Document:

Exhibit 10.1
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                          SECURITIES PURCHASE AGREEMENT
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     This  Securities  Purchase  Agreement  (this  "Agreement")  is  dated as of
                                                    ---------
December 31, 2004,  among Sinovac Biotech Ltd., a West Indies  corporation  (the
"Company"),  and each purchaser  identified on the signature pages hereto (each,
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including  its  successors  and assigns,  a  "Purchaser"  and  collectively  the
                                              ---------
"Purchasers"); and
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     WHEREAS,  subject to the terms and  conditions  set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below),  and Rule
506  promulgated  thereunder,  the  Company  desires  to issue  and sell to each
Purchaser,  and each Purchaser,  severally and not jointly,  desires to purchase
from the Company in the  aggregate,  up to  $3,500,000 of shares of Common Stock
and Warrants on the Closing Date.

     NOW, THEREFORE,  IN CONSIDERATION of the mutual covenants contained in this
Agreement,  and for  other  good and  valuable  consideration  the  receipt  and
adequacy of which are hereby acknowledged,  the Company and each Purchaser agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

       1.1    Definitions.  In addition to the terms  defined  elsewhere in this
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Agreement,  for all purposes of this  Agreement,  the  following  terms have the
meanings indicated in this Section  1.1:"Action" shall have the meaning ascribed
                                         ------
to such term in Section 3.1(j).

              "Affiliate" means any Person that,  directly or indirectly through
               ---------
       one or more  intermediaries,  controls  or is  controlled  by or is under
       common  control  with a Person as such  terms  are used in and  construed
       under Rule 144.  With  respect to a  Purchaser,  any  investment  fund or
       managed  account  that is  managed on a  discretionary  basis by the same
       investment manager as such Purchaser will be deemed to be an Affiliate of
       such Purchaser.

              "Closing" means the closing of the purchase and sale of the Common
               -------
       Stock and the Warrants pursuant to Section 2.1.

              "Closing  Date" means the Trading Day when all of the  Transaction
               -------------
       Documents  have been  executed and  delivered by the  applicable  parties
       thereto, and all conditions precedent to (i) the Purchasers'  obligations
       to pay the  Subscription  Amount and (ii) the  Company's  obligations  to
       deliver the Securities have been satisfied or waived.

              "Closing Price" means on any particular date (a) the last reported
               -------------
       closing  bid price per share of Common  Stock on such date on the Trading
       Market (as reported by Bloomberg L.P. at 4:15 PM (New York time),  or (b)
       if there is no such price on such date, then the closing bid price on the
       Trading  Market on the date nearest  preceding  such date (as reported by
       Bloomberg  L.P.  at 4:15 PM (New York time) for the closing bid price for
       regular  session  trading on such day), or (c) if the Common Stock is not
       then  listed or quoted on a Trading  Market  and if prices for the Common
       Stock are then quoted on the OTC Bulletin Board, the closing bid price of
       the Common Stock for such date (or the nearest preceding date) on the OTC
       Bulletin Board (as reported by Bloomberg L.P. at 4:15 PM (New York time),

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       (d) if the  Common  Stock is not then  listed or  quoted  on the  Trading
       Market and if prices for the Common Stock are then  reported in the "pink
       sheets" published by the Pink Sheets LLC (formerly the National Quotation
       Bureau  Incorporated (or a similar  organization or agency  succeeding to
       its functions of reporting  prices),  the most recent bid price per share
       of the Common Stock so reported, or (e) if the shares of Common Stock are
       not then publicly traded the fair market value of a share of Common Stock
       as determined by a qualified independent appraiser selected in good faith
       by  the  Purchasers  of  a  majority  in  interest  of  the  Shares  then
       outstanding.

              "Commission" means the Securities and Exchange Commission.
               ----------

              "Common  Stock" means the common  stock of the Company,  par value
               -------------
       $0.001 per share,  and any  securities  into which such common  stock may
       hereafter be reclassified.

              "Common Stock  Equivalents" means any securities of the Company or
               -------------------------
       the Subsidiaries which would entitle the holder thereof to acquire at any
       time Common Stock,  including  without  limitation,  any debt,  preferred
       stock, rights, options,  warrants or other instrument that is at any time
       convertible  into or exchangeable  for, or otherwise  entitles the holder
       thereof to receive, Common Stock.

              "Company  Counsel"  means as applicable  the firm of Devlin Jensen
               ----------------
       and the firm of Thomas Stepp and Associates.

              "Disclosure  Schedules"  means  the  Disclosure  Schedules  of the
               ---------------------
       Company delivered concurrently herewith.

              "Effective Date" means the date that the Registration Statement is
               --------------
       first declared effective by the Commission.

              "Evaluation  Date" shall have the meaning ascribed to such term in
               ----------------
       Section 3.1(r).

              "Exchange  Act"  means the  Securities  Exchange  Act of 1934,  as
               -------------
       amended.

              "Exempt Issuance" means the issuance of (a) shares of Common Stock
               ---------------
       or options to employees, officers or directors of the Company pursuant to
       any stock or option plan duly  adopted by a majority of the  non-employee
       members of the Board of  Directors  of the  Company or a majority  of the
       members of a committee of  non-employee  directors  established  for such
       purpose,  (b)  securities  upon  the  exercise  of or  conversion  of any
       securities issued hereunder,  convertible securities, options or warrants
       issued and outstanding on the date of this Agreement,  provided that such
       securities  have not been  amended  since the date of this  Agreement  to
       increase  the number of such  securities  or to decrease  the exercise or
       conversion  price  of any  such  securities,  and (c)  securities  issued
       pursuant to  acquisitions  or strategic  transactions,  provided any such
       issuance  shall  only be to a Person  which  is,  itself or  through  its
       subsidiaries,  an operating  company in a business  synergistic  with the
       business of the Company  and in which the  Company  receives  benefits in
       addition to the investment of funds,  but shall not include a transaction
       in which the Company is issuing  securities  primarily for the purpose of
       raising  capital or to an entity whose  primary  business is investing in
       securities.

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              "Force  Majeure"  shall mean any unusual event arising from causes
               --------------
       reasonably beyond the control of the Company that could not be reasonably
       anticipated  that causes a delay in or prevents  the  performance  of any
       obligation  under this Agreement or the agreements  contemplated  hereby,
       including  but  not  limited  to:  acts  of God;  fire;  war;  terrorism;
       insurrection;  civil disturbance;  explosion;  adverse weather conditions
       that   could   not  be   reasonably   anticipated;   unusual   delay   in
       transportation; strikes or other labor disputes; restraint by court order
       or order of public  authority  but  specifically  not including any event
       resulting from the failure of the Commission or Company's  transfer agent
       to act or perform any function.

              "FW"  means  Feldman  Weinstein  LLP with  offices  located at 420
               --
       Lexington Avenue, Suite 2620, New York, New York 10170-0002.

              "GAAP"  shall have the  meaning  ascribed  to such term in Section
               ----
       3.1(h).

              "Intellectual  Property Rights" shall have the meaning ascribed to
               -----------------------------
       such term in Section 3.1(o).

              "Legend Removal Date" shall have the meaning ascribed to such term
               -------------------
       in Section 4.1(c).

              "Liens"  means a lien,  charge,  security  interest,  encumbrance,
               -----
       right of first refusal, preemptive right or other restriction.

              "Material  Adverse Effect" shall have the meaning ascribed to such
               ------------------------
       term in Section 3.1(b).

              "Material Permits" shall have the meaning ascribed to such term in
               ----------------
       Section 3.1(m).

              "Participation  Maximum"  shall have the meaning  ascribed to such
               ----------------------
       term in Section 4.13.

              "Per Share Purchase Price" equals $3.00, subject to adjustment for
               ------------------------
       reverse and forward stock splits, stock dividends, stock combinations and
       other similar  transactions of the Common Stock that occur after the date
       of this Agreement.

              "Person" means an individual or corporation,  partnership,  trust,
               ------
       incorporated  or  unincorporated  association,   joint  venture,  limited
       liability  company,  joint  stock  company,  government  (or an agency or
       subdivision thereof) or other entity of any kind.

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

              "Purchaser  Party" shall have the meaning ascribed to such term in
               ----------------
       Section 4.9.

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              "Registration  Rights  Agreement"  means the  Registration  Rights
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       Agreement,  dated as of the date of this Agreement, among the Company and
       each Purchaser, in the form of Exhibit A hereto.

              "Registration  Statement" means a registration  statement  meeting
               -----------------------
       the  requirements  set forth in the  Registration  Rights  Agreement  and
       covering  the resale by the  Purchasers  of the  Shares  and the  Warrant
       Shares.

              "Required  Approvals" shall have the meaning ascribed to such term
               -------------------
       in Section 3.1(e).

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

              "SEC  Reports"  shall have the  meaning  ascribed  to such term in
               ------------
       Section 3.1(h).

              "Securities"  means  the  Shares,  the  Warrants  and the  Warrant
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       Shares.

              "Securities Act" means the Securities Act of 1933, as amended.
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              "Shares"  means the shares of Common  Stock  issued or issuable to
               ------
       each Purchaser pursuant to this Agreement.

              "Short Sales" shall include, without limitation, all "short sales"
               -----------
       as defined in Rule 3b-3 of the Exchange Act.

              "Subscription Amount" means, as to each Purchaser, the amounts set
               -------------------
       forth  below  such  Purchaser's  signature  block on the  signature  page
       hereto, in United States dollars and in immediately available funds.

              "Subsidiary"  shall mean the subsidiaries of the Company,  if any,
               ----------
       set forth on Schedule 3.1(a).

              "Trading Day" means a day on which the Common Stock is traded on a
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       Trading Market.

              "Trading Market" means the following markets or exchanges on which
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       the Common Stock is listed or quoted for trading on the date in question:
       the American  Stock  Exchange,  the New York Stock  Exchange,  the Nasdaq
       National Market or the Nasdaq SmallCap Market.

              "Transaction Documents" means this Agreement, the Warrants and the
               ---------------------
       Registration  Rights  Agreement  and any other  documents  or  agreements
       executed in connection with the transactions contemplated hereunder.

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              "Warrants" means the Common Stock Purchase  Warrants,  in the form
               --------
       of Exhibit B,  delivered to the  Purchasers  at the Closing in accordance
       with Section  2.2(a)(iii)  hereof,  which  warrants  shall be exercisable
       immediately  upon  issuance  for a term  of  two  years,  subject  to the
       Company's  right to call the Warrants as set forth therein,  and (a) from
       the Initial Exercise Date (as defined in the Warrant) until the one year,
       one Trading Day  anniversary of the Initial  Exercise Date, such Warrants
       shall have an exercise  price equal to $3.35,  subject to  adjustment  as
       provided  therein and (b) from the one year, one Trading Day  anniversary
       of the Initial  Exercise Date until the  Termination  Date (as defined in
       the Warrant),  such Warrants shall have an exercise price equal to $4.00,
       subject to adjustment as provided therein.

              "Warrant  Shares"  means the shares of Common Stock  issuable upon
               ---------------
       exercise of the Warrants.

                                   ARTICLE II.
                                PURCHASE AND SALE

       2.1    Closing.  On the Closing Date,  each Purchaser shall purchase from
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the  Company,  severally  and not  jointly  with the other  Purchasers,  and the
Company shall issue and sell to each Purchaser,  (a) a number of Shares equal to
such Purchaser's Subscription Amount divided by the Per Share Purchase Price and
(b) the Warrants as determined  pursuant to Section  2.2(a)(iii).  The aggregate
Subscription  Amounts for the Shares sold  hereunder  shall be up to $3,500,000.
Upon  satisfaction of the conditions set forth in Section 2.3, the Closing shall
occur at the offices of FW or such other  location as the parties shall mutually
agree.

       2.2    Deliveries
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              (a)    On the Closing Date,  the Company shall deliver or cause to
       be delivered (or deliver at a later time as approved by the Purchaser) to
       each Purchaser the following:

                     (i)    this Agreement duly executed by the Company;

                     (ii)   a certificate evidencing a number of Shares equal to
              such  Purchaser's  Subscription  Amount  divided  by the Per Share
              Purchase Price, registered in the name of such Purchaser;

                     (iii)  a Warrant of the form of Exhibit  B,  registered  in
              the name of such Purchaser, pursuant to which such Purchaser shall
              have the  right to  acquire  up to the  number of shares of Common
              Stock equal to 100% of the Shares to be issued to such Purchaser,

                     (iv)   the  Registration  Rights  Agreement  of the form of
              Exhibit A hereto duly executed by the Company; and

                     (v)    a legal opinion of Company  Counsel,  in the form of
              Exhibit C attached hereto.

              (b)    On the Closing Date,  each Purchaser shall deliver or cause
       to be delivered to the Company the following:

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                     (i)    this Agreement duly executed by such Purchaser;

                     (ii)   such   Purchaser's   Subscription   Amount  by  wire
              transfer to the account as  specified  in writing by the  Company;
              and

                     (iii)  the  Registration  Rights Agreement duly executed by
              such Purchaser.

       2.3    Closing Conditions.
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              (a)    The obligations of the Company hereunder in connection with
       the Closing are subject to the following conditions being met:

                     (i)    the accuracy in all material  respects when made and
              on the Closing Date of the  representations  and warranties of the
              Purchasers contained herein;

                     (ii)   all  obligations,  covenants  and  agreements of the
              Purchasers  required  to be  performed  at or prior to the Closing
              Date shall have been performed; and

                     (iii)  the  delivery  by the  Purchasers  of the  items set
              forth in Section 2.2(b) of this Agreement.

              (b)    The respective  obligations of the Purchasers  hereunder in
       connection with the Closing are subject to the following conditions being
       met:

                     (i)    the accuracy in all material respects on the Closing
              Date  of  the   representations  and  warranties  of  the  Company
              contained herein;

                     (ii)   all  obligations,  covenants  and  agreements of the
              Company  required to be  performed at or prior to the Closing Date
              shall have been performed;

                     (iii)  the  delivery  by the Company of the items set forth
              in Section 2.2(a) of this Agreement;

                     (iv)   there  shall have been no  Material  Adverse  Effect
              with respect to the Company since the date hereof; and

                     (v)    From the date hereof to the Closing Date, trading in
              the Common Stock shall not have been  suspended by the  Commission
              (except for any suspension of trading of limited  duration  agreed
              to by the Company,  which  suspension shall be terminated prior to
              the Closing),  and, at any time prior to the Closing Date, trading
              in securities generally as reported by Bloomberg Financial Markets
              shall not have been suspended or limited,  or minimum prices shall
              not have been  established on securities whose trades are reported
              by such  service,  or on any Trading  Market,  nor shall a banking
              moratorium  have been declared  either by the United States or New
              York State  authorities nor shall there have occurred any material
              outbreak  or  escalation  of  hostilities  or  other  national  or

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              international  calamity of such magnitude in its effect on, or any
              material  adverse change in, any financial  market which,  in each
              case,  in the  reasonable  judgment  of each  Purchaser,  makes it
              impracticable  or  inadvisable  to  purchase  the  Shares  at  the
              Closing.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

       3.1    Representations and Warranties of the Company. Except as set forth
              ---------------------------------------------
under the  corresponding  section of the Disclosure  Schedules which  Disclosure
Schedules  shall  be  deemed  a  part  hereof,  the  Company  hereby  makes  the
representations and warranties set forth below to each Purchaser:

              (a)    Subsidiaries.  All of the direct and indirect  subsidiaries
                     ------------
       of the  Company  are set forth on  Schedule  3.1(a).  The  Company  owns,
                                          ----------------
       directly  or  indirectly,  all of  the  capital  stock  or  other  equity
       interests  of each  Subsidiary  free and clear of any Liens,  and all the
       issued and  outstanding  shares of capital stock of each  Subsidiary  are
       validly issued and are fully paid,  non-assessable and free of preemptive
       and  similar  rights to  subscribe  for or  purchase  securities.  If the
       Company has no subsidiaries, then references in the Transaction Documents
       to the Subsidiaries will be disregarded.

              (b)    Organization and Qualification. Each of the Company and the
                     ------------------------------
       Subsidiaries  is an entity  duly  incorporated  or  otherwise  organized,
       validly  existing and in good standing under the laws of the jurisdiction
       of its incorporation or organization (as applicable),  with the requisite
       power and authority to own and use its properties and assets and to carry
       on its  business  as  currently  conducted.  Neither  the Company nor any
       Subsidiary  is in  violation or default of any of the  provisions  of its
       respective  certificate  or  articles of  incorporation,  bylaws or other
       organizational  or  charter  documents.  Each  of  the  Company  and  the
       Subsidiaries  is  duly  qualified  to  conduct  business  and is in  good
       standing as a foreign corporation or other entity in each jurisdiction in
       which the nature of the business  conducted or property owned by it makes
       such qualification necessary, except where the failure to be so qualified
       or in good standing,  as the case may be, could not have or reasonably be
       expected  to result in (i) a  material  adverse  effect on the  legality,
       validity or enforceability of any Transaction Documents,  (ii) a material
       adverse effect on the results of operations,  assets, business, prospects
       or financial  condition of the Company and the  Subsidiaries,  taken as a
       whole,  or (iii) a material  adverse  effect on the Company's  ability to
       perform in any material  respect on a timely basis its obligations  under
       any Transaction Documents (any of (i), (ii) or (iii), a "Material Adverse
                                                                ----------------
       Effect") and no Proceeding has been  instituted in any such  jurisdiction
       ------
       revoking,  limiting or curtailing or seeking to revoke,  limit or curtail
       such power and authority or qualification.

              (c)    Authorization;  Enforcement.  The Company has the requisite
                     ---------------------------
       corporate  power  and  authority  to  enter  into and to  consummate  the
       transactions  contemplated  by  each  of the  Transaction  Documents  and
       otherwise to carry out its  obligations  thereunder.  The  execution  and
       delivery  of each of the  Transaction  Documents  by the  Company and the
       consummation  by it of the  transactions  contemplated  thereby have been
       duly authorized by all necessary action on the part of the Company and no

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       further action is required by the Company in connection  therewith  other
       than  in  connection  with  the  Required  Approvals.   Each  Transaction
       Documents has been (or upon delivery will have been) duly executed by the
       Company and,  when  delivered in accordance  with the terms hereof,  will
       constitute  the valid and binding  obligation of the Company  enforceable
       against the Company in accordance with its terms except (i) as limited by
       applicable bankruptcy, insolvency,  reorganization,  moratorium and other
       laws of general  application  affecting  enforcement of creditors' rights
       generally  and (ii) as limited by laws  relating to the  availability  of
       specific performance, injunctive relief or other equitable remedies.

              (d)    No Conflicts.  The execution,  delivery and  performance of
                     ------------
       the  Transaction  Documents by the Company,  the issuance and sale of the
       Shares and the  consummation  by the  Company  of the other  transactions
       contemplated thereby do not and will not (i) conflict with or violate any
       provision of the Company's or any Subsidiary's certificate or articles of
       incorporation,  bylaws or other  organizational or charter documents,  or
       (ii) conflict with, or constitute a default (or an event that with notice
       or lapse of time or both  would  become a default)  under,  result in the
       creation of any Lien upon any of the  properties or assets of the Company
       or  any  Subsidiary,  or  give  to  others  any  rights  of  termination,
       amendment, acceleration or cancellation (with or without notice, lapse of
       time  or  both)  of,  any  agreement,  credit  facility,  debt  or  other
       instrument  (evidencing  a Company or  Subsidiary  debt or  otherwise) or
       other  understanding to which the Company or any Subsidiary is a party or
       by which any property or asset of the Company or any  Subsidiary is bound
       or affected, or (iii) subject to the Required Approvals, conflict with or
       result in a violation  of any law,  rule,  regulation,  order,  judgment,
       injunction,  decree or other  restriction  of any  court or  governmental
       authority  to which the  Company or a  Subsidiary  is subject  (including
       federal  and  state  securities  laws and  regulations),  or by which any
       property or asset of the Company or a  Subsidiary  is bound or  affected;
       except in the case of each of clauses  (ii) and (iii),  such as could not
       have or reasonably be expected to result in a Material Adverse Effect.

              (e)    Filings,   Consents  and  Approvals.  The  Company  is  not
                     -----------------------------------
       required to obtain any consent,  waiver,  authorization or order of, give
       any  notice  to, or make any filing or  registration  with,  any court or
       other  federal,  state,  local or other  governmental  authority or other
       Person in connection with the execution,  delivery and performance by the
       Company of the  Transaction  Documents,  other than (i) filings  required
       pursuant  to Section  4.4 of this  Agreement,  (ii) the  filing  with the
       Commission of the Registration  Statement,  (iii)  application(s) to each
       applicable  Trading  Market for the  listing  of the  Shares and  Warrant
       Shares for trading thereon in the time and manner required  thereby,  and
       (iv) the  filing of Form D with the  Commission  and such  filings as are
       required to be made under applicable state securities laws (collectively,
       the "Required Approvals").
            ------------------

              (f)    Issuance of the  Securities.  The Shares and  Warrants  are
                     ---------------------------
       duly  authorized  and,  when issued and paid for in  accordance  with the
       Transaction  Documents,  will be duly and validly issued,  fully paid and
       nonassessable,  free and clear of all Liens  imposed by the Company other
       than restrictions on transfer provided for in the Transaction  Documents.
       The  Warrant  Shares,  when  issued in  accordance  with the terms of the
       Transaction   Documents,   will  be  validly   issued,   fully  paid  and
       nonassessable,  free and clear of all Liens  imposed by the Company.  The

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       Company has reserved from its duly  authorized  capital stock the maximum
       number of shares of Common Stock issuable  pursuant to this Agreement and
       the Warrants.

              (g)    Capitalization.  The  capitalization  of the  Company is as
                     --------------
       described in the  Company's  most recent  periodic  report filed with the
       Commission.  The  Company  has not issued any  capital  stock  since such
       filing  other than  pursuant to the  exercise of employee  stock  options
       under the Company's stock option plans,  the issuance of shares of Common
       Stock to employees pursuant to the Company's employee stock purchase plan
       and pursuant to the  conversion or exercise of  outstanding  Common Stock
       Equivalents.  No Person has any right of first refusal, preemptive right,
       right  of  participation,  or any  similar  right to  participate  in the
       transactions  contemplated  by the  Transaction  Documents.  Except  as a
       result  of  the  purchase  and  sale  of  the  Securities,  there  are no
       outstanding  options,  warrants,  script rights to subscribe to, calls or
       commitments  of any  character  whatsoever  relating  to, or  securities,
       rights or obligations convertible into or exchangeable for, or giving any
       Person any right to subscribe for or acquire, any shares of Common Stock,
       or contracts,  commitments,  understandings  or arrangements by which the
       Company  or any  Subsidiary  is or may become  bound to issue  additional
       shares of Common Stock or Common Stock Equivalents. The issue and sale of
       the  Securities  will not  obligate the Company to issue shares of Common
       Stock or other  securities to any Person (other than the  Purchasers) and
       will not result in a right of any holder of Company  securities to adjust
       the exercise, conversion,  exchange or reset price under such securities.
       All of the outstanding shares of capital stock of the Company are validly
       issued, fully paid and nonassessable, have been issued in compliance with
       all  federal  and state  securities  laws,  and none of such  outstanding
       shares was issued in violation of any preemptive rights or similar rights
       to  subscribe  for  or  purchase  securities.   No  further  approval  or
       authorization of any  stockholder,  the Board of Directors of the Company
       or others is required for the issuance and sale of the Shares.  There are
       no stockholders agreements, voting agreements or other similar agreements
       with  respect to the  Company's  capital  stock to which the Company is a
       party or, to the  knowledge of the  Company,  between or among any of the
       Company's stockholders.

              (h)    SEC Reports;  Financial  Statements.  The Company has filed
                     -----------------------------------
       all  reports  required  to be filed by it as a foreign  reporting  issuer
       trading on the AMEX under the  Securities  Act and the Exchange  Act, for
       the two years  preceding  the date hereof (or such shorter  period as the
       Company  was  required  by law to  file  such  material)  (the  foregoing
       materials, including the exhibits thereto, being collectively referred to
       herein as the "SEC  Reports")  on a timely  basis or has received a valid
                      ------------
       extension of such time of filing and has filed any such SEC Reports prior
       to the expiration of any such extension.  As of their  respective  dates,
       the SEC Reports  complied in all material  respects with the requirements
       of the Securities Act and the Exchange Act and the rules and  regulations
       of the Commission  promulgated  thereunder,  and none of the SEC Reports,
       when filed,  contained any untrue statement of a material fact or omitted
       to state a material  fact  required to be stated  therein or necessary in
       order to make the statements therein, in light of the circumstances under
       which they were made,  not  misleading.  The financial  statements of the
       Company included in the SEC Reports comply in all material  respects with
       applicable  accounting  requirements and the rules and regulations of the
       Commission with respect thereto as in effect at the time of filing.  Such

                                        9
<PAGE>

       financial  statements  have been  prepared in  accordance  with  relevant
       regulatorily required generally accepted accounting principles applied on
       a consistent basis during the periods involved ("GAAP"), except as may be
                                                        ----
       otherwise specified in such financial statements or the notes thereto and
       except that unaudited financial  statements may not contain all footnotes
       required  by GAAP,  and  fairly  present  in all  material  respects  the
       financial position of the Company and its consolidated subsidiaries as of
       and for the dates  thereof and the results of  operations  and cash flows
       for the periods then ended, subject, in the case of unaudited statements,
       to normal, immaterial, year-end audit adjustments.

              (i)    Material  Changes.  Since  the date of the  latest  audited
                     -----------------
       financial   statements  included  within  the  SEC  Reports,   except  as
       specifically  disclosed in the SEC Reports,  (i) there has been no event,
       occurrence  or  development  that  has had or that  could  reasonably  be
       expected to result in a Material Adverse Effect, (ii) the Company has not
       incurred any liabilities  (contingent or otherwise)  other than (A) trade
       payables and accrued expenses incurred in the ordinary course of business
       consistent  with past  practice  and (B)  liabilities  not required to be
       reflected  in the  Company's  financial  statements  pursuant  to GAAP or
       required to be disclosed in filings made with the  Commission,  (iii) the
       Company has not altered  its method of  accounting,  (iv) the Company has
       not  declared  or made  any  dividend  or  distribution  of cash or other
       property  to  its  stockholders  or  purchased,   redeemed  or  made  any
       agreements  to purchase or redeem any shares of its capital stock and (v)
       the Company has not issued any equity securities to any officer, director
       or Affiliate, except pursuant to existing Company stock option plans. The
       Company  does not have  pending  before the  Commission  any  request for
       confidential treatment of information.

              (j)    Litigation.  There is no action,  suit, inquiry,  notice of
                     ----------
       violation,  proceeding or  investigation  pending or, to the knowledge of
       the Company,  threatened against or affecting the Company, any Subsidiary
       or any of their respective properties before or by any court, arbitrator,
       governmental or administrative  agency or regulatory  authority (federal,
       state,  county, local or foreign)  (collectively,  an "Action") which (i)
                                                              ------
       adversely affects or challenges the legality,  validity or enforceability
       of any of the  Transaction  Documents or the Securities or (ii) could, if
       there were an  unfavorable  decision,  have or  reasonably be expected to
       result  in a  Material  Adverse  Effect.  Neither  the  Company  nor  any
       Subsidiary,  nor any  director  or  officer  thereof,  is or has been the
       subject of any Action  involving  a claim of  violation  of or  liability
       under federal or state  securities laws or a claim of breach of fiduciary
       duty.  There has not been, and to the knowledge of the Company,  there is
       not  pending  or  contemplated,   any  investigation  by  the  Commission
       involving the Company or any current or former director or officer of the
       Company.  The  Commission  has not issued  any stop order or other  order
       suspending the  effectiveness of any registration  statement filed by the
       Company or any Subsidiary under the Exchange Act or the Securities Act.

              (k)    Labor  Relations.  No material  labor dispute exists or, to
                     ----------------
       the  knowledge  of the  Company,  is imminent  with respect to any of the
       employees of the Company which could  reasonably be expected to result in
       a Material Adverse Effect.

                                       10
<PAGE>

              (l)    Compliance.  Neither the Company nor any  Subsidiary (i) is
                     ----------
       in default  under or in violation of (and no event has occurred  that has
       not been waived that, with notice or lapse of time or both,  would result
       in a default by the Company or any Subsidiary under), nor has the Company
       or any Subsidiary  received notice of a claim that it is in default under
       or that it is in violation of, any indenture, loan or credit agreement or
       any other  agreement or  instrument to which it is a party or by which it
       or any of its  properties  is  bound  (whether  or not  such  default  or
       violation  has been  waived),  (ii) is in  violation  of any order of any
       court,  arbitrator  or  governmental  body,  or  (iii)  is or has been in
       violation  of  any  statute,  rule  or  regulation  of  any  governmental
       authority,  including without limitation all foreign,  federal, state and
       local laws  applicable  to its business  except in each case as could not
       have a Material Adverse Effect.

              (m)    Regulatory  Permits.   The  Company  and  the  Subsidiaries
                     -------------------
       possess  all  certificates,  authorizations  and  permits  issued  by the
       appropriate  federal,  state,  local or  foreign  regulatory  authorities
       necessary to conduct their respective  businesses as described in the SEC
       Reports,  except where the failure to possess such permits could not have
       or  reasonably  be  expected  to  result  in a  Material  Adverse  Effect
       ("Material  Permits"),  and neither the  Company nor any  Subsidiary  has
         -----------------
       received  any  notice  of  proceedings  relating  to  the  revocation  or
       modification of any Material Permit.

              (n)    Title to Assets. The Company and the Subsidiaries have good
                     ---------------
       and marketable  title as disclosed in public filings to all real property
       owned by them that is  material  to the  business  of the Company and the
       Subsidiaries and good and marketable title in all personal property owned
       by  them  that  is  material  to the  business  of the  Company  and  the
       Subsidiaries,  in each case free and clear of all Liens, except for Liens
       as do not  materially  affect  the  value  of  such  property  and do not
       materially  interfere  with the use made and  proposed to be made of such
       property by the Company and the Subsidiaries and Liens for the payment of
       federal, state or other taxes, the payment of which is neither delinquent
       nor subject to  penalties.  Any real property and  facilities  held under
       lease by the Company and the  Subsidiaries  are held by them under valid,
       subsisting  and   enforceable   leases  of  which  the  Company  and  the
       Subsidiaries are in compliance.

              (o)    Patents and  Trademarks.  The Company and the  Subsidiaries
                     -----------------------
       have,  or  have  rights  to  use,  all  patents,   patent   applications,
       trademarks,   trademark   applications,   service  marks,   trade  names,
       copyrights,  licenses and other similar rights  necessary or material for
       use in connection  with their  respective  businesses as described in the
       SEC  Reports  and which the  failure  to so have  could  have a  Material
       Adverse  Effect  (collectively,   the  "Intellectual  Property  Rights").
                                               ------------------------------
       Neither the Company nor any Subsidiary has received a written notice that
       the  Intellectual  Property  Rights used by the Company or any Subsidiary
       violates or infringes upon the rights of any Person.  To the knowledge of
       the Company,  all such  Intellectual  Property Rights are enforceable and
       there  is no  existing  infringement  by  another  Person  of  any of the
       Intellectual Property Rights of others.

              (p)    Insurance.  The Company and the Subsidiaries are insured by
                     ---------
       insurers of recognized financial  responsibility  against such losses and
       risks and in such amounts as are prudent and customary in the  businesses
       in which the Company and the Subsidiaries are engaged, including, but not
       limited to, directors and officers  insurance  coverage at least equal to

                                       11
<PAGE>

       the aggregate  Subscription  Amount. To the best of Company's  knowledge,
       such insurance contracts and policies are accurate and complete.  Neither
       the Company nor any Subsidiary has any reason to believe that it will not
       be able to  renew  its  existing  insurance  coverage  as and  when  such
       coverage  expires or to obtain similar  coverage from similar insurers as
       may be necessary to continue its business without a significant  increase
       in cost.

              (q)    Transactions  With Affiliates and Employees.  Except as set
                     -------------------------------------------
       forth  in the SEC  Reports,  none of the  officers  or  directors  of the
       Company and, to the  knowledge of the Company,  none of the  employees of
       the Company is presently a party to any  transaction  with the Company or
       any  Subsidiary  (other than for  services  as  employees,  officers  and
       directors),  including  any  contract,  agreement  or  other  arrangement
       providing for the  furnishing of services to or by,  providing for rental
       of real or personal property to or from, or otherwise  requiring payments
       to or from any officer, director or such employee or, to the knowledge of
       the  Company,  any  entity in which any  officer,  director,  or any such
       employee has a substantial interest or is an officer,  director,  trustee
       or partner,  in each case in excess of $60,000 other than (i) for payment
       of salary or consulting fees for services  rendered,  (ii)  reimbursement
       for  expenses  incurred  on  behalf  of the  Company  and (iii) for other
       employee  benefits,  including  stock option  agreements  under any stock
       option plan of the Company.

              (r)    Sarbanes-Oxley;  Internal Accounting Controls.  The Company
                     ---------------------------------------------
       is in material  compliance with all provisions of the  Sarbanes-Oxley Act
       of 2002 which are  applicable to it as a foreign issuer as of the Closing
       Date.  The  Company  and the  Subsidiaries  maintain a system of internal
       accounting controls  sufficient to provide reasonable  assurance that (i)
       transactions  are executed in  accordance  with  management's  general or
       specific  authorizations,  (ii) transactions are recorded as necessary to
       permit preparation of financial statements in conformity with GAAP and to
       maintain asset  accountability,  (iii) access to assets is permitted only
       in accordance with management's  general or specific  authorization,  and
       (iv) the recorded accountability for assets is compared with the existing
       assets at  reasonable  intervals  and  appropriate  action is taken  with
       respect  to any  differences.  If  applicable  to a  company  such as the
       Company,  the Company has established  disclosure controls and procedures
       (as  defined in  Exchange  Act Rules  13a-15(e)  and  15d-15(e))  for the
       Company and designed such  disclosure  controls and  procedures to ensure
       that  material  information  relating  to  the  Company,   including  its
       Subsidiaries,  is made known to the certifying  officers by others within
       those  entities,  particularly  during the period in which the  Company's
       most recently filed  periodic  report under the Exchange Act, as the case
       may be,  is  being  prepared.  If  applicable  to a  company  such as the
       Company,   the  Company's   certifying   officers   have   evaluated  the
       effectiveness  of the  Company's  controls and  procedures as of the date
       prior to the filing date of the most recently filed periodic report under
       the  Exchange  Act  (such  date,  the  "Evaluation  Date").  The  Company
                                               ----------------
       presented in its most recently filed  periodic  report under the Exchange
       Act the conclusions of the certifying officers about the effectiveness of
       the disclosure  controls and procedures based on their  evaluations as of
       the  Evaluation  Date.  Since the  Evaluation  Date,  there  have been no
       significant  changes in the Company's  internal controls (as such term is

                                       12
<PAGE>

       defined in Item 307(b) of  Regulation  S-K under the Exchange Act) or, to
       the Company's knowledge, in other factors that could significantly affect
       the Company's internal controls.

              (s)    Certain Fees. No brokerage or finder's fees or  commissions
                     ------------
       are or will be payable by the Company to any broker, financial advisor or
       consultant,  finder,  placement agent,  investment banker,  bank or other
       Person with respect to the  transactions  contemplated by this Agreement.
       The Purchasers  shall have no obligation with respect to any fees or with
       respect to any claims made by or on behalf of other Persons for fees of a
       type  contemplated in this Section that may be due in connection with the
       transactions contemplated by this Agreement.

              (t)    Private Placement.  Assuming the accuracy of the Purchasers
                     -----------------
       representations  and warranties set forth in Section 3.2, no registration
       under  the  Securities  Act is  required  for the  offer  and sale of the
       Securities by the Company to the Purchasers as contemplated  hereby.  The
       issuance and sale of the  Securities  hereunder  does not  contravene the
       rules and regulations of the Trading Market.

              (u)    Investment  Company.  The  Company  is  not,  and is not an
                     -------------------
       Affiliate  of, and  immediately  after receipt of payment for the Shares,
       will not be or be an Affiliate  of, an  "investment  company"  within the
       meaning of the  Investment  Company Act of 1940, as amended.  The Company
       shall conduct its business in a manner so that it will not become subject
       to the Investment Company Act.

              (v)    Registration  Rights.  No Person has any right to cause the
                     --------------------
       Company  to  effect  the  registration  under the  Securities  Act of any
       securities of the Company.

              (w)    Listing and Maintenance Requirements.  The Company's Common
                     ------------------------------------
       Stock is registered by the filing of a Form 20-F pursuant to the Exchange
       Act and pursuant to Section  12(b) of the  Exchange  Act, and the Company
       has taken no action  designed to, or which to its  knowledge is likely to
       have the effect of,  terminating  the  registration  of the Common  Stock
       under the Exchange Act nor has the Company received any notification that
       the  Commission  is  contemplating  terminating  such  registration.  The
       Company has not, in the 12 months  preceding  the date  hereof,  received
       notice from any Trading  Market on which the Common  Stock is or has been
       listed or quoted to the effect that the Company is not in compliance with
       the listing or  maintenance  requirements  of such  Trading  Market.  The
       Company  is,  and has no  reason  to  believe  that  it  will  not in the
       foreseeable  future  continue to be, in compliance  with all such listing
       and maintenance requirements.

              (x)    Application  of Takeover  Protections.  The Company and its
                     -------------------------------------
       Board of Directors have taken all necessary  action,  if any, in order to
       render inapplicable any control share acquisition,  business combination,
       poison pill  (including  any  distribution  under a rights  agreement) or
       other similar anti-takeover  provision under the Company's Certificate of
       Incorporation (or similar charter  documents) or the laws of its state of
       incorporation  that is or could become  applicable to the Purchasers as a
       result of the Purchasers and the Company  fulfilling their obligations or

                                       13
<PAGE>

       exercising  their  rights  under  the  Transaction  Documents,  including
       without  limitation  the  Company's  issuance of the  Securities  and the
       Purchasers' ownership of the Securities.

              (y)    Disclosure.  The Company confirms that, neither the Company
                     ----------
       nor any  other  Person  acting  on its  behalf  has  provided  any of the
       Purchasers  or  their  agents  or  counsel  with  any  information   that
       constitutes or might constitute  material,  non-public  information.  The
       Company  understands  and confirms that the  Purchasers  will rely on the
       foregoing  representations  and  covenants in effecting  transactions  in
       securities  of the Company.  All  disclosure  provided to the  Purchasers
       regarding  the Company,  its business and the  transactions  contemplated
       hereby,  including the Disclosure Schedules to this Agreement,  furnished
       by or on behalf of the Company  with respect to the  representations  and
       warranties  made  herein  are  true  and  correct  with  respect  to such
       representations and warranties and do not contain any untrue statement of
       a material fact or omit to state any material fact  necessary in order to
       make the statements  made therein,  in light of the  circumstances  under
       which they were made, not misleading. The Company acknowledges and agrees
       that no Purchaser  makes or has made any  representations  or  warranties
       with  respect to the  transactions  contemplated  hereby other than those
       specifically set forth in Section 3.2 hereof.

              (z)    No  Integrated  Offering.  Assuming  the  accuracy  of  the
                     ------------------------
       Purchasers'  representations  and  warranties  set forth in Section  3.2,
       neither the Company, nor any of its affiliates,  nor any Person acting on
       its or their behalf has, directly or indirectly, made any offers or sales
       of any  security  or  solicited  any  offers to buy any  security,  under
       circumstances  that would  cause this  offering of the  Securities  to be
       integrated  with prior  offerings  by the  Company  for  purposes  of the
       Securities  Act  or  any  applicable   shareholder  approval  provisions,
       including,  without  limitation,  under the rules and  regulations of any
       exchange or automated  quotation system on which any of the securities of
       the Company are listed or designated.

              (aa)   Solvency.  Based on the financial  condition of the Company
                     --------
       as of the Closing Date after giving  effect to the receipt by the Company
       of the  proceeds  from  the  sale of the  Securities  hereunder,  (i) the
       Company's  fair saleable value of its assets exceeds the amount that will
       be required to be paid on or in respect of the Company's  existing  debts
       and other  liabilities  (including known contingent  liabilities) as they
       mature;  (ii) the Company's assets do not constitute  unreasonably  small
       capital  to carry on its  business  for the  current  fiscal  year as now
       conducted  and as proposed to be conducted  including  its capital  needs
       taking into account the particular  capital  requirements of the business
       conducted by the Company,  and projected capital requirements and capital
       availability  thereof;  and (iii) the current  cash flow of the  Company,
       together  with  the  proceeds  the  Company  would  receive,  were  it to
       liquidate  all of its assets,  after taking into account all  anticipated
       uses of the cash, would be sufficient to pay all amounts on or in respect
       of its debt when such amounts are  required to be paid.  The Company does
       not intend to incur  debts  beyond its  ability to pay such debts as they
       mature  (taking into account the timing and amounts of cash to be payable
       on or in respect of its debt).  The Company has no knowledge of any facts
       or  circumstances  which  lead  it to  believe  that  it  will  file  for
       reorganization or liquidation under the bankruptcy or reorganization laws
       of any  jurisdiction  within  one year  from the  Closing  Date.  The SEC

                                       14
<PAGE>

       Reports  set forth as of the dates  thereof all  outstanding  secured and
       unsecured Indebtedness of the Company or any Subsidiary, or for which the
       Company or any  Subsidiary  has  commitments.  For the  purposes  of this
       Agreement,  "Indebtedness"  shall mean (a) any  liabilities  for borrowed
                    ------------
       money or amounts  owed in excess of $50,000  (other  than trade  accounts
       payable incurred in the ordinary course of business), (b) all guaranties,
       endorsements and other contingent  obligations in respect of Indebtedness
       of  others,  whether  or not the same are or should be  reflected  in the
       Company's  balance  sheet (or the notes  thereto),  except  guaranties by
       endorsement  of  negotiable  instruments  for  deposit or  collection  or
       similar  transactions  in the ordinary  course of  business;  and (c) the
       present value of any lease payments in excess of $50,000 due under leases
       required to be capitalized in accordance  with GAAP.  Neither the Company
       nor any Subsidiary is in default with respect to any Indebtedness.

              (bb)   Form F-3  Eligibility.  The Company is eligible to register
                     ---------------------
       the  resale  of  its  Common  Stock  by the  Purchasers  under  Form  F-3
       promulgated under the Securities Act and the Company hereby covenants and
       agrees to use its best  efforts to maintain its  eligibility  to use Form
       F-3 until the  Registration  Statement  covering the resale of the Shares
       shall have been filed with, and declared effective by, the Commission.

              (cc)   Taxes.  Except for matters that would not,  individually or
                     -----
       in the aggregate,  have or reasonably be expected to result in a Material
       Adverse  Effect,  the Company and each Subsidiary has filed all necessary
       federal,  state and foreign income and franchise tax returns and has paid
       or  accrued  all  taxes  shown as due  thereon,  and the  Company  has no
       knowledge  of a tax  deficiency  which has been  asserted  or  threatened
       against the Company or any Subsidiary.

              (dd)   General  Solicitation.  Neither  the Company nor any person
                     ---------------------
       acting on behalf of the  Company has offered or sold any of the Shares by
       any form of general solicitation or general advertising.  The Company has
       offered  the Shares for sale only to the  Purchasers  and  certain  other
       "accredited   investors"  within  the  meaning  of  Rule  501  under  the
       Securities Act.

              (ee)   Foreign Corrupt Practices.  Neither the Company, nor to the
                     -------------------------
       knowledge of the Company,  any agent or other person  acting on behalf of
       the Company,  has (i) directly or indirectly,  used any corrupt funds for
       unlawful contributions,  gifts,  entertainment or other unlawful expenses
       related to foreign or domestic political activity, (ii) made any unlawful
       payment to foreign or domestic  government  officials  or employees or to
       any foreign or domestic  political  parties or campaigns  from  corporate
       funds,  (iii)  failed  to  disclose  fully any  contribution  made by the
       Company (or made by any person  acting on its behalf of which the Company
       is aware) which is in violation of law, or (iv)  violated in any material
       respect any  provision of the Foreign  Corrupt  Practices Act of 1977, as
       amended.

              (ff)   Accountants.  The  Company's  accountants  are set forth on
                     -----------
       Schedule 3.1(ff) of the Disclosure Schedule.  To the Company's knowledge,
       ----------------
       such accountants, who the Company expects will express their opinion with
       respect to the  financial  statements  to be  included  in the  Company's
       Annual  Report for the year ending  December 31,  2004,  are a registered
       public accounting firm as required by the Securities Act.

                                       15
<PAGE>

              (gg)   Acknowledgment  Regarding  Purchasers'  Purchase of Shares.
                     ----------------------------------------------------------
       The Company acknowledges and agrees that each of the Purchasers is acting
       solely in the capacity of an arm's length  purchaser  with respect to the
       Transaction  Documents  and the  transactions  contemplated  hereby.  The
       Company further  acknowledges  that no Purchaser is acting as a financial
       advisor or  fiduciary  of the Company (or in any similar  capacity)  with
       respect to this Agreement and the  transactions  contemplated  hereby and
       any  advice  given  by  any   Purchaser   or  any  of  their   respective
       representatives  or agents in  connection  with  this  Agreement  and the
       transactions  contemplated hereby is merely incidental to the Purchasers'
       purchase of the Shares.  The Company further represents to each Purchaser
       that the Company's  decision to enter into this  Agreement has been based
       solely on the  independent  evaluation of the  transactions  contemplated
       hereby by the Company and its representatives.

              (hh)   Acknowledgement  Regarding  Purchasers'  Trading  Activity.
                     ----------------------------------------------------------
       Anything  in  this   Agreement  or  elsewhere   herein  to  the  contrary
       notwithstanding  (except for Section 4.15 hereof),  it is understood  and
       agreed by the Company (i) that none of the Purchasers  have been asked to
       agree,  nor has any  Purchaser  agreed,  to  desist  from  purchasing  or
       selling,  long and/or short,  securities of the Company,  or "derivative"
       securities  based on  securities  issued  by the  Company  or to hold the
       Securities for any specified  term;  (ii) that past or future open market
       or other  transactions  by any  Purchaser,  including  Short  Sales,  and
       specifically including,  without limitation,  Short Sales or "derivative"
       transactions,  before or after  the  closing  of this or  future  private
       placement  transactions,  may  negatively  impact the market price of the
       Company's  publicly-traded  securities;  (iii)  that any  Purchaser,  and
       counter parties in "derivative"  transactions to which any such Purchaser
       is a party, directly or indirectly, presently may have a "short" position
       in the Common Stock,  and (iv) that each Purchaser shall not be deemed to
       have any affiliation with or control over any arm's length  counter-party
       in any "derivative" transaction.

       3.2    Representations  and Warranties of the Purchasers.  Each Purchaser
              -------------------------------------------------
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:

              (a)    Organization;  Authority.  Such Purchaser is an entity duly
                     ------------------------
       organized,  validly  existing and in good standing  under the laws of the
       jurisdiction  of  its   organization   with  full  right,   corporate  or
       partnership  power and  authority  to enter  into and to  consummate  the
       transactions  contemplated by the Transaction  Documents and otherwise to
       carry  out  its  obligations  thereunder.  The  execution,  delivery  and
       performance by such Purchaser of the  transactions  contemplated  by this
       Agreement have been duly authorized by all necessary corporate or similar
       action on the part of such Purchaser. Each Transaction Documents to which
       it is a party  has  been  duly  executed  by  such  Purchaser,  and  when
       delivered by such  Purchaser in accordance  with the terms  hereof,  will
       constitute the valid and legally  binding  obligation of such  Purchaser,
       enforceable  against  it in  accordance  with its  terms,  except  (i) as
       limited  by  general  equitable  principles  and  applicable  bankruptcy,
       insolvency,   reorganization,   moratorium  and  other  laws  of  general
       application affecting enforcement of creditors' rights generally, (ii) as
       limited by laws  relating to the  availability  of specific  performance,
       injunctive  relief  or other  equitable  remedies  and (iii)  insofar  as
       indemnification and contribution  provisions may be limited by applicable
       law.

                                       16
<PAGE>

              (b)    Own Account. Such Purchaser understands that the Securities
                     -----------
       are  "restricted  securities"  and  have not been  registered  under  the
       Securities  Act or any applicable  state  securities law and is acquiring
       the Securities as principal for its own account and not with a view to or
       for distributing or reselling such Securities or any part thereof, has no
       present  intention  of  distributing  any of such  Securities  and has no
       arrangement  or  understanding  with  any  other  persons  regarding  the
       distribution of such  Securities  (this  representation  and warranty not
       limiting such  Purchaser's  right to sell the Securities  pursuant to the
       Registration Statement or otherwise in compliance with applicable federal
       and state  securities  laws).  Such Purchaser is acquiring the Securities
       hereunder in the ordinary course of its business. Such Purchaser does not
       have any agreement or  understanding,  directly or  indirectly,  with any
       Person to distribute any of the Securities.

              (c)    Purchaser  Status.  At the time such  Purchaser was offered
                     -----------------
       the Securities, it was, and at the date hereof it is, and on each date on
       which it exercises any Warrants,  it will be either:  (i) an  "accredited
       investor" as defined in Rule 501(a)(1),  (a)(2), (a)(3), (a)(7) or (a)(8)
       under the  Securities  Act or (ii) a "qualified  institutional  buyer" as
       defined in Rule 144A(a) under the  Securities  Act. Such Purchaser is not
       required to be  registered  as a  broker-dealer  under  Section 15 of the
       Exchange Act.

              (d)    Experience of Such Purchaser. Such Purchaser,  either alone
                     ----------------------------
       or together with its representatives,  has such knowledge, sophistication
       and  experience in business and financial  matters so as to be capable of
       evaluating  the merits  and risks of the  prospective  investment  in the
       Securities, and has so evaluated the merits and risks of such investment.
       Such  Purchaser is able to bear the economic risk of an investment in the
       Securities and, at the present time, is able to afford a complete loss of
       such investment.

              (e)    General Solicitation.  Such Purchaser is not purchasing the
                     --------------------
       Securities  as a result of any  advertisement,  article,  notice or other
       communication  regarding  the  Securities  published  in  any  newspaper,
       magazine  or  similar  media or  broadcast  over  television  or radio or
       presented  at any seminar or any other  general  solicitation  or general
       advertisement.

              (f)    Short Sales. Such Purchaser has not directly or indirectly,
                     -----------
       nor has any Person  acting on behalf of or pursuant to any  understanding
       with such  Purchaser,  executed any Short Sales in the  securities of the
       Company (including,  without  limitations,  any Short Sales involving the
       Company's  securities)  since  such  time  as  the  Purchaser  was  first
       contacted regarding an investment in the Company ("Discussion Time").
                                                          ---------------

       The Company  acknowledges and agrees that each Purchaser does not make or
has not made any  representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.

                                       17
<PAGE>

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

       4.1    Transfer Restrictions.
              ---------------------

              (a)    The Securities  may only be disposed of in compliance  with
       state and federal  securities  laws. In  connection  with any transfer of
       Securities other than pursuant to an effective  registration statement or
       Rule  144,  to  the  Company  or to an  affiliate  of a  Purchaser  or in
       connection with a pledge as  contemplated in Section 4.1(b),  the Company
       may require the  transferor  thereof to provide to the Company an opinion
       of counsel  selected by the transferor  and reasonably  acceptable to the
       Company,  the form and  substance of which  opinion  shall be  reasonably
       satisfactory  to the Company,  to the effect that such  transfer does not
       require registration of such transferred  Securities under the Securities
       Act. As a  condition  of  transfer,  any such  transferee  shall agree in
       writing  to be bound by the terms of this  Agreement  and shall  have the
       rights of a Purchaser  under this Agreement and the  Registration  Rights
       Agreement.

              (b)    The  Purchasers  agree  to the  imprinting,  so  long as is
       required by this Section 4.1(b),  of a legend on any of the Securities in
       the following form:

              THESE  SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
              EXCHANGE  COMMISSION OR THE SECURITIES  COMMISSION OF ANY STATE IN
              RELIANCE UPON AN EXEMPTION FROM REGISTRATION  UNDER THE SECURITIES
              ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,  ACCORDINGLY,
              MAY  NOT BE  OFFERED  OR  SOLD  EXCEPT  PURSUANT  TO AN  EFFECTIVE
              REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
              AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
              REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
              WITH  APPLICABLE  STATE  SECURITIES  LAWS AS  EVIDENCED BY A LEGAL
              OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
              OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE  COMPANY.  THESE
              SECURITIES  MAY BE PLEDGED IN  CONNECTION  WITH A BONA FIDE MARGIN
              ACCOUNT  WITH A  REGISTERED  BROKER-DEALER  OR OTHER  LOAN  WITH A
              FINANCIAL  INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED
              IN RULE 501(a) UNDER THE SECURITIES ACT.

              The Company acknowledges and agrees that a Purchaser may from time
       to time pledge pursuant to a bona fide margin agreement with a registered
       broker-dealer  or  grant  a  security  interest  in  some  or  all of the
       Securities to a financial institution that is an "accredited investor" as
       defined  in Rule  501(a)  under the  Securities  Act and who agrees to be
       bound by the  provisions of this  Agreement and the  Registration  Rights
       Agreement  and, if  required  under the terms of such  arrangement,  such
       Purchaser may transfer  pledged or secured  Securities to the pledgees or
       secured  parties.  Such a pledge  or  transfer  would not be  subject  to
       approval  of the  Company  and no legal  opinion of legal  counsel of the
       pledgee,  secured  party or  pledgor  shall  be  required  in  connection
       therewith.  Further,  no notice shall be required of such pledge.  At the

                                       18
<PAGE>

       appropriate  Purchaser's  expense,  the Company  will execute and deliver
       such reasonable documentation as a pledgee or secured party of Securities
       may  reasonably  request in  connection  with a pledge or transfer of the
       Securities,  including,  if the  Securities  are subject to  registration
       pursuant to the Registration Rights Agreement, the preparation and filing
       of any required  prospectus  supplement  under Rule  424(b)(3)  under the
       Securities  Act or other  applicable  provision of the  Securities Act to
       appropriately amend the list of Selling Stockholders thereunder.

              (c)    Certificates evidencing the Shares and Warrant Shares shall
       not  contain  any  legend  (including  the  legend  set forth in  Section
       4.1(b)),  (i) while a registration  statement (including the Registration
       Statement)  covering the resale of such  security is effective  under the
       Securities  Act,  or (ii)  following  any sale of such  Shares or Warrant
       Shares  pursuant to Rule 144,  or (iii) if such Shares or Warrant  Shares
       are eligible  for sale under Rule  144(k),  or (iv) if such legend is not
       required under  applicable  requirements of the Securities Act (including
       judicial  interpretations  and pronouncements  issued by the Staff of the
       Commission). The Company shall cause its counsel to issue a legal opinion
       to the Company's  transfer  agent  promptly  after the Effective  Date if
       required  by the  Company's  transfer  agent to effect the removal of the
       legend  hereunder.  If all or any portion of a Warrant is  exercised at a
       time  when  there is an  effective  registration  statement  to cover the
       resale of the Warrant Shares, such Warrant Shares shall be issued free of
       all legends.  The Company  agrees that following the Effective Date or at
       such time as such legend is no longer required under this Section 4.1(c),
       it will,  no later than three  Trading Days  following  the delivery by a
       Purchaser to the Company or the Company's transfer agent of a certificate
       representing  Shares or Warrant Shares, as the case may be, issued with a
       restrictive  legend (such date, the "Legend  Removal  Date"),  deliver or
                                            ---------------------
       cause to be delivered to such Purchaser a certificate  representing  such
       Securities  that is free  from all  restrictive  and other  legends.  The
       Company may not make any notation on its records or give  instructions to
       any  transfer  agent of the  Company  that  enlarge the  restrictions  on
       transfer set forth in this Section.  Certificates for Securities  subject
       to legend removal hereunder shall be transmitted by the transfer agent of
       the Company to the Purchasers by crediting the account of the Purchaser's
       prime broker with the Depository Trust Company System.

              (d)    In addition to such Purchaser's  other available  remedies,
       the Company  shall pay to a  Purchaser,  in cash,  as partial  liquidated
       damages and not as a penalty, for each $1,000 of Shares or Warrant Shares
       (based  on the  Closing  Price  of the  Common  Stock  on the  date  such
       Securities  are submitted to the  Company's  transfer  agent)  subject to
       Section  4.1(c),  $10 per Trading Day  (increasing to $20 per Trading Day
       five (5) Trading  Days after such  damages have begun to accrue) for each
       Trading  Day after the Legend  Removal  Date until  such  certificate  is
       delivered without legend;  provided,  however, that the Company shall not
                                  --------   -------
       be obligated to pay any per Trading Day  liquidated  damages with respect
       to delays  directly  caused by a Force Majeure;  provided,  further,  the
                                                        --------   -------
       Company  shall use best  efforts to remedy or overcome  such  failures as
       promptly as possible.  Nothing herein shall limit such Purchaser's  right
       to  pursue  actual   damages  for  the   Company's   failure  to  deliver
       certificates  representing  any Securities as required by the Transaction
       Documents, and such Purchaser shall have the right to pursue all remedies

                                       19
<PAGE>

       available  to it at law or in equity  including,  without  limitation,  a
       decree of specific performance and/or injunctive relief.

              (e)    Each  Purchaser,  severally  and not jointly with the other
       Purchasers,  agrees  that the  removal  of the  restrictive  legend  from
       certificates  representing Securities as set forth in this Section 4.1 is
       predicated  upon the Company's  reliance that the Purchaser will sell any
       Securities  pursuant  to  either  the  registration  requirements  of the
       Securities   Act,   including   any   applicable    prospectus   delivery
       requirements, or an exemption therefrom.

       4.2    Furnishing  of   Information.   As  long  as  any  Purchaser  owns
              ----------------------------
Securities,  the  Company  covenants  to timely  file (or obtain  extensions  in
respect  thereof  and file  within the  applicable  grace  period)  all  reports
required  to be filed by the  Company  after  the date  hereof  pursuant  to the
Exchange Act. As long as any Purchaser  owns  Securities,  if the Company is not
required to file  reports  pursuant  to the  Exchange  Act, it will  prepare and
furnish to the  Purchasers and make publicly  available in accordance  with Rule
144(c) such information as is required for the Purchasers to sell the Securities
under Rule 144.  The Company  further  covenants  that it will take such further
action as any holder of Securities  may  reasonably  request,  all to the extent
required from time to time to enable such Person to sell such Securities without
registration  under the  Securities  Act within the limitation of the exemptions
provided by Rule 144.

       4.3    Integration. The Company shall not sell, offer for sale or solicit
              -----------
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the  Securities  in a manner that would  require the  registration  under the
Securities  Act of the sale of the Securities to the Purchasers or that would be
integrated  with the offer or sale of the  Securities  for purposes of the rules
and  regulations  of any Trading  Market such that it would require  shareholder
approval  prior to the  closing of such  other  transaction  unless  shareholder
approval is obtained before the closing of such subsequent transaction.

       4.4    Securities Laws Disclosure;  Publicity. The Company shall, by 8:30
              --------------------------------------
a.m.  Eastern time on the Trading Day following  the date hereof,  issue a press
release reasonably acceptable to each Purchaser disclosing the material terms of
the  transactions  contemplated  hereby  and  within 4 Trading  Days of the date
hereof a Current  Report on Form 6-K  which  shall  have  attached  thereto  the
Transaction  Documents.  The Company and each Purchaser  shall consult with each
other in issuing  any other  press  releases  with  respect to the  transactions
contemplated  hereby,  and neither the Company nor any Purchaser shall issue any
such press release or otherwise make any such public statement without the prior
consent of the Company,  with respect to any press release of any Purchaser,  or
without the prior consent of each  Purchaser,  with respect to any press release
of the Company, which consent shall not unreasonably be withheld, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide  the  other  party  with  prior  notice  of  such  public  statement  or
communication.  Notwithstanding  the  foregoing,  the Company shall not publicly
disclose the name of any Purchaser,  or include the name of any Purchaser in any
filing with the Commission or any regulatory  agency or Trading Market,  without
the prior written consent of such  Purchaser,  except (i) as required by federal
securities law in connection with the registration statement contemplated by the
Registration Rights Agreement and (ii) to the extent such disclosure is required
by law or Trading  Market  regulations,  in which case the Company shall provide
the Purchasers  with prior notice of such  disclosure  permitted under subclause
(i) or (ii).

                                       20
<PAGE>

       4.5    Shareholder  Rights Plan. No claim will be made or enforced by the
              ------------------------
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring  Person" under any  shareholder  rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the  provisions of any such plan or  arrangement,  by
virtue of  receiving  Securities  under the  Transaction  Documents or under any
other  agreement  between  the  Company and the  Purchasers.  The Company  shall
conduct  its  business  in a manner so that it will not  become  subject  to the
Investment Company Act.

       4.6    Non-Public  Information.  The  Company  covenants  and agrees that
              -----------------------
neither it nor any other Person  acting on its behalf will provide any Purchaser
or its  agents  or  counsel  with  any  information  that the  Company  believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be  relying  on the  foregoing  representations  in  effecting  transactions  in
securities of the Company.

       4.7    Use of  Proceeds.  Except as set forth on  Schedule  4.7  attached
              ----------------                           -------------
hereto,  the Company shall use the net proceeds from the sale of the  Securities
hereunder  for working  capital  purposes  and not for the  satisfaction  of any
portion of the  Company's  debt  (other  than  payment of trade  payables in the
ordinary course of the Company's  business and prior  practices),  to redeem any
Common  Stock  or  Common  Stock   Equivalents  or  to  settle  any  outstanding
litigation.

       4.8    Reimbursement.  If any Purchaser  becomes involved in any capacity
              -------------
in any  Proceeding by or against any Person who is a stockholder  of the Company
(except as a result of sales, pledges,  margin sales and similar transactions by
such Purchaser to or with any current  stockholder),  solely as a result of such
Purchaser's acquisition of the Securities under this Agreement, the Company will
reimburse such Purchaser for its reasonable legal and other expenses  (including
the cost of any  investigation  preparation and travel in connection  therewith)
incurred  in  connection   therewith,   as  such  expenses  are  incurred.   The
reimbursement  obligations  of the  Company  under  this  paragraph  shall be in
addition to any  liability  which the Company may otherwise  have,  shall extend
upon the same terms and  conditions to any  Affiliates of the Purchasers who are
actually  named in such  action,  proceeding  or  investigation,  and  partners,
directors,  agents,  employees and controlling persons (if any), as the case may
be, of the  Purchasers  and any such  Affiliate,  and shall be binding  upon and
inure  to  the  benefit  of  any   successors,   assigns,   heirs  and  personal
representatives  of the Company,  the  Purchasers and any such Affiliate and any
such Person.  The Company also agrees that neither the  Purchasers  nor any such
Affiliates,  partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company  solely as a result of acquiring  the  Securities  under
this Agreement.

       4.9    Indemnification  of Purchasers.  Subject to the provisions of this
              ------------------------------
Section  4.9,  the Company  will  indemnify  and hold the  Purchasers  and their
directors,  officers,  shareholders,  partners,  employees and agents  (each,  a
"Purchaser Party") harmless from any and all losses,  liabilities,  obligations,
 ---------------
claims,  contingencies,  damages,  costs and expenses,  including all judgments,
amounts paid in  settlements,  court costs and  reasonable  attorneys'  fees and
costs of  investigation  that any such Purchaser  Party may suffer or incur as a
result  of or  relating  to (a)  any  breach  of  any  of  the  representations,
warranties,  covenants or agreements made by the Company in this Agreement or in
the  other  Transaction  Documents  or  (b)  any  action  instituted  against  a

                                       21
<PAGE>

Purchaser, or any of them or their respective Affiliates,  by any stockholder of
the Company who is not an  Affiliate of such  Purchaser,  with respect to any of
the transactions  contemplated by the Transaction  Documents (unless such action
is based  upon a  breach  of such  Purchaser's  representations,  warranties  or
covenants  under the Transaction  Documents or any agreements or  understandings
such  Purchaser  may have with any such  stockholder  or any  violations  by the
Purchaser of state or federal  securities  laws or any conduct by such Purchaser
which constitutes fraud,  gross negligence,  willful misconduct or malfeasance).
If any action shall be brought  against any Purchaser  Party in respect of which
indemnity may be sought pursuant to this  Agreement,  such Purchaser Party shall
promptly notify the Company in writing,  and the Company shall have the right to
assume the defense thereof with counsel of its own choosing. Any Purchaser Party
shall  have  the  right to  employ  separate  counsel  in any  such  action  and
participate  in the defense  thereof,  but the fees and expenses of such counsel
shall be at the expense of such  Purchaser  Party  except to the extent that (i)
the  employment  thereof  has been  specifically  authorized  by the  Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such  defense  and to employ  counsel or (iii) in such  action  there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue  between the  position of the Company and the  position of such  Purchaser
Party.  The  Company  will not be  liable  to any  Purchaser  Party  under  this
Agreement  (i) for any  settlement  by a Purchaser  Party  effected  without the
Company's prior written  consent,  which shall not be  unreasonably  withheld or
delayed;  or (ii) to the  extent,  but only to the  extent  that a loss,  claim,
damage or liability is  attributable  to any Purchaser  Party's breach of any of
the representations,  warranties, covenants or agreements made by the Purchasers
in this Agreement or in the other Transaction Documents.

       4.10   Reservation  of Common Stock.  As of the date hereof,  the Company
              ----------------------------
has reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive  rights, a sufficient number of shares of Common Stock
for the  purpose of  enabling  the  Company  to issue  Shares  pursuant  to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants.

       4.11   Listing of Common  Stock.  The Company  hereby  agrees to use best
              ------------------------
efforts to maintain the listing of the Common Stock on a Trading Market,  and as
soon as  reasonably  practicable  following  the Closing (but not later than the
earlier of the Effective Date and the first  anniversary of the Closing Date) to
list all of the Shares and Warrant  Shares on such Trading  Market.  The Company
further  agrees,  if the Company  applies to have the Common Stock traded on any
other Trading Market,  it will include in such application all of the Shares and
Warrant Shares,  and will take such other action as is necessary to cause all of
the  Shares and  Warrant  Shares to be listed on such  other  Trading  Market as
promptly as possible.  The Company will take all action reasonably  necessary to
continue  the listing and  trading of its Common  Stock on a Trading  Market and
will  comply in all  respects  with the  Company's  reporting,  filing and other
obligations under the bylaws or rules of the Trading Market.

       4.12   Equal Treatment of Purchasers.  No consideration  shall be offered
              -----------------------------
or paid to any  person to amend or consent  to a waiver or  modification  of any
provision of any of the Transaction  Documents unless the same  consideration is
also  offered  to  all  of  the  parties  to  the  Transaction  Documents.   For
clarification  purposes,  this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated  separately by each Purchaser,  and

                                       22
<PAGE>

is intended to treat for the Company the  Purchasers as a class and shall not in
any way be  construed  as the  Purchasers  acting in  concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.

       4.13   [INTENTIONALLY DELETED].

       4.14   Subsequent  Equity Sales. From the date hereof until the Effective
              ------------------------
Date,  the Company  shall be  prohibited  from  effecting  or  entering  into an
agreement  to  effect  any  Subsequent  Financing  involving  a  "Variable  Rate
                                                                  --------------
Transaction" (as defined below). The term "Variable Rate Transaction" shall mean
-----------                                -------------------------
a transaction in which the Company issues or sells any debt or equity securities
that are convertible into, exchangeable or exercisable for, or include the right
to  receive  additional  shares  of Common  Stock  either  (A) at a  conversion,
exercise or exchange  rate or other price that is based upon and/or  varies with
the trading  prices of or quotations  for the shares of Common Stock at any time
after the  initial  issuance  of such debt or equity  securities,  or (B) with a
conversion,  exercise or  exchange  price that is subject to being reset at some
future date after the initial  issuance of such debt or equity  security or upon
the occurrence of specified or contingent events directly or indirectly  related
to the business of the Company or the market for the Common Stock. Any Purchaser
shall be entitled to obtain  injunctive  relief  against the Company to preclude
any such  issuance,  which  remedy  shall be in addition to any right to collect
damages.

       4.15   Price Protection. As to each Purchaser, from the date hereof until
              ----------------
the  Effective  date, if the Company or any  Subsidiary  thereof shall issue any
Common  Stock or Common  Stock  Equivalents  entitling  any  person or entity to
acquire  shares of Common Stock at an effective  price per share less than a Per
Share  Purchase  Price (the  "Discounted  Purchase  Price",  as further  defined
                              ---------------------------
below),  within 5 Trading  Days of the date  thereof the Company  shall issue to
such Purchaser that number of additional shares of Common Stock equal to (a) the
actual Subscription Amount paid by such Purchaser at each Closing divided by the
Discounted  Purchase Price,  less (b) the sum of the Shares previously issued to
such Purchaser pursuant to this Agreement.  The term "Discounted Purchase Price"
                                                      -------------------------
shall  mean the  amount  actually  paid by third  parties  for a share of Common
Stock. The sale of Common Stock  Equivalents shall be deemed to have occurred at
the time of the  issuance of the Common  Stock  Equivalents  and the  Discounted
Purchase  Price  covered  thereby  shall also  include  the actual  exercise  or
conversion  price thereof at the time of the conversion or exercise (in addition
to the  consideration  per share of Common  Stock  underlying  the Common  Stock
Equivalents  received  by the  Company  upon such sale or issuance of the Common
Stock  Equivalents).  If shares are issued for a consideration  other than cash,
the per share  selling  price shall be the fair value of such  consideration  as
determined  in good faith by the Board of Directors of the Company.  The Company
may not refuse to issue a Purchaser  additional  Shares  hereunder  based on any
claim  that  such  Purchaser  or any one  associated  or  affiliated  with  such
Purchaser has been engaged in any  violation of law,  agreement or for any other
reason,  unless,  an  injunction  from a court,  on notice,  restraining  and or
enjoining  an issuance  hereunder  shall have been sought and  obtained  and the
Company  posts a surety bond for the benefit of such  Purchaser in the amount of
150% of the  market  value of such  Shares  (based on the  Closing  Price of the
Common  Stock on the date of the event giving rise to the  Company's  obligation
hereunder),  which is subject  to the  injunction,  which  bond shall  remain in
effect until the  completion  of  litigation  of the dispute and the proceeds of
which  shall be payable  to the  Purchaser  to the  extent it obtains  judgment.
Nothing herein shall limit a Purchaser's  right to pursue actual damages for the
Company's  failure to deliver Shares hereunder and such Purchaser shall have the

                                       23
<PAGE>

right to pursue  all  remedies  available  to it at law or in equity  including,
without limitation,  a decree of specific  performance and/or injunctive relief.
On the date of closing  of any  transaction  pursuant  to which  securities  are
issued for a Discounted  Purchase  Price,  the Company shall give the Purchasers
written notice  thereof.  By notice to the Company,  a Purchaser may irrevocably
elect to defer all or part of any  issuances  hereunder  by  consecutive  75 day
periods until all Shares issuable hereunder are issued. Notwithstanding anything
to the contrary herein, this Section 4.15 shall not apply to an Exempt Issuance.

       4.16   Short  Sales.  Each  Purchaser  covenants  that neither it nor any
              ------------
affiliates  acting on its behalf or pursuant to any  understanding  with it will
execute any Short Sales during the period from the  Discussion  Time until prior
to the time  that the  transactions  contemplated  by this  Agreement  are first
publicly announced as described in Section 4.4.  Notwithstanding  the foregoing,
no Purchaser makes any representation,  warranty or covenant hereby that it will
not engage in Short Sales in the  securities  of the Company after the time that
the transactions  contemplated by this Agreement are first publicly announced as
described in Section 4.4.

                                   ARTICLE V.
                                  MISCELLANEOUS

       5.1    Termination.  This Agreement may be terminated by any Purchaser or
              -----------
the Company, by written notice to the other parties, if the Closing has not been
consummated on or before  December 31, 2004;  provided that no such  termination
                                              --------
will  affect the right of any party to sue for any breach by the other party (or
parties).

       5.2    Fees and Expenses.  The Company shall  reimburse Truk  Opportunity
              -----------------
Fund,  LLC  ("Truk")  the  sum of  $10,000  for its  legal  fees  and  expenses.
              ----
Accordingly,  at the Closing,  the Company hereby  authorizes Truk to offset its
Subscription Amount by $10,000 as payment of such obligation.  The Company shall
deliver,  prior to the Closing,  a completed  and  executed  copy of the Closing
Statement,  attached  hereto as Annex A. Except as  otherwise  set forth in this
Agreement, each party shall pay the fees and expenses of its advisers,  counsel,
accountants and other experts,  if any, and all other expenses  incurred by such
party  incident  to  the  negotiation,   preparation,  execution,  delivery  and
performance of this  Agreement.  The Company shall pay all stamp and other taxes
and duties levied in connection with the delivery of the Securities.

       5.3    Entire  Agreement.  The Transaction  Documents,  together with the
              -----------------
exhibits and schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

       5.4    Notices. Any and all notices or other communications or deliveries
              -------
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
set forth on the signature  pages  attached  hereto prior to 6:30 p.m. (New York
City  time)  on a  Trading  Day,  (b) the next  Trading  Day  after  the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that

                                       24
<PAGE>

is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading
Day, (c) the second  Trading Day following the date of mailing,  if sent by U.S.
nationally  recognized  overnight courier service, or (d) upon actual receipt by
the party to whom such  notice is  required  to be given.  The  address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

       5.5    Amendments;  Waivers. No provision of this Agreement may be waived
              --------------------
or amended except in a written  instrument  signed, in the case of an amendment,
by the  Company  and each  Purchaser  or, in the case of a waiver,  by the party
against whom enforcement of any such waiver is sought.  No waiver of any default
with respect to any provision,  condition or requirement of this Agreement shall
be deemed to be a continuing  waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise  any right  hereunder in
any manner impair the exercise of any such right.

       5.6    Headings.  The headings  herein are for  convenience  only, do not
              --------
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,  and no
rules of strict construction will be applied against any party.

       5.7    Successors and Assigns.  This Agreement  shall be binding upon and
              ----------------------
inure to the benefit of the parties and their successors and permitted  assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written  consent of each  Purchaser.  Any Purchaser may assign
any or all of its  rights  under  this  Agreement  to any  Person  to whom  such
Purchaser  assigns or transfers any Securities,  provided such transferee agrees
in  writing to be bound,  with  respect to the  transferred  Securities,  by the
provisions hereof that apply to the "Purchasers".

       5.8    No Third-Party  Beneficiaries.  This Agreement is intended for the
              -----------------------------
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.9.

       5.9    Governing  Law.  All  questions   concerning   the   construction,
              --------------
validity,  enforcement and interpretation of the Transaction  Documents shall be
governed by and construed  and enforced in accordance  with the internal laws of
the State of New York,  without  regard to the  principles  of  conflicts of law
thereof.   Each  party  agrees  that  all  legal   proceedings   concerning  the
interpretations,  enforcement  and defense of the  transactions  contemplated by
this Agreement and any other  Transaction  Documents  (whether brought against a
party hereto or its respective affiliates,  directors,  officers,  shareholders,
employees  or agents)  shall be commenced  exclusively  in the state and federal
courts sitting in the City 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  (including  with  respect  to the  enforcement  of any of the
Transaction Documents),  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
improper  or  inconvenient   venue  for  such  proceeding.   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  via
registered or certified  mail or overnight  delivery (with evidence of delivery)

                                       25
<PAGE>

to such party at the  address in effect for  notices to it under this  Agreement
and agrees that such service shall  constitute  good and  sufficient  service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve  process in any manner  permitted by law. The parties
hereby waive all rights to a trial by jury.  If either  party shall  commence an
action or proceeding to enforce any  provisions  of the  Transaction  Documents,
then the  prevailing  party in such action or proceeding  shall be reimbursed by
the other party for its  attorneys'  fees and other costs and expenses  incurred
with  the   investigation,   preparation  and  prosecution  of  such  action  or
proceeding.

       5.10   Survival.  The representations and warranties herein shall survive
              --------
the Closing and delivery of the Shares and Warrant Shares.

       5.11   Execution.   This  Agreement  may  be  executed  in  two  or  more
              ---------
counterparts,  all of which when taken  together shall be considered one and the
same agreement and shall become effective when  counterparts have been signed by
each party and  delivered  to the other  party,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.

       5.12   Severability.  If any  provision  of this  Agreement is held to be
              ------------
invalid or unenforceable in any respect,  the validity and enforceability of the
remaining  terms  and  provisions  of  this  Agreement  shall  not in any way be
affected or impaired  thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,  and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

       5.13   Rescission and Withdrawal Right.  Notwithstanding  anything to the
              -------------------------------
contrary  contained in (and  without  limiting  any similar  provisions  of) the
Transaction  Documents,  whenever  any  Purchaser  exercises a right,  election,
demand or option under a  Transaction  Documents and the Company does not timely
perform its related  obligations within the periods therein provided,  then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice,  demand or election in whole
or in part without prejudice to its future actions and rights.

       5.14   Replacement  of  Securities.  If  any  certificate  or  instrument
              ---------------------------
evidencing any Securities is mutilated,  lost, stolen or destroyed,  the Company
shall  issue or cause to be issued in  exchange  and  substitution  for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument,  but only upon receipt of evidence reasonably satisfactory to the
Company  of such  loss,  theft  or  destruction  and  customary  and  reasonable
indemnity,  if requested.  The  applicants  for a new  certificate or instrument
under  such  circumstances  shall  also  pay any  reasonable  third-party  costs
associated with the issuance of such replacement Securities.

       5.15   Remedies.  In  addition to being  entitled to exercise  all rights
              --------
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of

                                       26
<PAGE>

obligations  described in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate.

       5.16   Payment Set Aside.  To the extent that the Company makes a payment
              -----------------
or  payments  to any  Purchaser  pursuant  to  any  Transaction  Documents  or a
Purchaser  enforces or  exercises  its rights  thereunder,  and such  payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated,  declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company,  a trustee,  receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable  cause of action),  then to the extent of any such  restoration
the  obligation  or part thereof  originally  intended to be satisfied  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

       5.17   Independent  Nature of  Purchasers'  Obligations  and Rights.  The
              ------------------------------------------------------------
obligations of each Purchaser  under any  Transaction  Documents are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser under any Transaction  Documents.  Nothing  contained herein or in any
Transaction  Documents,  and no action taken by any Purchaser  pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint  venture  or any other kind of entity,  or create a  presumption  that the
Purchasers  are in any way acting in concert or as a group with  respect to such
obligations or the transactions  contemplated by the Transaction Documents. Each
Purchaser  shall be  entitled to  independently  protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other  Transaction  Documents,  and it shall not be necessary  for any other
Purchaser  to be  joined  as an  additional  party  in any  proceeding  for such
purpose.  Each Purchaser has been  represented by its own separate legal counsel
in their review and  negotiation of the  Transaction  Documents.  For reasons of
administrative  convenience only,  Purchasers and their respective  counsel have
chosen to communicate  with the Company through FW. FW does not represent all of
the  Purchasers  but  only  Truk,  who  has  acted  as  placement  agent  to the
transaction.  The Company has  elected to provide all  Purchasers  with the same
terms and  Transaction  Documents  for the  convenience  of the  Company and not
because it was  required or  requested  to do so by the  Purchasers.  Should the
Purchaser's  payment hereunder be submitted to the Company Counsel,  in trust or
otherwise  (whether by wire transfer or  otherwise),  then the Purchaser  agrees
that he Company Counsel shall have no  accountability to the Purchaser except to
forward the funds to the Company and the Purchaser acknowledges that the Company
Counsel are merely  recipients for the Company and have no lawyer's  obligations
of any nature to the  Purchaser.  The  Purchaser  agrees that  submission of the
payment  to the  Company  Counsel  in trust is to be  deposited  into the  trust
account of the Company  and shall be the  property of the Company at that point.
The only duty the Company  Counsel shall have to the Purchaser is to deliver the
subscription  agreement  (as  delivered)  and  the  subscription  monies  to the
Company, all solely at the Company's  instruction.  Under no circumstances shall
the Company Counsel be considered to be giving legal or other advice or services
to the  Purchaser  and no  communication  between the Purchaser and such Company
Counsel shall be considered advice (at the most only administrative subscription
assistance  on behalf of the  Company) but the  Purchaser  shall rely solely and
exclusively on his own judgment and the advice of his own counsel.

                                       27
<PAGE>

       5.18   Liquidated Damages.  The Company's  obligations to pay any partial
              ------------------
liquidated  damages or other amounts owing under the Transaction  Documents is a
continuing  obligation of the Company and shall not  terminate  until all unpaid
partial liquidated damages and other amounts have been paid  notwithstanding the
fact that the instrument or security  pursuant to which such partial  liquidated
damages or other amounts are due and payable shall have been canceled.

       5.19   Construction.  The parties  agree that each of them  and/or  their
              ------------
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved  against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

                            (Signature Page Follows)

                                       28
<PAGE>

       IN WITNESS  WHEREOF,  the parties  hereto  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

SINOVAC BIOTECH LTD.                                 Address for Notice:
--------------------                                 -------------------

By:
   --------------------------------------
     Name:
     Title:

With a copy to (which shall not constitute notice):

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]

                                       29
<PAGE>

        [PURCHASER SIGNATURE PAGES TO SVA SECURITIES PURCHASE AGREEMENT]

       IN WITNESS WHEREOF,  the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Purchaser:
                   --------------------------------------------------------
Signature of Authorized Signatory of Purchaser:
                                                -----------------------------
Name of Authorized Signatory:
                              --------------------------------------------------
Title of Authorized Signatory:
                               -------------------------------------------------
Email Address of Purchaser:
                            ---------------------------------------------

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as above):

Subscription Amount:
Shares:
Warrant Shares:
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       30
<PAGE>

                                                                         Annex A
                                                                         -------

                                CLOSING STATEMENT
                                -----------------

Pursuant to the attached  Securities  Purchase  Agreement,  dated as of the date
hereto,  the  purchasers  shall  purchase up to  $3,500,000  of Common Stock and
Warrants from Sinovac Biotech Ltd., a West Indies  corporation  (the "Company").
                                                                      -------
All  funds  will be wired  into a Company  trust  account  maintained  by Devlin
Jensen,  counsel to the Company.  All funds will be disbursed in accordance with
this Closing Statement.

Disbursement Date:  December     , 2004
                             ----

I.     PURCHASE PRICE
       --------------

                    Gross Proceeds to be Received in Trust   $

II.    DISBURSEMENTS
       -------------

                                                             $
                                                             $
                                                             $
                                                             $
                                                             $

Total Amount Disbursed:                                      $

WIRE INSTRUCTIONS:
-----------------

Bank Name:             Royal Bank of Canada
Bank Address:          Hastings & Granville Branch
                       685 West Hastings Street
                       Vancouver, B.C.
                       Canada V6B 4N5
Transit Number:        06550 003
Account Name:          Devlin Jensen Client's Trust U.S. Account
                       Re: Sinovac Biotech Ltd.
Account Number:        400 413 1
ABA#:                  021 000 021
Swift Code:            ROYCCAT2

To:
    -------------------------------------

                                       31
<PAGE>

                         Schedule 3.1(a) - Subsidiaries
                         ------------------------------

     Name of Subsidiary        Percentage Ownership     State of Incorporation
     ------------------        --------------------     ----------------------

Sinovac Biotech Co., Ltd.              51% (*)        People's Republic of China
Tangshan Yian Biological              100%            People's Republic of China
Engineering Co., Ltd.
Sinovac Biotech (Canada) Ltd.         100%             British Columbia, Canada

(*)    On November 30, 2004, the Company entered into a share purchase agreement
(the "Share  Purchase  Agreement")  with China Bioway  Biotech  Group Co.,  Ltd.
("Bioway"),  Beijing Keding Co., Ltd. ("Keding") and Shenzhen Bio-Port Co., Ltd.
("Shenzhen") to acquire  13,000,000 (9.73%) of the issued and outstanding shares
of  Sinovac  Biotech  Co.,  Ltd.  ("Sinovac  (Beijing)"),   the  majority  owned
subsidiary of the Company, owned by Bioway,  3,890,000 (2.91%) of the issued and
outstanding  shares of Sinovac (Beijing) owned by Keding and 10,580,000  (7.92%)
of the issued and outstanding  shares of Sinovac  (Beijing) owned by Shenzhen in
exchange for  US$1,570,000  in cash to Bioway,  US$470,000 in cash to Keding and
US$1,270,000  to  Shenzhen.  The closing  date is set for December 30, 2004 (the
"Closing Date"), or on such earlier or later Closing Date as may be agreed to in
advance and in writing by each of the parties to the Share  Purchase  Agreement.
If the  Closing  Date has not  occurred  by  January  30,  2005,  subject  to an
extension  as may be mutually  agreed to by the parties for a maximum of 14 days
per  extension,  then the parties  shall each have the option to  terminate  the
Share Purchase Agreement by delivery of written notice to the other parties. The
Company's  Board of  Directors  approved the  entering  into the Share  Purchase
Agreement to acquire the additional 20.56% of the issued and outstanding  shares
of Sinovac (Beijing) on November 30, 2004.

                                       32
<PAGE>

                        Schedule 3.1(g) - Capitalization
                        --------------------------------

       The information on this Schedule 3.1(g) modifies the  representation  and
warranty set forth in Section 3.1(g) of the Securities Purchase Agreement:

       As of December 31, 2004, the Company's  issued and outstanding  shares of
common stock is 35,815,015 shares.

       On November 13, 2003,  the Company  granted  3,000,000  stock  options to
acquire  3,000,000 shares of common stock of the Company at a price of $1.31 per
share and expiring on November 13, 2008. On April 14, 2004, the Company  granted
2,000,000  stock  options to  acquire  2,000,000  shares of common  stock of the
Company at a price of $4.55 per share and expiring on April 14, 2009. On June 9,
2004, the Company  cancelled  4,500 stock options that were granted on April 14,
2004 and granted  4,500 stock options to acquire 4,500 shares of common stock of
the Company at a price of $3.36 per share expiring on June 9, 2009.

       As of December 31, 2004,  there have been 40,500 stock options  exercised
by optionees.

       On  February  24,  2004,  the Company  issued  3,800,000  share  purchase
warrants to various investors pursuant to 3,800,000 units (each a "Unit") issued
in a private  placement.  Each Unit consisted of one share of common stock,  one
non-transferable  share purchase warrant entitling the holder thereof to acquire
one  additional  share of common  stock of the  Company  at a price of $1.50 per
share until November 14, 2005, and one non-transferable piggyback share purchase
warrant  entitling the holder  thereof to acquire on additional  share of common
stock of the Company at a price of $3.00 per shares  until  November  14,  2005,
only if the share purchase warrants are first exercised.

       On March 19, 2004, the Company issued 379,200 share purchase  warrants to
various finder's  pursuant to 379,200 units (each a "Unit") issued as a finder's
fee in connection with the private  placement  closed on February 24, 2004. Each
Unit consisted of one share of common stock, one non-transferable share purchase
warrant  entitling the holder thereof to acquire one additional  share of common
stock of the Company at a price of $1.50 per share until  November 14, 2005, and
one  non-transferable  piggyback  share  purchase  warrant  entitling the holder
thereof to acquire on additional share of common stock of the Company at a price
of $3.00 per shares until November 14, 2005, only if the share purchase warrants
are first exercised.

       On November  13, 2004,  the Board of Directors of the Company  authorized
the extension of the expiry date of the share  purchase  warrants  issued in the
private  placement  offering  closed on February  24, 2004,  and the  associated
finder's fee share purchase  warrants issued on March 19, 2004 (the "Warrants"),
which were set to expire on November  14,  2004,  until  February 28, 2005 along
with  increasing  the  exercise  price of such  Warrants  by $0.05  every  month
starting on November  15,  2004 for an exercise  price of $1.55 on November  15,
2004,  $1.60 on  December  15,  2004,  $1.65 on January 15,  2005,  and $1.70 on
February 15, 2005.

       As of December 31, 2004, there have been 991,782 share purchase  warrants
exercised to acquire 991,782 shares of common stock of the Company.

                                       33
<PAGE>

       On August 24, 2004, the Company issued 12,500 shares of common stock to a
corporation for services rendered.

       On October  12,  2004,  the  Company  entered  into a Pledge,  Escrow and
Promissory Note Agreement with Lily Wang, the CFO and a director of the Company,
whereby Lily Wang has agreed to grant the Company  security on 3,000,000  common
shares in the  capital of the  Company  owned by Lily Wang as  security  for the
amount of US$1,849,000  owed by Lily Wang to the Company,  and whereby Lily Wang
is to make payments in accordance  with the Pledge,  Escrow and Promissory  Note
Agreement.

       On October  12,  2004,  the  Company  entered  into a Pledge,  Escrow and
Indemnity Agreement with Heping Wang, a director of the Company,  whereby Heping
Wang has agreed to grant the Company  security on 1,500,000 common shares in the
capital  of the  Company  owned by Heping  Wang as  security  for the  amount of
9,000,000  RMB that the Company  owes to the China  Venture  Fund on demand (the
"Loan"),  which Loan was  acquired  by the  Company  in the course of  acquiring
Tangshan Yian  Biological  Engineering  Co., Ltd. from Heping Wang and for which
Heping Wang agreed to  indemnify  and pay the Company for all payments and costs
of the Loan as and when incurred by the Company and within 30 days of demand for
any indemnity.

       On October 14,  2004,  the Company and Heping Wang  entered into a Letter
Agreement  whereby the Company and Heping Wang have agreed that the Company will
not be required to pay the  US$2,200,000.00  that it owes to Heping Wang,  which
was part of the  consideration to be paid by the Company to Hepiong Wang for the
purchase  of  100%  of the  issued  and  outstanding  shares  of  Tangshan  Yian
Biological Engineering Co., Ltd. ("Tangshan Yian"), and which is due and payable
on January 30, 2005,  until Heping Wang first pays the  US$2,600,000.00  that he
owes to Tangshan Yian, which is now a wholly-owned subsidiary of the Company.

       Except for this  Securities  Purchase  Agreement,  the Company  expect to
receive  subscriptions  to acquire up to  500,000  units  (each a "Unit") of the
Company at a price of $3.00 per Unit.  Each Unit consists of one share of common
stock of the Company and one  non-transferable  share  purchase  warrant (each a
"Warrant").  Each  Warrant  will  entitle the  eligible  owner to  purchase  one
additional  common share of the Company (each a "Warrant  Share") for the period
commencing  upon the date of issuance of the Units by the Board and  expiring on
the earlier of:

       (a)    October 15, 2006; and

       (b)    fifteen  (15)  business  days from date that the Company  provides
              notice in writing to the  Subscriber  that:  (i) the  Company  has
              registered  on a  Form  F-1,  or  other  appropriate  registration
              statement,  the Warrant Shares  underlying the Warrants;  (ii) the
              Company  being a  reporting  and  trading  issuer  listed  in good
              standing on a public trading forum; and (iii) the Company's common
              shares  have been  trading or traded at a price of US$5.00 or more
              for a period of ten (10) days.

       (the "Warrant Exercise Period")

                                       34
<PAGE>

The Warrant  Shares shall have an exercise price of U.S. $3.35 per Warrant Share
for the first  twelve (12)  months,  and if still  available  after  twelve (12)
months,  the  Warrant  Shares  shall have an  exercise  price of U.S.  $4.00 per
Warrant Share until October 15, 2006.

Other Arrangements under which the Company may become bound to issue Securities
-------------------------------------------------------------------------------

       1.     Shares of common  stock of the Company to be issued in  accordance
              with the Warrants and  Piggyback  Warrants  issued on February 24,
              2004 and March 19, 2004.
       2.     Certain finder's fees payable to Roberto Ebrahimi, which includes,
              but is not limited to,  shares of common  stock of the Company and
              warrants  to  acquire  shares of common  stock of the  Company  in
              accordance  with  Consulting  Services and Finder's Fee  Agreement
              entered into between the Company and Roberto Ebrahimi.
       3.     Certain  finder's fees payable to Gemstone  Securities  LLC, which
              includes,  but is not  limited to,  warrants to acquire  shares of
              common stock of the Company.
       4.     Certain  finder's fees payable to Credit Suisse Advisory  Partners
              AG,  which  includes,  but is not limited to,  warrants to acquire
              shares of  common  stock of the  Company  in  accordance  with the
              Financial  Advisory Agreement entered into between the Company and
              Credit Suisse Advisory Partners AG.

                                       35
<PAGE>

               Schedule 3.1(h) - SEC Reports; Financial Statements
               ---------------------------------------------------

       The information on this Schedule 3.1(h) modifies the  representation  and
warranty set forth in Section 3.1(h) of the Securities Purchase Agreement:

       1.     The Company makes no representation or warranty  regarding whether
it may have failed to file reports required to be filed by it under the Exchange
Act (the "SEC Reports") for the two years  preceding the date hereof on a timely
basis.  The Company does  represent  and warrant  that, if it has failed to file
reports  required  to be filed by it under  the  Exchange  Act for the two years
preceding  the date hereof on a timely basis that its failure will not result in
a Material Adverse Effect.

       2.     The Company makes no representation or warranty  regarding whether
the SEC Reports  when filed  contained  untrue  statements  of material  fact or
omitted to state a material fact  required to be stated  therein or necessary in
order to make the statements  therein, in light of the circumstances under which
they were made, not  misleading.  However,  the Company  represents and warrants
that if any untrue statement or omission was made in the SEC Reports, the untrue
statement or omission will not result in a Material Adverse Effect.

                                       36
<PAGE>

                       Schedule 3.1(i) - Material Changes
                       ----------------------------------

       The information on this Schedule 3.1(i) modifies the  representation  and
warranty set forth in Section 3.1(i) of the Securities Purchase Agreement:

       On November 30, 2004, the Company entered into a share purchase agreement
(the "Share  Purchase  Agreement")  with China Bioway  Biotech  Group Co.,  Ltd.
("Bioway"),  Beijing Keding Co., Ltd. ("Keding") and Shenzhen Bio-Port Co., Ltd.
("Shenzhen") to acquire  13,000,000 (9.73%) of the issued and outstanding shares
of  Sinovac  Biotech  Co.,  Ltd.  ("Sinovac  (Beijing)"),   the  majority  owned
subsidiary of the Company, owned by Bioway,  3,890,000 (2.91%) of the issued and
outstanding  shares of Sinovac (Beijing) owned by Keding and 10,580,000  (7.92%)
of the issued and outstanding  shares of Sinovac  (Beijing) owned by Shenzhen in
exchange for  US$1,570,000  in cash to Bioway,  US$470,000 in cash to Keding and
US$1,270,000  to  Shenzhen.  The closing  date is set for December 30, 2004 (the
"Closing Date"), or on such earlier or later Closing Date as may be agreed to in
advance and in writing by each of the parties to the Share  Purchase  Agreement.
If the  Closing  Date has not  occurred  by  January  30,  2005,  subject  to an
extension  as may be mutually  agreed to by the parties for a maximum of 14 days
per  extension,  then the parties  shall each have the option to  terminate  the
Share Purchase Agreement by delivery of written notice to the other parties. The
Company's  Board of  Directors  approved the  entering  into the Share  Purchase
Agreement to acquire the additional 20.56% of the issued and outstanding  shares
of Sinovac (Beijing) on November 30, 2004.

       On  December  16,  2004,  the Company  entered  into an Avian Flu Vaccine
Co-Development  Agreement  with  the  Chinese  Centre  of  Disease  Control  and
Prevention ("China CDC"). The two parties intend to apply for government funding
for this  Avian  Flu  Vaccine  Co-Development  project.  Under  the terms of the
agreement,  the new drug  certificate,  production  license and patents  will be
applied for by the Company and as a result,  the commercial rights will be owned
by the Company.

                                       37
<PAGE>

                      Schedule 3.1(m) - Regulatory Permits
                      ------------------------------------

1.     Document  from the  Ministry  of  Science &  Technology  of the  People's
       Republic  of China - Exhibit  99.5 to the Form 6-K filed on  February  4,
       2004.

2.     Test Reports of National  Institute for the Control of  Pharmaceutical  &
       Biological  Products - Exhibit  99.6 to the Form 6-K filed on February 4,
       2004.

3.     Certificate  issued  from  the  Food & Drug  Administration  of the PRC -
       Exhibit 99.7 to the Form 6-K filed on February 4, 2004.

4.     Certificate of Good Manufacturing  Practices for Pharmaceutical  Products
       with respect to Inactivated  Hepatitis A Vaccine (Small Volume Parenteral
       Solution)  issued on March 5, 2002 and  remaining  valid  until  March 5,
       2003.

5.     Certificate of Good Manufacturing  Practices for Pharmaceutical  Products
       with respect to Inactivated Hepatitis A Vaccine issued on May 7, 2003 and
       remaining valid until May 6, 2008.

                                       38
<PAGE>

                           Schedule 3.1(p) - Insurance
                           ---------------------------

       The information on this Schedule 3.1(p) modifies the  representation  and
warranty set forth in Section 3.1(p) of the Securities Purchase Agreement:

       The Company does not maintain any insurance agreements or arrangements.

                                       39
<PAGE>

                         Schedule 3.1(s) - Certain Fees
                         ------------------------------

       The information on this Schedule 3.1(s) modifies the  representation  and
warranty set forth in Section 3.1(s) of the Securities Purchase Agreement:

       The Company will be paying certain  finder's fees to Gemstone  Securities
LLC,  which  includes cash and warrants to acquire shares of common stock of the
Company with respect to the transaction  contemplated by the Securities Purchase
Agreement.  In addition,  the Company will be paying  certain  finder's  fees to
Credit Suisse Advisory  Partners AG, which includes cash and warrants to acquire
shares  of  common  stock  of  the  Company  with  respect  to  the  transaction
contemplated by the Securities Purchase Agreement.

                                       40
<PAGE>

                      Schedule 3.1(v) - Registration Rights
                      -------------------------------------

       The information on this Schedule 3.1(v) modifies the  representation  and
warranty set forth in Section 3.1(v) of the Securities Purchase Agreement:

       The Company is required under the Registration  Rights Agreement which is
Exhibit A to the Securities  Purchase Agreement to register the Securities to be
issued under the Securities Purchase Agreement.  In addition, the Company may be
required in a possible future  financing(s) to register securities issued by the
Company in accordance with the Financial Advisory Agreement entered into between
the Company and Credit Suisse Advisory Partners AG.

                                       41
<PAGE>

                         Schedule 3.1(ee) - Accountants
                         ------------------------------

       The Company's accountants are Moore Stephens Ellis Foster Ltd.

                                       42
<PAGE>

                         Schedule 4.7 - Use of Proceeds
                         ------------------------------

       The  information  on this  Schedule 4.7 modifies the  representation  and
warrant set forth in Section 4.7 of the Securities Purchase Agreement:

       The Company will be using some or all of the net  proceeds  from the sale
of the Securities hereunder for working capital purposes and for the acquisition
of the additional  20.56% of Sinovac Biotech Co., Ltd. from China Bioway Biotech
Group Co., Ltd., Beijing Keding Co., Ltd. and Shenzhen Bio-Port Co., Ltd.

                                       43Exhibit 10.2
------------

                                                                       EXHIBIT A
                                                                       ---------

                          REGISTRATION RIGHTS AGREEMENT
                          -----------------------------

       This Registration Rights Agreement (this "Agreement") is made and entered
                                                 ---------
into as of December 31, 2004, by and among  Sinovac  Biotech Ltd., a West Indies
corporation  (the  "Company"),  and the purchasers  signatory  hereto (each such
                    -------
purchaser, a "Purchaser" and collectively, the "Purchasers").
              ---------                         ----------

       This  Agreement is made pursuant to the  Securities  Purchase  Agreement,
dated as of the date hereof among the Company and the Purchasers  (the "Purchase
                                                                        --------
Agreement").
---------

       The Company and the Purchasers hereby agree as follows:

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

              "Advice" shall have the meaning set forth in Section 6(d).
               ------

              "Effectiveness  Date"  means,  with  respect  to the  Registration
               -------------------
       Statement  required  to be filed  hereunder,  the  earlier of (a) May 15,
       2005,  and (b) the  fifth  Trading  Day  following  the date on which the
       Company is notified by the  Commission  that the  Registration  Statement
       will not be  reviewed  or is no longer  subject  to  further  review  and
       comments.

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

              "Event" shall have the meaning set forth in Section 2(b).
               -----

              "Event Date" shall have the meaning set forth in Section 2(b).
               ----------

              "Filing Date" means,  with respect to the  Registration  Statement
               -----------
       required to be filed hereunder, February 15, 2005.

              "Holder" or "Holders" means the holder or holders, as the case may
               ------      -------
       be, from time to time of Registrable Securities.

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

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

              "Losses" shall have the meaning set forth in Section 5(a).
               ------

              "Plan of Distribution" shall have the meaning set forth in Section
               --------------------
       2(a).

                                        1
<PAGE>

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

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

              "Registrable  Securities"  means all of the Shares and the Warrant
               -----------------------
       Shares  issuable,  together  with any  shares of Common  Stock  issued or
       issuable   upon  any  stock  split,   dividend  or  other   distribution,
       recapitalization   or  similar  event  with  respect  to  the  foregoing,
       including  the Shares  issuable  pursuant to Section 4.15 of the Purchase
       Agreement.

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

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

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

              "Selling  Shareholder  Questionnaire"  shall have the  meaning set
               -----------------------------------
       forth in Section 3(a).

       2.     Registration.
              ------------

              (a)    On or prior to the Filing Date,  the Company  shall prepare
       and file with the  Commission  the  Registration  Statement  covering the
       resale of all of the Registrable Securities for an offering to be made on
       a  continuous  basis  pursuant  to Rule  415 or the  relevant  provisions
       permitting  the filing of a Registration  Statement by a foreign  private
       issuer.  The Registration  Statement  required hereunder shall be on Form
       F-3  (except if the Company is not then  eligible to register  for resale
       the  Registrable  Securities on Form F-3, in which case the  Registration
       shall  be on  another  appropriate  form  in  accordance  herewith).  The
       Registration  Statement  required  hereunder  shall  contain  (except  if

                                        2
<PAGE>

       otherwise   directed  by  the   Holders)   substantially   the  "Plan  of
                                                                        --------
       Distribution"  attached  hereto as Annex A.  Subject to the terms of this
       ------------                       -------
       Agreement,   the  Company  shall  use  its  best  efforts  to  cause  the
       Registration  Statement to be declared effective under the Securities Act
       as promptly as possible  after the filing  thereof,  but in any event not
       later than the Effectiveness Date, and shall use its best efforts to keep
       the Registration  Statement  continuously  effective under the Securities
       Act  until  the  date  when all  Registrable  Securities  covered  by the
       Registration  Statement  have  been  sold or may be sold  without  volume
       restrictions  pursuant to Rule 144(k) as determined by the counsel to the
       Company  pursuant to a written  opinion letter to such effect,  addressed
       and acceptable to the Company's  transfer agent and the affected  Holders
       (the  "Effectiveness  Period").  The Company shall immediately notify the
              ---------------------
       Holders via facsimile of the effectiveness of the Registration  Statement
       on  the  same  day  that  the  Company   receives   notification  of  the
       effectiveness from the Commission. Failure to so notify the Holder within
       1 Trading Day of such notification shall be deemed an Event under Section
       2(b).

              (b)    If: (i) a  Registration  Statement is not filed on or prior
       to the Filing Date (if the Company files a Registration Statement without
       affording the Holder the opportunity to review and comment on the same as
       required  by  Section  3(a),  the  Company  shall  not be  deemed to have
       satisfied  this clause (i)),  or (ii) the Company  fails to file with the
       Commission  a  request  for  acceleration  in  accordance  with  Rule 461
       promulgated  under the  Securities  Act,  within five Trading Days of the
       date that the Company is notified  (orally or in  writing,  whichever  is
       earlier) by the  Commission  that a  Registration  Statement  will not be
       "reviewed,"  or is not subject to further  review,  or (iii) prior to the
       date when such Registration  Statement is first declared effective by the
       Commission,  the  Company  fails to file a  pre-effective  amendment  and
       otherwise  respond in  writing  to  comments  made by the  Commission  in
       respect of such Registration  Statement within 20 calendar days after the
       receipt of comments by or notice from the Commission  that such amendment
       is  required  in  order  for a  Registration  Statement  to  be  declared
       effective, or (iv) a Registration Statement filed or required to be filed
       hereunder is not declared  effective by the  Commission  on or before the
       Effectiveness  Date,  or (v)  after a  Registration  Statement  is  first
       declared effective by the Commission,  it ceases for any reason to remain
       continuously  effective as to all Registrable  Securities for which it is
       required to be effective, or the Holders are not permitted to utilize the
       Prospectus therein to resell such Registrable Securities, for in any such
       case 10  consecutive  calendar  days but no more than an  aggregate of 15
       calendar days during any 12 month period  (which need not be  consecutive
       Trading Days)(any such failure or breach being referred to as an "Event,"
       and for  purposes  of  clause  (i) or (iv) the date on which  such  Event
       occurs,  or for  purposes  of  clause  (ii) the date on which  such  five
       Trading Day period is exceeded,  or for purposes of clause (iii) the date
       which such 20 calendar day period is exceeded,  or for purposes of clause
       (v) the date on which such 10 or 15 calendar day period,  as  applicable,
       is exceeded being  referred to as "Event Date"),  then in addition to any
                                          ----------
       other  rights the Holders may have  hereunder  or under  applicable  law,
       then,  on each such Event Date and on each  monthly  anniversary  of each
       such Event  Date (if the  applicable  Event  shall not have been cured by
       such date) until the applicable  Event is cured, the Company shall pay to
       each Holder an amount in cash, as partial liquidated damages and not as a
       penalty,  equal  to 1.0%  during  the  first  two  months  that an  Event
       continues and  thereafter  2.0% monthly of the aggregate  purchase  price
       paid  by  such  Holder  pursuant  to  the  Purchase   Agreement  for  any

                                        3
<PAGE>

       Registrable  Securities then held by such Holder;  provided,  however, if
                                                          --------   -------
       the Company files another  registration  Statement prior to the Effective
       Date of the  Registration  Statement,  liquidated  damages,  if any, that
       accrue prior to the Effective Date of the Registration Statement shall be
       2% per month until the  Effective  Date,  notwithstanding  the  foregoing
       provision.  If the Company  fails to pay any partial  liquidated  damages
       pursuant  to this  Section  in full  within  seven  days  after  the date
       payable, the Company will pay interest thereon at a rate of 18% per annum
       (or such lesser maximum amount that is permitted to be paid by applicable
       law) to the Holder,  accruing daily from the date such partial liquidated
       damages are due until such amounts,  plus all such interest thereon,  are
       paid in full. The partial liquidated damages pursuant to the terms hereof
       shall apply on a daily pro-rata basis for any portion of a month prior to
       the cure of an Event.

              (c)    If the Company issues additional Shares pursuant to Section
       4.15 of the Purchase  Agreement (such date, the "Additional  Registration
                                                        ------------------------
       Date"), then the Company shall file as soon as reasonably practicable but
       ----
       in any case prior to the 45th day after the Additional Registration Date,
       an additional  Registration  Statement covering the resale by the Holders
       of all of  such  Shares  and  cause  such  Registration  Statement  to be
       declared  effective within 120 days of the Additional  Registration Date.
       Such filing date and date to be  effective  shall be deemed  Filing Dates
       and Effectiveness Dates for purposes of determining liquidated damages on
       such Registrable Securities.

       3.     Registration Procedures
              -----------------------

              In  connection   with  the  Company's   registration   obligations
       hereunder, the Company shall:

              (a)    Not less than five  Trading Days prior to the filing of the
       Registration  Statement  or any related  Prospectus  or any  amendment or
       supplement thereto,  the Company shall, (i) furnish to the Holders copies
       of  all  such  documents  proposed  to  be  filed  (including   documents
       incorporated or deemed  incorporated by reference to the extent requested
       by such  Person)  which  documents  will be subject to the review of such
       Holders,  and  (ii)  cause  its  officers  and  directors,   counsel  and
       independent  certified public accountants to respond to such inquiries as
       shall be necessary,  in the reasonable  opinion of respective  counsel to
       conduct a reasonable  investigation  within the meaning of the Securities
       Act. The Company  shall not file the  Registration  Statement or any such
       Prospectus or any amendments or supplements  thereto to which the Holders
       of a majority of the Registrable  Securities shall  reasonably  object in
       good faith,  provided  that the Company is notified of such  objection in
       writing  no later  than 5 Trading  Days  after the  Holders  have been so
       furnished copies of such documents.  Each Holder agrees to furnish to the
       Company a completed  Questionnaire in the form attached to this Agreement
       as Annex B (a  "Selling  Shareholder  Questionnaire")  not less  than two
                       -----------------------------------
       Trading Days prior to the Filing Date or by the end of the fourth Trading
       Day following the date on which such Holder  receives draft  materials in
       accordance with this Section.

              (b)    (i) Prepare and file with the Commission  such  amendments,
       including  post-effective  amendments,  to the Registration Statement and

                                        4
<PAGE>

       the Prospectus  used in connection  therewith as may be necessary to keep
       the Registration  Statement  continuously  effective as to the applicable
       Registrable  Securities for the Effectiveness Period and prepare and file
       with the Commission such additional  Registration  Statements in order to
       register  for  resale  under the  Securities  Act all of the  Registrable
       Securities;   (ii)  cause  the  related   Prospectus  to  be  amended  or
       supplemented   by  any  required   Prospectus   supplement,   and  as  so
       supplemented  or amended to be filed  pursuant to Rule 424; (iii) respond
       as promptly as  reasonably  possible to any  comments  received  from the
       Commission  with respect to the  Registration  Statement or any amendment
       thereto and, as promptly as reasonably  possible,  upon request,  provide
       the Holders true and complete  copies of all  correspondence  from and to
       the Commission relating to the Registration Statement; and (iv) comply in
       all material  respects with the  provisions of the Securities Act and the
       Exchange  Act  with  respect  to  the   disposition  of  all  Registrable
       Securities  covered by the  Registration  Statement during the applicable
       period in  accordance  with the intended  methods of  disposition  by the
       Holders thereof set forth in the Registration  Statement as so amended or
       in such Prospectus as so supplemented.

              (c)    Notify the Holders of Registrable  Securities to be sold as
       promptly as  reasonably  possible  and (if  requested by any such Person)
       confirm such notice in writing  promptly  following the day (i)(A) when a
       Prospectus or any Prospectus  supplement or  post-effective  amendment to
       the  Registration  Statement  is  proposed  to be  filed;  (B)  when  the
       Commission  notifies the Company  whether there will be a "review" of the
       Registration Statement and whenever the Commission comments in writing on
       the  Registration  Statement (the Company shall upon request provide true
       and complete copies thereof and all written  responses thereto to each of
       the Holders);  and (C) with respect to the Registration  Statement or any
       post-effective amendment, when the same has become effective; (ii) of any
       request by the  Commission  or any other  Federal  or state  governmental
       authority   during  the  period  of  effectiveness  of  the  Registration
       Statement for amendments or supplements to the Registration  Statement or
       Prospectus or for  additional  information;  (iii) of the issuance by the
       Commission  or any other federal or state  governmental  authority of any
       stop order suspending the  effectiveness  of the  Registration  Statement
       covering any or all of the  Registrable  Securities or the  initiation of
       any Proceedings  for that purpose;  (iv) of the receipt by the Company of
       any notification  with respect to the suspension of the  qualification or
       exemption from  qualification  of any of the  Registrable  Securities for
       sale  in  any  jurisdiction,  or the  initiation  or  threatening  of any
       Proceeding  for such purpose;  and (v) of the  occurrence of any event or
       passage  of time that  makes the  financial  statements  included  in the
       Registration  Statement ineligible for inclusion therein or any statement
       made  in  the  Registration  Statement  or  Prospectus  or  any  document
       incorporated or deemed to be incorporated  therein by reference untrue in
       any material  respect or that requires any revisions to the  Registration
       Statement,  Prospectus  or other  documents  so that,  in the case of the
       Registration Statement or the Prospectus, as the case may be, it will not
       contain  any untrue  statement  of a  material  fact or omit to state any
       material  fact  required to be stated  therein or  necessary  to make the
       statements  therein,  in light of the circumstances under which they were
       made, not misleading.

              (d)    Use best  efforts to avoid the  issuance of, or, if issued,
       obtain the withdrawal of (i) any order  suspending the  effectiveness  of

                                        5
<PAGE>

       the Registration  Statement,  or (ii) any suspension of the qualification
       (or exemption from  qualification)  of any of the Registrable  Securities
       for sale in any jurisdiction, at the earliest practicable moment.

              (e)    Furnish  to each  Holder,  without  charge,  at  least  one
       conformed copy of the Registration  Statement and each amendment thereto,
       including financial statements and schedules,  all documents incorporated
       or deemed to be incorporated therein by reference to the extent requested
       by such Person,  and all exhibits to the extent  requested by such Person
       (including  those  previously  furnished or  incorporated  by  reference)
       promptly after the filing of such documents with the Commission.

              (f)    Promptly  deliver to each Holder,  without charge,  as many
       copies  of  the  Prospectus  or  Prospectuses  (including  each  form  of
       prospectus) and each amendment or supplement  thereto as such Persons may
       reasonably   request  in  connection   with  resales  by  the  Holder  of
       Registrable  Securities.  Subject  to the  terms of this  Agreement,  the
       Company hereby  consents to the use of such Prospectus and each amendment
       or supplement  thereto by each of the selling  Holders in connection with
       the  offering  and sale of the  Registrable  Securities  covered  by such
       Prospectus  and any  amendment or  supplement  thereto,  except after the
       giving on any notice pursuant to Section 3(c).

              (g)    Prior to any resale of Registrable  Securities by a Holder,
       use its  commercially  reasonable  efforts  to  register  or  qualify  or
       cooperate with the selling Holders in connection with the registration or
       qualification  (or exemption from the Registration or  qualification)  of
       such  Registrable  Securities  for the  resale  by the  Holder  under the
       securities  or Blue  Sky laws of such  jurisdictions  within  the  United
       States  as any  Holder  reasonably  requests  in  writing,  to  keep  the
       Registration or qualification (or exemption  therefrom)  effective during
       the  Effectiveness  Period  and to do any and all  other  acts or  things
       reasonably  necessary to enable the disposition in such  jurisdictions of
       the  Registrable  Securities  covered  by  the  Registration   Statement;
       provided,  that the Company shall not be required to qualify generally to
       --------
       do  business  in any  jurisdiction  where  it is not  then so  qualified,
       subject the Company to any material tax in any such jurisdiction where it
       is not then so subject or file a general consent to service of process in
       any such jurisdiction.

              (h)    If NASDR Rule 2710  requires  any  broker-dealer  to make a
       filing prior to executing a sale by a Holder,  make an Issuer Filing with
       the NASDR, Inc.  Corporate  Financing  Department  pursuant to NASDR Rule
       2710(b)(10)(A)(i)  and respond  within five  Trading Days to any comments
       received  from  NASDR in  connection  therewith,  and pay the  filing fee
       required in connection therewith.

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

                                        6
<PAGE>

              (j)    Upon the  occurrence of any event  contemplated  by Section
       3(c)(v),  as promptly as  reasonably  possible,  prepare a supplement  or
       amendment,  including a  post-effective  amendment,  to the  Registration
       Statement  or a  supplement  to the related  Prospectus  or any  document
       incorporated or deemed to be incorporated therein by reference,  and file
       any other required document so that, as thereafter delivered, neither the
       Registration  Statement  nor  such  Prospectus  will  contain  an  untrue
       statement of a material fact or omit to state a material fact required to
       be stated therein or necessary to make the statements  therein,  in light
       of the circumstances  under which they were made, not misleading.  If the
       Company  notifies the Holders in accordance with clauses (ii) through (v)
       of  Section  3(c) above to suspend  the use of any  Prospectus  until the
       requisite  changes to such  Prospectus  have been made,  then the Holders
       shall  suspend  use of such  Prospectus.  The  Company  will use its best
       efforts  to  ensure  that the use of the  Prospectus  may be  resumed  as
       promptly as is practicable. The Company shall be entitled to exercise its
       right  under  this  Section  3(i)  to  suspend  the   availability  of  a
       Registration Statement and Prospectus,  subject to the payment of partial
       liquidated  damages  pursuant to Section 2(b), for a period not to exceed
       60 days (which need not be consecutive days) in any 12 month period.

              (k)    Comply with all  applicable  rules and  regulations  of the
       Commission.

              (l)    The Company may require each  selling  Holder to furnish to
       the  Company a certified  statement  as to the number of shares of Common
       Stock  beneficially  owned  by  such  Holder  and,  if  required  by  the
       Commission,  the person thereof that has voting and  dispositive  control
       over the Shares.  During any  periods  that the Company is unable to meet
       its  obligations  hereunder  with  respect  to  the  registration  of the
       Registrable  Securities  solely  because any Holder fails to furnish such
       information  within three  Trading  Days of the  Company's  request,  any
       liquidated  damages that are accruing at such time as to such Holder only
       shall be tolled and any Event that may otherwise  occur solely because of
       such  delay  shall  be  suspended  as to such  Holder  only,  until  such
       information is delivered to the Company.

       4.     Registration  Expenses.  All fees  and  expenses  incident  to the
              ----------------------
performance  of or compliance  with this Agreement by the Company shall be borne
by the Company  whether or not any  Registrable  Securities are sold pursuant to
the Registration  Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including,  without  limitation,  fees and expenses (A) with respect to filings
required  to be made with the Trading  Market on which the Common  Stock is then
listed for trading,  (B) in compliance with applicable  state securities or Blue
Sky laws  reasonably  agreed to by the  Company in writing  (including,  without
limitation, fees and disbursements of counsel for the Company in connection with
Blue  Sky  qualifications  or  exemptions  of  the  Registrable  Securities  and
determination  of the eligibility of the  Registrable  Securities for investment
under the laws of such jurisdictions as requested by the Holders) and (C) if not
previously paid by the Company in connection with an Issuer Filing, with respect
to any filing  that may be  required  to be made by any broker  through  which a
Holder intends to make sales of  Registrable  Securities  with NASD  Regulation,
Inc.  pursuant to the NASD Rule 2710, so long as the broker is receiving no more
than a  customary  brokerage  commission  in  connection  with such  sale,  (ii)
printing  expenses   (including,   without  limitation,   expenses  of  printing

                                        7
<PAGE>

certificates  for  Registrable  Securities and of printing  prospectuses  if the
printing of prospectuses is reasonably requested by the holders of a majority of
the  Registrable  Securities  included  in the  Registration  Statement),  (iii)
messenger,  telephone  and delivery  expenses,  (iv) fees and  disbursements  of
counsel for the Company, (v) Securities Act liability insurance,  if the Company
so desires  such  insurance,  and (vi) fees and  expenses  of all other  Persons
retained by the Company in connection with the  consummation of the transactions
contemplated  by this Agreement.  In addition,  the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including,  without limitation,
all salaries and expenses of its  officers  and  employees  performing  legal or
accounting  duties),  the expense of any annual  audit and the fees and expenses
incurred in  connection  with the listing of the  Registrable  Securities on any
securities  exchange  as  required  hereunder.  In no event shall the Company be
responsible  for any  broker or  similar  commissions  or,  except to the extent
provided for in the Transaction Documents,  any legal fees or other costs of the
Holders.

       5.     Indemnification
              ---------------

              (a)    Indemnification   by  the  Company.   The  Company   shall,
                     ----------------------------------
       notwithstanding  any  termination of this  Agreement,  indemnify and hold
       harmless each Holder, the officers, directors, agents, brokers (including
       brokers  who offer and sell  Registrable  Securities  as  principal  as a
       result of a pledge  or any  failure  to  perform  under a margin  call of
       Common Stock),  investment  advisors and employees of each of them,  each
       Person who controls any such Holder  (within the meaning of Section 15 of
       the  Securities  Act or Section 20 of the Exchange Act) and the officers,
       directors,  agents and employees of each such controlling  Person, to the
       fullest extent  permitted by applicable law, from and against any and all
       losses,  claims,   damages,   liabilities,   costs  (including,   without
       limitation,  reasonable  attorneys'  fees)  and  expenses  (collectively,
       "Losses"),  as  incurred,  arising  out of or  relating  to any untrue or
        ------
       alleged untrue statement of a material fact contained in the Registration
       Statement,  any  Prospectus or any form of prospectus or in any amendment
       or supplement thereto or in any preliminary prospectus, or arising out of
       or  relating  to any  omission  or alleged  omission  of a material  fact
       required to be stated therein or necessary to make the statements therein
       (in the  case of any  Prospectus  or form  of  prospectus  or  supplement
       thereto,  in light of the  circumstances  under which they were made) not
       misleading,  except to the extent, but only to the extent,  that (i) such
       untrue   statements  or  omissions  are  based  solely  upon  information
       regarding such Holder  furnished in writing to the Company by such Holder
       expressly for use therein, or to the extent that such information relates
       to such  Holder  or such  Holder's  proposed  method of  distribution  of
       Registrable Securities and was reviewed and expressly approved in writing
       by such Holder  expressly  for use in the  Registration  Statement,  such
       Prospectus  or such form of  Prospectus or in any amendment or supplement
       thereto (it being  understood that the Holder has approved Annex A hereto
       for this purpose) or (ii) in the case of an occurrence of an event of the
       type  specified  in Section  3(c)(ii)-(v),  the use by such  Holder of an
       outdated or  defective  Prospectus  after the Company has  notified  such
       Holder in writing that the  Prospectus is outdated or defective and prior
       to the receipt by such Holder of the Advice contemplated in Section 6(d).
       The Company shall notify the Holders promptly of the institution,  threat
       or  assertion  of any  Proceeding  of  which  the  Company  is  aware  in
       connection with the transactions contemplated by this Agreement.

                                        8
<PAGE>

              (b)    Indemnification  by Holders.  Each Holder shall,  severally
                     ---------------------------
       and not jointly,  indemnify and hold harmless the Company, its directors,
       officers,  agents and  employees,  each Person who  controls  the Company
       (within the meaning of Section 15 of the Securities Act and Section 20 of
       the Exchange Act), and the  directors,  officers,  agents or employees of
       such controlling  Persons,  to the fullest extent permitted by applicable
       law, from and against all Losses, as incurred,  to the extent arising out
       of or based solely  upon:  (x) such  Holder's  failure to comply with the
       prospectus delivery  requirements of the Securities Act or (y) any untrue
       or  alleged  untrue  statement  of  a  material  fact  contained  in  any
       Registration Statement, any Prospectus,  or any form of prospectus, or in
       any amendment or supplement thereto or in any preliminary prospectus,  or
       arising  out of or  relating  to any  omission  or alleged  omission of a
       material  fact  required to be stated  therein or  necessary  to make the
       statements  therein not  misleading  (i) to the  extent,  but only to the
       extent,  that such  untrue  statement  or omission  is  contained  in any
       information  so  furnished  in  writing  by such  Holder  to the  Company
       specifically  for  inclusion  in  the  Registration   Statement  or  such
       Prospectus  or (ii) to the  extent  that (1) such  untrue  statements  or
       omissions  are  based  solely  upon  information  regarding  such  Holder
       furnished  in writing to the  Company by such  Holder  expressly  for use
       therein, or to the extent that such information relates to such Holder or
       such Holder's  proposed method of distribution of Registrable  Securities
       and was  reviewed  and  expressly  approved  in  writing  by such  Holder
       expressly for use in the Registration Statement (it being understood that
       the Holder has approved Annex A hereto for this purpose), such Prospectus
       or such form of Prospectus  or in any amendment or supplement  thereto or
       (2) in the case of an  occurrence  of an event of the type  specified  in
       Section 3(c)(ii)-(v),  the use by such Holder of an outdated or defective
       Prospectus after the Company has notified such Holder in writing that the
       Prospectus  is  outdated  or  defective  and prior to the receipt by such
       Holder of the Advice  contemplated in Section 6(d). In no event shall the
       liability of any selling  Holder  hereunder be greater in amount than the
       dollar  amount of the net proceeds  received by such Holder upon the sale
       of  the  Registrable  Securities  giving  rise  to  such  indemnification
       obligation.

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

              An  Indemnified  Party  shall  have the right to  employ  separate
       counsel in any such Proceeding and to participate in the defense thereof,
       but the fees and expenses of such counsel shall be at the expense of such
       Indemnified  Party or  Parties  unless:  (1) the  Indemnifying  Party has
       agreed in writing  to pay such fees and  expenses;  (2) the  Indemnifying
       Party shall have failed promptly to assume the defense of such Proceeding

                                        9
<PAGE>

       and to employ counsel  reasonably  satisfactory to such Indemnified Party
       in any such  Proceeding;  or (3) the named parties to any such Proceeding
       (including any impleaded parties) include both such Indemnified Party and
       the  Indemnifying  Party,  and such  Indemnified  Party shall  reasonably
       believe  that a material  conflict  of interest is likely to exist if the
       same  counsel  were  to  represent   such   Indemnified   Party  and  the
       Indemnifying Party (in which case, if such Indemnified Party notifies the
       Indemnifying  Party in writing that it elects to employ separate  counsel
       at the expense of the Indemnifying  Party,  the Indemnifying  Party shall
       not have the right to assume the defense  thereof and the reasonable fees
       and  expenses  of one  separate  counsel  shall be at the  expense of the
       Indemnifying  Party).  The Indemnifying Party shall not be liable for any
       settlement of any such Proceeding  effected  without its written consent,
       which consent shall not be unreasonably  withheld.  No Indemnifying Party
       shall, without the prior written consent of the Indemnified Party, effect
       any  settlement  of any  pending  Proceeding  in  respect  of  which  any
       Indemnified  Party  is  a  party,  unless  such  settlement  includes  an
       unconditional  release of such  Indemnified  Party from all  liability on
       claims that are the subject matter of such Proceeding.

              Subject to the terms of this  Agreement,  all reasonable  fees and
       expenses of the Indemnified Party (including reasonable fees and expenses
       to the extent incurred in connection with  investigating  or preparing to
       defend such  Proceeding in a manner not  inconsistent  with this Section)
       shall be paid to the Indemnified  Party, as incurred,  within ten Trading
       Days of written notice thereof to the Indemnifying Party; provided,  that
                                                                 --------
       the Indemnified Party shall promptly reimburse the Indemnifying Party for
       that  portion of such fees and  expenses  applicable  to such actions for
       which  such  Indemnified   Party  is  not  entitled  to   indemnification
       hereunder, determined based upon the relative faults of the parties.

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

                                       10
<PAGE>

              The parties  hereto agree that it would not be just and  equitable
       if contribution pursuant to this Section 5(d) were determined by pro rata
       allocation or by any other method of  allocation  that does not take into
       account  the  equitable  considerations  referred  to in the  immediately
       preceding paragraph. Notwithstanding the provisions of this Section 5(d),
       no Holder shall be required to contribute,  in the aggregate,  any amount
       in excess of the amount by which the proceeds  actually  received by such
       Holder  from  the  sale  of the  Registrable  Securities  subject  to the
       Proceeding  exceeds  the  amount  of any  damages  that such  Holder  has
       otherwise been required to pay by reason of such untrue or alleged untrue
       statement or omission or alleged omission, except in the case of fraud by
       such Holder.

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

       6.     Miscellaneous
              -------------

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

              (b)    No  Piggyback  on  Registrations.  Except  as set  forth on
                     --------------------------------
       Schedule  6(b)  attached  hereto,  neither  the  Company  nor  any of its
       --------------
       security  holders  (other  than the  Holders  in such  capacity  pursuant
       hereto) may include securities of the Company in a Registration Statement
       other than the Registrable Securities.

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

              (d)    Discontinued   Disposition.   Each  Holder  agrees  by  its
                     --------------------------
       acquisition of such Registrable Securities that, upon receipt of a notice
       from the Company of the  occurrence of any event of the kind described in
       Section 3(c), such Holder will forthwith discontinue  disposition of such
       Registrable  Securities  under  the  Registration  Statement  until  such
       Holder's  receipt of the  copies of the  supplemented  Prospectus  and/or
       amended  Registration  Statement  or until it is advised in writing  (the
       "Advice") by the Company that the use of the applicable Prospectus may be
        ------
       resumed,  and, in either case,  has received  copies of any additional or
       supplemental  filings that are  incorporated or deemed to be incorporated
       by reference in such  Prospectus or Registration  Statement.  The Company
       will use its best efforts to ensure that the use of the Prospectus may be
       resumed  as  promptly  as  it   practicable.   The  Company   agrees  and

                                       11
<PAGE>

       acknowledges  that any  periods  during  which the Holder is  required to
       discontinue the disposition of the Registrable Securities hereunder shall
       be subject to the provisions of Section 2(b).

              (e)    Piggy-Back  Registrations.   If  at  any  time  during  the
                     -------------------------
       Effectiveness  Period  there is not an effective  Registration  Statement
       covering  all  of  the  Registrable  Securities  and  the  Company  shall
       determine  to  prepare  and  file  with  the  Commission  a  registration
       statement  relating to an offering  for its own account or the account of
       others under the  Securities Act of any of its equity  securities,  other
       than on Form S-4 or Form S-8 (each as  promulgated  under the  Securities
       Act) or their then equivalents relating to equity securities to be issued
       solely in connection  with any  acquisition  of any entity or business or
       equity  securities  issuable in connection with the stock option or other
       employee benefit plans or on account of the Company's status as a foreign
       private  issuer,  then the  Company  shall send to each  Holder a written
       notice of such  determination  and, if within fifteen days after the date
       of such notice, any such Holder shall so request in writing,  the Company
       shall  include  in such  registration  statement  all or any part of such
       Registrable Securities such Holder requests to be registered,  subject to
       customary  underwriter cutbacks applicable to all holders of registration
       rights.

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

              (g)    Notices.  Any and all  notices or other  communications  or
                     -------
       deliveries  required  or  permitted  to be  provided  hereunder  shall be
       delivered as set forth in the Purchase Agreement.

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

              (i)    No Inconsistent Agreements.  Neither the Company nor any of
                     --------------------------
       its  subsidiaries  has  entered,  as of the date  hereof,  nor  shall the
       Company  or any  of its  subsidiaries,  on or  after  the  date  of  this
       Agreement, enter into any agreement with respect to its securities,  that
       would have the effect of impairing  the rights  granted to the Holders in
       this Agreement or otherwise conflicts with the provisions hereof.  Except
       as set  forth  on  Schedule  6(i),  neither  the  Company  nor any of its
                          --------------

                                       12
<PAGE>

       subsidiaries  has  previously  entered  into any  agreement  granting any
       registration  rights with respect to any of its  securities to any Person
       that have not been satisfied in full.

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

              (k)    Governing Law. All questions  concerning the  construction,
                     -------------
       validity,  enforcement  and  interpretation  of this  Agreement  shall be
       determined with the provisions of the Purchase Agreement.

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

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

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

              (o)    Independent Nature of Holders'  Obligations and Rights. The
                     ------------------------------------------------------
       obligations  of each Holder  hereunder are several and not joint with the
       obligations  of any  other  Holder  hereunder,  and no  Holder  shall  be
       responsible  in any way for the  performance  of the  obligations  of any
       other  Holder  hereunder.  Nothing  contained  herein  or  in  any  other
       agreement or document  delivered  at any closing,  and no action taken by
       any Holder pursuant hereto or thereto,  shall be deemed to constitute the
       Holders as a partnership,  an  association,  a joint venture or any other
       kind of entity,  or create a presumption  that the Holders are in any way
       acting in concert with respect to such  obligations  or the  transactions
       contemplated by this Agreement.  Each Holder shall be entitled to protect
       and enforce its rights,  including without  limitation the rights arising
       out of this Agreement, and it shall not be necessary for any other Holder
       to be joined as an additional party in any proceeding for such purpose.

                            *************************

                                       13
<PAGE>

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

                                            SINOVAC BIOTECH LTD.
                                            --------------------

                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

                                       14
<PAGE>

                      [HOLDER'S SIGNATURE PAGE TO SVA RRA]

Name of Holder:
                --------------------------------
Signature of Authorized Signatory of Holder:
                                             ---------------------------
Name of Authorized Signatory:
                              --------------------------
Title of Authorized Signatory:
                               --------------------------

                           [SIGNATURE PAGES CONTINUE]

                                       15
<PAGE>

                                     ANNEX A
                                     -------

                              Plan of Distribution
                              --------------------

       The Selling Stockholders (the "Selling Stockholders") of the common stock
                                      --------------------
("Common  Stock")  of Sinovac  Biotech  Ltd.,  a West  Indies  corporation  (the
  -------------
"Company") and any of their pledgees,  assignees and successors-in-interest may,
 -------
from time to time,  sell any or all of their shares of Common Stock on any stock
exchange,  market or  trading  facility  on which the  shares  are  traded or in
private  transactions.  These sales may be at fixed or  negotiated  prices.  The
Selling  Stockholders  may use any one or  more of the  following  methods  when
selling shares:

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

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

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

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

       o      privately negotiated transactions;

       o      settlement  of short  sales  entered  into  after the date of this
              prospectus;

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

       o      a combination of any such methods of sale;

       o      through  the  writing or  settlement  of options or other  hedging
              transactions, whether through an options exchange or otherwise; or

       o      any other method permitted pursuant to applicable law.

       The Selling  Stockholders  may also sell shares  under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available,  rather
                                         --------------
than under this prospectus.

       Broker-dealers  engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the Selling  Stockholders  (or, if any  broker-dealer  acts as
agent  for the  purchaser  of  shares,  from the  purchaser)  in  amounts  to be
negotiated.  Each  Selling  Stockholder  does not expect these  commissions  and
discounts  relating  to its sales of shares to exceed what is  customary  in the
types of transactions involved.

                                       16
<PAGE>

       In connection with the sale of the Common Stock or interests therein, the
Selling  Stockholders may enter into hedging transactions with broker-dealers or
other  financial  institutions,  which may in turn  engage in short sales of the
Common Stock in the course of hedging the  positions  they  assume.  The Selling
Stockholders  may also sell shares of the Common  Stock short and deliver  these
securities  to close out their  short  positions,  or loan or pledge  the Common
Stock to  broker-dealers  that in turn may sell these  securities.  The  Selling
Stockholders   may  also  enter   into   option  or  other   transactions   with
broker-dealers  or other  financial  institutions or the creation of one or more
derivative  securities which require the delivery to such broker-dealer or other
financial  institution of shares offered by this  prospectus,  which shares such
broker-dealer  or  other  financial  institution  may  resell  pursuant  to this
prospectus (as supplemented or amended to reflect such transaction).

       The  Selling  Stockholders  and any  broker-dealers  or  agents  that are
involved  in selling  the shares may be deemed to be  "underwriters"  within the
meaning of the Securities Act in connection with such sales. In such event,  any
commissions  received  by such  broker-dealers  or agents  and any profit on the
resale  of the  shares  purchased  by  them  may be  deemed  to be  underwriting
commissions or discounts under the Securities Act. Each Selling  Stockholder has
informed  the  Company  that it does not have any  agreement  or  understanding,
directly or indirectly, with any person to distribute the Common Stock.

       The Company is required to pay certain fees and expenses  incurred by the
Company  incident to the  registration of the shares.  The Company has agreed to
indemnify the Selling Stockholders against certain losses,  claims,  damages and
liabilities, including liabilities under the Securities Act.

       Because Selling  Stockholders may be deemed to be  "underwriters"  within
the  meaning of the  Securities  Act,  they will be  subject  to the  prospectus
delivery requirements of the Securities Act. In addition, any securities covered
by this  prospectus  which  qualify  for sale  pursuant  to Rule 144  under  the
Securities  Act may be sold under Rule 144  rather  than under this  prospectus.
Each  Selling  Stockholder  has advised us that they have not  entered  into any
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the resale shares. There is no underwriter or coordinating
broker acting in  connection  with the proposed sale of the resale shares by the
Selling Stockholders.

       We agreed to keep this prospectus  effective until the earlier of (i) the
date on which  the  shares  may be resold by the  Selling  Stockholders  without
registration  and  without  regard to any volume  limitations  by reason of Rule
144(e) under the  Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold  pursuant to the  prospectus  or Rule 144 under the
Securities  Act or any other rule of similar  effect.  The resale shares will be
sold only through  registered or licensed  brokers or dealers if required  under
applicable  state securities  laws. In addition,  in certain states,  the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable  state or an exemption  from the  registration  or  qualification
requirement is available and is complied with.

       Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not  simultaneously  engage
in market making activities with respect to the Common Stock for a period of two
business days prior to the commencement of the  distribution.  In addition,  the

                                       17
<PAGE>

Selling  Stockholders  will be subject to applicable  provisions of the Exchange
Act and the rules and regulations thereunder,  including Regulation M, which may
limit the timing of  purchases  and sales of shares of the  Common  Stock by the
Selling Stockholders or any other person. We will make copies of this prospectus
available  to the Selling  Stockholders  and have  informed  them of the need to
deliver a copy of this  prospectus to each  purchaser at or prior to the time of
the sale.

                                       18
<PAGE>

                                                                         Annex B
                                                                         -------

                              Sinovac Biotech Ltd.
                              --------------------

                 Selling Securityholder Notice and Questionnaire
                 -----------------------------------------------

       The undersigned  beneficial  owner of common stock,  par value $0.001 per
share (the "Common Stock"),  of Sinovac Biotech Ltd., a West Indies  corporation
            ------------
(the "Company"), (the "Registrable Securities") understands that the Company has
      -------          ----------------------
filed or  intends  to file with the  Securities  and  Exchange  Commission  (the
"Commission")   a  registration   statement  on  Form  S-3  (the   "Registration
 ----------                                                         ------------
Statement") for the registration and resale under Rule 415 of the Securities Act
---------
of 1933, as amended (the "Securities  Act"), of the Registrable  Securities,  in
                          ---------------
accordance  with the terms of the  Registration  Rights  Agreement,  dated as of
December 31, 2004 (the "Registration  Rights Agreement"),  among the Company and
                        ------------------------------
the Purchasers  named therein.  A copy of the  Registration  Rights Agreement is
available  from the Company  upon  request at the address set forth  below.  All
capitalized  terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

       Certain  legal   consequences   arise  from  being  named  as  a  selling
securityholder  in  the  Registration  Statement  and  the  related  prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel  regarding the consequences of being
named  or not  being  named  as a  selling  securityholder  in the  Registration
Statement and the related prospectus.

                                     NOTICE
                                     ------

       The  undersigned  beneficial  owner  (the  "Selling  Securityholder")  of
                                                   -----------------------
Registrable Securities hereby elects to include the Registrable Securities owned
by it and listed below in Item 3 (unless otherwise  specified under such Item 3)
in the Registration Statement.

                                       19
<PAGE>

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

                                  QUESTIONNAIRE
                                  -------------

1.     Name.

       (a)    Full Legal Name of Selling Securityholder

              ------------------------------------------------------------------

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

              ------------------------------------------------------------------

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

              ------------------------------------------------------------------

2.     Address for Notices to Selling Securityholder:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Telephone:
          ----------------------------------------------------------------------
Fax:
     ---------------------------------------------------------------------------
Contact Person:
                ----------------------------------------------------------------

3.     Beneficial Ownership of Registrable Securities:

       (a)    Type and Number of Registrable Securities beneficially owned:

              ------------------------------------------------------------------

              ------------------------------------------------------------------

              ------------------------------------------------------------------

                                       20
<PAGE>

4.     Broker-Dealer Status:

       (a)    Are you a broker-dealer?

                              Yes [_]       No [_]

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

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

                              Yes [_]       No [_]

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

                              Yes [_]       No [_]

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

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

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

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

              ------------------------------------------------------------------

              ------------------------------------------------------------------

                                       21
<PAGE>

6.     Relationships with the Company:

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

       State any exceptions here:

       -------------------------------------------------------------------------

       -------------------------------------------------------------------------

       The undersigned agrees to promptly notify the Company of any inaccuracies
or changes in the information  provided herein that may occur  subsequent to the
date hereof at any time while the Registration Statement remains effective.

       By signing  below,  the  undersigned  consents to the  disclosure  of the
information  contained  herein  in its  answers  to  Items 1  through  6 and the
inclusion of such  information  in the  Registration  Statement  and the related
prospectus.  The undersigned  understands  that such  information will be relied
upon by the Company in  connection  with the  preparation  or  amendment  of the
Registration Statement and the related prospectus.

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

Dated:                           Beneficial Owner:
       ---------------------                       -----------------------------

                                 By:
                                      ------------------------------------------
                                      Name:
                                      Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED  NOTICE AND  QUESTIONNAIRE,  AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

                                       22
<PAGE>

              Schedule 6(b) to the Registration Rights Agreement -
              ----------------------------------------------------
                         No Piggyback and Registrations
                         ------------------------------

       The  information  on this Schedule 6(b) modifies the  representation  and
warrant set forth in Section 6(b) of the Registration Rights Agreement:

       The  Company  reserves  the right to include  up to 650,000  Units in the
capital  of  the  Company  in  a  Registration  Statement  over  and  above  the
Registrable Securities.

                                       23

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