at any time for any reason, or for no reason, with or without
cause.

     

    (d)           Restriction on
Transfer.  Unless otherwise expressly provided in an individual
Award Agreement, no Award (other than Restricted Shares after they Vest) will be
transferable other than by will or the laws of descent and distribution and each
Award will be exercisable (if exercise is required), during the lifetime of the
Participant, only by the Participant or, in the event the Participant becomes
legally incompetent, by the Participant's guardian or legal
representative.  Notwithstanding the foregoing, the Committee, in its
discretion, may provide in any Award Agreement that the Award:

     

    ·           May
be freely transferred;

     

    ·           May
be freely transferred to a class of transferees specified in the Award
Agreement; or

     

    ·           May
be transferred, but only subject to any terms and conditions specified in the
Award Agreement (including, without limitation, a condition that an Award may
only be transferred without payment of consideration).

     

    Furthermore,
notwithstanding the foregoing, any Award may be surrendered to Corporation
pursuant to Section 6.5(h) in connection with the payment of the purchase
or option price of another Award or the payment of the Participant's federal,
state, or local tax withholding obligation with respect to the exercise or
payment of another Award.

     

    (e)           Termination of
Employment.  The terms and conditions under which an Award may
be exercised, if at all, after a Participant's termination of employment or
service as a Non-Employee Board Director, Non-Employee Subsidiary Director, or
Consultant will be determined by the Committee and specified in the applicable
Award Agreement.

     

    
      
        
           

        

        
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    (f)           Change in
Control.  The Committee, in its discretion, may provide in any
Award Agreement that:

     

    (i)        
   In the event of a Change in Control of Corporation, all or a
specified portion of the Award (to the extent then outstanding) will become
immediately Vested to the full extent not previously Vested.  Any such
acceleration of Award Vesting must comply with applicable regulatory
requirements and any Participant will be entitled to decline the accelerated
Vesting of all or any portion of his or her Award, if he or she determines that
such acceleration may result in adverse tax consequences to him or her;
and

     

    (ii)        
  In the event the Board approves a proposal
for:  (i) merger, exchange or consolidation in which Corporation
is not the resulting or surviving corporation (or in which Corporation is the
resulting or surviving corporation but becomes a subsidiary of another
corporation); (ii) transfer of all or substantially all the assets of
Corporation; (iii) sale of 25 percent or more of the combined voting
power of Corporation's Voting Securities; or (iv) the dissolution or
liquidation of Corporation (each, a "Transaction"), the Committee will notify
Participants in writing of the proposed Transaction (the "Proposed Transaction
Notice") at least 30 days prior to the effective date of the proposed
Transaction.  The Committee may, in its sole discretion, and to the
extent possible under the structure of the Transaction, select one of the
following alternatives for treating outstanding Awards under the
Plan:

     

    (a)           The
Committee may provide that outstanding Awards will be converted into or replaced
by Awards of a similar type relating to the securities of the surviving or
acquiring corporation in the Transaction.  The amount and type of
securities subject to and the exercise price (if applicable) of the replacement
or converted Awards will be determined by the Committee based on the exchange
ratio, if any, used in determining shares of the surviving corporation to be
issued to holders of Shares of Corporation.  If there is no exchange
ratio in the Transaction, the Committee will, in making its determination, take
into account the relative values of the companies involved in the Transaction
and such other factors as the Committee deems relevant.  Such
replacement or converted Awards will continue to Vest over the period (and at
the same rate) as the Awards which the replacement or converted Awards replaced,
unless determined otherwise by the Committee;

     

    (b)           The
Committee may provide a 30-day period prior to the consummation of the
Transaction during which all outstanding Awards will tentatively become fully
Vested, and upon consummation of such Transaction, all outstanding and
unexercised Awards will immediately terminate.  If the Committee
elects to provide such 30-day period for the exercise of Awards, the Proposed
Transaction Notice must so state.  Participants, by written notice to
Corporation, may exercise their Awards and, in so exercising the Awards, may
condition such exercise upon, and provide that such exercise will become
effective immediately prior to, the consummation of the Transaction, in which
event Participants need not make payment for any Common Stock to be purchased
upon exercise of an Award until five days after written notice by Corporation to
the Participants that the Transaction has been consummated (the "Transaction
Notice").  If the Transaction is consummated, each Award, to the
extent not previously exercised prior to the consummation of the Transaction,
will terminate and cease being exercisable as of the effective date of such
consummation.  If the Transaction is abandoned, (1) all
outstanding Awards not exercised will continue to be Vested and exercisable, to
the extent such Awards were Vested and exercisable prior to the date of the
Proposed Transaction Notice, and (2) to the extent that any Awards not
exercised prior to such abandonment have become Vested and exercisable solely by
operation of this Section 6.5(f)(ii), such Vesting and exercisability will
be deemed annulled, and the Vesting and exercisability provisions otherwise in
effect will be reinstituted, as of the date of such abandonment; or

     

    
      
        
           

        

        
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    (c)           The
Committee may provide that outstanding Awards that are not fully Vested will
become fully Vested subject to Corporation's right to pay each Participant a
cash amount (determined by the Committee and based on the amount, if any, being
received by Corporation's shareholders in the Transaction) in exchange for
cancellation of the applicable Award.

     

    Unless
the Committee specifically provides otherwise in the change in control provision
for a specific Award Agreement, Awards will become Vested as of a Change in
Control date only if, or to the extent, such acceleration in the Vesting of the
Awards does not result in an "excess parachute payment" within the meaning of
Section 280G(b) of the Code.  The Committee, in its discretion,
may include change in control provisions in some Award Agreements and not in
others, may include different change in control provisions in different Award
Agreements, and may include change in control provisions for some Awards or some
Participants and not for others.

     

    (g)           Conditioning or Accelerating
Benefits.  The Committee, in its discretion, may include in any
Award Agreement a provision conditioning or accelerating the Vesting of an Award
or the receipt of benefits pursuant to an Award, either automatically or in the
discretion of the Committee, upon the occurrence of specified events, including
without limitation, a Change in Control of Corporation (subject to the foregoing
paragraph (f)), a sale of all or substantially all of the property and assets of
Corporation, or an event of the type described in Section 13 of this
Plan.

     

    (h)           Payment of Purchase Price
and Withholding.  The Committee, in its discretion, may include
in any Award Agreement a provision permitting the Participant to pay the
purchase or option price, if any, for the Shares or other property issuable
pursuant to the Award, or the Participant's federal, state, or local tax
withholding obligations with respect to such issuance, in whole or in part by
any one or more of the following methods; provided, however, that the
availability of any one or more methods of payment may be suspended from time to
time if the Committee determines that the use of such payment method would
result in adverse financial accounting treatment for Corporation or adverse tax
treatment for Corporation or the Participant:

     

    (i)           By
delivering previously owned Shares (including fully vested Restricted
Shares);

     

    (ii)          By
surrendering other outstanding Vested Awards under the Plan denominated in
Shares or in Share equivalent units;

     

    
      
        
           

        

        
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    (iii)         By
reducing the number of Shares or other property otherwise Vested and issuable
pursuant to the Award;

     

    (iv)         Unless
specifically prohibited by any applicable statute or rule, including, without
limitation, the provisions of the Sarbanes-Oxley Act of 2002, by delivering to
Corporation a promissory note payable on such terms and over such period as the
Committee may determine;

     

    (v)          By
delivery (in a form approved by the Committee) of an irrevocable direction to a
securities broker acceptable to the Committee (subject to the provisions of the
Sarbanes-Oxley Act of 2002 and any other applicable statute or
rule):

     

    (a)           To
sell Shares subject to the Award and to deliver all or a part of the sales
proceeds to Corporation in payment of all or a part of the option or purchase
price and taxes or withholding taxes attributable to the issuance;
or

     

    (b)           To
pledge Shares subject to the Award to the broker as security for a loan and to
deliver all or a part of the loan proceeds to Corporation in payment of all or a
part of the option or purchase price and taxes or withholding taxes attributable
to the issuance; or

     

    (vi)         In
any combination of the foregoing or in any other form approved by the
Committee.

     

    Shares
withheld or surrendered as described above will be valued based on their Fair
Market Value on the date of the transaction.  Any Shares withheld or
surrendered with respect to a Reporting Person will be subject to such
additional conditions and limitations as the Committee may impose to comply with
the requirements of the Exchange Act.

     

    (i)           Reporting
Persons.  With respect to all Awards granted to Reporting
Persons, the following limitations will apply only if or to the extent required
by Rule 16b-3 under the Exchange Act, unless the Award Agreement provides
otherwise:

     

    (i)           Awards
requiring exercise will not be exercisable until at least six months after the
date the Award was granted, except in the case of the death or Disability of the
Participant; and

     

    (ii)          Shares
issued pursuant to any other Award may not be sold by the Participant for at
least six months after acquisition, except in the case of the death or
Disability of the Participant.

     

    Award
Agreements for Awards to Reporting Persons must also comply with any future
restrictions imposed by such Rule 16b-3.

     

    (j)           Service
Periods.  At the time of granting an Award, the Committee may
specify, by resolution or in the Award Agreement, the period or periods of
service performed or to be performed by the Participant in connection with the
grant of the Award.

     

    
      
        
        

      

      
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    (k)           Prohibition on Repricing of
Options and Stock Appreciation Rights.  Except for adjustments
pursuant to Section 13, at no time shall the exercise price of an Option or the
base price of a Stock Appreciation Right granted under the Plan be subsequently
repriced during the period of its exercisability.  For purposes of
this Section, repricing means any of the following or any other action that has
the same effect:

     

    (i)           Lowering
the exercise or base price after the Option or Stock Appreciation Right is
granted;

     

    (ii)          Any
other action that is treated as a repricing under generally accepted accounting
principles; or

     

    (iii)         Canceling
an Option or Stock Appreciation Right at a time when its exercise or base price
exceeds the Fair Market Value of the underlying Shares, in exchange for another
Award, unless the cancellation and exchange occurs in connection with a merger,
acquisition, spin-off or other similar corporate transaction.

     

    7.           OPTIONS

     

    7.1           Types of
Options.  Options granted under the Plan may be in the form of
Incentive Stock Options or Nonqualified Options.  The grant of each
Option and the Award Agreement governing each Option will identify the Option as
an ISO or an NQO.  In the event the Code is amended to provide for
tax-favored forms of stock options other than or in addition to Incentive Stock
Options, the Committee may grant Options under the Plan meeting the requirements
of such forms of options.

     

    7.2           General.  All
Options will be subject to the terms and conditions set forth in Section 6
and this Section 7 and Award Agreements governing Options may contain such
additional terms and conditions, not inconsistent with the express provisions of
the Plan, as the Committee deems desirable.

     

    7.3           Option
Price.  Each Award Agreement for Options will state the option
exercise price per Share of Common Stock purchasable under the Option, which may
not be less than 100 percent of the Fair Market Value of a Share on the
date of grant for all Options.

     

    7.4           Option
Term.  The Award Agreement for each Option will specify the
term of each Option, which may be unlimited or may have a specified period
during which the Option may be exercised, as determined by the
Committee.

     

    7.5           Time of
Exercise.  The Award Agreement for each Option will specify, as
determined by the Committee:

     

    (a)           The
time or times when the Option becomes exercisable and whether the Option becomes
exercisable in full or in graduated amounts based
on:  (i) continuation of employment over a period specified in
the Award Agreement, (ii) satisfaction of performance goals or criteria
specified in the Award Agreement, or (iii) a combination of continuation of
employment and satisfaction of performance goals or criteria;

     

    
      
        
           

        

        
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    (b)           Such
other terms, conditions, and restrictions as to when the Option may be exercised
as determined by the Committee; and

     

    (c)           The
extent, if any, to which the Option will remain exercisable after the
Participant ceases to be an employee, Consultant, or director of Corporation or
a Subsidiary.

     

    An Award
Agreement for an Option may, in the discretion of the Committee, provide
whether, and to what extent, the time when an Option becomes exercisable may be
accelerated or otherwise modified (i) in the event of the death,
Disability, or Retirement of the Participant, or (ii) upon the occurrence
of a Change in Control.  The Committee may, at any time in its
discretion, accelerate the time when all or any portion of an outstanding Option
becomes exercisable.

     

    7.6           Special Rules for Incentive
Stock Options.  In the case of an Option designated as an
Incentive Stock Option, the terms of the Option and the Award Agreement will
conform with the statutory and regulatory requirements specified pursuant to
Section 422 of the Code, as in effect on the date such ISO is
granted.  ISOs may be granted only to employees of Corporation or a
Subsidiary.  ISOs may not be granted under the Plan after August 20,
2019, unless the ten-year limitation of Section 422(b)(2) of the Code is
removed or extended.

     

    7.7           Restricted
Shares.  In the discretion of the Committee, the Shares
issuable upon exercise of an Option may be Restricted Shares if so provided in
the Award Agreement for the Option.

     

    7.8           Limitation on Number of
Shares Subject to Options.  The aggregate number of Incentive
Stock Options that may be granted under the Plan may not exceed 800,000 Shares,
and in no event may Options (whether or not ISOs) for more than 300,000 Shares
be granted to any individual under the Plan during any fiscal year.

     

    8.           STOCK
APPRECIATION RIGHTS

     

    8.1           General.  Stock
Appreciation Rights are subject to the terms and conditions set forth in
Section 6 and this Section 8 and Award Agreements governing Stock
Appreciation Rights may contain such additional terms and conditions, not
inconsistent with the express terms of the Plan, as the Committee deems
desirable.

     

    8.2           Nature of Stock Appreciation
Right.  A Stock Appreciation Right is an Award entitling a
Participant to receive an amount equal to the excess (or, if the Committee
determines at the time of grant, a portion of the excess) of the Fair Market
Value of a Share of Common Stock on the date of exercise of the SAR over the
base price, as described below, on the date of grant of the SAR, multiplied by
the number of Shares with respect to which the SAR is being
exercised.  The base price will be designated by the Committee in the
Award Agreement for the SAR and may be the Fair Market Value of a Share on the
grant date of the SAR or such other higher price as the Committee
determines.  The base price may not be less than the Fair Market Value
of a Share on the grant date of the SAR.

     

    
      
        
           

        

        
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      8.3           Exercise.  A
Stock Appreciation Right may be exercised by a Participant in accordance with
procedures established by the Committee.  The Committee may also
provide that a SAR will be automatically exercised on one or more specified
dates or upon the satisfaction of one or more specified
conditions.  In the case of SARs granted to Reporting Persons,
exercise of the SARs will be limited by the Committee to the extent required to
comply with the applicable requirements of Rule 16b-3 under the Exchange
Act.

       

      8.4           Form of
Payment.  Payment upon exercise of a Stock Appreciation Right
must be made in Shares, provided that the Committee may provide in an Award
Agreement that a Stock Appreciation Right may be settled using cash or
installments (a "Cash Settled SAR") if the Committee determines that under the
terms of such Award Agreement the Cash Settled SAR will comply with the
requirements of Section 409A.

       

      8.5           Limitation on Number of
Stock Appreciation Rights.  In no event may more than 300,000
Stock Appreciation Rights be granted to any individual under the Plan during any
fiscal year.

       

      9.          
RESTRICTED AWARDS

       

      9.1           Types of Restricted
Awards.  Restricted Awards granted under the Plan may be in the
form of either Restricted Shares or Restricted Stock Units.

       

      (a)           Restricted
Shares.  A Restricted Share is an Award of Shares transferred
to a Participant subject to such terms and conditions as the Committee deems
appropriate, including, without limitation, restrictions on the sale,
assignment, transfer, or other disposition of such Restricted Shares and may
include a requirement that the Participant forfeit such Restricted Shares back
to Corporation upon termination of Participant's employment (or service as a
Non-Employee Board Director, Non-Employee Subsidiary Director, or Consultant)
for specified reasons within a specified period of time or upon other
conditions, as set forth in the Award Agreement for such Restricted
Shares.  Each Participant receiving a Restricted Share will be issued
a stock certificate in respect of such Shares, registered in the name of such
Participant, and will execute a stock power in blank with respect to the Shares
evidenced by such certificate.  The certificate evidencing such
Restricted Shares and the stock power will be held in custody by Corporation
until the Restrictions have lapsed.

       

      (b)           Restricted Stock
Units.  A Restricted Stock Unit is an Award of units (with each
unit having a value equivalent to one Share) granted to a Participant subject to
such terms and conditions as the Committee deems appropriate, and may include a
requirement that the Participant forfeit such Restricted Stock Units upon
termination of Participant's employment (or service as a Non-Employee Board
Director, Non-Employee Subsidiary Director, or Consultant) for specified reasons
within a specified period of time or upon other conditions, as set forth in the
Award Agreement for such Restricted Stock Units.  Under Section 409A,
Restricted Stock Unit Awards may be treated, for income tax purposes, as
deferred compensation arrangements.  In each Award Agreement for each
Restricted Stock Unit Award, the Committee will (a) specify the Settlement
Period and (b) set the other terms and conditions of the Award Agreement so that
the Restricted Stock Unit Award will comply with all applicable requirements of
Section 409A.

      
        
           

        

        
          - 15
-

          
            

          

        

        
           

        

      

       

      9.2           General.  Restricted
Awards are subject to the terms and conditions of Section 6 and this
Section 9 and Award Agreements governing Restricted Awards may contain such
additional terms and conditions, not inconsistent with the express provisions of
the Plan, as the Committee deems desirable.

       

      9.3           Restriction
Period.  Award Agreements for Restricted Awards will provide
that Restricted Awards, and the Shares subject to Restricted Awards, may not be
transferred, and may provide that, in order for a Participant to Vest in such
Restricted Awards, the Participant must remain in the employment (or remain as a
Non-Employee Board Director, Non-Employee Subsidiary Director, or Consultant) of
Corporation or its Subsidiaries, subject to relief for reasons specified in the
Award Agreement, for a period commencing on the grant date of the Award and
ending on such later date or dates as the Committee may designate at the time of
the Award (the "Restriction Period").  During the Restriction Period,
a Participant may not sell, assign, transfer, pledge, encumber, or otherwise
dispose of Shares received under or governed by a Restricted Award
grant.  The Committee, in its sole discretion, may provide for the
lapse of restrictions in installments during the Restriction
Period.  Upon expiration of the applicable Restriction Period (or
lapse of Restrictions during the Restriction Period where the Restrictions lapse
in installments) the Participant will be entitled to settlement of the
Restricted Award or portion thereof, as the case may be.  Although
Restricted Awards will usually Vest based on continued employment (or service as
a Non-Employee Board Director, Non-Employee Subsidiary Director, or Consultant)
and Performance Awards under Section 10 will usually Vest based on
attainment of Performance Goals, the Committee, in its discretion, may condition
Vesting of Restricted Awards on attainment of Performance Goals as well as
continued employment (or service as a Non-Employee Board Director, Non-Employee
Subsidiary Director, or Consultant).  In such case, the Restriction
Period for such a Restricted Award will include the period prior to satisfaction
of the Performance Goals.

       

      9.4           Forfeiture.  If
a Participant ceases to be an employee (or Consultant, Non-Employee Board
Director, or Non-Employee Subsidiary Director) of Corporation or a Subsidiary
during the Restriction Period for any reason other than reasons which may be
specified in an Award Agreement (such as death, Disability, or Retirement) the
Award Agreement may require that all non-Vested Restricted Awards previously
granted to the Participant be forfeited and returned to
Corporation.

       

      9.5           Settlement of Restricted
Awards.

       

      (a)           Restricted
Shares.  Upon Vesting of a Restricted Share Award, the legend
on such Shares will be removed, the Participant's stock power will be returned
and the Shares will no longer be Restricted Shares.

       

      (b)           Restricted Stock
Units.  Within the Settlement Period after Vesting of a
Restricted Stock Unit Award, a Participant will be entitled to receive payment
for Restricted Stock Units in an amount equal to the aggregate Fair Market Value
of the Shares covered by such Restricted Stock Units at the expiration of the
applicable Restriction Period.  Payment in settlement of a Restricted
Stock Unit will be made during the Settlement Period following the conclusion of
the applicable Restriction Period in cash, in installments, or in Shares equal
to the number of Restricted Stock Units or in any other manner or combination of
such methods as the Committee, in its sole discretion, determines.

      

        
          
             

          

          
            - 16
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      9.6           Rights as a
Shareholder.  A Participant has, with respect to unforfeited
Shares received under a grant of Restricted Shares, all the rights of a
shareholder of Corporation, including the right to vote the shares, and the
right to receive any cash dividends.  Stock dividends issued with
respect to Restricted Shares will be treated as additional Shares covered by the
grant of Restricted Shares and will be subject to the same
Restrictions.  A Participant will have no rights as a shareholder with
respect to a Restricted Stock Unit Award until Shares are issued to the
Participant in settlement of the Award.

       

      9.7           Limitation in Number of
Restricted Awards.  The aggregate number of shares subject to
Restricted Share Awards and Restricted Stock Unit Awards that may be granted
under the Plan may not exceed 750,000 Shares, and in no event may Restricted
Awards representing more than 300,000 Shares be granted to any individual under
the Plan during any fiscal year.

       

      10.         PERFORMANCE
AWARDS

       

      10.1         General.  Performance
Awards are subject to the terms and conditions set forth in Section 6 and
this Section 10 and Award Agreements governing Performance Awards may
contain such other terms and conditions not inconsistent with the express
provisions of the Plan, as the Committee deems desirable.

       

      10.2         Nature of Performance
Awards.  A Performance Award is an Award of units (with each
unit having a value equivalent to one Share) granted to a Participant subject to
such terms and conditions as the Committee deems appropriate, including, without
limitation, the requirement that the Participant forfeit all or a portion of
such Performance Award in the event specified performance criteria are not met
within a designated period of time.  Under Section 409A, Performance
Awards may be treated, for income tax purposes, as deferred compensation
arrangements.  In the Award Agreement for each Performance Award, the
Committee will (a) specify the Settlement Period, and (b) set the other terms
and conditions of the Award Agreement so that the Performance Award will comply
with all applicable requirements of Section 409A.

       

      10.3         Performance
Cycles.  For each Performance Award, the Committee will
designate a performance period (the "Performance Cycle") with a duration to be
determined by the Committee in its discretion within which specified Performance
Goals are to be attained.  There may be several Performance Cycles in
existence at any one time and the duration of Performance Cycles may differ from
each other.

       

      10.4         Performance
Goals.  The Committee will establish Performance Goals for each
Performance Cycle on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select.  Performance
Goals may be based on (i) performance criteria for Corporation, a
Subsidiary, or an operating group, (ii) a Participant's individual
performance, or (iii) a combination of both.  Performance Goals
may include objective and subjective criteria.  During any Performance
Cycle, the Committee may adjust the Performance Goals for such Performance Cycle
as it deems equitable in recognition of unusual or nonrecurring events affecting
Corporation, changes in applicable tax laws or accounting principles, or such
other factors as the Committee may determine.

      

        
          
             

          

          
            - 17
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      10.5         Performance Goals for
Executive Officers.  The Performance Goals for Performance
Awards granted to executive officers of Corporation may relate to corporate
performance, business unit performance, or a combination of both.

       

      (a)           Corporate
Performance Goals will be based on financial performance goals related to the
performance of Corporation as a whole and may include one or more measures
related to earnings, profitability, cash flow (including measures based on
Earnings Before Interest, Taxes, Depreciation, and Amortization [EBITDA]),
efficiency, or return to shareholders such as earnings per share, operating
income, stock price, costs of production, revenue growth, return on equity,
return on assets or return on invested capital.

       

      (b)           Business
unit Performance Goals will be based on a combination of financial goals and
strategic goals related to the performance of an identified business unit for
which a Participant has responsibility.  Strategic goals for a
business unit may include one or a combination of objective factors relating to
success in implementing strategic plans or initiatives, introducing products,
constructing facilities, developing software, or other identifiable
objectives.  Financial goals for a business unit may include the
degree to which the business unit achieves one or more objective measures
related to its revenues, earnings, profitability, efficiency, operating income,
costs of production, cash flow, return on equity, return on assets, or return on
invested capital.

       

      (c)           Any
corporate or business unit Performance Goals may be expressed as absolute
amounts or as ratios or percentages.  Success may be measured against
various standards, including budget targets, improvement over prior periods, and
performance relative to other companies, business units, or industry
groups.

       

      10.6         Determination of
Awards.  As soon as practicable after the end of a Performance
Cycle, the Committee will determine the extent to which Performance Awards have
been earned on the basis of performance in relation to the established
Performance Goals.

       

      10.7         Timing and Form of
Payment.  Settlement of earned Performance Awards will be made
to the Participant within the Settlement Period after the expiration of the
Performance Cycle and the Committee's determination under Section 10.6, in the
form of cash, installments, Shares, or any combination of the foregoing or in
any other form as the Committee determines.

       

      10.8         Limitation on Number of
Performance Awards.  In no event may Performance Awards
representing more than 300,000 Shares be granted to any individual under the
Plan during any fiscal year.

       

      11.         OTHER
STOCK-BASED AND COMBINATION AWARDS

       

      11.1         Other Stock-Based
Awards.  The Committee may grant other Awards under the Plan
pursuant to which Shares are or may in the future be acquired, or Awards
denominated in or measured by Share equivalent units, including Awards valued
using measures other than the market value of Shares.  Other
Stock-Based Awards are not restricted to any specific form or structure and may
include, without limitation, Share purchase warrants, other rights to acquire
Shares, and securities convertible into or redeemable for
Shares.  Other Stock-Based Awards may be granted either alone, in
addition to, or in tandem with, any other type of Award granted under the
Plan.

      

        
          
             

          

          
            - 18
-

            
              

            

          

          
             

          

        

      

       

      11.2         Combination
Awards.   The Committee may also grant Awards under the
Plan in tandem or combination with other Awards or in exchange of Awards, or in
tandem or combination with, or as alternatives to, grants or rights under any
other employee plan of Corporation, including the plan of any acquired
entity.  No action authorized by this section will reduce the amount
of any existing benefits or change the terms and conditions thereof without the
Participant's consent.

       

      12.         DIVIDEND
EQUIVALENTS

       

      Any Award
may, to the extent provided in its Award Agreement, at the discretion of the
Committee, earn dividend equivalents.  In respect of any such Award
that is outstanding on a dividend record date for Common Stock, the Participant
may be credited with an amount equal to the amount of cash or stock dividends
that would have been paid on the Shares covered by such Award, had such covered
Shares been issued and outstanding on such dividend record date.  The
Committee will establish such rules and procedures governing the crediting of
dividend equivalents, including the timing, form of payment, and payment
contingencies of such dividend equivalents, as it deems appropriate or
necessary.

       

      13.         ADJUSTMENTS
UPON CHANGES IN CAPITALIZATION, ETC.

       

      13.1         Plan Does Not Restrict
Corporation.  The existence of the Plan and the Awards granted
under the Plan will not affect or restrict in any way the right or power of the
Board or the shareholders of Corporation to make or authorize any adjustment,
recapitalization, reorganization, or other change in Corporation's capital
structure or its business, any merger or consolidation of Corporation, any issue
of bonds, debentures, preferred or prior preference stocks ahead of or affecting
Corporation's capital stock or the rights thereof, the dissolution or
liquidation of Corporation or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding.

      13.2         Adjustments to Shares
Subject to the Plan and Outstanding Awards.  In the event of a
stock split (including a reverse stock split), a dividend or distribution paid
in Common Stock, or a recapitalization of or affecting Common Stock, the
aggregate number and kind of shares reserved for issuance under the Plan, the
maximum limitations on the number of shares that may be issued as Awards granted
to a single Participant in any fiscal year under the Plan, the number, kind, and
price per share subject to each outstanding Option and SAR and the number and
kind of shares subject to other Awards granted under the Plan, will
automatically be adjusted proportionately, or substituted, to reflect the effect
of such stock split, distribution paid in Common Stock, or
recapitalization.  In the event of any merger or consolidation,
separation (including a spin off), a reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the
Code), any partial or complete liquidation, or any other change in corporate
capitalization not specifically addressed in the preceding sentence, the
Committee may make such adjustments or substitution in the aggregate number and
kind of shares reserved for issuance under the Plan, the maximum limitations on
the number of shares that may be issued as Awards granted to a single
Participant under the Plan, the number, kind, and price per share subject to
each outstanding Option and SAR, the number and kind of shares subject to other
outstanding Awards under the Plan and/or such other equitable adjustments or
substitutions as it may determine to be appropriate in its sole
discretion.

      

        
          
             

          

          
            - 19
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      14.         AMENDMENT
AND TERMINATION

       

        
The Board may amend, suspend, or terminate the Plan or any portion of the Plan
at any time, provided that no amendment may be made without shareholder approval
if such approval is required by applicable law or the requirements of an
applicable stock exchange or registered securities association.

       

      15.         MISCELLANEOUS

       

      15.1          Tax
Withholding.  Corporation has the right to deduct from any
settlement of any Award under the Plan, including the delivery or Vesting of
Shares or Awards, any federal, state, or local taxes of any kind required by law
to be withheld with respect to such payments or to take such other action as may
be necessary in the opinion of Corporation to satisfy all obligations for the
payment of such taxes.  The recipient of any payment or distribution
under the Plan has the obligation to make arrangements satisfactory to
Corporation for the satisfaction of any such tax withholding
obligations.  Corporation will not be required to make any such
payment or distribution under the Plan until such obligations are
satisfied.

       

      15.2         Unfunded
Plan.  The Plan will be unfunded and Corporation will not be
required to segregate any assets that may at any time be represented by Awards
under the Plan.  Any liability of Corporation to any person with
respect to any Award under the Plan will be based solely upon any contractual
obligations that may be effected pursuant to the Plan.  No such
obligation of Corporation will be deemed to be secured by any pledge of, or
other encumbrance on, any property of Corporation.

       

      15.3         Annulment of
Awards.  Any Award Agreement may provide, in the discretion of
the Committee, that the grant of an Award payable in cash is revocable until
cash is paid in settlement of the Award or that grant of an Award payable in
Shares is revocable until the Participant becomes entitled to the certificate in
settlement of the Award.  In the event the employment (or service as a
Non-Employee Board Director, Non-Employee Subsidiary Director, or Consultant) of
a Participant is terminated for cause (as defined below), any Award that is
revocable will be annulled as of the date of such termination for
cause.  For the purpose of this Section 15.3, the term "for
cause" has the meaning set forth in the Participant's employment agreement, if
any, or otherwise means any discharge (or removal) for material or flagrant
violation of the policies and procedures of Corporation or for other performance
or conduct which is materially detrimental to the best interests of Corporation,
as determined by the Committee.

      
        
           

        

        
          - 20
-

          
            

          

        

        
           

        

      

       

      15.4         Engaging in Competition With
Corporation.  Any Award Agreement may provide, in the
discretion of the Committee, that, if a Participant terminates employment (or
service as a Non-Employee Board Director, Non-Employee Subsidiary Director, or
Consultant) with Corporation or a Subsidiary for any reason whatsoever, and
within a period of time (as specified in the Award Agreement) after the date of
such termination accepts employment with any competitor of (or otherwise engages
in competition with) Corporation, the Committee, in its sole discretion, may
require such Participant to return to Corporation the economic value of any
Award that is realized or obtained (measured at the date of exercise, Vesting,
or payment) by such Participant at any time during the period beginning on the
date that is six months prior to the date of such Participant's termination of
employment (or service as a Non-Employee Board Director, Non-Employee Subsidiary
Director, or Consultant) with Corporation.

       

      15.5         Other Corporation Benefit
and Compensation Programs.  Payments and other benefits
received by a Participant under an Award made pursuant to the Plan are not to be
deemed a part of a Participant's regular, recurring compensation for purposes of
the termination indemnity or severance pay law of any state or country and will
not be included in, or have any effect on, the determination of benefits under
any other employee benefit plan or similar arrangement provided by Corporation
or a Subsidiary unless expressly so provided by such other plan or arrangements,
or except where the Committee expressly determines that an Award or portion of
an Award should be included to accurately reflect competitive compensation
practices or to recognize that an Award has been made in lieu of a portion of
cash compensation.  Awards under the Plan may be made in combination
with or in tandem with, or as alternatives to, grants, awards, or payments under
any other Corporation or Subsidiary plans, arrangements, or
programs.  The Plan notwithstanding, Corporation or any Subsidiary may
adopt such other compensation programs and additional compensation arrangements
as it deems necessary to attract, retain, and reward employees and directors for
their service with Corporation and its Subsidiaries.

       

      15.6         Securities Law
Restrictions.  No Shares may be issued under the Plan unless
counsel for Corporation is satisfied that such issuance will be in compliance
with applicable federal and state securities laws.  Certificates for
Shares delivered under the Plan may be subject to such stop-transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange or registered securities association upon which the Common
Stock is then listed or quoted, and any applicable federal or state securities
laws.  The Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such
restrictions.

       

      15.7         Governing
Law.  Except with respect to references to the Code or federal
securities laws, the Plan and all actions taken thereunder will be governed by
and construed in accordance with the laws of the state of Oregon.

       

      16.         SHAREHOLDER
APPROVAL

       

      The
amendment and restatement of the Plan is expressly subject to the approval of
the Plan, as amended and restated, by a majority of the total votes cast at a
meeting of Corporation's shareholders duly held in accordance with the
requirements of the Oregon Business Corporation Act and Corporation's
Bylaws.  If such approval is not obtained on or before
September 30, 2009, the Plan will continue in effect without the amendments
reflected herein.

      
        
           

        

        
          - 21
-Unassociated Document

    REGISTRATION
RIGHTS AGREEMENT

    

    THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) dated August
26th, 2009,
is made and entered into by and among American Dairy, Inc. (the “Company”), a company
incorporated in the State of Utah in the United States, and Sequoia Capital
China Growth Fund I, L.P. and its affiliates as set forth on the signature page
(collectively, the “Purchasers” and individually,
an “Purchaser”).  The
Company and the Purchasers are referred to herein collectively as the “Parties” and individually as a
“Party.” Capitalized
terms used herein but not otherwise defined herein shall have the respective
meanings set forth in the Subscription Agreement (as defined
below).

    

    WITNESSETH:

    

    WHEREAS,
pursuant to the Subscription Agreement dated August 11th, 2009
(the “Subscription
Agreement”) among the Company and the Purchasers, the Company has agreed
to issue and sell to the Purchasers, and the Purchasers have agreed to purchase,
2,100,000 shares of Common Stock of the Company;

    

    WHEREAS,
as set forth in Section 8 of the Subscription Agreement, the Company may issue
additional shares of Common Stock to the Purchasers; and

    

    WHEREAS,
to induce the Purchasers to execute and deliver the Subscription Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act (as defined below), and applicable state securities laws, with respect to
the shares of the Company’s Common Stock issued and issuable to the
Purchasers.

    

    NOW,
THEREFORE, in consideration of the premises set forth above, the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties hereto hereby agree as follows:

    

    1. Certain
Definitions.

    

    As used
in this Agreement, the following terms shall have the following
meanings:

    

    “2009 Notes Registration Rights
Agreement” means the Registration Rights Agreement, dated October 2,
2006, by and between the Company and the investors that are parties thereto, as
amended or restated from time to time.

    

    “2012 Notes Registration Rights
Agreement” means the Registration Rights Agreement, dated June 1, 2007,
by and between the Company, Citadel Equity Fund Ltd. and other parties thereto,
as amended or restated from time to time.

    

    “Affiliate” means, with respect
to any Person, any other Person which directly or indirectly controls, is
controlled by, or is under common control with, such Person.

    

    “Business Day” means a day,
other than a Saturday or Sunday, on which banks in New York City are open for
the general transaction of business.

    

    “Closing Date” has the meaning
ascribed to it in the Subscription Agreement.

    

    “Effectiveness Date” means the
date on which the Registration Statement is declared effective by the
SEC.

    

    “Effectiveness Period” means a
period that will terminate upon the earlier of (i) the date on which all
Registrable Securities have been sold pursuant to the Registration Statement, as
amended from time to time, (ii) the date on which all Registrable Securities
covered by such Registration Statement are eligible to be sold pursuant to Rule
144 without limitations as to volume, or (iii) three (3) years from the Closing
Date as defined in the Subscription Agreement.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

    

    “Filing Date” means the date on
which the Registration Statement is first filed with the SEC.

    

    “Person” means an individual,
corporation, partnership, limited liability company, trust, business trust,
association, joint stock company, joint venture, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity
not specifically listed herein.

    

    “Prospectus” shall mean the
prospectus included in any Registration Statement, as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration Statement and
by all other amendments and supplements to the prospectus, including
post-effective amendments and all material incorporated by reference in such
prospectus.

    

    “Register,” “registered” and “registration” refer to a
registration made by preparing and filing a Registration Statement or similar
document in compliance with the Securities Act (as defined below), and the
declaration or ordering of effectiveness of such Registration Statement or
document.

    

    “Registrable Securities” shall
mean (i) the Shares, (ii) the Performance Adjustment Shares, if any, (iii) the
Participation Shares, if any, (each of them has the meaning ascribed to it in
the Subscription Agreement) and (iv) any other securities issued or issuable
with respect to or in exchange for any of (i), (ii) or (iii) above, including
shares issued in replacement therefor, whether upon any stock split, stock
dividend, recapitalization, subdivision or similar event or otherwise, provided, however, that a
security shall cease to be a Registrable Security upon sale pursuant to a
Registration Statement or upon eligibility for resale without volume limitations
pursuant to Rule 144 under the Securities Act.

    

    “Registration Statement” shall
mean any registration statement of the Company filed under the Securities Act
that covers the resale of any of the Registrable Securities pursuant to the
provisions of this Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.

    

    “SEC” means the United States
Securities and Exchange Commission.

    

     “Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.

    

    2. Registration.

    

    (a) Mandatory
Registration.

    

    (i) The
Company agrees to file under the Securities Act with the SEC as promptly as
practicable but in any event within 15 days after the Closing Date (the “Filing Deadline”) a
Registration Statement on Form S-3 or, in the event the Company is not eligible
to use Form S-3, on Form S-1, covering the resale of the Registrable Securities
issued or issuable pursuant to the Subscription Agreement. For the avoidance of
doubt, the Registration Statement shall also cover the Performance Adjustment
Shares as may become issuable pursuant to Section 8.5 of the Subscription
Agreement. Accordingly, the number of shares of Common Stock initially included
in such Registration Statement shall be no less than 2,625,000, consisting of
(i) 2,100,000 shares immediately issuable pursuant to the Subscription Agreement
and (ii) 525,000 shares, which represents the maximum number of Performance
Adjustment Shares issuable pursuant to the Subscription Agreement. Such
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided in
accordance with Section 4(c) below to the Purchasers and their counsel prior to
its filing or other submission.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (ii) The
Company agrees to cause the Registration Statement to become effective as soon
as practicable but in any event no later than the date (the “Effectiveness Deadline”) of
the earlier of (x) the 90th
calendar day following the Closing Date, provided that if the SEC
reviews and has written comments to the filed Registration Statement that would
require the filing of a pre-effective amendment thereto with the SEC, then
Effectiveness Deadline shall be the 120th
calendar day following the Closing Date, or (y) the 5th trading
day following the date that the Company is notified by the SEC that the initial
Registration Statement will not be reviewed or it is no longer subject to review
and comments. The date on which the Registration Statement is actually declared
effective by the SEC shall be referred to herein as the “Effectiveness Date.” The
Company shall notify the Purchasers by facsimile or e-mail as promptly as
practicable, and in any event, within one (1) Business Day, after any such
Registration Statement is declared effective and shall provide the Purchasers
with copies of any related Prospectus to be used in connection with the sale or
other disposition of the securities covered thereby. The Company shall keep the
Registration Statement continuously effective during the Effectiveness
Period.

    

    (iii) In
the event of (x) the Registration Statement is not filed with the SEC on or
prior to the Filing Deadline,  or (y) the Registration Statement is
not declared effective by the SEC on or prior to the Effectiveness Deadline, the
Company shall make a monthly payment in an amount of US$[0.945 million], which
represents 1.5% of the Aggregate Purchase Price (as defined in the Subscription
Agreement), to the Purchasers as the exclusive remedy (at law or equity) for the
damages to the Purchasers by reason of any such delay in or reduction of their
ability to sell the Registrable Securities, until the filing or effectiveness,
as applicable. Such payments shall be paid in U.S. dollar in immediately
available funds at the end of each month during which any of (x) or (y) above
remains outstanding.

    

    (b) Demand Registration
Rights.

    

    (i) Generally. Subject to
the conditions set forth in this Section 2(b), if, at any time after the Filing
Deadline and prior to the expiration of the Effectiveness Period, (x) (I)
additional Registrable Securities which have not been included in the
Registration Statement of the Company pursuant to Section 2(a) above, including
without limitation the Participation Shares, are issued or issuable to the
Purchasers or (II) a Registration Statement covering the sale of all of the
Registrable Securities is not then effective and available for sales thereof by
the Purchasers, and (y) the Company receives from the Purchasers a written
request (the “Demand
Request”) requesting that the Company effect a registration with respect
to all or a part of the Registrable Securities (which request shall state the
number of shares of Registrable Securities to be disposed of and the intended
methods of disposition of such shares by the Purchasers), the Company shall as
soon as practicable, file and use commercially reasonable efforts to effect such
registration (including, without limitation, filing post-effective amendments,
appropriate qualifications under applicable U.S. blue sky or other state
securities laws, and appropriate compliance with the Securities Act) and to
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in the Demand Request.

    

    (ii)
Limitations.
The Company shall not be obligated to effect, or to take any action to effect,
any such registration pursuant to this Section 2(b):

    

    (A) If
the Purchasers, together with the holders of any other securities of the Company
entitled to inclusion in such registration statement (the “Other Holders”), propose to
sell Registrable Securities and such other securities (if any) at an aggregate
offering price (after deduction of underwriters’ discounts and expenses related
to issuance) of less than U.S.$10,000,000;

    

    
      
        
        

      

      
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    (B) After
the Company has initiated one (1) such registrations pursuant to this Section
2(b) (counting for these purposes only (I) registrations which have been
declared or ordered effective, and (II) a demand registration right under this
Section 2(b) that the Purchasers have affirmatively forfeited); or

    

    (C)
During the period starting with the date sixty (60) days prior to the Company’s
good faith estimate of the date of filing of, and ending on a date one hundred
eighty (180) days after the effective date of, a Company-initiated registration;
provided that the
Company is actively employing commercially reasonable efforts to cause such
registration statement to become effective.

    

    (iii)
Deferral. If
(A) in the good faith judgment of the Board of Directors of the Company
(excluding any interested directors), the filing of a registration statement
under this Section 2(b) covering the Registrable Securities would be materially
detrimental to the Company and the Board of Directors of the Company (excluding
any interested directors) concludes, as a result, that it is in the best
interests of the Company to defer the filing of such registration statement at
such time, and (B) the Company shall furnish to such Purchasers a certificate
signed by the Chief Executive Officer or the Chief Financial Officer of the
Company stating that in the good faith judgment of the Board of Directors of the
Company (excluding any interested directors), it would be materially detrimental
to the Company for such registration statement to be filed in the near future
and that it is, therefore, in the best interests of the Company to defer the
filing of such registration statement, then (in addition to the limitations set
forth in Section 2(b)(ii) above) the Company shall have the right to defer such
filing for a period of not more than one hundred twenty (120) days after receipt
of the request of the Purchasers, and, provided further, that the
Company shall not defer its obligation in this manner more than twice in any
twelve (12) month period.

    

    (iv)
Underwriting.

    

    (A) If
the Purchasers intend to distribute the Registrable Securities covered by their
Demand Request by means of an underwriting, they shall so advise the Company as
a part of their request made pursuant to this Section 2(b). In such event, the
right of the Purchasers to include all or any portion of their Registrable
Securities in such registration pursuant to this Section 2(b) shall be
conditioned upon the Purchasers’ participation in such underwriting and the
inclusion of the Purchasers’ Registrable Securities to the extent provided
herein. If the Company shall request inclusion in any registration pursuant to
this Section 2(b) of securities being sold for its own account, or if Other
Holders shall request inclusion in any registration pursuant to this Section
2(b), the Purchasers shall offer to include such securities in the underwriting
and such offer shall be conditioned upon the participation of the Company or
such Other Holders in such underwriting and the inclusion of the Company’s and
such Other Holders’ other securities of the Company and their acceptance of the
further applicable provisions of this Section 2. The Company shall (together
with the Purchasers and Other Holders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected for
such underwriting by the Company.

    

    (B)
Notwithstanding any other provision of this Section 2(b), if the underwriters
advise the Purchasers in writing that marketing factors require a limitation on
the number of shares to be underwritten, the number of Registrable Securities
and the securities held by Other Holders that may be so included shall be
allocated as follows: (I) first, to the Purchasers; (II) second, to Other
Holders electing to register shares in connection with such registration; and
(III) third, to the Company, which the Company may allocate, at its discretion,
for its own account, or for the account of others designated by the
Company.

    

    
      
        
        

      

      
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    (C) If a
person who has requested inclusion in a registration pursuant to this Section
2(b) does not agree to the terms of any underwriting in accordance with this
Section 2(b)(iv), such person shall be excluded from the underwriting by written
notice from the Company, the underwriters or the Purchasers. The securities so
excluded shall also be withdrawn from registration. If shares are so withdrawn
from the registration and if the number of shares to be included in such
registration was previously reduced as a result of marketing factors pursuant to
Section 2(b)(iv)(B) above, then the Company shall then offer to the Purchasers
and Other Holders who have elected to include and retained rights to include
securities in the registration the right to include additional Registrable
Securities or the securities held by Other Holders, as applicable, in the
registration in an aggregate amount equal to the number of shares so withdrawn,
with such shares to be allocated among such Investors and Other Holders
requesting additional inclusion, in order of priority as set forth in Section
2(b)(iv)(B) above.

    

    (c) Piggyback Registration
Rights.

    

    (i) Generally. If, at any
time after the Filing Deadline and prior to the expiration of the Effectiveness
Period, (A) the Company proposes to register shares of Common Stock under the
Securities Act in connection with the public offering of such shares for cash
other than a registration statement on Form S-8 or Form S-4 or any successor or
other forms promulgated for similar purposes (a “Proposed Registration”) and
(B) a Registration Statement covering the sale of all of the Registrable
Securities is not then effective and available for sales thereof by the
Purchasers, the Company shall, at such time, promptly give the Purchasers a
written notice of such Proposed Registration. The Purchasers shall have ten (10)
Business Days from their receipt of such notice to deliver to the Company a
written request specifying the amount of Registrable Securities that the
Purchasers intend to sell and the Purchasers’ intended method of distribution.
Upon receipt of such request, the Company shall use commercially reasonable
efforts to cause all Registrable Securities which the Company has been requested
to register to be registered under the Securities Act to the extent necessary to
permit their sale or other disposition in accordance with the intended methods
of distribution specified in the request of the Purchasers; provided, however, that the
Company shall have the right to postpone or withdraw any registration effected
pursuant to this Section 2(c) without obligation to the Purchasers.

    

    (ii)
Underwriting.

    

    (A) If
the Registration of which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so advise the Purchasers
as part of the written notice given pursuant to Section 2(c)(i). In such event,
the right of the Purchasers to include all or any portion of their Registrable
Securities in such registration pursuant to this Section 2(c) shall be
conditioned upon the Purchasers’ participation in such underwriting and the
inclusion of the Purchasers’ Registrable Securities to the extent provided
herein. If the Purchasers shall request inclusion in any registration pursuant
to this Section 2(c) of their Registrable Securities, the Company shall offer to
include such securities in the underwriting and such offer shall be conditioned
upon the participation of the Purchasers and the inclusion of the Purchasers’
Registrable Securities and their acceptance of the further applicable provisions
of this Section 2(c). The Purchasers whose shares are to be included in such
Registration shall (together with Other Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for such underwriting by the Company.

    

    (B)
Notwithstanding any other provision of this Section 2(c), if the underwriters
advise the Company in writing that marketing factors require a limitation on the
number of shares to be underwritten, the Company shall be obligated to include
in the registration statement only such limited portion of the Registrable
Securities with respect to which the Purchasers have requested inclusion
hereunder as such underwriters shall permit. The Company shall not exclude any
Registrable Securities unless the Company has first excluded all outstanding
securities, the holders of which are not entitled to inclusion of such
securities in the registration statement or are not entitled to pro rata
inclusion with the Registrable Securities; and any exclusion of Registrable
Securities shall be made pro rata with holders of other securities that are
entitled to pro rata inclusion with the Registrable Securities, who have elected
to include such securities in the registration statement.

    

    
      
        
        

      

      
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    (C) If a
person who has requested inclusion in a registration pursuant to this Section
2(c) does not agree to the terms of any underwriting in accordance with this
Section 2(c)(ii), such person shall be excluded from the underwriting by written
notice from the Company or the underwriter. The securities so excluded shall
also be withdrawn from registration. If shares are so withdrawn from the
registration and if the number of shares to be included in such registration was
previously reduced as a result of marketing factors pursuant to Section
2(c)(ii)(B) above, then the Company shall then offer to the Purchasers and Other
Holders who have elected to include and retained rights to include securities in
the registration the right to include additional Registrable Securities or the
securities held by Other Holders, as applicable, in the registration in an
aggregate amount equal to the number of shares so withdrawn, with such shares to
be allocated among the Purchasers and Other Holders requesting additional
inclusion, in order of priority as set forth in Section 2(c)(ii)(B)
above.

    

    (d) Expenses.

    

    The
Company will pay all expenses associated with each registration, including
filing and printing fees, the Company’s counsel and accounting fees and
expenses, costs associated with clearing the Registrable Securities for sale
under applicable state securities laws and listing fees, but excluding fees and
expenses of counsel to the Purchasers, discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities being sold, provided that the Company
shall pay the reasonable fees and expenses of one counsel for the Purchasers not
to exceed U.S.$5,000.

    

    3. Suspension.

    

    (a)
Subject to Section 3(b) below, in the event: (i) of any request by the SEC or
any other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to the
Registration Statement or related prospectus or for additional information so
that the Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or otherwise fail to
comply with the applicable rules and regulations of the federal securities laws;
(ii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose; (iii) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for resale in any jurisdiction or the initiation of any proceeding
for such purpose, provided that, considering
the advice of counsel, the Company reasonably believes that it must qualify in
such jurisdiction; (iv) of any event or circumstance that, considering the
advice of counsel, the Company reasonably believes necessitates the making of
any changes in the Registration Statement or related prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of a related prospectus, it will not contain any untrue statement of a
material fact or any 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; or (v) that the
Company reasonably believes, considering the advice of counsel, that the Company
may, in the absence of a suspension described hereunder, be required under state
or federal securities laws to disclose any corporate development, the disclosure
of which could reasonably be expected to have a material adverse effect upon the
Company, its shareholders, a potentially material transaction or event involving
the Company, or any negotiations, discussions or proposals directly relating
thereto; then the Company shall deliver a certificate in writing (the “Suspension Notice”) to each
holder of Registrable Securities (the “Holder”) to the effect of the
foregoing (but in no event, without the prior written consent of the Purchasers,
shall the Company disclose to the Purchasers any of the facts or circumstances
regarding any material nonpublic information) and, upon receipt of such
Suspension Notice, the Holder will refrain from selling any Registrable
Securities pursuant to the Registration Statement (a “Suspension”) until the
Holder’s receipt of copies of a supplemented or amended prospectus prepared and
filed by the Company or until the Holder is advised in writing by the Company
that the current prospectus may be used and the Holder has received copies of
any additional or supplemental filings that are incorporated or deemed
incorporated by reference in any such prospectus.

    

    
      
        
        

      

      
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    (b)
Notwithstanding the foregoing, the Company shall not suspend any Registration
Statement or related prospectus for more than sixty (60) consecutive days or for
a total of more than one hundred twenty (120) days in any twelve (12) month
period.

    

    (c) The
Company will use commercially reasonable efforts to terminate a Suspension as
promptly as practicable after delivery of a Suspension Notice to the
Holders.

    

    4. Company
Obligations.

    

    The
Company will use commercially reasonable efforts to effect the registration of
the Registrable Securities in accordance with the terms hereof, and pursuant
thereto the Company will, at the expense of the Company:

    

    (a) use
commercially reasonable efforts to cause such Registration Statement to become
effective and to remain continuously effective for the Effectiveness Period and
advise the Purchasers in writing when the Effectiveness Period has
expired;

    

    (b)
prepare and file with the SEC such amendments and post-effective amendments to
the Registration Statement and such supplements to the Prospectus as may be
necessary to keep the Registration Statement effective for the period specified
in Section 4(a) and to comply with the provisions of the Securities Act and the
Exchange Act with respect to the distribution of all of the Registrable
Securities covered thereby;

    

    (c)
provide copies to and permit counsel designated by the Purchasers, if any, to
review the Registration Statement and any amendments or supplements thereto and
any comments made by the staff of the SEC and the Company’s responses thereto a
reasonable period of time prior to its filing with the SEC or its receipt from
the SEC as applicable and shall duly consider comments made by such counsel
thereon;

    

    (d)
furnish to the Purchasers and their legal counsel (i) promptly after any
Registration Statement is prepared and publicly distributed, filed with the SEC,
or received by the Company (but not later than two (2) Business Days after the
filing date, receipt date or sending date, as the case may be) an electronic
copy of any Registration Statement and any amendment thereto, each preliminary
prospectus and Prospectus and each amendment or supplement thereto, and each
letter written by or on behalf of the Company to the SEC or the staff of the
SEC, and each item of correspondence from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any portion of any
thereof which contains information for which the Company has sought confidential
treatment), and (ii) an electronic copy of a Prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents
as each Purchaser may reasonably request in connection with the disposition of
the Registrable Securities owned by such Purchaser that are covered by the
related Registration Statement;

    

    
      
        
        

      

      
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    (e) use
commercially reasonable efforts to (i) prevent the issuance of any stop order or
other suspension of effectiveness and, (ii) if such order is issued, obtain the
withdrawal of any such order at the earliest practicable time and to notify the
Purchasers of the issuance of such an order and the resolution
thereof;

    

    (f) prior
to any public offering of Registrable Securities, use commercially reasonable
efforts to register or qualify or cooperate with the Purchasers and their
counsel in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions requested by the Purchasers and do any and all other reasonable
acts or things necessary or advisable to enable the distribution in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; provided,
however, that the Company shall not be required in connection therewith
or as a condition thereto to (i) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 4(f),
(ii) subject itself to general taxation in any jurisdiction where it would not
otherwise be so subject but for this Section 4(f), or (iii) file a general
consent to service of process in any such jurisdiction;

    

    (g) use
commercially reasonable efforts to cause all Registrable Securities covered by a
Registration Statement to be listed on the primary securities exchange,
interdealer quotation system or other market on which similar securities issued
by the Company are then listed;

    

    (h) as
soon as practicable notify the Purchasers, at any time when a Prospectus
relating to Registrable Securities is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any 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 omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and at the
request of any such holder, as soon as practicable, and subject to the Company’s
right to delay or refrain from filing as contemplated herein, prepare and
furnish to such holder an electronic copy of a supplement to or an amendment of
such Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;

    

    (i)
otherwise use commercially reasonable efforts to comply with all applicable
rules and regulations of the SEC under the Securities Act and the Exchange Act,
take such other actions as may be necessary to facilitate the registration of
the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability
Date (as defined below), an earnings statement covering a period of at least
twelve (12) months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, including Rule 158 promulgated thereunder (for the
purpose of this subsection 4(i), “Availability Date” means the
45th day following the end of the fourth fiscal quarter that includes the
effective date of such Registration Statement, except that, if such fourth
fiscal quarter is the last quarter of the Company’s fiscal year, “Availability
Date” means the 90th day after the end of such fourth fiscal
quarter);

    

    (j) with
a view to making available to the Purchasers the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the SEC that may at any time
permit the Purchasers to sell shares of Common Stock to the public without
registration, the Company covenants and agrees to: (i) make and keep adequate
current public information available, as those terms are understood and defined
in Rule 144, during the Effectiveness Period; (ii) file with the SEC in a timely
manner all reports and other documents required of the Company under the
Exchange Act; and (iii) furnish to the Purchasers upon request, as long as the
Purchasers own any Registrable Securities, (A) a written statement by the
Company that it has complied with the reporting requirements of the Exchange
Act, (B) a copy of the Company’s most recent Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, and (C) such other information as may be
reasonably requested in order to avail the Purchasers of any rule or regulation
of the SEC that permits the selling of any such Registrable Securities without
registration;

    

    
      
        
        

      

      
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    (k) hold
in confidence and not make any disclosure of information concerning the
Purchasers provided to the Company if at the time such information is provided
the Company is notified of the confidential nature of such information 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 that
includes the Purchasers’ Registrable Securities, (iii) the release of such
information is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction, (iv) such information has been made
generally available to the public other than by disclosure in violation of this
or any other agreement, or (v) the Purchasers consent to the form and content of
any such disclosure, which consent shall not be unreasonably withheld or
delayed. The Company shall, upon learning that disclosure of any information
concerning the Purchasers is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the
Purchasers;

    

    (l)
provide a transfer agent and registrar, which may be a single entity, for the
Registrable Securities not later than the Effectiveness Date of the Registration
Statement;

    

    (m) if,
after the Closing Date, any Purchaser believes, based upon the written opinion
of its legal counsel, that it could reasonably be deemed to be an underwriter of
Registrable Securities, or if any Purchaser intends to distribute the
Registrable Securities covered by means of an underwriting, at the request of
such Purchaser, the Company shall (i) cause to be prepared and shall furnish to
such Purchaser or underwriters, on the date of the effectiveness of a
Registration Statement and thereafter from time to time on such dated as such
Purchaser or underwriter may reasonably request (A) a customary “comfort
letter,” dated as of such date, from the Company’s independent certified public
accountants to underwriters in an underwritten public offering, addressed to
such Purchaser or underwriters, and (B) an opinion, dated as of such date, of
legal 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 such Purchaser or underwriters, (ii)
make available by such Purchaser or underwriters, their legal counsel and one
firm of accountants or other agents retained by such Purchaser or underwriters
(collectively, the “Inspectors”) during regular
business hours and upon reasonable notice, all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the “Records”), as shall be
reasonably deemed necessary or appropriate 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 such Purchaser or underwriters and the other Inspectors)
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 (x) 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 Securities Act, (y) ordered by a court of competent
jurisdiction or (z) the information in such Records has been made generally
available to the public other than by disclosure in violation of this Agreement,
and (iii) in the event of an underwritten offering, enter into an underwriting
agreement in customary form with the representative of the underwriter. Nothing
herein (or in any other confidentiality agreement between the Company and any
Purchaser) shall be deemed to limit any Purchaser’s ability to sell Registrable
Securities in a manner which is otherwise consistent with applicable laws and
regulations; and

    

    (n) if
requested by the Purchasers, the Company shall, as soon as practicable (i)
incorporate in a prospectus supplement or post-effective amendment such
information as the Purchasers 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 and (iii) supplement or make amendments to any
Registration Statement if reasonably requested by the Purchasers holding any
Registrable Securities.

    

    
      
        
        

      

      
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    5. Obligations of the
Purchasers.

    

    (a) Each
Purchaser shall furnish in writing 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 required to
effect the registration of such Registrable Securities and as shall be necessary
so that the Registration Statement, the Prospectus or any preliminary prospectus
or similar offering document shall not include any untrue statement or alleged
untrue statement of a material fact or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall promptly notify the Company if any such
previously provided information shall contain or omit any such information. Each
Purchaser shall also execute such documents in connection with such registration
as the Company may reasonably request. At least five (5) Business Days prior to
the first anticipated filing date of any Registration Statement, the Company
shall notify each Purchaser of the information the Company requires from such
Purchaser if such Purchaser elects to have any of the Registrable Securities
included in the Registration Statement. A Purchaser shall provide such
information to the Company at least two (2) Business Days prior to the first
anticipated filing date of such Registration Statement if such Purchaser elects
to have any of the Registrable Securities included in the Registration
Statement.

    

    (b) Each
Purchaser, by its 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 a Registration Statement hereunder, unless such
Purchaser has notified the Company in writing of its election to exclude all of
its Registrable Securities from such Registration Statement.

    

    (c) Each
Purchaser agrees that, upon receipt of any notice from the Company of the
commencement of a Suspension pursuant to Section 3, such Purchaser will
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities, until the
Purchaser’s receipt of the supplemented or amended prospectus filed with the SEC
and until any related post-effective amendment is declared effective and, if so
directed by the Company, the Purchaser shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Purchaser’s possession of the Prospectus covering
the Registrable Securities current at the time of receipt of such
notice.

    

    6. Indemnification.

    

    (a) Indemnification by the
Company.

    

    The
Company agrees to indemnify and hold harmless, to the fullest extent permitted
by law, the Purchasers and their respective directors, managers, officers,
employees, stockholders, members, and each Person who controls any Purchaser
(within the meaning of the Securities Act) against any losses, claims, damages,
judgments, amounts paid in settlement, liabilities and expenses (including,
without limitation, reasonable attorneys’ fees) resulting from or which arise
out of or are based upon (i) any untrue statement or alleged untrue statement of
a material fact in any 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 of 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) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in the light of the circumstances under which
the statements therein were made, not misleading (any of the foregoing, a “Violation”), and will
reimburse each Purchaser and their respective directors, managers, members,
officers, employees, stockholders or controlling Persons for any legal and other
expenses reasonably incurred as such expenses are reasonably incurred by such
Person in connection with investigating, defending, settling, compromising or
paying any such Violation; provided, however, that the
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished in writing by a Purchaser specifically for
use in such Registration Statement or Prospectus or any other offering
document.

    

    
      
        
        

      

      
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    (b) Indemnification by the
Purchasers.

    

    Each
Purchaser agrees, severally and jointly, to indemnify and hold harmless, to the
fullest extent permitted by law, the Company, its directors, officers,
employees, shareholders and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, judgments,
amounts paid in settlement, liabilities and expenses (including, without
limitation, reasonable attorneys’ fees) resulting from or which arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact required to
be stated in the Registration Statement or Prospectus or preliminary prospectus
or amendment or supplement thereto or necessary to make the statements therein
not misleading, to the extent, but only to the extent that such untrue statement
or omission or alleged statement or omission is contained in any information
furnished in writing by such Purchaser to the Company specifically for inclusion
in such Registration Statement or Prospectus or amendment or supplement thereto,
and (ii) any inaccuracy in the representations and warranties of the Purchaser
contained in this Agreement, and will reimburse the Company, and its directors,
officers, employees, shareholders or controlling Persons for any legal and other
expenses reasonably incurred as such expenses are reasonably incurred by such
Person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. In no event
shall the liability of a Purchaser be greater in amount than the dollar amount
of the proceeds (net of all expenses paid by such Purchaser in connection with
any claim relating to this Section 6 and the amount of any damages such
Purchaser has otherwise been required to pay by reason of such untrue statement
or omission or alleged untrue statement or omission) received by such Purchaser
upon the sale of the Registrable Securities included in the Registration
Statement giving rise to such indemnification obligation.

    

    (c) Conduct of Indemnification
Proceedings.

    

    Any
Person entitled to indemnification hereunder shall (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party; provided that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim within
five (5) Business Days after written notice thereof and employ counsel
reasonably satisfactory to such Person or (c) a conflict of interest exists
between such Person and the indemnifying party with respect to such claims (in
which case, if the Person notifies the indemnifying party in writing that such
Person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person); and provided, further, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more than
one additional firm of attorneys at any time for all such indemnified parties.
No indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation.

    

    
      
        
        

      

      
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    (d) Contribution.

    

    If for
any reason the indemnification provided for in the preceding paragraphs (a) and
(b) is unavailable to an indemnified party or insufficient to hold it harmless,
other than as expressly specified therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations. No Person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the
Securities Act shall be entitled to contribution from any Person not guilty of
such fraudulent misrepresentation. In no event shall the contribution obligation
of a Purchaser be greater in amount than the dollar amount of the proceeds (net
of all expense paid by such Purchaser in connection with any claim relating to
this Section 6 and the amount of any damages such Purchaser has otherwise been
required to pay by reason of such untrue statement or omission or alleged untrue
statement or omission) received by such Purchaser upon the sale of the
Registrable Securities included in the Registration Statement giving rise to
such contribution obligation.

    

    7. Miscellaneous.

    

    (a) Amendments and
Waivers. This Agreement may be amended only by a writing signed by the
Company and the Purchasers. The Company may take any action herein prohibited,
or omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or
omission to act, of the Purchasers.

    

    (b) Notices. All notices
and other communications provided for or permitted hereunder shall be made as
set forth in Section 10.6 of the Subscription Agreement.

    

    (c) Assignments and Transfers by
Purchasers. The provisions of this Agreement shall be binding upon and
inure to the benefit of the Purchasers and their respective successors and
permitted assigns. A Purchaser may transfer or assign, in whole or from time to
time in part, to one or more Persons its rights hereunder to whom such Purchaser
transfers the Registrable Securities in compliance with Section 10.13 of the
Subscription Agreement, provided that such Purchaser
complies with all laws applicable thereto and provides written notice of
assignment to the Company promptly after such assignment is
effected.

    

    (d) Assignments and Transfers by
the Company. This Agreement may not be assigned by the Company without
the prior written consent of the Purchasers, provided, however, that the
Company may assign their respective rights and delegate their respective duties
hereunder to any surviving or successor corporation in connection with a merger
or consolidation of the Company, as applicable, with another corporation, or a
sale, transfer or other disposition of all or substantially all of the Company’s
assets, as applicable, to another corporation, without the prior written consent
of the Purchasers, after notice duly given by the Company, as applicable, to
each Purchaser.

    

    (e) Benefits of the
Agreement. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the Parties. Nothing in this Agreement, express or implied, is intended to
confer upon any Party other than the Parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this
Agreement.

    

    
      
        
        

      

      
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    (f) Counterparts; Faxes.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. This Agreement may also be executed and delivered via facsimile
or other electronic transmission, which shall be deemed due execution and
delivery for all purposes.

    

    (g) Titles and Subtitles.
The titles and subtitles used in this Agreement are used for convenience only
and are not to be considered in construing or interpreting this
Agreement.

    

    (h) Severability. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the Parties hereby waive any provision of law which
renders any provisions hereof prohibited or unenforceable in any
respect.

    

    (i) Further Assurances.
The Parties shall execute and deliver all such further instruments and documents
and take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.

    

    (j) No Inconsistent
Agreements. The Company represents, warrants and agrees that (i) it has
not entered into, and shall not, on or after the date of this Agreement, enter
into any agreement that is inconsistent with the rights granted to the
Purchasers in this Agreement or otherwise conflicts with the provisions hereof,
and (ii) except for the 2009 Notes Registration Rights Agreement and the 2012
Notes Registration Rights Agreement, it has not previously entered into any
agreement which remains in effect granting any registration rights with respect
to any of its securities to any person.

    

    (k) Entire Agreement.
This Agreement, together with the Subscription Agreement, is intended by the
Parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the Parties hereto
in respect of the subject matter contained herein. This Agreement, together with
the Subscription Agreement, supersedes all prior agreements and understandings
between the Parties with respect to such subject matter.

    

    (l) Governing Law; Jurisdiction;
Jury Trial. 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. 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 WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (m) Termination. This
Agreement, and all rights and obligations hereunder, shall terminate and be of
no further force and effect on the third anniversary of the Closing Date as
defined in the Subscription Agreement.

    

    

    [SIGNATURE
PAGE FOLLOWS]

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and
delivered on the date and year first above written.

     

     

    

     

    

    

    The
Company:

    American
Dairy, Inc.

    

    

    

    By: /s/
Leng You-Bin                                                                           

    Name: Leng You-Bin

    Title:
Chairman and Chief Executive Officer

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
Purchasers:

    SEQUOIA
CAPITAL CHINA I, L.P.

    SEQUOIA
CAPITAL CHINA PARTNERS FUND I, L.P.

    SEQUOIA
CAPITAL CHINA PRINCIPALS FUND I, L.P.

    

    By:
Sequoia Capital China Management I, L.P.

          
A Cayman Islands Exempted Limited partnership

          
General Partner of Each

    

    By: SC
China Holding Limited

          
A Cayman Islands limited liability company

          
Its General Partner

    

     

     

    /s/ Jimmy Wong                                                                       

    Name: 
Jimmy Wong

    Title:   
Authorized Signatory

    

    

    SEQUOIA
CAPITAL CHINA GROWTH FUND I, L.P.

    SEQUOIA
CAPITAL CHINA GROWTH PARTNERS FUND I, L.P.

    SEQUOIA
CAPITAL CHINA GF PRINCIPALS FUND I, L.P.

       

    By:
Sequoia Capital China Growth Fund Management I, L.P.

          
A Cayman Islands exempted limited partnership

          
General Partner of Each

    

    By: SC
China Holding Limited

          
A Cayman Islands limited liability company

          
Its General Partner

    

    

     

     

    /s/ Jimmy Wong                                                                       

    Name: 
Jimmy Wong

    Authorized
Signatory

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SEQUOIA
CAPITAL U.S. GROWTH FUND IV, L.P.

    

    

    By:  /s/                                                                           

    Name:

    Title:

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