Document:

REGISTRATION RIGHTS AGREEMENT

      This Registration Rights Agreement (this "Agreement") is made and entered
into as of February 14, 2006, among Azur Holdings, Inc., a Delaware corporation
(the "Company"), and the purchasers signatory hereto (each such purchaser is a
"Purchaser" and collectively, the "Purchasers").

      Reference is made to (a) the Securities Purchase Agreement dated as of May
31, 2005 among Azur International, Inc., a Nevada corporation ("Azur"), and
certain of the Purchasers (the May 31, 2005 Purchase Agreement") and (b) the
Securities Purchase Agreement, dated as of November 3, 2005 among Azur and
certain of the Purchasers (the "November 2, 2005 Purchase Agreement").

      On the date hereof the Company is entering into an Exchange Agreement with
Azur pursuant to which, among other things, the Company is issuing an aggregate
of approximately 24,375,000 shares of common stock, par value $.0001 per share
of the Company (the "Company Shares") to Azur. Azur intends to distribute one
share of common stock of the Company for each three shares of Azur held by each
stockholder of Azur, including each Purchaser (the "Distribution").

      In addition, pursuant to a Waiver Agreement and Amendment dated the date
hereof among the Company and certain of the Purchasers, the Company and the
Purchasers party to such agreement have agreed that the warrants to purchase an
aggregate of 10 million shares of Azur common stock at $.50 per share issued to
certain of the Purchasers pursuant to the November 2, 2005 Purchase Agreement
shall be exchanged for five year warrants to purchase an aggregate of 10 million
shares of common stock of the Company at an exercise price of $0.50 (subject to
adjustment therein) per share (the "Company Warrants").

      In addition, pursuant to a separate Waiver Agreement and Amendment dated
the date hereof among the Company and certain of the Purchasers, the Company and
the Purchasers party to such agreement have agreed that the debentures issued to
such Purchasers pursuant the May 31, 2005 Purchase Agreement (the "Debentures")
shall be convertible into Company Shares as well as Azur Shares and that the
initial conversion rate would be one Company Share for each $3.00 (subject to
adjustment therein) principal amount of the debenture being converted.

      The Company and the Purchasers hereby agree as follows:

      1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the November 2, 2005 Purchase Agreement shall have the
meanings given such terms in the November 2, 2005 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 initial Registration
Statement required to be filed hereunder, June 13 2006 and, with respect to any
additional Registration Statements which may be required pursuant to Section
3(c), the 60th calendar day following the date on which the Company first knows,
or reasonably should have known, that such additional Registration Statement is
required hereunder; provided, however, in the event the Company is notified by
the Commission that one of the above Registration Statements will not be
reviewed or is no longer subject to further review and comments, the
Effectiveness Date as to such Registration Statement shall be the fifth Trading
Day following the date on which the Company is so notified if such date precedes
the dates required above.

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      "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 initial Registration Statement
required hereunder, March 13, 2006 and, with respect to any additional
Registration Statements which may be required pursuant to Section 3(c), the 30th
day following the date on which the Company first knows, or reasonably should
have known that such additional Registration Statement is required hereunder.

      "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).

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

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

      "Registrable Securities" means all of (i) the shares of common stock of
the Company (the "Company Shares"), to be distributed in the Distribution, (ii)
all of the Company Shares issuable upon exercise of the Company Warrants, and
(iii) all of the Company Shares issuable upon conversion of the Debentures,
together with any Company Shares issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event (including a
merger) with respect to the foregoing.

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      "Registration Statement" means the registration statements required to be
filed hereunder and any additional registration statements contemplated by
Section 3(c), including (in each case) the Prospectus, amendments and
supplements to such 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 such 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 initial Filing Date, the Company (or its
successor or parent) shall prepare and file with the Commission a Registration
Statement covering the distribution of all of the Company Shares in the
Distribution, 130% of the Company Shares issuable pursuant to the Company
Warrants, 130% of the Company Shares issuable upon conversion of the Debentures
and any other Company Shares which are Registrable Securities. If required
pursuant to Section 3(c) of this Agreement, on or prior to each Filing Date
after the initial Filing Date, the Company (or its successor or parent) shall
prepare and file with the Commission a Registration Statement covering the
resale of the Registrable Securities on such Filing Date for an offering to be
made on a continuous basis pursuant to Rule 415. The initial Registration
Statement shall be on Form SB-2 (except if the Company is not then eligible to
register for resale the Registrable Securities on Form SB-2 or as to any
subsequent filings, such registration shall be on another form as appropriate in
accordance herewith) and shall each contain (unless 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 a Registration Statement to be declared effective under the Securities
Act as promptly as possible after the filing thereof, but in any event prior to
the applicable Effectiveness Date, and shall use its best efforts to keep such
Registration Statement continuously effective under the Securities Act until all
Registrable Securities covered by such 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 telephonically request
effectiveness of a Registration Statement as of 5:00 pm Eastern Time on a
Trading Day. The Company shall immediately notify the Holders via facsimile of
the effectiveness of a Registration Statement on the same Trading Day that the
Company telephonically confirms effectiveness with the Commission, which shall
be the date requested for effectiveness of a Registration Statement. The Company
shall, by 9:30 am Eastern Time on the Trading Day after the Effective Date (as
defined in the Purchase Agreement), file a Form 424(b)(5) with the Commission.
Failure to so notify the Holder within 1 Trading Day of such notification shall
be deemed an Event under Section 2(b).

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            (b) If: (i) a Registration Statement is not filed on or prior to its
Filing Date (if the Company files a Registration Statement without affording the
Holders 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 not subject to further review, or (iii) prior to its
Effectiveness Date, 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 by its Effectiveness Date, or (v) after the
Effectiveness Date, a Registration Statement 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 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, 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% of the aggregate purchase price paid
by such Holder for the Notes pursuant to the November 2, 2005 Purchase
Agreement. 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.

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      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 each
Registration Statement or any related Prospectus or any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), the Company shall, (i) furnish to each
Holder copies of all such documents proposed to be filed, which documents (other
than those incorporated or deemed to be incorporated by reference) 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 a 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 a Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep a
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
(subject to the terms of this Agreement), 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 a Registration
Statement or any amendment thereto and as promptly as reasonably possible
provide the Holders true and complete copies of all correspondence from and to
the Commission relating to a 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 a
Registration Statement during the applicable period in accordance (subject to
the terms of this Agreement) with the intended methods of disposition by the
Holders thereof set forth in such Registration Statement as so amended or in
such Prospectus as so supplemented.

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            (c) If during the Effectiveness Period, the number of Registrable
Securities underlying the Company Warrants and Debentures at any time exceeds
90% of the number of the Company Shares then registered in a Registration
Statement, then the Company shall file as soon as reasonably practicable, but in
any case prior to the applicable Filing Date, an additional Registration
Statement covering the resale by the Holders of not less than 130% of the number
of such Registrable Securities underlying the Company Warrants and Debentures.

            (d) Notify the Holders of Registrable Securities to be sold (which
notice shall, pursuant to clauses (ii) through (vi) hereof, be accompanied by an
instruction to suspend the use of the Prospectus until the requisite changes
have been made) as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than five Trading Days prior to such filing) and (if requested
by any such Person) confirm such notice in writing no later than one Trading Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a "review" of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement (the Company shall provide true and complete copies
thereof and all written responses thereto to each of the Holders); and (C) with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the Commission or any other federal or state governmental authority
of any stop order suspending the effectiveness of a Registration Statement
covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; (v) of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in a 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 a
Registration Statement, Prospectus or other documents so that, in the case of a
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; and
(vi) the occurrence or existence of any pending corporate development with
respect to the Company that the Company believes may be material and that, in
the determination of the Company, makes it not in the best interest of the
Company to allow continued availability of a Registration Statement or
Prospectus; provided that any and all of such information shall remain
confidential to each Holder until such information otherwise becomes public,
unless disclosure by a Holder is required by law; provided, further,
notwithstanding each Holder's agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.

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

            (f) Furnish to each Holder, without charge, at least one conformed
copy of each such 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.

            (g) 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(d).

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

            (i) 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 each 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 each 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.

            (j) 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 a
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.

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            (k) Upon the occurrence of any event contemplated by this Section 3,
as promptly as reasonably possible under the circumstances taking into account
the Company's good faith assessment of any adverse consequences to the Company
and its stockholders of the premature disclosure of such event, prepare a
supplement or amendment, including a post-effective amendment, to a 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 a 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 (vi) of Section 3(d) 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(k) 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.

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

            (m) The Company may require each selling Holder to furnish to the
Company a certified statement as to the number of Company Shares 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 a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Trading Market on which the Company Shares are 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
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 a 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.

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      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 a 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 a 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(d)(ii)-(vi), 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 arising from or in connection with the transactions
contemplated by this Agreement of which the Company is aware.

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            (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 such 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 a 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(d)(ii)-(vi), 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.

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            (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 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.

                                       11
<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 the initial Registration Statement other than the Registrable
Securities. Except as set forth in the Disclosure Schedule 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 statements until the initial
Registration Statement required hereunder is declared effective by the
Commission, provided that this Section 6(b) shall not prohibit the Company from
filing amendments to registration statements already filed.

            (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 a Registration
Statement.

                                       12
<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(d), such
Holder will forthwith discontinue disposition of such Registrable Securities
under a 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 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, 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; provided, however, that, the Company shall not
be required to register any Registrable Securities pursuant to this Section 6(e)
that are eligible for resale pursuant to Rule 144(k) promulgated under the
Securities Act or that are the subject of a then effective Registration
Statement.

            (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.

                                       13
<PAGE>

            (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 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.

                                       14
<PAGE>

            (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.

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

                                       15
<PAGE>

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

AZUR HOLDINGS, INC.

By: /s/ Donald Winfrey
    ------------------
    Name: Donald Winfrey
    Title: President

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

                                       16
<PAGE>

                     [SIGNATURE PAGE OF HOLDERS TO AZUR RRA]

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

                           [SIGNATURE PAGES CONTINUE]

                                       17
<PAGE>

                                     ANNEX A

                              Plan of Distribution

      Each Selling Stockholder (the "Selling Stockholders") of the common stock
("Common Stock") of Azur Holdings, Inc., a Delaware 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 the Trading Market
or any other 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. A Selling Stockholder 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 effective date of the
      registration statement of which this prospectus is a part;

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, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.

                                       18
<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 written or oral agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock. In no event shall any broker-dealer receive fees, commissions and markups
which, in the aggregate, would exceed eight percent (8%).

      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 written or oral
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.

                                       19
<PAGE>

      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 the applicable
restricted period, as defined in Regulation M, 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 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.

                                       20
<PAGE>

                                     Annex B

                               AZUR HOLDINGS, INC.

                 Selling Securityholder Notice and Questionnaire

      The undersigned beneficial owner of common stock, par value $.0001 per
share (the "Common Stock"), of Azur Holdings, Inc., a Delaware 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 SB-2 (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
________________, 2006 (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.

                                       21
<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 or indirectly alone or with others has power to
            vote or dispose of the securities covered by the questionnaire):

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

2.    Address for Notices to Selling Securityholder:

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

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

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

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

3.    Beneficial Ownership of Registrable Securities:

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

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

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

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

                                       22
<PAGE>

4.    Broker-Dealer Status:

      (a)   Are you a broker-dealer?

            Yes |_| No |_|

      (b)   If "yes" to Section 4(a), did you receive your Registrable
            Securities as compensation for investment banking services to the
            Company.

            Yes |_| No |_|

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

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

            Yes |_| No |_|

      (d)   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:

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

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

                                       23
<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 and any amendments or supplements thereto. 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:

                                       24Exhibit 4.1

                          LOUNSBERRY HOLDINGS III, INC.

                           CERTIFICATE OF DESIGNATION

                                       OF

                      SERIES A CONVERTIBLE PREFERRED STOCK

      Pursuant to Section 151(g) of the Delaware General Corporation Law,
Lounsberry Holdings III, Inc., a Delaware corporation (the "Corporation"), does
hereby certify as follows:

      1. The following resolution was duly adopted by the Board of Directors of
the Corporation on February 8, 2006:

      RESOLVED, that pursuant to Article 5 of the Certificate of Incorporation
of this Corporation, there be created a series of the Preferred Stock, par value
$.0001 per share ("Preferred Stock"), consisting of five million (5,000,000)
shares, to be designated as the Series A Convertible Preferred Stock ("Series A
Preferred Stock"), and that the holders of shares the Series A Preferred Stock
shall have the rights, preferences and privileges set forth in the Statement of
Designation set forth in Exhibit A to this Resolution ("Certificate of
Designations"); and it was further

      RESOLVED, that the president of this Corporation be, and she hereby is,
authorized and empowered to execute and file with the Secretary of State of the
State of Delaware, the Certificate of Designation setting forth the rights,
preferences and privileges of the holders of the Series A Preferred Stock.

      2. Set forth as Exhibit A to this Certificate of Designation is a true and
correct copy of the Statement of Designations relating to the Series A Preferred
Stock.

      IN WITNESS WHEREOF, Lounsberry Holdings III, Inc. has caused this
certificate to be signed by its president this th day of February, 2006.

                                        By:
                                           -------------------------------------
                                           Meiyi Xia, President

<PAGE>

                                                                       EXHIBIT A

                            STATEMENT OF DESIGNATIONS

      Section 1. DEFINITIONS. Capitalized terms used and not otherwise defined
herein that are defined in the Purchase Agreement (as defined below) shall have
the meanings given such terms in the Purchase Agreement. For the purposes
hereof, the following terms shall have the following meanings:

            "Bankruptcy Event" means any of the following events: (a) the
      Company or any Significant Subsidiary (as such term is defined in Rule
      1.02(s) of Regulation S-X) thereof commences a case or other proceeding
      under any bankruptcy, reorganization, arrangement, adjustment of debt,
      relief of debtors, dissolution, insolvency or liquidation or similar law
      of any jurisdiction relating to the Company or any Significant Subsidiary
      thereof; (b) there is commenced against the Company or any Significant
      Subsidiary thereof any such case or proceeding that is not stayed or
      dismissed within 90 days after commencement; (c) the Company or any
      Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any
      order of relief or other order approving any such case or proceeding is
      entered; (d) the Company or any Significant Subsidiary thereof suffers any
      appointment of any custodian or the like for it or any substantial part of
      its property that is not discharged or stayed within 90 days; (e) the
      Company or any Significant Subsidiary thereof makes a general assignment
      for the benefit of creditors; (f) the Company or any Significant
      Subsidiary thereof calls a meeting of its creditors with a view to
      arranging a composition, adjustment or restructuring of its debts; or (g)
      the Company or any Significant Subsidiary thereof, by any act or failure
      to act, expressly indicates its consent to, approval of or acquiescence in
      any of the foregoing or takes any corporate or other action for the
      purpose of effecting any of the foregoing.

            "Closing Date" means the Closing Date, as defined in the Purchase
      Agreement.

            "Commission" means the Securities and Exchange Commission.

            "Common Stock" means the Company's common stock, par value $.0001
      per share, and stock of any other class into which such shares may
      hereafter have been reclassified or changed.

            "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.

            "Conversion Date" shall have the meaning set forth in Section 6(a).

            "Conversion Ratio" shall have the meaning set forth in Section 6(a).

            "Conversion Price" shall mean the price paid for one share of
      Preferred Stock divided by the number of shares of Common Stock issuable
      upon conversion of one share of Preferred Stock.

            "Conversion Shares" means, collectively, the shares of Common Stock
      into which the shares of Series A Preferred Stock are convertible in
      accordance with the terms hereof.

                                      -2-
<PAGE>

            "Conversion Shares Registration Statement" means a registration
      statement that meets the requirements of the Registration Rights Agreement
      and registers the resale of all Conversion Shares by the Holder, who shall
      be named as a "selling stockholder" thereunder, all as provided in the
      Registration Rights Agreement.

            "Dilutive Issuance" shall have the meaning set forth in Section 7(b)
      hereof.

            "Effective Date" means the date that the Conversion Shares
      Registration Statement is declared effective by the Commission.

            "EBITDA" shall have the meaning set forth in the Purchase Agreement.

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

            "Exempt Issuance" shall have the meaning set forth in Section 1.3.10
      of the Purchase Agreement.

            "Fundamental Transaction" shall have the meaning set forth in
      Section 7(f)(iv) hereof.

            "Holder" shall have the meaning given such term in Section 2 hereof.

            "Investors" shall mean the persons named in Schedule A to the
      Purchase Agreement.

            "Junior Securities" means the Common Stock and all other equity or
      equity equivalent securities of the Company other than those securities
      that are explicitly senior in rights or liquidation preference to the
      Series A Preferred Stock.

            "Original Issue Date" shall mean the date of the first issuance of
      any shares of the Series A Preferred Stock regardless of the number of
      transfers of any particular shares of Series A Preferred Stock and
      regardless of the number of certificates which may be issued to evidence
      such Series A Preferred Stock.

            "Person" means a corporation, an association, a partnership, a
      limited liability company, a business association, an individual, a trust,
      a government or political subdivision thereof or a governmental agency.

            "Purchase Agreement" means the Preferred Stock Purchase Agreement,
      dated as of the February 8, 2006, to which the Company and the original
      Holders are parties, as amended, modified or supplemented from time to
      time in accordance with its terms, a copy of which is on file at the
      principal offices of the Company.

            "Registration Rights Agreement" means the Registration Rights
      Agreement, dated as of the Closing Date, to which the Company and the
      original Holder are parties, as amended, modified or supplemented from
      time to time in accordance with its terms.

            "Securities" shall have the meaning set forth in Section 1.3.17 of
      the Purchase Agreement.

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

                                      -3-
<PAGE>

            "Series A Preferred Stock" shall have the meaning set forth in
      Section 2.

            "Subscription Amount" shall mean the three million nine hundred
      thousand dollars ($3,900,000) to be paid for the Preferred Stock and
      Warrants purchased pursuant to the Purchase Agreement, in United States
      Dollars and in immediately available funds.

            "Subsidiary" shall mean a corporation, limited liability company,
      partnership, joint venture or other business entity of which the Company
      owns beneficially or of record more than a majority of the equity
      interest.

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

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

            "Transaction Documents" shall have the meaning set forth in the
      Purchase Agreement.

            "VWAP" means, for any date, the price determined by the first of the
      following clauses that applies: (a) if the Common Stock is then listed or
      quoted on a Trading Market, the daily volume weighted average price of the
      Common Stock for such date (or the nearest preceding date) on the primary
      Trading Market on which the Common Stock is then listed or quoted as
      reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30
      a.m. EST to 4:02 p.m. Eastern Time) using the VAP function; (b) 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 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
      (c) in all other cases, the fair market value of a share of Common Stock
      as determined by a nationally recognized-independent appraiser selected in
      good faith by Purchasers holding a majority of the principal amount of
      Series A Preferred Stock then outstanding.

            "Warrants" shall have the meaning set forth in the Purchase
      Agreement.

      Section 2. DESIGNATION, AMOUNT AND PAR VALUE. The series of preferred
stock, par value $.0001 per share ("Preferred Stock") consisting of five million
(5,000,000 shares) shall be designated as the Company's Series A Convertible
Preferred Stock (the "Series A Preferred Stock") and the number of shares so
designated shall be (which shall not be subject to increase without the consent
of all of the holders of 75% of the then outstanding shares of Series A
Preferred Stock (each a "Holder" and collectively, the "Holders")). In the event
of the conversion of shares of Series A Preferred Stock into this Company's
Common Stock, pursuant to Section 6 hereof, or in the event that the Company
shall otherwise acquire and cancel any shares of Series A Preferred Stock, the
shares of Series A Preferred Stock so converted or otherwise acquired and
canceled shall have the status of authorized but unissued shares of preferred
stock, without designation as to series until such stock is once more designated
as part of a particular Series by the Company's Board of Directors. In addition,
if the Company shall not issue the maximum number of shares of Series A
Preferred Stock, the Company may, from time to time, by resolution of the Board
of Directors and the approval of the holders of a majority of the outstanding
shares of Series A Preferred Stock, reduce the number of shares of Series A
Preferred Stock authorized, provided, that no such reduction shall reduce the
number of authorized shares to a number which is less than the number of shares
of Series A Preferred Stock then issued or reserved for issuance. The number of
shares by which the Series A Preferred Stock is reduced shall have the status of
authorized but unissued shares of Preferred Stock, without designation as to
series, until such stock is once more designated as part of a particular Series
by the Company's Board of Directors. The Board of Directors shall cause to be
filed with the Secretary of State of the State of Delaware such certificate as
shall be necessary to reflect any reduction in the number of shares constituting
the Series A Preferred Stock.

                                      -4-
<PAGE>

      Section 3. DIVIDENDS AND OTHER DISTRIBUTIONS. No dividends shall be
payable with respect to the Series A Preferred Stock. No dividends shall be
payable with respect to the Common Stock while the Series A Preferred Stock is
outstanding. The Common Stock shall not be redeemed while the Series A Preferred
Stock is outstanding.

      Section 4. VOTING RIGHTS. The Series A Preferred Stock shall have no
voting rights. However, so long as any shares of Series A Preferred Stock are
outstanding, the Company shall not, without the affirmative approval of the
Holders of 75% of the shares of the Series A Preferred Stock then outstanding,
(a) alter or change adversely the powers, preferences or rights given to the
Series A Preferred Stock or alter or amend this Certificate of Designation, (b)
authorize or create any class of stock ranking as to dividends or distribution
of assets upon a Liquidation (as defined in Section 5) senior to or otherwise
pari passu with the Series A Preferred Stock, or any of preferred stock
possessing greater voting rights or the right to convert at a more favorable
price than the Series A Preferred Stock, (c) amend its certificate of
incorporation or other charter documents in breach of any of the provisions
hereof, (d) increase the authorized number of shares of Series A Preferred
Stock, or (e) enter into any agreement with respect to the foregoing. The
holders of the Series A Preferred Stock will not be entitled to vote as a class
with respect to the increase or decrease in the number of authorized shares of
preferred stock; provided, however, that the provisions of Section 6(c) of this
Certificate of Designation may not be amended or waived.

      Section 5. LIQUIDATION. Upon any liquidation, dissolution or winding-up of
the Company, whether voluntary or involuntary (a "Liquidation"), the Holders
shall be entitled to receive out of the assets of the Company, whether such
assets are capital or surplus, for each share of Series A Preferred Stock an
amount equal to one and 25/100 dollars ($1.25), which amount is referred to as
the "Liquidation Value," before any distribution or payment shall be made to the
holders of any Junior Securities and after any distributions or payments made to
holders of any class or series of securities which are senior to the Series A
Preferred Stock upon voluntary or involuntary liquidation, dissolution or
winding up, and if the assets of the Company shall be insufficient to pay in
full such amounts, then the entire assets to be distributed to the Holders shall
be distributed among the Holders ratably in accordance with the respective
amounts that would be payable on such shares if all amounts payable thereon were
paid in full. In the event the assets of the Company available for distribution
to the holders of shares of Series A Preferred Stock upon dissolution,
liquidation or winding up of the Company, whether voluntary or involuntary,
shall be insufficient to pay in full all amounts to which such holders are
entitled pursuant to Section 5, no such distribution shall be made on account of
any shares of any other class or series of capital stock of the Company ranking
on a parity with the shares of Series A Preferred Stock upon such dissolution,
liquidation or winding up unless proportionate distributive amounts shall be
paid on account of the shares of Series A Preferred Stock, ratably, in
proportion to the full distributable amounts for which holders of all such
parity shares are respectively entitled upon such dissolution, liquidation or
winding up. At the election of a Holder made by written notice delivered to the
Company at least two (2) business days prior to the effective date of the
subject transaction, as to the shares of Series A Preferred Stock held by such
Holder, a Fundamental Transaction (excluding for purposes of this Section 5 any
Fundamental Transaction described in Section 7(f)(iv)(A) or 7(f)(iv)(B)) or
Change of Control shall be treated as a Liquidation as to such Holder.

                                      -5-
<PAGE>

      Section 6. CONVERSION.

            a)    Conversions at Option of Holder. Each share of Series A
Preferred Stock shall be initially convertible (subject to the limitations set
forth in Section 6(c)), into one (1) share of Common Stock (as adjusted as
provided below, the "Conversion Ratio") at the option of the Holders, at any
time and from time to time from and after the Original Issue Date. Holders shall
effect conversions by providing the Company with the form of conversion notice
attached hereto as Annex A (a "Notice of Conversion") as fully and originally
executed by the Holder, together with the delivery by the Holder to the Company
of the stock certificate(s) representing the number of shares of Series A
Preferred Stock so converted, with such stock certificates being duly endorsed
in full for transfer to the Company or with an applicable stock power duly
executed by the Holder in the manner and form as deemed reasonable by the
transfer agent of the Common Stock. Each Notice of Conversion shall specify the
number of shares of Series A Preferred Stock to be converted, the number of
shares of Series A Preferred Stock owned prior to the conversion at issue, the
number of shares of Series A Preferred Stock owned subsequent to the conversion
at issue, the stock certificate number and the shares of Series A Preferred
Stock represented thereby which are accompanying the Notice of Conversion, and
the date on which such conversion is to be effected, which date may not be prior
to the date the Holder delivers such Notice of Conversion and the applicable
stock certificates to the Company by overnight delivery service (the "Conversion
Date"). If no Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the Trading Day immediately following the date that
such Notice of Conversion and applicable stock certificates are received by the
Company. The calculations and entries set forth in the Notice of Conversion
shall control in the absence of manifest or mathematical error. Shares of Series
A Preferred Stock converted into Common Stock in accordance with the terms
hereof shall be canceled and may not be reissued. The Conversion Price of the
Series A Preferred Stock shall be equal to twelve cents ($.12) per share. If the
initial Conversion Price is adjusted pursuant to Section 7 or as otherwise
provided herein, the Conversion Ratio shall likewise be adjusted and the new
Conversion Ratio shall equal the Liquidation Value divided by the new Conversion
Price. Thereafter, subject to any further adjustments in the Conversion Price,
each share of Series A Preferred Stock shall be initially convertible into that
number of shares of Common Stock equal to the new Conversion Ratio.

            b)    Automatic Conversion Upon Change of Control. Subject to
Section 5, all of the outstanding shares of Series A Preferred Stock shall be
automatically converted into the Conversion Shares upon the close of business on
the business day immediately preceding the date fixed for consummation of any
transaction resulting in a Change of Control of the Company (an "Automatic
Conversion Event"). A "Change in Control" means a consolidation or merger of the
Company with or into another company or entity in which the Company is not the
surviving entity or the sale of all or substantially all of the assets of the
Company to another company or entity not controlled by the then existing
stockholders of the Company in a transaction or series of transactions. The
Company shall not be obligated to issue certificates evidencing the Conversion
Shares unless certificates evidencing the shares of Series A Preferred Stock so
converted are either delivered to the Company or its transfer agent or the
holder notifies the Company or its transfer agent in writing that such
certificates have been lost, stolen, or destroyed and executes an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection therewith. Upon the conversion of the Series A Preferred Stock
pursuant to this Section 6(b), the Company shall promptly send written notice
thereof, by hand delivery or by overnight delivery, to the holder of record of
all of the Series A Preferred Stock at its address then shown on the records of
the Company, which notice shall state that certificates evidencing shares of
Series A Preferred Stock must be surrendered at the office of the Company (or of
its transfer agent for the Common Stock, if applicable).

                                      -6-
<PAGE>

            c)    Beneficial Ownership Limitation. Except as provided in Section
6(b) of this Statement of Designation, which shall apply as stated therein if an
Automatic Conversion Event shall occur, the Company shall not effect any
conversion of the Series A Preferred Stock, and the Holder shall not have the
right to convert any portion of the Series A Preferred Stock to the extent that
after giving effect to such conversion, the Holder (together with the Holder's
affiliates), as set forth on the applicable Notice of Conversion, would
beneficially own in excess of 4.9% of the number of shares of the Common Stock
outstanding immediately after giving effect to such conversion. For purposes of
the foregoing sentence, the number of shares of Common Stock beneficially owned
by the Holder and its affiliates shall include the number of shares of Common
Stock issuable upon conversion of the Series A Preferred Stock with respect to
which the determination of such sentence is being made, but shall exclude the
number of shares of Common Stock which would be issuable upon (A) conversion of
the remaining, non-converted shares of Series A Preferred Stock beneficially
owned by the Holder or any of its affiliates, so long as such shares of Series A
Preferred Stock are not convertible within sixty (60) days from the date of such
determination, and (B) exercise or conversion of the unexercised or
non-converted portion of any other securities of the Company (including the
Warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any of its
affiliates, so long as such other securities of the Company are not exercisable
nor convertible within sixty (60) days from the date of such determination. For
purposes of this Section 6(c), in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding shares of
Common Stock as reflected in the most recent of the following: (A) the Company's
most recent quarterly reports, Form 10-Q, Form 10-QSB, Annual Reports, Form
10-K, or Form 10-KSB, as the case may be, as filed with the Commission under the
Exchange Act (B) a more recent public announcement by the Company or (C) any
other written notice by the Company or the Company's transfer agent setting
forth the number of shares of Common Stock outstanding. Upon the written or oral
request of the Holder, the Company shall within two (2) Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the Company, including the Series A Preferred Stock, by the Holder or its
affiliates since the date as of which such number of outstanding shares of
Common Stock was publicly reported by the Company. For purposes of this Section
6(c), beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act. This Section 6(c) may be not be waived or amended.

            d)    Mechanics of Conversion

                  i.    Delivery of Certificate Upon Conversion. Except as
otherwise set forth herein, not later than three Trading Days after each
Conversion Date (the "Share Delivery Date"), the Company shall deliver to the
Holder (A) a certificate or certificates which, after the Effective Date, shall
be free of restrictive legends and trading restrictions (other than those
required by the Purchase Agreement) representing the number of shares of Common
Stock being acquired upon the conversion of shares of Series A Preferred Stock,
and (B) a bank check in the amount of accrued and unpaid dividends (if the
Company has elected or is required to pay accrued dividends in cash). After the
Effective Date, the Company shall, upon request of the Holder, deliver any
certificate or certificates required to be delivered by the Company under this
Section electronically through the Depository Trust Company or another
established clearing Company performing similar functions if the Company's
transfer agent has the ability to deliver shares of Common Stock in such manner.
If in the case of any Notice of Conversion such certificate or certificates are
not delivered to or as directed by the applicable Holder by the third Trading
Day after the Conversion Date, the Holder shall be entitled to elect by written
notice to the Company at any time on or before its receipt of such certificate
or certificates thereafter, to rescind such conversion, in which event the
Company shall immediately return the certificates representing the shares of
Series A Preferred Stock tendered for conversion.

                                      -7-
<PAGE>

                  ii.   Obligation Absolute; Partial Liquidated Damages. The
Company's obligations to issue and deliver the Conversion Shares upon conversion
of Series A Preferred Stock in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of such Conversion Shares. In the event a Holder shall elect to convert
any or all of its Series A Preferred Stock, the Company may not refuse
conversion based on any claim that such Holder or any one associated or
affiliated with the Holder of has been engaged in any violation of law,
agreement or for any other reason (other than the inability of the Company to
issue shares of Common Stock as a result of the limitation set forth in Section
6(c) hereof) unless, an injunction from a court, on notice, restraining and or
enjoining conversion of all or part of this Series A Preferred Stock shall have
been sought and obtained and the Company posts a surety bond for the benefit of
the Holder in the amount of 150% of the Conversion Value of Series A Preferred
Stock outstanding, which is subject to the injunction, which bond shall remain
in effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such Holder to the extent it obtains
judgment. In the absence of an injunction precluding the same, the Company shall
issue Conversion Shares or, if applicable, cash, upon a properly noticed
conversion. If the Company fails to deliver to the Holder such certificate or
certificates pursuant to Section 6(d)(i) within two Trading Days of the Share
Delivery Date applicable to such conversion, the Company shall pay to such
Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of
Conversion Value of Series A Preferred Stock being converted, $50 per Trading
Day (increasing to $100 per Trading Day after three (3) Trading Days and
increasing to $200 per Trading Day six (6) Trading Days after such damages begin
to accrue) for each Trading Day after the Share Delivery Date until such
certificates are delivered. Nothing herein shall limit a Holder's right to
pursue actual damages for the Company's failure to deliver certificates
representing shares of Common Stock upon conversion within the period specified
herein and such Holder shall have the right to pursue all remedies available to
it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.

                  iii.  Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Conversion. If the Company fails to deliver to the Holder such
certificate or certificates pursuant to Section 6(d)(i) by a Share Delivery
Date, and if after such Share Delivery Date the Holder purchases (in an open
market transaction or otherwise) Common Stock to deliver in satisfaction of a
sale by such Holder of the Conversion Shares which the Holder was entitled to
receive upon the conversion relating to such Share Delivery Date (a "Buy-In"),
then the Company shall pay in cash to the Holder the amount by which (x) the
Holder's total purchase price (including brokerage commissions, if any) for the
Common Stock so purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder was entitled to receive from the
conversion at issue multiplied by (2) the price at which the sell order giving
rise to such purchase obligation was executed. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of shares of Series A Preferred
Stock with respect to which the aggregate sale price giving rise to such
purchase obligation is $10,000, under clause (A) of the immediately preceding
sentence the Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts payable to the
Holder in respect of the Buy-In, together with applicable confirmations and
other evidence reasonably requested by the Company. Nothing herein shall limit a
Holder's right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing shares of Common Stock upon conversion of the shares
of Series A Preferred Stock as required pursuant to the terms hereof.

                                      -8-
<PAGE>

                  iv.   Reservation of Shares Issuable Upon Conversion. The
Company covenants that it will at all times reserve and keep available out of
its authorized and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of the Series A Preferred Stock, each as herein
provided, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holders, not less than such number of shares of
the Common Stock as shall (subject to any additional requirements of the Company
as to reservation of such shares set forth in the Purchase Agreement) be
issuable (taking into account the adjustments and restrictions of Section 7)
upon the conversion of all outstanding shares of Series A Preferred Stock. The
Company covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly and validly authorized, issued and fully paid,
nonassessable and, if the Conversion Shares Registration Statement is then
effective under the Securities Act, registered for public sale in accordance
with such Conversion Shares Registration Statement.

                  v.    Fractional Shares. Upon a conversion hereunder, the
Company shall not be required to issue stock certificates representing fractions
of shares of the Common Stock. All fractional shares shall be carried forward
and any fractional shares which remain after a Holder converts all of his or her
Series A Preferred Stock shall be dropped and eliminated.

                  vi.   Transfer Taxes. The issuance of certificates for shares
of the Common Stock on conversion of the Series A Preferred Stock shall be made
without charge to the Holders thereof for any documentary stamp or similar taxes
that may be payable in respect of the issue or delivery of such certificate,
provided that the Company shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issuance and delivery of any
such certificate upon conversion in a name other than that of the Holder of such
shares of Series A Preferred Stock so converted and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.

                  vii.  Absolute Obligation. Except as expressly provided
herein, no provision of this Certificate of Designation shall alter or impair
the obligation of the Company, which is absolute and unconditional, to pay the
liquidated damages (if any) on, the shares of Series A Preferred Stock at the
time, place, and rate, and in the coin or currency, herein prescribed.

                                      -9-
<PAGE>

      Section 7. CERTAIN ADJUSTMENTS.

            a)    Stock Dividends and Stock Splits. If the Company, at any time
while the Series A Preferred Stock is outstanding: (A) shall pay a stock
dividend or otherwise make a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company pursuant to this Series A Preferred
Stock), (B) subdivide outstanding shares of Common Stock into a larger number of
shares, (C) combine (including by way of reverse stock split) outstanding shares
of Common Stock into a smaller number of shares, or (D) issue by
reclassification of shares of the Common Stock any shares of capital stock of
the Company, then the Conversion Value shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.

            b)    Price Adjustment. Until such time as the Investors hold no
Securities, except for (i) Exempt Issuances, (ii) issuances covered by Sections
7(a), 7(c) and 7(d) hereof or (iii) an issuance of Common Stock upon exercise or
upon conversion of warrants, options or other convertible securities for which
an adjustment has already been made pursuant to this Section 7, as to all of
which this Section 7(b) does not apply, if the Company closes on the sale or
issuance of Common Stock at a price, or warrants, options, convertible debt or
equity securities with a exercise price per share or exercise price per share
which is less than the Conversion Price then in effect (such lower sales price,
conversion or exercise price, as the case may be, being referred to as the
"Lower Price"), the Conversion Price in effect from and after the date of such
transaction shall be reduced to the Lower Price. For purpose of determining the
exercise price of warrants issued by the Company, the price, if any, paid per
share for the warrants shall be added to the exercise price of the warrants. The
"Conversion Price" shall mean the price paid for one share of Preferred Stock
divided by the number of shares of Common Stock issuable upon conversion of one
share of Preferred Stock. The "Conversion Rate" is the number of shares of
Common Stock issuable upon conversion of one (1) share of Preferred Stock. The
initial Conversion Rate is one (1) share of Common Stock per share of Preferred
Stock and the initial Conversion Price is one and 25/100 dollars ($1.25).

            c)    Conversion Price Adjustment Based on Pre-Tax Income Per Share
and Adjusted EBITDA.

                  i.    In the event Konzern's Adjusted EBITDA for the year
                        ended December 31, 2005 is less than $5,650,000, then
                        the Conversion Price shall be reduced by the percentage
                        shortfall, up to a maximum of 30%. Thus, if Adjusted
                        EBITDA for 2005 is $3,955,000 or less, the Conversion
                        Price shall be reduced by 30%. As used in this Section
                        7(c)(i), Adjusted EBITDA shall mean shall mean earnings
                        before interest, taxes, depreciation and amortization,
                        determined in accordance with U.S. GAAP, minus capital
                        expenditures. Such reduction shall be made at the time
                        the Company files its Form 10-KSB for the year ended
                        March 31, 2006, and shall apply to the all of the Series
                        A Preferred Stock which is outstanding on the date the
                        Form 10-KSB is filed, or, if not filed on time, on the
                        date that filing was required.

                                      -10-
<PAGE>

                  ii.   In addition to any adjustment pursuant to Section
                        7(c)(i) of this Warrant, in the event the Company's
                        fully-diluted Pre-Tax Income, as defined in Section
                        1.3.14 of the Purchase Agreement, Per Share for the year
                        ended December 31, 2006 is between $0.40 and $0.20 (50%
                        Decline) per share on a fully-diluted basis, then the
                        conversion price shall be reduced proportionately by 0%
                        if the fully-diluted Pre Tax Income is $0.40 per share
                        or greater and by 50% if the fully-diluted Pre Tax
                        Income is $0.20 per share (50% decrease) or less. For
                        example if the earnings are $0.32 per share (20%
                        Decline) then the Conversion Price, as defined in the
                        Certificate of Designation, shall be reduced by 20% of
                        the then current conversion price per share.
                        Fully-diluted Pre-Tax Income Per Share shall be based on
                        the number of outstanding shares of Common Stock plus
                        all shares of Common Stock issuable upon conversion of
                        all outstanding convertible securities and upon exercise
                        of all outstanding warrants, options and rights,
                        regardless of whether (i) such shares would be included
                        in determining diluted earnings per share and (ii) such
                        convertible securities are subject to a restriction or
                        limitation on exercise. Thus, for purpose of determining
                        fully-diluted Pre-Tax Income Per Share, the 4.9%
                        Limitation shall be disregarded. The adjustment to the
                        conversion price shall be made within five business days
                        of the audited numbers being reported to the SEC and
                        shall apply to the all of the Series A Preferred Stock
                        which is outstanding on the date the Form 10-KSB or Form
                        10-K for the year ended December 31, 2006 is filed, or,
                        if not filed on time, on the date that filing was
                        required.

            d)    Pro Rata Distributions. If the Company, at any time while
Series A Preferred Stock is outstanding, shall distribute to all holders of
Common Stock (and not to Holders) evidences of its indebtedness or assets or
rights or warrants to subscribe for or purchase any security, then in each such
case the Conversion Price shall be determined by multiplying such Conversion
Price in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the VWAP determined as of the record date mentioned above,
and of which the numerator shall be such VWAP on such record date less the then
fair market value at such record date of the portion of such assets or evidence
of indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Holders of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

            e)    Calculations. All calculations under this Section 7 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may be.
The number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Company or any of its
subsidiaries. For purposes of this Section 7, the number of shares of Common
Stock deemed to be issued and outstanding as of a given date shall be the sum of
the number of shares of Common Stock (excluding treasury shares and shares owned
by subsidiaries, if any) actually issued and outstanding.

                                      -11-
<PAGE>

            f)    Notice to Holders.

                  i.    Adjustment to Conversion Price. Whenever the Conversion
Price is adjusted pursuant to any of this Section 7, the Company shall promptly
mail to each Holder a notice setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment. If the Company issues a variable rate security, despite the
prohibition thereon in the Purchase Agreement, the Company shall be deemed to
have issued Common Stock or Common Stock Equivalents at the lowest possible
conversion or exercise price at which such securities may be converted or
exercised in the case of a Variable Rate Transaction (as defined in the Purchase
Agreement), or the lowest possible adjustment price in the case of an MFN
Transaction (as defined in the Purchase Agreement).

                  ii.   Notices of Other Events. If (A) the Company shall
declare a dividend (or any other distribution) on the Common Stock; (B) the
Company shall declare a redemption of the Common Stock; (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or of any
rights; (D) the approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock or any Fundamental
Transaction, (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company; then in
each case, the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of the Series A Preferred Stock, and
shall cause to be mailed to the Holders at their last addresses as they shall
appear upon the stock books of the Company, at least 30 calendar days prior to
the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification is expected to become
effective or close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such
reclassification or Fundamental Transaction; provided, that the failure to mail
such notice or any defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such notice.

                  iii.  Exempt Issuance. Notwithstanding the foregoing, no
adjustment in the Conversion Price will be made in respect of an Exempt
Issuance.

                  iv.   Fundamental Transaction. If, at any time while this
Series A Preferred Stock is outstanding, (A) the Company effects any merger or
consolidation of the Company with or into another Person, (B) the Company
effects any sale of all or substantially all of its assets in one or a series of
related transactions, (C) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (D) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a "Fundamental Transaction"), then upon any subsequent
conversion of this Series A Preferred Stock, the Holder shall have the right to
receive, for each Conversion Share that would have been issuable upon such
conversion absent such Fundamental Transaction, the same kind and amount of
securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been, immediately prior to
such Fundamental Transaction, the holder of one share of Common Stock (the
"Alternate Consideration"). For ------------------------ purposes of any such
conversion, the determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion the Conversion Price
among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any conversion of this
Series A Preferred Stock following such Fundamental Transaction. To the extent
necessary to effectuate the foregoing provisions, any successor to the Company
or surviving entity in such Fundamental Transaction shall file a new Certificate
of Designations with the same terms and conditions and issue to the Holder new
preferred stock consistent with the foregoing provisions and evidencing the
Holder's right to convert such preferred stock into Alternate Consideration. The
terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply
with the provisions of this paragraph (f)(iv) and insuring that this Series A
Preferred Stock (or any such replacement security) will be similarly adjusted
upon any subsequent transaction analogous to a Fundamental Transaction.
Notwithstanding the foregoing or any other provisions of this Certificate of
Designations, in the event that the agreement relating to a Fundamental
Transaction provides for the conversion or exchange of the Series A Preferred
Stock into equity or debt securities, cash or other consideration and the
agreement is approved by the holders of a majority of the. then-outstanding
shares of Series A Preferred Stock, then the holders of the Series A Preferred
Stock shall have only the rights set forth in such agreement.

                                      -12-
<PAGE>

      Section 8. Miscellaneous.

            a)    Notices. Any and all notices or other communications or
deliveries to be provided by the Holders hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered
personally, by facsimile, sent by a nationally recognized overnight courier
service, addressed to the Company, at its principal address as reflected in its
most recent filing with the Commission. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service addressed to each Holder at the facsimile telephone
number or address of such Holder appearing on the books of the Company, or if no
such facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given when received, and any notice by telecopier
shall be effective if confirmation of receipt is given by the party to whom the
notice is transmitted. -

            b)    Lost or Mutilated Preferred Stock Certificate. If a Holder's
Series A Preferred Stock certificate shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated certificate, or in lieu of or in
substitution for a lost, stolen or destroyed certificate, a new certificate for
the shares of Series A Preferred Stock so mutilated, lost, stolen or destroyed
but only upon receipt of evidence of such loss, theft or destruction of such
certificate, and of the ownership thereof, and indemnity, if requested, all
reasonably satisfactory to the Company.

                                      -13-
<PAGE>

            c)    Next Business Day. Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day.

            d)    Headings. The headings contained herein are for convenience
only, do not constitute a part of this Certificate of Designations and shall not
be deemed to limit or affect any of the provisions hereof.

            e)    Rank of Series. For purposes of this Certificate of
Designation, any stock of any series or class of the Company shall be deemed to
rank

                  (i)   prior to the shares of Series A Preferred Stock, as to
dividends or upon liquidation, dissolution or winding up, as the case may be, if
the holders of such class or classes shall be entitled to the receipt of
dividends or of amounts distributable upon dissolution, liquidation or winding
up of the Company, as the case may be, in preference or priority to the holders
of shares of Series A Preferred Stock;

                  (ii)  on a parity with shares of Series A Preferred Stock, as
to dividends or upon liquidation, dissolution or winding up, as the case may be,
whether or not the dividend rates, dividend payment dates or redemption or
liquidation prices per share or sinking fund provisions, if any, be different
from those of Series A Preferred Stock, if the holders of such stock shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Company, as the case may be, in
proportion to their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of such stock
and the holders of shares of Series A Preferred Stock; and

                  (iii) junior to shares of Series A Preferred Stock as to
dividends or upon liquidation, dissolution or winding up, as the case may be, if
such class shall be Common Stock or if the holders of shares of Series A
Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Company, as the
case may be, in preference or priority to the holders of shares of such class or
classes.

            f)    Amendment. This Certificate of Designation may be amended with
the approval of the Company's board of directors and the consent of the holders
of seventy-five percent (75%) of the outstanding shares of Series A Preferred
Stock, except that the conversion limitation set forth in Section 6.2(b) shall
not be amended.

                                      -14-
<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES A
                                PREFERRED STOCK)

The undersigned hereby elects to convert the number of shares of Series A
Convertible Preferred Stock indicated below, into shares of common stock, par
value $0.0001 per share (the "Common Stock"), of Lounsberry Holdings III, Inc.,
a Delaware corporation (the "Company"), according to the conditions hereof, as
of the date written below. If shares are to be issued in the name of a person
other than undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Company in accordance therewith. No fee will be
charged to the Holder for any conversion, except for such transfer taxes, if
any.

Conversion calculations:

  Date to Effect Conversion: ___________________________________________________
  Number of shares of Common Stock owned prior to Conversion: __________________
  Number of shares of Series A Preferred Stock to be Converted: ________________
  Value of shares of Series A Preferred Stock to be Converted: _________________
  Number of shares of Common Stock to be Issued: _______________________________
  Certificate Number of Series A Preferred Stock attached hereto:_______________
  Number of Shares of Series A Preferred Stock represented by attached
    certificate:_________

  Number of shares of Series A Preferred Stock subsequent to Conversion: _______

                                        [HOLDER]

                                        By:___________________________________
                                           Name:
                                           Title:

                                      -15-

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