Document:

ADDITIONAL BORROWERS JOINDER SUPPLEMENT

      THIS ADDITIONAL  BORROWERS JOINDER  SUPPLEMENT (this  "Agreement") is made
this 31st day of August,  2004,  by and among  ARGAN,  INC.,  formerly  known as
Puroflow  Incorporated,  a corporation  organized under the laws of the State of
Delaware ("Designated  Borrower"),  the other "Existing Borrowers" (as that term
is defined below) and AGAX/VLI ACQUISITION CORPORATION.  ("AGAX"), a corporation
organized under the laws of the State of Delaware (the  "Additional  Borrower"),
and BANK OF AMERICA, N.A., a national banking association (the "Lender").

      NOW, THEREFORE, for value received the undersigned agree as follows:

      1. Reference is hereby made to the Financing and Security  Agreement dated
as of August 19, 2003 (as amended, modified, restated, substituted, extended and
renewed at any time and from time to time,  the  "Financing  Agreement")  by and
among Designated Borrower, and SOUTHERN MARYLAND CABLE, INC.,  constituting each
Person  which is  included  in the  definition  of  "Borrower"  (as that term is
defined  in the  Financing  Agreement)  immediately  prior  to the  date of this
Agreement (together with Designated Borrower,  the "Existing Borrowers") and the
Lender. Capitalized terms not otherwise defined in this Agreement shall have the
meanings given to them in the Financing Agreement.

      2.  (a)  The  Additional   Borrower  and  the  Existing  Borrowers  hereby
acknowledge, confirm and agree that on and as of the date of this Agreement, the
Additional Borrower has become an "Additional Borrower" (as that term is defined
in the Financing Agreement), and, along with the Existing Borrowers, is included
in the  definition  of "Borrower"  under the  Financing  Agreement and the other
Financing  Documents for all purposes thereof,  and as such shall be jointly and
severally  liable, as provided in the Financing  Documents,  for all Obligations
thereunder  (whether incurred or arising prior to, on, or subsequent to the date
hereof)  and  otherwise  bound by all of the terms,  provisions  and  conditions
thereof.

      (b) Without in any way implying any limitation on any of the provisions of
this  Agreement,  the  Financing  Agreement,  or  any  of  the  other  Financing
Documents,  the Additional  Borrower hereby  assigns,  pledges and grants to the
Lender,  and  agrees  that the  Lender  shall have a  perfected  and  continuing
security  interest  in,  and  Lien  on,  (i)  all of the  Additional  Borrower's
Accounts,   Inventory,   Chattel  Paper,  Documents,   Instruments,   Equipment,
Investment  Property and General  Intangibles,  whether now owned or existing or
hereafter acquired or arising, (ii) all returned, rejected or repossessed goods,
the sale or lease of which  shall have given or shall give rise to an Account or
Chattel Paper, (iii) all insurance policies relating to the foregoing,  (iv) all
books and records in whatever media (paper, electronic or otherwise) recorded or
stored,  with respect to the foregoing and all equipment and general intangibles
necessary  or  beneficial  to retain,  access  and/or  process  the  information
contained in those books and records, and (v) all cash and non-cash proceeds and
products of the  foregoing.  The  Additional  Borrower  further  agrees that the
Lender shall have in respect thereof all of the rights and remedies of a secured
party  under  the  Uniform  Commercial  Code as well as those  provided  in this
Agreement,  under each of the other  Financing  Documents  and under  applicable
Laws.

<PAGE>

      (c) Without in any way implying any limitation on any of the provisions of
this  Agreement,  the  Additional  Borrower  agrees to  execute  such  financing
statements,   instruments,  and  other  documents  as  the  Lender  may  require
including, without limitation, an allonge for each of the Notes.

      (d) Without in any way implying any limitation on any of the provisions of
this Agreement,  the Additional Borrower hereby represents and warrants that all
of the  representations  and warranties of the Additional  Borrower contained in
the Financing  Documents are true and correct on and as of the date hereof as if
made on and as of such date, both before and after giving effect to this Joinder
Supplement,  and  that no  Event of  Default  or  Default  has  occurred  and is
continuing or exists or would occur or exist after giving effect to this Joinder
Supplement.

      3.  Prior  to any  further  advance  by the  Lender  under  the  Financing
Agreement,  the  Additional  Borrower  shall  satisfy the  following  conditions
precedent in a manner  satisfactory  in form and substance to the Lender and its
counsel:

      (a) The Lender shall have received:

      (i) a certificate of good standing certified by the Secretary of State, or
other  appropriate  Governmental  Authority,  of the state of  formation  of the
Additional Borrower;

      (ii) a certified copy from the  appropriate  Governmental  Authority under
which  the   Additional   Borrower  is  organized,   of  Additional   Borrower's
organizational documents and all recorded amendments thereto;

      (iii) a  certificate  of  qualification  to do business  certified  by the
Secretary of State or other Governmental Authority of each jurisdiction in which
the Additional Borrower conducts business; and

      (iv) a  certificate  dated as of the Closing  Date by the  Secretary or an
Assistant Secretary of Additional Borrower covering:

      (A) true and complete copies of each Additional Borrower's  organizational
and governing documents and all amendments thereto;

      (B) true and complete  copies of the resolutions of its Board of Directors
authorizing  (A)  the  execution,  delivery  and  performance  of the  Financing
Documents  to which it is a party,  (B) the  borrowings  hereunder,  and (C) the
granting of the Liens contemplated by this Agreement and the Financing Documents
to which the Additional Borrower is a party;

      (C) the  incumbency,  authority  and  signatures  of the  officers  of the
Additional  Borrower  authorized to sign this Agreement and the other  Financing
Documents to which the Additional Borrower is a party; and

      (D) the identity of the Additional  Borrower's current directors,  and any
common stock holders and other equity holders, who to the Additional  Borrower's
knowledge own more than 20% of the outstanding stock.

      (b) The Lender shall have  received the  favorable  opinion of counsel for
the Additional Borrower addressed to the Lender.

                                       2
<PAGE>

            (c) The  Additional  Borrower  shall  have  delivered  a  Collateral
Disclosure  List  required  under the  provisions  of  Section  3.3  (Collateral
Disclosure  List) of the  Financing  Agreement  duly  executed by a  Responsible
Officer of the Additional Borrower.

            (d) The  Additional  Borrower shall have: (i) executed and delivered
all Financing Documents required to be filed, registered or recorded in order to
create, in favor of the Lender, a perfected Lien in the Collateral (subject only
to  the  Permitted  Liens)  in  form  and  in  sufficient   number  for  filing,
registration,  and recording in each office in each  jurisdiction  in which such
filings,  registrations  and recordations are required,  and (ii) delivered such
evidence as the Lender deems satisfactory that all necessary filing fees and all
recording and other similar fees,  and all Taxes and other  expenses  related to
such filings, registrations and recordings will be or have been paid in full.

            (e) The Lender  shall have  received  an  insurance  certificate  in
accordance with the provisions of Section 6.1.8  (Insurance)  from the Financing
Agreement.

            (f) The Lender  shall have  received a waiver from each  landlord of
each and every business  premise leased by the Additional  Borrower and on which
any of the Collateral is or may hereafter be located,  which landlords'  waivers
must be  reasonably  acceptable  to the Lender and its counsel in their sole and
absolute discretion.

            (g) The Lender shall have  received an agreement  acknowledging  the
Liens of the Lender from each bailee,  warehouseman,  consignee or similar third
party which has possession of any of the  Collateral,  which  agreements must be
reasonably  acceptable  to the Lender and its counsel in their sole and absolute
discretion.

            (h) Not later than October 15, 2004, the Lender shall have completed
a field  examination  of the  Additional  Borrower's  business,  operations  and
income,  the  results  of  which  field  examination  shall  be in all  respects
acceptable to the Lender in its sole and absolute  discretion  and shall include
reference discussions with key customers and vendors.

      4. Each Person included in the term "Borrower" hereby covenants and agrees
with the Lender as follows:

      (a) The Obligations include all present and future  indebtedness,  duties,
obligations, and liabilities,  whether now existing or contemplated or hereafter
arising, of the Additional Borrower or the Existing Borrowers.

      (b) Reference in this  Agreement,  the  Financing  Agreement and the other
Financing  Documents to the  "Borrower" or otherwise  with respect to any one or
more of the Persons now or hereafter  included in the  definition  of "Borrower"
shall  mean  each and every  such  Person  and any one or more of such  Persons,
jointly and severally, unless the context requires otherwise (by way of example,
and not  limitation,  if only one such Person is the owner of the real  property
which is the subject of a mortgage).

                                       3
<PAGE>

      (c) Each Person  included in the term  "Borrower" in the discretion of its
respective  management is to agree among  themselves as to the allocation of the
proceeds of Loans,  provided,  however,  that each such Person be deemed to have
represented  and  warranted  to the Lender at the time of  allocation  that each
benefit and use of proceeds is a Permitted Use.

      (d) For  administrative  convenience,  each  Person  included  in the term
"Borrower" hereby  irrevocably  appoints  Designated  Borrower as the Borrower's
attorney-in-fact,  with power of substitution (with the prior written consent of
the Lender in the exercise of its sole and absolute discretion),  in the name of
Designated  Borrower or in the name of the Borrower or otherwise to take any and
all actions with respect to the this Agreement,  the other Financing  Documents,
the  Obligations  and/or the  Collateral  (including,  without  limitation,  the
proceeds  thereof)  as  Designated  Borrower  may so  elect  from  time to time,
including, without limitation,  actions to (i) request advances under the Loans,
and direct the Lender to disburse or credit the proceeds of any Loan directly to
an account of Designated Borrower, any one or more of such Persons or otherwise,
which direction shall evidence the making of such Loan and shall  constitute the
acknowledgement by each such Person of the receipt of the proceeds of such Loan,
(ii) enter into, execute,  deliver, amend, modify, restate,  substitute,  extend
and/or renew this Agreement,  any Additional  Borrowers Joinder Supplement,  any
other  Financing  Documents,  security  agreements,  mortgages,  deposit account
agreements,  instruments,  certificates, waivers, letter of credit applications,
releases,  documents  and  agreements  from time to time,  and (iii) endorse any
check or other  item of  payment  in the name of such  Person  or in the name of
Designated  Borrower.  The  foregoing  appointment  is coupled with an interest,
cannot be revoked  without the prior written  consent of the Lender,  and may be
exercised  from  time to  time  through  Designated  Borrower'  duly  authorized
officer,  officers or other Person or Persons designated by Designated  Borrower
to act from time to time on behalf of Designated Borrower.

      (e)  Each  Person  included  in the  term  "Borrower"  hereby  irrevocably
authorizes  the  Lender  to make  Loans to any one or more  all of such  Person,
pursuant to the provisions of this Agreement upon the written, oral or telephone
request any one or more of the  Persons  who is from time to time a  Responsible
Officer of a Borrower  under the  provisions of the most recent  certificate  of
corporate  resolutions  and/or  incumbency  of the Person  included  in the term
"Borrower" on file with the Lender and also upon the written,  oral or telephone
request of any one of the Persons who is from time to time a Responsible Officer
of Designated  Borrower under the  provisions of the most recent  certificate of
corporate resolutions and/or incumbency for Designated Borrower on file with the
Lender.

      (f) The Lender  assumes no  responsibility  or  liability  for any errors,
mistakes,  and/or  discrepancies  in the  oral,  telephonic,  written  or  other
transmissions of any instructions,  orders,  requests and confirmations  between
the Lender and any one or more of the Persons included in the term "Borrower" in
connection  with the Credit  Facilities,  any Loan, or any other  transaction in
connection with the provisions of this Agreement.

      5. Without  implying any limitation on the joint and several nature of the
Obligations, the Lender agrees that, notwithstanding any other provision of this
Agreement,  the Persons included in the term  "Borrower," may create  reasonable
inter-company  indebtedness  between or among the Borrowers  with respect to the
allocation  of the benefits  and proceeds of the advances and Credit  Facilities

                                       4
<PAGE>

under this  Agreement.  The  Borrowers  agree among  themselves,  and the Lender
consents to that agreement, that each Borrower shall have rights of contribution
from all of the other Borrowers to the extent such Borrower  incurs  Obligations
in excess of the proceeds of the Loans received by, or allocated to purposes for
the direct benefit of, such Borrower. All such indebtedness and rights shall be,
and are hereby  agreed by the  Borrowers  to be,  subordinate  in  priority  and
payment to the indefeasible  repayment in full in cash of the Obligations,  and,
unless the Lender agrees in writing otherwise,  shall not be exercised or repaid
in whole or in part until all of the Obligations have been  indefeasibly paid in
full in cash. The Borrowers  agree that all of such  inter-company  indebtedness
and  rights  of  contribution   are  part  of  the  Collateral  and  secure  the
Obligations. Each Borrower hereby waives all rights of counterclaim,  recoupment
and offset between or among themselves  arising on account of that  indebtedness
and otherwise.  Each Borrower shall not evidence the inter-company  indebtedness
or rights of contribution by note or other instrument, and shall not secure such
indebtedness   or   rights   of   contribution   with  any  Lien  or   security.
Notwithstanding anything contained in this Agreement to the contrary, the amount
covered by each Borrower under the Obligations  (including,  without limitation,
Section  2.3.8  (Guaranty) of the  Financing  Agreement)  shall be limited to an
aggregate amount (after giving effect to any collections from, rights to receive
contribution  from or  payments  made by or on behalf of any other  Borrower  in
respect of the  Obligations)  which,  together  with other amounts owing by such
Borrowers to the Lender under the  Obligations,  is equal to the largest  amount
that  would  not be  subject  to  avoidance  under  the  Bankruptcy  Code or any
applicable provisions of any applicable, comparable state or other Laws.

      6. (a) Each Person included in the term "Borrower"  hereby  represents and
warrants  to the Lender  that each of them will derive  benefits,  directly  and
indirectly,  from each Loan, both in their separate  capacity and as a member of
the  integrated  group to  which  each  such  Person  belongs  and  because  the
successful  operation of the  integrated  group is dependent  upon the continued
successful  performance  of the  functions of the  integrated  group as a whole,
because  (i)  the  terms  of the  consolidated  financing  provided  under  this
Agreement are more  favorable than would  otherwise  would be obtainable by such
Persons individually, and (ii) the additional administrative and other costs and
reduced  flexibility  associated with individual  financing  arrangements  which
would otherwise be required if obtainable would  substantially  reduce the value
to such Persons of the financing.

      (b) Each Person  included in the term  "Borrower"  hereby  represents  and
warrants  that  all of  the  representations  and  warranties  contained  in the
Financing Documents are true and correct on and as of the date hereof as if made
on and as of such date,  both before and after giving effect to this  Agreement,
and that no Event of Default or Default has occurred and is continuing or exists
or would occur or exist after giving effect to this Agreement.

      7. Guaranty.

      (a) Each Person included in the term "Borrower" hereby unconditionally and
irrevocably, guarantees to the Lender:

      (i)  the  due  and   punctual   payment   in  full  (and  not  merely  the
collectibility)  by the other  Persons  included in the term  "Borrower"  of the
Obligations,  including unpaid and accrued interest  thereon,  in each case when
due and payable, all according to the terms of this Agreement, the Notes and the
other Financing Documents;

      (ii)  the  due  and   punctual   payment  in  full  (and  not  merely  the
collectibility)  by the other  Persons  included in the term  "Borrower"  of all
other sums and charges  which may at any time be due and  payable in  accordance
with this Agreement, the Notes or any of the other Financing Documents;

      (iii) the due and punctual  performance  by the other Persons  included in
the  term  "Borrower"  of all of  the  other  terms,  covenants  and  conditions
contained in the Financing Documents; and

                                       5
<PAGE>

      (iv) all the other  Obligations of the other Persons  included in the term
"Borrower".

      (b) The  obligations  and  liabilities of each Person included in the term
"Borrower"  as a  guarantor  under  this  paragraph  7  shall  be  absolute  and
unconditional and joint and several, irrespective of the genuineness,  validity,
priority,  regularity or enforceability  of this Agreement,  any of the Notes or
any of the Financing  Documents or any other  circumstance which might otherwise
constitute a legal or equitable discharge of a surety or guarantor.  Each Person
included in the term "Borrower" in its capacity as a guarantor  expressly agrees
that the Lender may, in its sole and absolute  discretion,  without notice to or
further assent of such Borrower and without in any way  releasing,  affecting or
in any way impairing the joint and several  obligations  and liabilities of such
Person as a guarantor hereunder unless otherwise specifically provided:

      (i) waive  compliance  with,  or any  defaults  under,  or grant any other
indulgences under or with respect to any of the Financing Documents;

      (ii) modify,  amend,  change or  terminate  any  provisions  of any of the
Financing Documents;

      (iii)  grant  extensions  or  renewals  of or with  respect  to the Credit
Facilities, the Notes or any of the other Financing Documents;

      (iv)  effect any  release,  subordination,  compromise  or  settlement  in
connection with this  Agreement,  any of the Notes or any of the other Financing
Documents;

      (v) agree to the substitution,  exchange,  release or other disposition of
the Collateral or any part thereof,  or any other  collateral for the Loan or to
the subordination of any lien or security interest therein;

      (vi) make  advances for the purpose of performing  any term,  provision or
covenant  contained  in this  Agreement,  any of the  Notes or any of the  other
Financing Documents with respect to which the Borrower shall then be in default;

      (vii) make future advances  pursuant to the Financing  Agreement or any of
the other Financing Documents;

      (viii) assign, pledge,  hypothecate or otherwise transfer the Commitments,
the Obligations, the Notes, any of the other Financing Documents or any interest
therein, all as and to the extent permitted by the provisions of this Agreement;

      (ix) deal in all  respects  with the other  Persons  included  in the term
"Borrower" as if this paragraph 7 were not in effect;

      (x) effect any release,  compromise  or  settlement  with any of the other
Persons included in the term "Borrower", whether in their capacity as a Borrower
or as a guarantor under this paragraph 7 or any other guarantor; and

                                       6
<PAGE>

      (xi)  provide   debtor-in-possession   financing  or  allow  use  of  cash
collateral in proceedings  under the Bankruptcy  Code, it being expressly agreed
by all Persons  included in the term "Borrower"  that any such financing  and/or
use would be part of the Obligations.

      (c) The  obligations  and  liabilities of each Person included in the term
"Borrower",  as guarantor  under this  paragraph 7 shall be primary,  direct and
immediate,  shall  not be  subject  to any  counterclaim,  recoupment,  set off,
reduction or defense  based upon any claim that such Person may have against any
one or more of the other  Persons  included in the term  "Borrower",  the Lender
and/or any other  guarantor  and shall not be  conditional  or  contingent  upon
pursuit or enforcement by the Lender of any remedies it may have against Persons
included in the term "Borrower" with respect to this Agreement, the Notes or any
of the other Financing  Documents,  whether  pursuant to the terms thereof or by
operation of law. Without  limiting the generality of the foregoing,  the Lender
shall not be required to make any demand upon any of the Persons included in the
term  "Borrower",  or to sell the  Collateral  or otherwise  pursue,  enforce or
exhaust  its or  their  remedies  against  the  Persons  included  in  the  term
"Borrower" or the Collateral either before,  concurrently with or after pursuing
or enforcing its rights and remedies  hereunder.  Any one or more  successive or
concurrent actions or proceedings may be brought against each Person included in
the term "Borrower"  under this paragraph 7, either in the same action,  if any,
brought  against any one or more of the Persons  included in the term "Borrower"
or in separate actions or proceedings, as often as the Lender may deem expedient
or advisable. Without limiting the foregoing, it is specifically understood that
any  modification,  limitation  or  discharge  of  any  of  the  liabilities  or
obligations of any one or more of the Persons  included in the term  "Borrower",
any other guarantor or any obligor under any of the Financing Documents, arising
out of, or by virtue of, any bankruptcy, arrangement,  reorganization or similar
proceeding  for relief of debtors  under  federal or state law  initiated  by or
against any one or more of the Persons included in the term "Borrower", in their
respective  capacities as borrowers and  guarantors  under this  paragraph 7, or
under any of the Financing Documents shall not modify,  limit,  lessen,  reduce,
impair, discharge, or otherwise affect the liability of each Borrower under this
paragraph 7 in any manner  whatsoever,  and this  paragraph  7 shall  remain and
continue  in full  force  and  effect.  It is the  intent  and  purpose  of this
paragraph 7 that each  Person  included  in the term  "Borrower"  shall and does
hereby waive all rights and benefits  which might accrue to any other  guarantor
by  reason  of any  such  proceeding,  and  the  Persons  included  in the  term
"Borrower"  agree  that  they  shall  be  liable  for  the  full  amount  of the
obligations  and   liabilities   under  this  paragraph  7  regardless  of,  and
irrespective to, any  modification,  limitation or discharge of the liability of
any one or more of the  Persons  included  in the  term  "Borrower",  any  other
guarantor or any obligor under any of the Financing  Documents,  that may result
from any such proceedings.

      (d) Each Person included in the term  "Borrower",  as guarantor under this
paragraph 7, hereby  unconditionally,  jointly and  severally,  irrevocably  and
expressly waives:

      (i)  presentment  and demand for payment of the Obligations and protest of
non-payment;

      (ii) notice of acceptance of this paragraph 7 and of  presentment,  demand
and protest thereof;

      (iii)  notice of any  default  hereunder  or under the Notes or any of the
other Financing Documents and notice of all indulgences;

                                       7
<PAGE>

      (iv) notice of any  increase in the amount of any portion of or all of the
indebtedness guaranteed by this paragraph 7;

      (v) demand for observance,  performance or enforcement of any of the terms
or  provisions  of this  paragraph  7, the Notes or any of the  other  Financing
Documents;

      (vi)  all  errors  and   omissions   in   connection   with  the  Lender's
administration of all indebtedness guaranteed by this paragraph 7;

      (vii) any right or claim of right to cause a marshalling  of the assets of
any one or more of the other Persons included in the term "Borrower";

      (viii) any act or  omission of the Lender  which  changes the scope of the
risk as guarantor hereunder; and

      (ix) all other  notices and demands  otherwise  required by law which such
Person may lawfully waive.

      (e) Within  ten (10) days  following  any  request of the Lender so to do,
each Person  included in the term  "Borrower"  will  furnish the Lender and such
other  persons  as the  Lender  may  direct  with a  written  certificate,  duly
acknowledged  stating in detail whether or not any credits,  offsets or defenses
exist with respect to this paragraph 7.

      8. This  Agreement  shall be governed  by and  construed  and  enforced in
accordance with the laws of the State of Maryland,  without regard to principles
of choice of law.

                     [Signatures are on the following page]

                                       8
<PAGE>

         WITNESS the due execution hereof as of the day and year first written
above.

WITNESS:                                     ARGAN, INC.

_________________________                    By:________________________(SEAL)
                                                Name:
                                                Title:

WITNESS:                                      AGAX/VLI ACQUISITION CORPORATION

_________________________                     By:________________________(SEAL)
                                                 Name:
                                                 Title:

WITNESS:                                       BANK OF AMERICA, N. A.

_________________________                      By:________________________(Seal)
                                                  Name:
                                                  Title:

                                       9REGISTRATION RIGHTS AGREEMENT

                  This Registration  Rights Agreement (this "Agreement") is made
and entered into as of September 1, 2004, by and among LJ International  Inc., a
British Virgin Islands 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) the 90th
         calendar day  following the date of the Purchase  Agreement  (the 120th
         calendar day in the case of a "full review" by the Commission), 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,  the  30th  calendar  day
         following the date of the Purchase Agreement.

                  "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).

                                       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,  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.

                  "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.

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.  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   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

                                       2
<PAGE>

         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").

(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)  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 15 calendar days after the receipt
         of comments by or notice from the  Commission  that such  amendment  is
         required  in  order  for such  Registration  Statement  to be  declared
         effective,  or (iii) a Registration  Statement  filed or required to be
         filed  hereunder is not  declared  effective  by the  Commission  on or
         before the Effectiveness  Date, or (iv) 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
         (iii) the date on which such Event  occurs,  or for  purposes of clause
         (ii) the date which such 15  calendar  day period is  exceeded,  or for
         purposes of clause  (iv) 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 2.0% of the aggregate
         purchase price paid by such Holder  pursuant to the Purchase  Agreement
         for any Registrable Securities then held by such Holder. 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 15% 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.

3.       Registration Procedures

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

                                       3
<PAGE>

(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  Holder  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  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 (where  appropriate,  public filing on EDGAR shall be
         deemed  sufficient notice hereunder with respect to filing which do not
         effect the  availability  of the  Prospectus for resales by the Holder)
         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

                                       4
<PAGE>

         any  request  by  the   Commission   or  any  other  Federal  or  state
         governmental authority (or any comparable  jurisdictional authority for
         the British Virgin Islands) 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 (or any comparable  jurisdictional authority for
         the  British  Virgin   Islands)  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  commercially  reasonable  efforts to avoid the issuance of, or, if
         issued,   obtain  the  withdrawal  of  (i)  any  order  suspending  the
         effectiveness of 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

                                       5
<PAGE>

         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 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.

(i)      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
         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.

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

(k)      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 shall be tolled and
         any Event that may otherwise  occur solely  because of such delay shall
         be suspended, until such information is delivered to the Company.

                                       6
<PAGE>

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,  and  (B) in  compliance  with  applicable  state
         securities or Blue Sky laws (or any comparable  jurisdictional  law for
         the  British  Virgin  Islands)),  (ii)  printing  expenses  (including,
         without limitation,  expenses of printing  certificates for Registrable
         Securities and of printing prospectuses if the printing of prospectuses
         is reasonably requested by the 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 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

                                       7
<PAGE>

         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.

(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.

                                       8
<PAGE>

                  An Indemnified  Party shall have the right to employ  separate
         counsel  in any  such  Proceeding  and to  participate  in the  defense
         thereof,  but the fees and  expenses  of such  counsel  shall be at the
         expense  of  such  Indemnified   Party  or  Parties  unless:   (1)  the
         Indemnifying Party has agreed in writing to pay such fees and expenses;
         (2) the  Indemnifying  Party shall have  failed  promptly to assume the
         defense  of  such   Proceeding   and  to  employ   counsel   reasonably
         satisfactory to such Indemnified  Party in any such Proceeding;  or (3)
         the named  parties  to any such  Proceeding  (including  any  impleaded
         parties)  include  both such  Indemnified  Party  and the  Indemnifying
         Party,  and such  Indemnified  Party shall  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 a claim for indemnification under Section 5(a) or 5(b)
         is unavailable  to an Indemnified  Party (by reason of public policy or
         otherwise),  then each Indemnifying Party, in lieu of indemnifying such
         Indemnified  Party,  shall  contribute to the amount paid or payable by
         such Indemnified  Party as a result of such Losses,  in such proportion
         as is  appropriate  to reflect the relative  fault of the  Indemnifying
         Party and Indemnified Party in connection with the actions,  statements
         or omissions that resulted in such Losses as well as any other relevant
         equitable considerations. The relative fault of such Indemnifying Party
         and Indemnified  Party shall be determined by reference to, among other
         things, whether any action in question, including any untrue or alleged
         untrue  statement of a material fact or omission or alleged omission of
         a material  fact,  has been taken or made by, or relates to information
         supplied by, such  Indemnifying  Party or  Indemnified  Party,  and the
         parties'  relative  intent,   knowledge,   access  to  information  and

                                       9
<PAGE>

         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.

                  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. Except as set forth on the Disclosure Schedules
         attached to the  Purchase  Agreement,  no Person has any right to cause
         the Company to effect the registration  under the Securities Act of any
         securities  of the  Company.  The  Company  shall  not file  any  other
         registration statement until after the Effective Date.

(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.

                                       10
<PAGE>

(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
         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 F-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,  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.

(g)      Notices.  Any and all  notices or other  communications  or  deliveries
         required  or  permitted  to be  provided  hereunder  shall  be  made in
         accordance with the provisions of 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.  Each Holder may
         assign  their  respective  rights  hereunder  in the  manner and to the
         Persons as permitted under the Purchase Agreement.

(i)      Execution  and  Counterparts.  This  Agreement  may be  executed in any
         number of counterparts,  each of which when so executed shall be deemed
         to be an original and, all of which taken together shall constitute one
         and the same Agreement. In the event that any signature is delivered by
         facsimile  transmission,  such  signature  shall create a valid binding

                                       11
<PAGE>

         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.

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

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

(l)      Severability.  If any term, provision,  covenant or restriction of this
         Agreement is held by a court of competent  jurisdiction  to be invalid,
         illegal, void or unenforceable, the remainder of the terms, provisions,
         covenants and  restrictions set forth herein shall remain in full force
         and effect and shall in no way be  affected,  impaired or  invalidated,
         and the parties hereto shall use their 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.

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

(n)      Independent   Nature  of  Purchasers'   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.

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

                                       12
<PAGE>

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

                                 LJ INTERNATIONAL INC.

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

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

                                       13

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO JADE RRA]

Name of Investing Entity: __________________________
Signature of Authorized Signatory of Investing Entity: _________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________

                           [SIGNATURE PAGES CONTINUE]

                                       14
<PAGE>

                                  SCHEDULE 6(b)

                          PIGGYBACK REGISTRATION RIGHTS

The Company issued 80,000 warrants at $4.57 per share,  exercisable  through May
31, 2005, which have piggyback registration rights.

                                       15
<PAGE>

                                     ANNEX A

                              Plan of Distribution

         The Selling  Stockholders  (the "Selling  Stockholders")  of the common
stock  ("Common  Stock") of LJ  International  Inc.,  a British  Virgin  Islands
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 our 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 our 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(k) 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 (or any comparable  jurisdictional  law for the
British Virgin Islands).  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 our common stock for a period

                                       17
<PAGE>

of two business days prior to the commencement of the distribution. In addition,
the  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 our 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

                              LJ INTERNATIONAL INC.

                 SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

         The undersigned  beneficial  owner of common stock, par value $0.01 per
share (the "Common Stock"),  of LJ  International  Inc, a British Virgin Islands
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 F-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
September 1, 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 Principal Amount 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

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